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My pension came with a provision that allowed me to collect a few hundred dollars a month less but provide the full pension for life to my wife if I die before her. If she dies before I do, I get that few hundred a month added on to my monthly pension.
What I was mainly talking about is if change jobs or die before vested.
Many can get that coverage but it is not like getting the money in the fund if the primary dies without this coverage or both die, no money to give to heirs.
The article below is from December 2020, and it says the same thing - that federal government pensions have been and are considered quite generous:
"The Bottom Line"
"Employees eligible for FERS receive benefits from three separate plans. In a world where pensions are being discontinued by corporations and governments, FERS is still seen as one of the best retirement packages available. Some believe, however, that as the federal government continues to rein in costs, FERS could undergo changes that would make it less attractive."
I just retired this past September at the age of 64.7 which was two years earlier than I planned as I realized that working in a high Covid exposure healthcare environment at my age the time had come for me to retire. My income since retirement has been an 80% FERS pension since my pension has not been finalized yet and a reduced Social Security survivor's benefit. With no mortgage, car loan, or other major outstanding debt; after my B/C, dental, vision, and taxes are deducted from my full pension amount and in February when I turn 65 Medicare Part B will be deducted along with taxes from my survivor's benefit what remains covers all my household expenses including food, weekly spending money, and some money left to put back in the bank since my SO funds the extras such as our entertainment, vacations, lawn care, and house repairs . In January I will add another income stream when I start taking withdrawals from my TSP/401K. With me delaying taking my SS at 70 which will be my highest income stream at that time, if I don't lower my RMDs by starting to take withdrawals now I will be hit with higher taxes as well as a higher Medicare Part B premium. Even with retiring earlier than planned, once I start taking my TSP withdrawals I will end up with a higher net retirement income than my net working income because in addition to all those deductions going away, I will no longer be max+ contributing to the TSP as well as saving as extensively in my liquid fund account. So for me nothing has really changed income wise, and very glad I was in a position to be able to retire earlier than I originally planned and have absolutely no regrets in making that decision.
The article below is from December 2020, and it says the same thing - that federal government pensions have been and are considered quite generous:
"The Bottom Line"
"Employees eligible for FERS receive benefits from three separate plans. In a world where pensions are being discontinued by corporations and governments, FERS is still seen as one of the best retirement packages available. Some believe, however, that as the federal government continues to rein in costs, FERS could undergo changes that would make it less attractive."
What you copied misses some very critical info - 2 of the "separate plans" referenced are regular ones that most have, SS and a bastardized type of 401K called TSP (extremely limited investment choices). From the article - "Employees under FERS receive retirement benefits from three sources: the basic benefit plan, Social Security, and the Thrift Savings Plan (TSP)."
I would not call the FERS pension "quite generous" - most receive 1.1% per year worked - that means after 30 years, getting about 33% of pay. From the article - "If you worked for 25 years and earned $75,000 per year, your monthly payment would be around $1,560, according to the formula."
Another example, is Powell, the Fed chair - his salary is $206,500 and his term is 10 years so his pension would be $22,715/year - he is not getting wealthy on that pension. Good thing he worked on wall street and is worth between $20M and $55M according to his filings.
I just retired this past September at the age of 64.7 which was two years earlier than I planned as I realized that working in a high Covid exposure healthcare environment at my age the time had come for me to retire. My income since retirement has been an 80% FERS pension since my pension has not been finalized yet and a reduced Social Security survivor's benefit. With no mortgage, car loan, or other major outstanding debt; after my B/C, dental, vision, and taxes are deducted from my full pension amount and in February when I turn 65 Medicare Part B will be deducted along with taxes from my survivor's benefit what remains covers all my household expenses including food, weekly spending money, and some money left to put back in the bank since my SO funds the extras such as our entertainment, vacations, lawn care, and house repairs . In January I will add another income stream when I start taking withdrawals from my TSP/401K. With me delaying taking my SS at 70 which will be my highest income stream at that time, if I don't lower my RMDs by starting to take withdrawals now I will be hit with higher taxes as well as a higher Medicare Part B premium. Even with retiring earlier than planned, once I start taking my TSP withdrawals I will end up with a higher net retirement income than my net working income because in addition to all those deductions going away, I will no longer be max+ contributing to the TSP as well as saving as extensively in my liquid fund account. So for me nothing has really changed income wise, and very glad I was in a position to be able to retire earlier than I originally planned and have absolutely no regrets in making that decision.
