Please explain the federal annuity

[Anonymous]

Anonymous wrote:

Anonymous wrote:Don't forget that if you take the deferred annuity at 62, you'll be eligible to buy into FEHP at subsidized employee rates. Of course, the value of that is questionable but is not zero.

Wrong. You can only buy into the health plan if you are retirement eligible when you leave the government and defer retirement then. You leave before you are retirement eligible and you are SOL. It is one of the most valuable pieces of retirement. When I went to a retirement seminar 10 years ago they said value of having the federal health plan in retirement was about 300K.

Sorry, I misspoke. I meant to say if you take the POSTPONED annuity, you can get FEHB at 62. See http://www.plan-your-federal-retirement.com/fers-deferred-retirement-vs-postponed-fers-retirement

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My wife is Fed Law Enforcement and has mandatory retirement at 57. If I understand it correctly, she gets 35% of her high 3 after 20 years, and then and additional 1% for each year beyond 20 up to a maximum of 42%.

WoW! Never heard of such a generous federal pension. Regular civil servants hired in the last 30 years (since the late 1980s) get 1% of their highest salary (or 1.1% if you worked for a really long time) times their time of service. So if you worked for 20 years you would get an annual pension worth 20% of your highest salary.

I think FDIC gets an even more generous pension calculation.

Not FDIC. The Fed Reserve that gets a more generous pension.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

The salary tables do not indicate that GS 15-10 is paid 163k. Regardless of that, leaving before getting 20 years in would be monumentally stupid.

Why? What happens with 20 year’s service if you are leaving well before retirement age anyway? Isn’t it just a straight calculation based on number of years?

After 20 years, your pension under FERS is calculated as 1.1% for each year of service rather than 1.0%

Ok, so if I calculated correctly, that's a difference of $4,920 per year? (If the high-3 salary is $164,000, I calculate the pension after 19 years as a federal employee at $31,160 (versus the pension after 20 years as a federal employee as $36,080).) Do I have that right? If so, it's not a huge difference is one could get a better salary in the private sector (by leaving a the 19th year instead of the 20th year.) Or maybe she should stay if the health insurance benefits in retirement are so great? (Can someone explain what they are?)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

The salary tables do not indicate that GS 15-10 is paid 163k. Regardless of that, leaving before getting 20 years in would be monumentally stupid.

Why? What happens with 20 year’s service if you are leaving well before retirement age anyway? Isn’t it just a straight calculation based on number of years?

After 20 years, your pension under FERS is calculated as 1.1% for each year of service rather than 1.0%

Ok, so if I calculated correctly, that's a difference of $4,920 per year? (If the high-3 salary is $164,000, I calculate the pension after 19 years as a federal employee at $31,160 (versus the pension after 20 years as a federal employee as $36,080).) Do I have that right? If so, it's not a huge difference is one could get a better salary in the private sector (by leaving a the 19th year instead of the 20th year.) Or maybe she should stay if the health insurance benefits in retirement are so great? (Can someone explain what they are?)

To get the health insurance benefits she would have to be eligible for retirement (minimum retirement age) at the time she separates and currently be subscribing to the federal health insurance (and have done so for 5 years over the course of her employment). It all can be postponed until she actually execute the retiremeent.

My understanding is that the health insurance is quite valuable. You pay the same rates as employees. You also need to register for medicare and your FEHB benefits work in tandem with medicare. Some plans provide a lot of benefits such as complete elimination of co-pays and various credits because of how the systems work together. Its complicated and I plan to go to a seminar to understand.

I am almost 54 and my MRA age is 56. At this point, it would be very costly for me to leave before I hit MRA. I currently have 22 years in.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

The salary tables do not indicate that GS 15-10 is paid 163k. Regardless of that, leaving before getting 20 years in would be monumentally stupid.

Why? What happens with 20 year’s service if you are leaving well before retirement age anyway? Isn’t it just a straight calculation based on number of years?

After 20 years, your pension under FERS is calculated as 1.1% for each year of service rather than 1.0%

Ok, so if I calculated correctly, that's a difference of $4,920 per year? (If the high-3 salary is $164,000, I calculate the pension after 19 years as a federal employee at $31,160 (versus the pension after 20 years as a federal employee as $36,080).) Do I have that right? If so, it's not a huge difference is one could get a better salary in the private sector (by leaving a the 19th year instead of the 20th year.) Or maybe she should stay if the health insurance benefits in retirement are so great? (Can someone explain what they are?)

To get the health insurance benefits she would have to be eligible for retirement (minimum retirement age) at the time she separates and currently be subscribing to the federal health insurance (and have done so for 5 years over the course of her employment). It all can be postponed until she actually execute the retiremeent.

