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I am a federal employee who will be eligible to retire in 4 years when I turn 55. I am under the CSRS retirement plan. I plan on attending a seminar in the next few months to get more information on retirement. I thought I ask some of you experts here a few questions.
1) I know that if I work longer beyond age 55 my annuity will be more. For those who have CSRS, is this additional annuity worth the extra years of working? How much more income % wise will I take home working more years? If I retire at 55 I am planning to start up my own business, how much income would I have to make to offset the additional income had I retired at a later age?
2) Also I live in a COLA/locality pay location and I am considering moving to a lower cost of living area. Will my annuity change with such move or will it still be based on the COLA/locality pay area that I currently work and live?
3) I've had the chance to convert over to FERS in the past but stuck with CSRS. Was this a wise decision?
4) I am content with my health plan (HMO) and want to keep this when I retire. How does this work once you are retired? Are there changes on how it works currently?
5) I understand that there is a yearly increase every year (cost of living) How is this based? What type of % increases have there been in recent years?
6) Is there anything else that I need to do now to maximize my annuity/benefits until I retire?
Working for the government is very demanding work(havent spent too much time pondering retirement) and the pay is usually not as much as in the private sector, but its retirement plans appear to be good.
Last edited by GoJohnnyGo; 12-09-2008 at 06:45 PM..
1) I believe it works out to about 2% additional over a certain number of years.
2) I do not believe that COLA like in Alaska is counted in figuring your annuity. However I believe locality pay is since it is considered salary.
3) Depends. For a woman with a husband who will provide spousal SS income, it would be better to be CSCS offset or sometimes FERS. Mostly better to be CSRS.
4) Health insurance works the same.
5) Yes there is a CSRS cost of living adjustment. Cant give you specifics but a google search should answer the ?
6) You can add to the "Voluntary Contribution Program" thru OPM if CSRS or increase your TSP payments. Other than that, annuity is based on years of service and high 3 salary consequtive years so increase your grade.
I am getting ready to retire Jan. 31 with over 31 years of service and it was a great career.
1) I believe it works out to about 2% additional over a certain number of years.
2) I do not believe that COLA like in Alaska is counted in figuring your annuity. However I believe locality pay is since it is considered salary.
3) Depends. For a woman with a husband who will provide spousal SS income, it would be better to be CSCS offset or sometimes FERS. Mostly better to be CSRS.
4) Health insurance works the same.
5) Yes there is a CSRS cost of living adjustment. Cant give you specifics but a google search should answer the ?
6) You can add to the "Voluntary Contribution Program" thru OPM if CSRS or increase your TSP payments. Other than that, annuity is based on years of service and high 3 salary consequtive years so increase your grade.
I am getting ready to retire Jan. 31 with over 31 years of service and it was a great career.
Congratulations. If I retire at 55 years I wouldve put in about the same amount of years.
I'm planning on going out next year. You really should take the retirement class. I think everyone should take it early. There is so much to think about and plan for.
If you have a true COLA salary (AK, HI, some other locations), then your annuity is based on the base pay rate and not the additional COLA. If you get locality pay, then your annuity is based on the locality pay. This seems unfair and there have been some unsuccessful bills to change the COLA pay to locality pay. But not yet.
Sticking with CSRS sure seems like the smartest thing I ever did. Pretty much too late to regret the decision now.
You have all the same option at the same payment as if you were working for the health benefits. You can change every open season. Once you get old enough for medicare, they say the best thing is take part B but not parts c or d. Then your health insurance will pay what medicare doesn't and people say they end up paying nothing at all - no more co-pays. You pretty much have to do this since once you are eligible for medicare, your insurance won't pay for what medicare covers anyway.
The CSRS retirement COLA is the same as the social security COLA. They use the consumer price index and count it up for each month from November to October. You will know by mid October what the next year"s COLA will be. For 2009 it is 5.8% - a lot higher than usual. But the FERS folks only get 4.8% COLA.
You can do the Voluntary Contributions if you don't owe any redeposits. If you choose, you can buy an additional annuity with all or part of it: at 55 it is $7/$100 56 it is $7.20/$100 and so on. They say this is a good deal but buying an annuity out of your TSP funds is a bad idea - not nearly as good an investment. The COLA won't increase the Vol. Cont. Annuity tho.
