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What do you do about Minimum Retirement ages Required by Pensions??
Old 07-19-2007, 01:46 PM   #1
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What do you do about Minimum Retirement ages Required by Pensions??

I have been lurking a month or so and need a little insight

I am married M39, 2 kids 14/17 and recently retired from the Reserves after 20+ years (pension will be COLA adjusted about 7,500 a year at 60)

I already have 20 years as a fulltime federal employee and @ 57 will receive a federal pension of about 38,000 a year (plus good Health ins) (This amount ncludes a supplement that mirrors the Social Sec that I will get at 62 so the 38k is consistent from 57 on plus at 60 I start getting the 7.5K from the reserves)

We have about 225K in a 401K plan and own our house with no other debt

On the downside we have no $ saved for the kids college that is approaching next year.... (Wife is going to second interview for job at very nice private college tomorrow and they would cover 100% tuition for all family members for a 4yrdegree -- So pray for us!)

We save 16% of my salary and get a match of 5% for the 401K.

I see no hope to retire before 57 because the pension mentioned above requires me working to a Minimum retirement age of 57 before I draw the $$ without incurring a large penalty and forfitting health benefits.

Guess I just need to concentrate on staying healthy so I can enjoy Retirement at 57 on.....
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Old 07-19-2007, 02:00 PM   #2
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I'm still learning a lot, myself, but I believe you could do a 72t on the retirement funds at any point you're comfortable with the accumulation. Basically, you'd agree with the IRS to take substantially equal payments from your account for five years or until you're 59 1/2, whichever is longer. So, you could stop at age 50 with, say, 500k in your account and then start drawing that down until you're 59 1/2 (you can do whatever you want at that point).

Read more about it here: Retire Early: Can I withdraw money from my IRA before age 59½ ?

and here: Welcome to 72t on the Net

Talk to a tax professional before considering this route.

My thoughts are with your wife with her job interview. If it comes to it, though, if you're intent on helping your kids with college, decide to what level you want to do that. I went to a state school with little monetary help from my parents (but I lived at home and they fed me).. you might want to start laying ground rules with them regarding if you're the bank of dad or only helping assistance to a point (pay for in-state school, only pay for a portion of private school, etc). Only you can decide what's going to be best for you and yours.
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Old 07-19-2007, 03:47 PM   #3
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I would have HR or the equivalent actually run the numbers on your pension at 57 vs. 52 (or whenever you would be eligable despite penalties). It might not be as bad as you think or the penalties not substantial given a high enough 401k balance.
My mom retired two years ago and several of her friends found that after running the numbers they weren't giving up that much if they left now vs. 3 years from now.
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Old 07-19-2007, 05:08 PM   #4
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OK, so you're a civil service employee who falls under the FERs retirement system, and your MRA is 57. You are retired from the reserves and have another 20+ yrs to wait for that pension to kick in. I'm fairly familiar with your situation, since I'm a fed also, although I'm under CSRS, and I'm also a reservist, with over 30 yrs now & 5 to go till I can retire. I'll retire from both at age 55. I'm not as well versed with FERS as I am CSRS, but am I correct in thinking if you bail before your MRA, that you'll probably forfiet your FEHB (health ins. benefits)? Thinking I read that somewhere. There was a point, about 12 years ago when I seriously considered bailing on my government career and going into something else, but I talked myself out of it in the end, and decided to stick with it. I had then about the amount of time you have now. Now, at age 49.5, I'm glad I made that call, because it's all downhill from here. I say if you're happy being a fed, are satisfied with all that comes with being employed by uncle sam including future retirement bennies, and aren't dreading going to work everyday, then try to hang in there. On the other hand, if you're not enjoying what you're doing, hate going to work everyday and find yourself constantly thinking about being in some other situation (different job, self-employed or ER'd) then you have to make that call. As for me, I'm happy I chose to stay, and when Jan 18, 2013 rolls around, is what I'm gonna look like!
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Old 07-20-2007, 05:27 AM   #5
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Quote:
Originally Posted by militaryman View Post
I am married M39, 2 kids 14/17 and recently retired from the Reserves after 20+ years (pension will be COLA adjusted about 7,500 a year at 60)
Welcome to the board, MM. You may need to watch your back—you could be worth more dead than alive.

When you retired from the Reserves, if you selected a Survivor Benefit Plan then it’ll start paying out if you don’t make it to 60. In fact some Reservists have even filed for retirement in their 40s/50s with SBP and cancelled the SBP when they reached age 60 just to have some “life insurance” during the gray-area years.

It’s extremely common for Reservists to miscalculate their pension amount. The pay scale used in the calculation is actually the maximum longevity pay for your rank, whether you had those years of service or not. (It’s an incentive for you to file for retirement instead of separating.) The pay scales are those in effect for the High-Three years before you turn age 60, so that’s a bit difficult to nail down. (Hypothetically military pay will rise at the rate of the ECI.) And finally you’ll want to check the 40-year pay tables that took effect in April to see if there’s a new (higher) max longevity pay for the rank you retired at.