My understanding is that the health insurance is quite valuable. You pay the same rates as employees. You also need to register for medicare and your FEHB benefits work in tandem with medicare. Some plans provide a lot of benefits such as complete elimination of co-pays and various credits because of how the systems work together. Its complicated and I plan to go to a seminar to understand.

I am almost 54 and my MRA age is 56. At this point, it would be very costly for me to leave before I hit MRA. I currently have 22 years in.

Forgive my ignorance as I am in my mid-40's, but once you qualify for Medicare at age 65, what type of health insurance do you need? At the risk of sounding like an idiot, does Medicare not cover most things that normal health insurance would cover?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Another poster. What if I have 30 years and am just 57 (which is the minimum retirement age) when I end federal service? How much would I expect to get? High 3 is $163,000. Would it make a difference if I opted to wait until I was 62 to start receiving the annuity, even if I retired at age 57? Thanks. I've been trying to figure this out but finding it confusing.

163000 x 0.3 (30%) = 48900/12 = 4075. Less if you choose survivor benefit for your spouse. (~90% of 4075)

I don't know if you can ask for delayed payment.

This. Also deduct medical insurance premium.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

The salary tables do not indicate that GS 15-10 is paid 163k. Regardless of that, leaving before getting 20 years in would be monumentally stupid.

Why? What happens with 20 year’s service if you are leaving well before retirement age anyway? Isn’t it just a straight calculation based on number of years?

After 20 years, your pension under FERS is calculated as 1.1% for each year of service rather than 1.0%

Ok, so if I calculated correctly, that's a difference of $4,920 per year? (If the high-3 salary is $164,000, I calculate the pension after 19 years as a federal employee at $31,160 (versus the pension after 20 years as a federal employee as $36,080).) Do I have that right? If so, it's not a huge difference is one could get a better salary in the private sector (by leaving a the 19th year instead of the 20th year.) Or maybe she should stay if the health insurance benefits in retirement are so great? (Can someone explain what they are?)

To get the health insurance benefits she would have to be eligible for retirement (minimum retirement age) at the time she separates and currently be subscribing to the federal health insurance (and have done so for 5 years over the course of her employment). It all can be postponed until she actually execute the retiremeent.

My understanding is that the health insurance is quite valuable. You pay the same rates as employees. You also need to register for medicare and your FEHB benefits work in tandem with medicare. Some plans provide a lot of benefits such as complete elimination of co-pays and various credits because of how the systems work together. Its complicated and I plan to go to a seminar to understand.

I am almost 54 and my MRA age is 56. At this point, it would be very costly for me to leave before I hit MRA. I currently have 22 years in.

Forgive my ignorance as I am in my mid-40's, but once you qualify for Medicare at age 65, what type of health insurance do you need? At the risk of sounding like an idiot, does Medicare not cover most things that normal health insurance would cover?

Thanks for asking this. I've always wanted to know...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

The salary tables do not indicate that GS 15-10 is paid 163k. Regardless of that, leaving before getting 20 years in would be monumentally stupid.

Why? What happens with 20 year’s service if you are leaving well before retirement age anyway? Isn’t it just a straight calculation based on number of years?

After 20 years, your pension under FERS is calculated as 1.1% for each year of service rather than 1.0%

Ok, so if I calculated correctly, that's a difference of $4,920 per year? (If the high-3 salary is $164,000, I calculate the pension after 19 years as a federal employee at $31,160 (versus the pension after 20 years as a federal employee as $36,080).) Do I have that right? If so, it's not a huge difference is one could get a better salary in the private sector (by leaving a the 19th year instead of the 20th year.) Or maybe she should stay if the health insurance benefits in retirement are so great? (Can someone explain what they are?)

To get the health insurance benefits she would have to be eligible for retirement (minimum retirement age) at the time she separates and currently be subscribing to the federal health insurance (and have done so for 5 years over the course of her employment). It all can be postponed until she actually execute the retiremeent.

My understanding is that the health insurance is quite valuable. You pay the same rates as employees. You also need to register for medicare and your FEHB benefits work in tandem with medicare. Some plans provide a lot of benefits such as complete elimination of co-pays and various credits because of how the systems work together. Its complicated and I plan to go to a seminar to understand.

I am almost 54 and my MRA age is 56. At this point, it would be very costly for me to leave before I hit MRA. I currently have 22 years in.

Forgive my ignorance as I am in my mid-40's, but once you qualify for Medicare at age 65, what type of health insurance do you need? At the risk of sounding like an idiot, does Medicare not cover most things that normal health insurance would cover?

Thanks for asking this. I've always wanted to know...

It is frankly impossible to get a straight answer.

