Reply to Is it accurate to think of FERS as delayed Como?

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Reply to "Is it accurate to think of FERS as delayed Como?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]IIRC and this is very much a ballpark I think the total pension cost is something like 14% or 15% and you are paying 4.4% of that cost (I assume since you said stay until 5 years you were hired recently and are not in the older versions of FERS).  So, you can think of the FERS benefit as being about 10% of your salary.[/quote]

This is because the government pays as it goes. If they gave you a raise and tpld you to invest it over several decades while working and then withdraw it to provide your own annuity, it wouldn’t be 10% it would be more like 2%. [/quote]

PP here and 2% seems low for a 100% risk free investment although I guess you would have your 4% back top so total investment of 6% of salary.  I think it's important to adjust for the risk free nature of the FERS investment vs investing in the market.[/quote]

PP. True, though the 2% figure assumes using the 4.4% FERS deduction goes to retirement, so the total annual investment is over 6%. I agree with you on the risk aspect, although I would argue that the long-term nature of both investment and withdrawal allow averaging over market cycles so there isn’t as much of the volatility risk one associates with equity investments. [/quote]

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