If anything in that last paragraph changes the results of your military pension calculations then you may be able to spend down your savings a bit more in anticipation of a boost at age 60.

Quote:
Originally Posted by militaryman View Post
On the downside we have no $ saved for the kids college that is approaching next year.... (Wife is going to second interview for job at very nice private college tomorrow and they would cover 100% tuition for all family members for a 4yrdegree -- So pray for us!)
I wouldn’t delay retirement for a college fund—there’s a lot more educational assistance in the world than “retirement assistance”. There’s a strong sentiment that kids are more motivated to perform in college when they’re paying for it, up to the point where work hours interfere with studying. Of course every kid is a different situation.

Quote:
Originally Posted by militaryman View Post
I see no hope to retire before 57 because the pension mentioned above requires me working to a Minimum retirement age of 57 before I draw the $$ without incurring a large penalty and forfitting health benefits.
Guess I just need to concentrate on staying healthy so I can enjoy Retirement at 57 on.....
I think the only other alternatives would be for one of you to remain eligible for health insurance (keep working) or for you to pay for your own health insurance. But the cost of that may break an ER budget, especially if there are pre-existing medical conditions.
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Thanks for the replies
Old 07-20-2007, 06:57 AM   #6
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Thanks for the replies

Yeah I also understood that FERS folks who bail early lose their health benefits and that is a big consideration for me --

I calculated the military pension amount for today's dollars but understand it will actually be inflation adjusted at 60


I do find myself content to continue where I am at for awhile especially since my kids are still in school and will be going to a local college (if my wife gets this job at the university offering free tuition) --- I would not want to relocate or start "traveling the world" until they are somewhat "finished" But I see in 10 years that things maybe different --

My best chance "out" I think is after I have 25 years in (4 years away) hoping for a early out offer (has not been happening in my agency)

If that happened I would get an immediate pension (reduced because of shorter time worked of course) and I could keep the health benefits.

Hope I get that offer around 50 years old!

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Old 05-03-2016, 12:56 PM   #7
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Updating this ... Almost nine years later

I am still married 47, (29 years!)

2 Adult kids now 23/25 The older one is working on a Master's degree after becoming bored with working. She has no debt and is engaged to be married to a smart fella who seems like a "good guy". The younger daughter graduated with her BS in December and is working full-time but still at home.... ( she also is debt free )

My wife DID end up getting a job at a university that gave full tuition scholarship that allowed both girls to attend for only the cost of "FEES" and books ( not insignificant ) which we covered. The older daughter is getting her Masters also on a full ride

I now have just shy of 30 years as a full-time federal employee and @ 57 will receive a federal pension of about $48,000 a year (plus good Health ins) (This amount includes a supplement that mirrors the Social Sec that I will get at 62 so the 48k is consistent from 57 on plus at 60 I start getting the $10K from the Reserve Retirement) I have updated these figures with the calculations as they come out in todays dollars after raises from the last nine years.

We now have about 525K in a 401K plan and still own our house with no other debt.

We save 19% of my salary and get a match of 5% for the 401K.
Hoping to have around $900K or so at 57 retirement

I am now 8.5 years until I am eligible to retire with an immediate annuity. ( officially at 56 and 8mos.) I am not really even dreaming about an earlier retirement than that. My wife continues to work although she does not need to and we now use her income to fund savings for weddings, vacations and things we do not HAVE to do deal with once retired. Since the girls are done their degrees at that college she can feel free to go elsewhere to work if she finds a better opportunity or interest.

I have concentrated on health starting a few years ago (lost 40 lbs) and maintain a trim 175 ( I'm 6'2") I hit the gym 6 days a week for about 40min/visit.
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Old 05-03-2016, 01:18 PM   #8
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Thanks for the update. You + family are in great shape to retire once pension kicks in or even sooner. Give a hug to DW.
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Old 05-03-2016, 02:03 PM   #9
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I love the update info and that you thought to provide it. Your DW saved a bucket of $$ with the family tuition benefit! Nice progress.
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Old 05-03-2016, 07:51 PM   #10
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All sounds good...I'm a combination FERS/AF Reserve retirement guy myself. Here's some info from my experience, in case any of it could be useful to you.

Depending on the workload when you retire from Civil Service, it may be a while before you start receiving your full retirement. In my case it was 6 months and the interim pay was about 65% of my final pay. For me, putting aside cash to bridge that gap helped keep lifestyle the same until the total amount kicked in. I also had to validate some AD time bought back with AD orders, so your archives could be worth a buck or two.

TSP withdrawals worked fine, though options are limited and all payment actions are done on paper, not via website...may be changed by the time you need it.

Military retirement kicked in on time with no delays or interim amounts. You just need to get with the Personnelists 6 months or so ahead of time to start the process.

Transitioning from FEHB to TRICARE wasn't a problem. My current providers accepted both carriers. I kept my Dental and Vision through BENEFEDS to go with TRICARE and the combination worked well.

Best of luck
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Old 05-03-2016, 08:33 PM   #11
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Congrats! Great progress there after so many years. That's a great pension amount.
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