Reply to Please explain the federal annuity

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I’m totally confused about determining what age you “retire” at. Say you worked for the government from age 31-35 (5 years total) then left for the private sector.  To make the math easy, say your high 3 average was $100,000. If you file for benefits when you are 62, what benefits, if any, are you entitled to?[/quote]

5% of 100k (which have been eroded by 27 years of inflation so probably won't cover 5% of your living expences)[/quote]

NP - So then wouldn't it be better to pull out the contributions when you leave the gov't at 35 and then invest them so they have some growth? At 100k over 5 yrs contributing 4.4%, you would have put in 22k, which would be a sizeable chunk to put into an IRA. In contrast the payouts from the annuity would be $5000/yr or about ~$400/month. Is the value of the annuity the fact that that $400/month would be in perpetuity? (Just figuring out how to compare these things against each other.)[/quote]

Very good question and astute analysis.  Employees classified as FERS-FRAE and FERS-RAE should have their pension contributions refunded in this scenario and invest them into an IRA.   Meanwhile, regular FERS employees should [i][b]not[/b][/i] have their pension contributions refunded and defer the pension until 62 no matter how far that is away because they paid a pittance for it (0.8% of salary).[/quote]

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