does the government pay %50 of your salary when u retire? (55, pension plan)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
we were told that the %50 thing used to be for people who were working for the government LONG time ago.
we were told that you only get %1 for every year you are with them.
is this true?........thanks.
I don't know the exact formula but my wife and I both retired from the government. She had 32 years service and gets a little over 50%. I was lucky. On my 55th birthday I had thirty years and ONE day at the Post Office. I get 50% of what I was making when I left.
Yes, you only get 1% credit for every year you work for the Federal Government. The pension formula was changed around 1984, and only folks who had worked for at least five years could stay with the old Civil Service Retirement System program, which gave 2% credit per year after 10 years (the first 10 years had somewhat reduced credits).
With this change the Govt also instituted a program called FERS (think 401K), in which an employee could contribute up to 5% of their income, and the Govt would match this contribution. This money piles up in accounts selected by the employee, such as money market funds, stock market indexes or bond funds. This money is tax deferred, and is expected to be drawn down throughout your retirement years. In effect the Govt shifted much of the funding responsibility to the individual, and reduced the old pension amounts.
In my particular state, government positions receive a percent of their time worked. I haven't calculated the percent, but it is not 50% across the board, and fewer workers receive anything near that percentage.
we were told that the %50 thing used to be for people who were working for the government LONG time ago.
we were told that you only get %1 for every year you are with them.
is this true?........thanks.
For the armed forces if you do 20 years you will recieve a pension the very next month and it's %50 of your base pay ( averaged out from the last three years at work)
The military is changing over to a new method of calcuating it. Under their new system no body will get a dime before they are 50.
I retired after 20 years in the Navy, and I am getting 50% of my base-pay [as averaged from my last 3 years on Active duty]. Base-pay is about a third of my Active Duty take home pay. So my pension is closer to 1/6 of what my Active Duty take home pay was.
The current federal govt (states will be different) has what they call a 3 legged pension plan started about 1984-85. There's 1) social security (this is when congress changed SS from a poverty safety net program to one meant to support the whole population in retirement as a guarenteed supplement to pensions), there's 2) the FERS pension (1% of base salary averaged over the last 3 years of working time), and 3) the Thrift savings program (FERS initially allowed up to 10% of salary investment in various indexed funds or savings with up to 5% of that matched by the govt - so they could sock away up to 15%). The Thrift - similar to a 401K - now only has the IRS limit, currentlty $15,500/yr of tax deferred savings + another $5000 if you are 50 or older. Depending on the year the employee was born, eligibility age is rising. The Thrift is portable including the matching $$, so if the employee leaves the govt, he can take all that money with him.
Now, of course, Feds who are invested in the stock market are looking at retirment fading because their thrift money is shrinking dramatically. Also, the participation of FERS employees in the Thrift - even contributing a measly 5% so they get the extra 5% matched, is alarmingly small. They say with wise investing and contributing the max allowed, that FERS will provide a better retirement than the old system. But apparently there are few who do that and lousy stock market returns makes it even worse.
The old system allowed one to retire at 55 with 30 years of service at approximately 58% of the average top 3 salary years. The more years of service, the higher the percentage up to a max of 80% at something like 45 years. The salary contributions were mandatory. You caould get the $$ contributed out if you left but no interest was ever paid on that $$.
We teachers get about 55 % of the final three years (averaged).
__________________ ******************
People may not recall what you said to them, but they will always remember how you made them feel .
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.