If you have any Fed service that wasn't covered under the CSRS, then you will owe a deposit back into the CSRS. You don't have to pay it but if you don't, the time gets counted in your service time then it gets deducted from your annuity. This is why you need to take the retirement class - they explain how to know all this.
Only you can know whether working longer to get more annuity is worth it. For me, if I was eligible a year ago, it would have been worth more next year to get the COLA than to have worked another year. Most years, the COLA isn't so high and so this would not be true.
The minumum 55/30 yrs gets you about 59% of your current salary. You can add sick leave to your service time 2087 hours = 1 year of time. You add the sick leave time to your service time, convert to whole months and drop any days less than a whole month (30 days = 1 month in the calculations). So that is one way to get additonal annuity - save all your sick leave.
Once you are eligible, you are essentially working for your salary - minus the annuity. Your situation will tell you whether that is enough. It will be for me since I paid my house off. Other people think they need to stay longer. I worked up spreadsheets with my current spending/budget and tracked it for several years before and also pluged in future budgets using my annuity. then I removed what I know for sure I won't spend (commute costs, e.g.) to see if it would work. I am now living on less than my annuity will be and socking away the difference now, so I'm pretty sure the money will be fine.
If the TSP is healthy, it can provide additonal funds. Of course, the current malaise may make this a dicey thing.
Some people don't do very well not having a job to go to, so you need to think about what you will do with yourself when you don't have a job to occupy you or define who you are.
There are some proposals to change the annuity calculation to using a high 5 year average instead of the high 3. This will drop the annuity so we all hope that doesn't happen, but it could.
I'm planning on going out next year. You really should take the retirement class. I think everyone should take it early. There is so much to think about and plan for.
There are calculators that do a decent job of calculating your annuity and you can put in different scenarios. CSRS FERS Calculators and Free Retirement Savings GAP Analysis
USGS Retirement Estimator (http://hr.er.usgs.gov/calculators/retire/ - broken link)
This early, I would use your current salary as an estimate of the high 3. It will give you an idea of the annuity in current dollars.
If you have a true COLA salary (AK, HI, some other locations), then your annuity is based on the base pay rate and not the additional COLA. If you get locality pay, then your annuity is based on the locality pay. This seems unfair and there have been some unsuccessful bills to change the COLA pay to locality pay. But not yet.
Sticking with CSRS sure seems like the smartest thing I ever did. Pretty much too late to regret the decision now.
You have all the same option at the same payment as if you were working for the health benefits. You can change every open season. Once you get old enough for medicare, they say the best thing is take part B but not parts c or d. Then your health insurance will pay what medicare doesn't and people say they end up paying nothing at all - no more co-pays. You pretty much have to do this since once you are eligible for medicare, your insurance won't pay for what medicare covers anyway.
The CSRS retirement COLA is the same as the social security COLA. They use the consumer price index and count it up for each month from November to October. You will know by mid October what the next year"s COLA will be. For 2009 it is 5.8% - a lot higher than usual. But the FERS folks only get 4.8% COLA.
You can do the Voluntary Contributions if you don't owe any redeposits. If you choose, you can buy an additional annuity with all or part of it: at 55 it is $7/$100 56 it is $7.20/$100 and so on. They say this is a good deal but buying an annuity out of your TSP funds is a bad idea - not nearly as good an investment. The COLA won't increase the Vol. Cont. Annuity tho.
If you have any Fed service that wasn't covered under the CSRS, then you will owe a deposit back into the CSRS. You don't have to pay it but if you don't, the time gets counted in your service time then it gets deducted from your annuity. This is why you need to take the retirement class - they explain how to know all this.
Only you can know whether working longer to get more annuity is worth it. For me, if I was eligible a year ago, it would have been worth more next year to get the COLA than to have worked another year. Most years, the COLA isn't so high and so this would not be true.
The minumum 55/30 yrs gets you about 59% of your current salary. You can add sick leave to your service time 2087 hours = 1 year of time. You add the sick leave time to your service time, convert to whole months and drop any days less than a whole month (30 days = 1 month in the calculations). So that is one way to get additonal annuity - save all your sick leave.