Your FERS pension is not anywhere near 80% - it would take 73 years of service to get to that level and that program has not been around that long (1983). Even under CSRS (previous program) it would take 42 years to get to 80% and then would be subject to WEP which would eliminate almost all SS - only a few are on CSRS at this point and should have at least 38 years of service.
What you copied misses some very critical info - 2 of the "separate plans" referenced are regular ones that most have, SS and a bastardized type of 401K called TSP (extremely limited investment choices). From the article - "Employees under FERS receive retirement benefits from three sources: the basic benefit plan, Social Security, and the Thrift Savings Plan (TSP)."
I would not call the FERS pension "quite generous" - most receive 1.1% per year worked - that means after 30 years, getting about 33% of pay. From the article - "If you worked for 25 years and earned $75,000 per year, your monthly payment would be around $1,560, according to the formula."
Another example, is Powell, the Fed chair - his salary is $206,500 and his term is 10 years so his pension would be $22,715/year - he is not getting wealthy on that pension. Good thing he worked on wall street and is worth between $20M and $55M according to his filings.
I need to add a bit to that line. A FERS retiree only gets a factor of 1.1% if they retire at 62 with 20 years or more service. Otherwise they get only a 1% per year calculation.
Quote:
Originally Posted by ddeemo
Your FERS pension is not anywhere near 80% - it would take 73 years of service to get to that level and that program has not been around that long (1983). Even under CSRS (previous program) it would take 42 years to get to 80% and then would be subject to WEP which would eliminate almost all SS - only a few are on CSRS at this point and should have at least 38 years of service.
You are mistaken. she said net not gross. and you bet she is going to be near 80% of her net income before retirement. I know because I am in that exact same system.
Our lowest yearly income will be in the next few years until my husband starts receiving HIS social security at about age 69 (our projected plan at this point), at which time our income will take a significant jump. (We are living off my SS payments and his 401k until then, with cash savings as a "back-up", if that proves to be necessary.)
*However, our peak earnings occurred when my husband was 51-64. It was WAY below that before then.
I totally disagree with the person who said you need exactly the amount of money in retirement that you're making right now. That isn't true. What you need in retirement is around the amount that you're actually SPENDING prior to retirement--that is, your typical budget, plus or minus. Some things may drop off or decrease, other things will increase.
The amount of money one makes prior to retirement isn't equal to the amount one actually spends. Prior to going on semi-retirement, I purposely lived on only 1/2 of my take-home income. The take-home income wasn't even my full income. So I was probably living on only 25% of my gross pay. I was doing this to get used to a reduced income. And I did that successfully, with money left over too. So I don't agree with the people who say you need 80% of your pre-retirement income for retirement. I didn't, and many others don't either.
This topic has been beat to death on C-D where there's a lot of disagreement about how much money one needs. Some people say they need $1 million whereas others live on SS.
Prior to retirement (at least 5 years prior), you should be writing down your expenditures every month to get a handle on what you spend. It's too late to do this at the point when you actually retire. I suggest you get a budget book and track items by categories. Then you will see what you actually spend. Once you know exactly what you're spending, you're better equipped to know what you need in retirement. You might be able to determine from reviewing your budget book that you are going to spend less in retirement because you'll have the mortgage paid off or you're planning to downsize. Or you might see that you are spending an unhealthy amount of money every month on frills that you don't really need and be able to shave $600 off your spending.
Most of us back into what we have and mold a life to fit .
What we were spending when we had a pay check or two coming in may be quite different when they stop.
It isn’t like one can magically do anything about creating more money then they actually end up with except work longer
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