Reply to FERS 4.4% payroll deduction

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]No, you cannot opt out of FERS, and if you think you can get a better return on that biweekly deduction by investing it yourself, there’s a bridge I’d like to sell you. Your TSP deduction is the portion of your money that gets invested on your behalf. The pension deduction is a pay-in for an eventual payout.  If you leave you can ask for a lump sum payout, but if you stay more than five years, you can get a pension benefit for life when you finally retire. It will be really small if you only stay a short time.[/quote]

How can you calculate the pension you can get if you leave at 5, 10, 20 or 30 years? [/quote]

With excel and a solid understanding of the impact of assumptions of salary increases, but especially inflation, in the intervening time between retirement and collection.[/quote]

OPM also has a calculator: https://www.opm.gov/retirement-center/calculators/federal-ball-park-estimator/
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OP asked about valuing the pension assuming leaving after as few as 5 years.  This calculator assumes you will stay until MRA and doesn’t allow any other assumptions.  It doesn’t account for inflation, as the pension is not adjusted at all for inflation until MRA for someone who leaves well before MRA.  It doesn’t discount to present value, which is essential for answering the question of what a future stream of cash is worth.   [/quote]

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