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Old 06-22-2007, 05:49 AM
18 posts, read 229,640 times
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sorry, after reading many of your responses(thank you so much!), I guess I wasn't clear enough.
I was offered a job for DoD. I am married with 3 kids(and will probably have 1 more).
I want to make sure that I am doing the right thing when it comes to planning for retirement. As far as I know I can contribute 5% and they'll match it up. Also they have a pension which equals %1 for each year you are with them. Does seem right? Everytime I look at it, it doesn't seem like enough.
Do any of you have any experience with this or any thoughts you'll like to share?
thanks in advance.
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Old 06-22-2007, 07:07 AM
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Sounds like you are looking at federal government retirement under FERS. Although your TSP is matched up to 5%, you can contribute up to 15% (I believe it's up to that amount now) pre-tax.
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Old 06-22-2007, 10:32 AM
Location: New Orleans, LA
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Originally Posted by mlv311 View Post
Sounds like you are looking at federal government retirement under FERS. Although your TSP is matched up to 5%, you can contribute up to 15% (I believe it's up to that amount now) pre-tax.
I'm not sure about DOD - - but federal employees in general who have begun their career in recent years (and are under FERS) can contribute $15,000 with an additional $5000 "over 50 catchup". Last year I contributed $20K, plus received the extra 5% match. I am with USDOI.

When a FERS employee qualifies for an immediate unreduced retirement, the amount will be based on the average of the highest three years of salary (hi-3). The monthly payment = (hi-3) x 0.01 x (years worked)/12. So, for example, if you begin working at age 32, and at age 62 you decide to retire, and the average of your highest three years of salary was $60K, then your monthly payment = (60,000)x(0.01)x(30 years)/12 = 1500. Of course, taxes and medical insurance would be deducted from that.

That amount is supplemented by your TSP (=401K), and by social security. Here is a publication explaining more about the FERS retirement system: http://www.opm.gov/forms/pdfimage/RI90-1.pdf

I would check carefully though, because I think DOD may be different in some ways. I just don't know. Good luck!

Last edited by NOLA2SGF; 06-22-2007 at 10:41 AM..
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Old 06-22-2007, 10:47 AM
1,261 posts, read 5,615,778 times
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I guess to answer your question: Is it enough for retirement? Probably not. I think that to take full advantage of TSP (i.e., 401K), you should contribute above what the agency matches.
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Old 06-25-2007, 11:53 PM
Location: Sequim, WA
786 posts, read 1,906,914 times
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alcidesvigo99...I'm a federal retiree (I responded to your other post), but, I was civil service (CSRS). I kind of doubt there are too many FERS retirees yet, since FERS wasn't implemented until the 1980s. In short, a FERS retirement in itself will not provide a very good income. Anyone contributing to FERS really needs to contribute as much as they can to the Thrift Savings Plan (TSP). Yes, the government will match the first 5 percent, but if you can contribute 10-15 percent from the beginning, you will get a good start. You can go to the TSP web site (or other web sites), and just play around with the calculator to see what sums of money yield various output to supplement a FERS retirement 30 years from now. I'm no financial planner, but you might just try this using an average rate of inflation of 4 percent, so that you can expect today's money (and money requirements) to double every 18 years. Like the corporate world, federal employees are going to have to do a lot more from now on to plan for their retirements. I hope that helps.
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Old 06-26-2007, 10:09 AM
Location: Sacramento
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Alcid, I too am a retired federal employee. Your reading of the Federal retirement plan is correct as far as you went, you forgot to include Social Security. Assuming the Social Security system will exists much as it does today, this is a fairly significant portion of your long term retirement income, especially if your average salary is in the $70K or less range (using todays income figures).

Do I think it is enough? Absolutely, if you look at working 40 years and contributing 5% of your income to a tax deferred savings plan with another matching contribution from the Federal Govt, on top of getting about 38% of your final income in pension, plus Social Security, that is quite a bit of money.
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Old 11-01-2008, 11:27 AM
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One advantage you have is that federal pay is better now that the "Anti-Bureaucrats" (Nixon, Carter, Reagan) are no longer in charge. The President's Federal pay Panel used to advise a "comparability increase" that was usually above the rate of inflation. But what feds usually got was zero to 2 percent, even though inflation was above that figure. The exception: Carter gave us 9% when he was runing for re-election, but inflation wiped that out. One year, Reagan gave us zero increase, saying that Federal employees have to "set the example." I'm still setting it because of pay compression during my federal years. The one advantage you can give yourself is to max your TSP, and plan on consulting work after you retire. In my second year of retirement, my consulting income was nearly double my federal salary. Now, at 72, I am still consulting -- about 3 to 4 months a year. I know most feds can't plan on doing that, so you should either (1) have marketable knowledge/ skills gained as a fed, or (2) put in your full 40 years.
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Old 11-01-2008, 12:20 PM
Location: DC Area, for now
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The FERS retirement system is based on the so-called 3 tier stool: Social Security, the FERS annuity, and your Thrift savings. The Thrift contributions are limited only by the IRS limit ($15,500 this year, $16,500 next year) If you contribute at least 5% of your salary, the Fed govt will put in a matching amount up to 5%. There are several funds you can invest your money in from govt bonds to stock markets). It is stupid not to contyribute at least 5% as that would be throwing away free money. Of course over the last month, Fed Thrift savings have tanked just like the rest of the stock market.

Most FERS people fail to invest in the Thrift to the max amount and an alarming number at all, thus endangering their retirement. It is a universal problem with the change to self-responsibility for retirement savings from the defined benefit system of yore.

Still, it is considered one of the better retirement systems out there nowadays.

DOD civilian retirement plan is the same as the rest of the Civilian Feds. Active military is different.
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Old 11-01-2008, 08:58 PM
Location: Forests of Maine
30,680 posts, read 49,443,611 times
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I am not a civlian Federal retiree. I am a Military retiree.

Same but different.

I get roughly $1200+ per month.

I invested into a nice portfolio, and used it to buy a small farm, in a depressed area.

My Dw works 32 hours a week for DECA [a Federal employee] and we do okay.

We have no mortgage, our property taxes are under $50. Our vehicle taxes have been totaling about $35.
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Old 11-02-2008, 04:40 AM
Location: Tennessee
34,685 posts, read 33,686,426 times
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I'm a former Fed (34 years) but I'm CSRS, not FERS. I'm very happy with my pension. Although I took a hit in gross, my net monthly pay in retirement is about the same as when I was working because I don't pay state income tax and because I'm not dumping the max allowed (automatic paycheck deduction) into my TSP like I was doing when I was working. I haven't touched my TSP money yet.

I think FERS is okay if you start working for the government at a young age and start your TSP contributions immediately. But, there is a reason the pension plans were changed in 1983 and things like that aren't usually mandated to benefit the recipient.
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