Medicare Part A (hospital care) is free and is primary on hospital expenses
Medicare Part B costs (134-428/month depending on income) covers medical expenses, but there is a deductible and they don't pay all
Medicare Part C (Medicare Advantage) is, I think, basically like a health care company providing coordinating your coverage in addition to what Parts A and B provide. This may include prescription coverage.
Madicare Part D is a stand alone prescription coverage.

My guess is with the federal retirement FEHB you take Part A and B and then FEHB is secondary insurance but is similar to the Medicare Advantage in that it covers more and provides your prescription coverage. Several of the providers set themselves up to be appealing to retirees and they basically cover all copays. and give some credits for medical expenses My guess is when we retire DH and I will be in the second highest income category for payments so if today we would pay: $700 in medicare premiums and $430 in FEHB premiums (BCBS basic family). Non of that is pre-tax.

[Anonymous]

Prescriptions can be very, very expensive for the elderly, and insurance varies greatly in how much is covered.

[Anonymous]

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

If she has a marketable skill, the question I would ask is how long she has to stay to be able to retire with an immediate annuity, which means she locks in federal health benefits. That's worth much more than the additional pension.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

The salary tables do not indicate that GS 15-10 is paid 163k. Regardless of that, leaving before getting 20 years in would be monumentally stupid.

Why? What happens with 20 year’s service if you are leaving well before retirement age anyway? Isn’t it just a straight calculation based on number of years?

After 20 years, your pension under FERS is calculated as 1.1% for each year of service rather than 1.0%

Ok, so if I calculated correctly, that's a difference of $4,920 per year? (If the high-3 salary is $164,000, I calculate the pension after 19 years as a federal employee at $31,160 (versus the pension after 20 years as a federal employee as $36,080).) Do I have that right? If so, it's not a huge difference is one could get a better salary in the private sector (by leaving a the 19th year instead of the 20th year.) Or maybe she should stay if the health insurance benefits in retirement are so great? (Can someone explain what they are?)

To get the health insurance benefits she would have to be eligible for retirement (minimum retirement age) at the time she separates and currently be subscribing to the federal health insurance (and have done so for 5 years over the course of her employment). It all can be postponed until she actually execute the retiremeent.

My understanding is that the health insurance is quite valuable. You pay the same rates as employees. You also need to register for medicare and your FEHB benefits work in tandem with medicare. Some plans provide a lot of benefits such as complete elimination of co-pays and various credits because of how the systems work together. Its complicated and I plan to go to a seminar to understand.

I am almost 54 and my MRA age is 56. At this point, it would be very costly for me to leave before I hit MRA. I currently have 22 years in.

Forgive my ignorance as I am in my mid-40's, but once you qualify for Medicare at age 65, what type of health insurance do you need? At the risk of sounding like an idiot, does Medicare not cover most things that normal health insurance would cover?

Thanks for asking this. I've always wanted to know...

It is frankly impossible to get a straight answer.

Medicare Part A (hospital care) is free and is primary on hospital expenses
Medicare Part B costs (134-428/month depending on income) covers medical expenses, but there is a deductible and they don't pay all
Medicare Part C (Medicare Advantage) is, I think, basically like a health care company providing coordinating your coverage in addition to what Parts A and B provide. This may include prescription coverage.
Madicare Part D is a stand alone prescription coverage.

My guess is with the federal retirement FEHB you take Part A and B and then FEHB is secondary insurance but is similar to the Medicare Advantage in that it covers more and provides your prescription coverage. Several of the providers set themselves up to be appealing to retirees and they basically cover all copays. and give some credits for medical expenses My guess is when we retire DH and I will be in the second highest income category for payments so if today we would pay: $700 in medicare premiums and $430 in FEHB premiums (BCBS basic family). Non of that is pre-tax.

It is impossible to get a straight answer on this. I once spent hours looking for it. Best I could tell, you need to take Part A (which is mandatory and free), but if you're high income, Part B is expensive, and not worth it if you have a good FEHB plan. I think the Feds don't give a straight answer because they don't want to discourage retirees from getting Part B, even if it isn't really in their financial interest, because it lessens the expense on the FEHB plans.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is very helpful. Can one of the experts give me their thoughts on this scenario?

My DW is a GS 15 10, making $163,000 per year. She's been a federal employee (attorney) for 18.5 years.

She's thinking of switching to the private sector in a few years. She likes working and so plans to work until 65 or later.

Should she wait until after she has 20 years of federal employment to make the switch to the private sector, since she's only 1.5 years away?

And if she doesn't feel strongly about making the switch to the private sector, what about just staying in the current job, which she likes well enough? Thank you.