Once you are eligible, you are essentially working for your salary - minus the annuity. Your situation will tell you whether that is enough. It will be for me since I paid my house off. Other people think they need to stay longer. I worked up spreadsheets with my current spending/budget and tracked it for several years before and also pluged in future budgets using my annuity. then I removed what I know for sure I won't spend (commute costs, e.g.) to see if it would work. I am now living on less than my annuity will be and socking away the difference now, so I'm pretty sure the money will be fine.
If the TSP is healthy, it can provide additonal funds. Of course, the current malaise may make this a dicey thing.
Some people don't do very well not having a job to go to, so you need to think about what you will do with yourself when you don't have a job to occupy you or define who you are.
There are some proposals to change the annuity calculation to using a high 5 year average instead of the high 3. This will drop the annuity so we all hope that doesn't happen, but it could.
Did I say you should take the retirement class?
Thank you for the wealth of information. I really hadnt put too much time thinking and planning for retirement until I realized that I was a few years away to becoming eligible. Well congratulations on your retirement and doing those spreadsheets and calculations is great idea. I definately need to invest some time planning it and of course taking that class. That 5.8% COLA certainly is a very nice increase. The way things are with the economy I am happy that I kept CSRS and not switched over to FERS. I had always heard conflicting theories in the past which was better. But lately I've been hearing scary stories from people who have FERS and are close to retirement. I also have heard from people who have FERS and were able to use a good strategy to avoid a crisis. I hope it works out for them. Its not only the government but employees nationwide who have lost a substantial amount of their 401K. Makes you think if alot of these people will be able to retire at all. Very tough times our nation is going through now. Again thanks for the information.
[b][quote=GoJohnnyGo;6493604]I am a federal employee who will be eligible to retire in 4 years when I turn 55. I am under the CSRS retirement plan. I plan on attending a seminar in the next few months to get more information on retirement. I thought I ask some of you experts here a few questions.
Read the book before you go to the seminar so you know what to ask.
1) I know that if I work longer beyond age 55 my annuity will be more. For those who have CSRS, is this additional annuity worth the extra years of working? How much more income % wise will I take home working more years? If I retire at 55 I am planning to start up my own business, how much income would I have to make to offset the additional income had I retired at a later age?
I don't know the answers to your questions but I retired at 55 (though not on my birthday) with 34 years under CSRS. I'm actually doing better in retirement than when I was working. Let me tell you why.
I originally had planned to work until 60 and then I did my calculations and found my monthly net pay working and my net pay pension were about the same. Yup, that's right. It was about a $12 difference per month. Reason? I was throwing the max into Thrift (a big paycheck deduction) when I was working which goes away when you retire. No more bond deduction. No more PMA dues (union dues if you are bargaining unit). No more CSRS deduction. No more state income tax deduction (I moved to a no income tax state). I kept my health insurance and I decreased my life insurance after discussing it with the person assigned to give me an estimate. If you've been throwing a lot into TSP, you've actually been living on less than you probably think.
When you do your calculations you want to compare your monthly net pay (2 paychecks for me) to the amount you will net monthly in retirement. If you are living just fine on your net pay now, and it's close to the net monthly pension payment, you should be fine. I think a lot of people get scared because they compare gross (pension VS paycheck) and see that big difference so they work longer.
The other thing is what kind of lifestyle are you looking for in retirement. You know, someone who wants to travel a lot, for example, is going to need more money.
2) Also I live in a COLA/locality pay location and I am considering moving to a lower cost of living area. Will my annuity change with such move or will it still be based on the COLA/locality pay area that I currently work and live?
Your move has no impact on your pension gross. Your pension amount is based on the average of your high 3 years of work which includes locality pay in those 3 years. There's no locality pay applied after you retire.
3) I've had the chance to convert over to FERS in the past but stuck with CSRS. Was this a wise decision?
Very wise, in my opinion.
4) I am content with my health plan (HMO) and want to keep this when I retire. How does this work once you are retired? Are there changes on how it works currently?
Okay, here's where you need to do some homework. I moved to Tennessee from Maryland. I kept Blue Cross but I had to get a new card. I believe in MD it was called Care First and here it's called Tennessee Blue Cross or something like that. You need to make sure whatever insurance you have 1) doesn't need to be switched over within the company when you change states and 2) your new state has an adequate number of physicians that will accept your insurance. Call the number on your card and ask for the book for your new state.
5) I understand that there is a yearly increase every year (cost of living) How is this based? What type of % increases have there been in recent years?