The salary tables do not indicate that GS 15-10 is paid 163k. Regardless of that, leaving before getting 20 years in would be monumentally stupid.

Why? What happens with 20 year’s service if you are leaving well before retirement age anyway? Isn’t it just a straight calculation based on number of years?

After 20 years, your pension under FERS is calculated as 1.1% for each year of service rather than 1.0%

Ok, so if I calculated correctly, that's a difference of $4,920 per year? (If the high-3 salary is $164,000, I calculate the pension after 19 years as a federal employee at $31,160 (versus the pension after 20 years as a federal employee as $36,080).) Do I have that right? If so, it's not a huge difference is one could get a better salary in the private sector (by leaving a the 19th year instead of the 20th year.) Or maybe she should stay if the health insurance benefits in retirement are so great? (Can someone explain what they are?)

To get the health insurance benefits she would have to be eligible for retirement (minimum retirement age) at the time she separates and currently be subscribing to the federal health insurance (and have done so for 5 years over the course of her employment). It all can be postponed until she actually execute the retiremeent.

My understanding is that the health insurance is quite valuable. You pay the same rates as employees. You also need to register for medicare and your FEHB benefits work in tandem with medicare. Some plans provide a lot of benefits such as complete elimination of co-pays and various credits because of how the systems work together. Its complicated and I plan to go to a seminar to understand.

I am almost 54 and my MRA age is 56. At this point, it would be very costly for me to leave before I hit MRA. I currently have 22 years in.

Forgive my ignorance as I am in my mid-40's, but once you qualify for Medicare at age 65, what type of health insurance do you need? At the risk of sounding like an idiot, does Medicare not cover most things that normal health insurance would cover?

Thanks for asking this. I've always wanted to know...

It is frankly impossible to get a straight answer.

Medicare Part A (hospital care) is free and is primary on hospital expenses
Medicare Part B costs (134-428/month depending on income) covers medical expenses, but there is a deductible and they don't pay all
Medicare Part C (Medicare Advantage) is, I think, basically like a health care company providing coordinating your coverage in addition to what Parts A and B provide. This may include prescription coverage.
Madicare Part D is a stand alone prescription coverage.

My guess is with the federal retirement FEHB you take Part A and B and then FEHB is secondary insurance but is similar to the Medicare Advantage in that it covers more and provides your prescription coverage. Several of the providers set themselves up to be appealing to retirees and they basically cover all copays. and give some credits for medical expenses My guess is when we retire DH and I will be in the second highest income category for payments so if today we would pay: $700 in medicare premiums and $430 in FEHB premiums (BCBS basic family). Non of that is pre-tax.

It is impossible to get a straight answer on this. I once spent hours looking for it. Best I could tell, you need to take Part A (which is mandatory and free), but if you're high income, Part B is expensive, and not worth it if you have a good FEHB plan. I think the Feds don't give a straight answer because they don't want to discourage retirees from getting Part B, even if it isn't really in their financial interest, because it lessens the expense on the FEHB plans.

One thing PArt B covers that (i believe) most FEHB plans do not is durable medical equipment (wheelchairs, walkers, etc.) and maybe hearing aids?

[Anonymous]

My dad is a retiring fed and after looking at various advice and calculations, he is using a FEHB plan in retirement, Medicare Part A (free) but not Part B. He went back and forth on having both FEHB and Part B, but ultimately decided it didn't make sense to have both. Note though that he has a healthy retirement income and lots of savings, and no serious chronic health conditions as of now. I think (but I'm not sure about this) that you can elect Part B later, but you pay much more the longer you wait to elect it. Still though, if you develop some condition or medical need for which Part B provides better coverage, my understanding is you can add it later even though it will be quite costly then.

[Anonymous]

PP here. Also, the poster who said they were told the medical benefit is worth $300k, that's in sum total, right? Just trying to figure out how much it's worth annually. E.g., how much more salary does one need to earn to equal the annual value of the medical retirement benefit. Anyone know how to estimate that?

[Anonymous]

Anonymous wrote:PP here. Also, the poster who said they were told the medical benefit is worth $300k, that's in sum total, right? Just trying to figure out how much it's worth annually. E.g., how much more salary does one need to earn to equal the annual value of the medical retirement benefit. Anyone know how to estimate that?

The problem is that no one knows what insurance costs for 70 year olds will be 20 years from now under Obamacare (because the premiums are adjusted by age, unlike FEHB). After being on Obamacare for a couple of years, and now back on FEHB in retirement (Hill staffer), I would say that FEHB is worth more than $300,000. The difference for my family is over $1,000 per month (now! It would be more ten years from now). I have friends whose accountants have told them its worth much more.