Aw, we're getting a good one this year - 5.8% (CSRS), the largest since 1982. It's based on the Consumer Price Index from the third quarter of 2007 through the third quarter of 2008. It's the law so Congress/the president has no say-so regarding the amount, unlike when you are still in the workforce.
6) Is there anything else that I need to do now to maximize my annuity/benefits until I retire?
Considering you are 4 years away, apply for higher graded jobs to get your high 3 years amount up. Make an effort to get Outstanding evaluations and then ask for a high quality step instead of a cash award.
Considering the state of the American economy, giving you TSP advice would not be wise.
Working for the government is very demanding work(havent spent too much time pondering retirement) and the pay is usually not as much as in the private sector, but its retirement plans appear to be good.[/QUOTE]
Yes, pay is less retirement is better.
And if you are like me, here's what else will happen. You'll have huge savings in these areas when you retire:
1. Gasoline presuming you have a driving commute to work.
2. Dry cleaning (you'll live in play clothes that you throw in the washing machine).
3. Lunch (ever figure out how much you spend either eating out or eating in the cafeteria 5 days per week?)
4. Snacks, coffee (vending machine stuff that you eat/drink at your desk)
5. Office gifts/office parties
6. Purchase of work clothes/shoes (usually more expensive than play clothes)
One piece of advice, I would give you. If you are married take out the smallest annuity you can for your spouse. That way your spouse will always be able to be insured under your policy. When I was going to the retirement seminars, no one told me this, but a lady who was retiring right before me did and I'm glad she did. If something should happen to me, he can remarry and carry that spouse on MY insurance.
I retired at 55, after working 30 years. I have a CSRS annuity and also eligible for SS - because I did go with FERS. I did get caught up in the offset or windfall, but could draw on my husband's SS as well as mine.
BTW, I recieved notice for SSA today about th 5.8 rate increase!
One piece of advice, I would give you. If you are married take out the smallest annuity you can for your spouse. That way your spouse will always be able to be insured under your policy. When I was going to the retirement seminars, no one told me this, but a lady who was retiring right before me did and I'm glad she did. If something should happen to me, he can remarry and carry that spouse on MY insurance.
I retired at 55, after working 30 years. I have a CSRS annuity and also eligible for SS - because I did go with FERS. I did get caught up in the offset or windfall, but could draw on my husband's SS as well as mine.
BTW, I recieved notice for SSA today about th 5.8 rate increase!
Actually with the Federal annuity, the survivor benefit is not yours to decide upon. If you have a spouse, that benefit belongs to the spouse. The only way you can refuse it or reduce it is if your spouse signs the right away.
I am a federal employee who will be eligible to retire in 4 years when I turn 55. I am under the CSRS retirement plan. I plan on attending a seminar in the next few months to get more information on retirement. I thought I ask some of you experts here a few questions.
Quote:
Originally Posted by GoJohnnyGo
Read the book before you go to the seminar so you know what to ask.
1) I know that if I work longer beyond age 55 my annuity will be more. For those who have CSRS, is this additional annuity worth the extra years of working? How much more income % wise will I take home working more years? If I retire at 55 I am planning to start up my own business, how much income would I have to make to offset the additional income had I retired at a later age?
I don't know the answers to your questions but I retired at 55 (though not on my birthday) with 34 years under CSRS. I'm actually doing better in retirement than when I was working. Let me tell you why.
I originally had planned to work until 60 and then I did my calculations and found my monthly net pay working and my net pay pension were about the same. Yup, that's right. It was about a $12 difference per month. Reason? I was throwing the max into Thrift (a big paycheck deduction) when I was working which goes away when you retire. No more bond deduction. No more PMA dues (union dues if you are bargaining unit). No more CSRS deduction. No more state income tax deduction (I moved to a no income tax state). I kept my health insurance and I decreased my life insurance after discussing it with the person assigned to give me an estimate. If you've been throwing a lot into TSP, you've actually been living on less than you probably think.
When you do your calculations you want to compare your monthly net pay (2 paychecks for me) to the amount you will net monthly in retirement. If you are living just fine on your net pay now, and it's close to the net monthly pension payment, you should be fine. I think a lot of people get scared because they compare gross (pension VS paycheck) and see that big difference so they work longer.
The other thing is what kind of lifestyle are you looking for in retirement. You know, someone who wants to travel a lot, for example, is going to need more money.
2) Also I live in a COLA/locality pay location and I am considering moving to a lower cost of living area. Will my annuity change with such move or will it still be based on the COLA/locality pay area that I currently work and live?
Your move has no impact on your pension gross. Your pension amount is based on the average of your high 3 years of work which includes locality pay in those 3 years. There's no locality pay applied after you retire.
3) I've had the chance to convert over to FERS in the past but stuck with CSRS. Was this a wise decision?
Very wise, in my opinion.
4) I am content with my health plan (HMO) and want to keep this when I retire. How does this work once you are retired? Are there changes on how it works currently?
Okay, here's where you need to do some homework. I moved to Tennessee from Maryland. I kept Blue Cross but I had to get a new card. I believe in MD it was called Care First and here it's called Tennessee Blue Cross or something like that. You need to make sure whatever insurance you have 1) doesn't need to be switched over within the company when you change states and 2) your new state has an adequate number of physicians that will accept your insurance. Call the number on your card and ask for the book for your new state.
5) I understand that there is a yearly increase every year (cost of living) How is this based? What type of % increases have there been in recent years?
Aw, we're getting a good one this year - 5.8% (CSRS), the largest since 1982. It's based on the Consumer Price Index from the third quarter of 2007 through the third quarter of 2008. It's the law so Congress/the president has no say-so regarding the amount, unlike when you are still in the workforce.
6) Is there anything else that I need to do now to maximize my annuity/benefits until I retire?
Considering you are 4 years away, apply for higher graded jobs to get your high 3 years amount up. Make an effort to get Outstanding evaluations and then ask for a high quality step instead of a cash award.
Considering the state of the American economy, giving you TSP advice would not be wise.
[b]Working for the government is very demanding work(havent spent too much time pondering retirement) and the pay is usually not as much as in the private sector, but its retirement plans appear to be good.[/QUOTE]
Yes, pay is less retirement is better.
And if you are like me, here's what else will happen. You'll have huge savings in these areas when you retire:
1. Gasoline presuming you have a driving commute to work.
2. Dry cleaning (you'll live in play clothes that you throw in the washing machine).
3. Lunch (ever figure out how much you spend either eating out or eating in the cafeteria 5 days per week?)
4. Snacks, coffee (vending machine stuff that you eat/drink at your desk)
5. Office gifts/office parties
6. Purchase of work clothes/shoes (usually more expensive than play clothes)
After this post I'm thinking about skipping the class Haha in all seriousness I admire how great a job you've done in setting yourself up for retirement. Based on this thread there are some very smart people here. Well one thing is for sure we think alike in many ways. I could probably get by without having to supplement my pension especially if I move to a lesser cost of living area. In addition If I decide to start a business/or seek enjoyable employment that will only be to enhance my lifestyle.
Not to really provide additional insight, the posters have done this very well, but I've also retired under CSRS, about 1/2 year before my 55th birthday with 34 years of service. As others have mentioned, if you are contributing 5% or more to your thrift savings plan, your net monthly income won't drop much upon retirement.
Basically, it was a no brainer to me. After 55, you are pretty much working for free.
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Thank you for the wealth of information. I really hadnt put too much time thinking and planning for retirement until I realized that I was a few years away to becoming eligible. Well congratulations on your retirement and doing those spreadsheets and calculations is great idea. I definately need to invest some time planning it and of course taking that class. That 5.8% COLA certainly is a very nice increase. The way things are with the economy I am happy that I kept CSRS and not switched over to FERS. I had always heard conflicting theories in the past which was better. But lately I've been hearing scary stories from people who have FERS and are close to retirement. I also have heard from people who have FERS and were able to use a good strategy to avoid a crisis. I hope it works out for them. Its not only the government but employees nationwide who have lost a substantial amount of their 401K. Makes you think if alot of these people will be able to retire at all. Very tough times our nation is going through now. Again thanks for the information.
Haha in all seriousness I admire how great a job you've done in setting yourself up for retirement. Based on this thread there are some very smart people here. Well one thing is for sure we think alike in many ways. I could probably get by without having to supplement my pension especially if I move to a lesser cost of living area. In addition If I decide to start a business/or seek enjoyable employment that will only be to enhance my lifestyle.
