FERS Retirement Briefing

[GolfingDuo]

Hi All

Recently there has been some discussion on FERS (Federal Employees Retirement System) and retirement. It so happened that is one of the reasons I joined here. I have in my short time learned a great deal from some very smart people here.

Two days ago our HR department put on a retirement seminar/briefing for employees and families. It was a one day presentation and I have asked if I could post the briefing here. Your administrators have given me permission. I hope you will find the information valuable for your your situations if you are FERS employees or know someone.

If anyone has questions on the information presented please ask. If you need to you can call the 877 number listed on slide 5 or 6. ABC (Army Benefit Center is the FERS inter-agency that takes you from your local HR to the final destination at retirement of OPM. It helps stream line the process and gets everyone on the road to enjoying their retirement.

There are two things that I took as important for everyone to take from this. Besides starting early investing the two are call for a retirement estimate and expect a two month period at the end as you retire to not be paid. Calling for the estimate will give you an idea how much and what you will need to do if you are missing time or what have you to buy back. Calling the number will get you that information in a report. Second they can also contact DFAS in your behalf to get paid receipts for military buy back time.

Enjoy everyone. Thanks to Gumby for helping out here.

[ejw93]

Duo -

Great Post! Thanks for the briefing slides.

I did not know 'someone else' was keeping a copy of Military Buy Back receipts.

Good to know this in case there is a house fire and/or something happens to my backup scanned documents on a 'Cloud' drive!

[GolfingDuo]

Not a problem. As I indirectly said I am glad to pass on information since I have gotten information from here.

Thanks for the compliment.

[timo2]

Thank for the slides. I would like to add that when calculating a FERS benefit, if you plan on leaving a survivor benefit, that will reduce the calculated benefit the worker receives. On my last estimate, it was a 10% reduction, but I don't know if that is the standard amount or not.

The only reason there is a FERS is it was part of the mechanism to transition federal employees into the social security system. I expect one day Congress will decide the transition is over and get rid of it.

[timo2]

Also, since the COLA for the FERS pension may be reduced from the CPI by up to 2% (depending upon the rise in the CPI), this makes the COLA for social security more valuable than the FERS COLA, and is part of the reason it makes sense for me to wait until 70 to maximize my social security benefit. And move to a chained CPI would reduce the FERS COLA even more from the CPI, which means I'll need a little more cash on hand after 70 to make up for that than I had originally planned.

[zinger1457]

Thanks for posting. More FERS employees need to take the FERS pyramid slide to heart, where the FERS annuity is the smallest component and TSP the largest of one's retirement savings. As an ex-FERS employee it seemed to me that most FERS employees act as if that pyramid is inverted.

[GolfingDuo]

Quote:

Originally Posted by timo2 Thank for the slides. I would like to add that when calculating a FERS benefit, if you plan on leaving a survivor benefit, that will reduce the calculated benefit the worker receives. On my last estimate, it was a 10% reduction, but I don't know if that is the standard amount or not. The only reason there is a FERS is it was part of the mechanism to transition federal employees into the social security system. I expect one day Congress will decide the transition is over and get rid of it.

Under FERS and one of the slides speaks to that. It is 10% of your benefit to pay out 50% survivor benefits. It is 5% to pay out 25% survivor benefits.

If you are planning or have any intention of carrying FEHB (Federal Health Benefits) you will need to at least carry the SBP in 5%. If there is no SBP there is no option for FEHB.

It isnt the case with Tri-Care for military. That will carry on I believe.

Quote:

Originally Posted by timo2 Also, since the COLA for the FERS pension may be reduced from the CPI by up to 2% (depending upon the rise in the CPI), this makes the COLA for social security more valuable than the FERS COLA, and is part of the reason it makes sense for me to wait until 70 to maximize my social security benefit. And move to a chained CPI would reduce the FERS COLA even more from the CPI, which means I'll need a little more cash on hand after 70 to make up for that than I had originally planned.

FERS COLA kicks in at 65 anyway. That is one of the reasons I believe I will be waiting until age 70 to file for and take my SS. I hope I won't really need to tap into it as I get it. I would like to bank it on for trips and things like that.

As mathjak has said in a number of post everyone puts a lot of emphasis on planning for death but no one seems to be planning for living. I plan on harrassing DW for a good long time. Maybe even be a pain in her butt until the cow jumps over the moon.

[David1961]

For what it's worth, I retired recently and got my first retirement check the next month. However, it was about 80% of what I ended up getting. It can take OPM up to 8 months to calculate your pension amount accurately and in the meantime, they estimate what it will be and pay you about 80% of what they expect you to get.

[GolfingDuo]

Quote:

Originally Posted by zinger1457 Thanks for posting. More FERS employees need to take the FERS pyramid slide to heart, where the FERS annuity is the smallest component and TSP the largest of one's retirement savings. As an ex-FERS employee it seemed to me that most FERS employees act as if that pyramid is inverted.

This is absolutely true. Your FERS retirement is basically the number of years you are an employee as a percentage of your basic salary. Lets say for example you have 25 years that is 25% of your base pay. Think on that when you think you can retire on that sort of income. Of course many can do 40 years and do. In my case I am going to end up with about 39 years. This is because all federal service is taken into consideration and especially if you did military time and bought that back paying 3% of your pay earned during those years for those years.

Quote:

Originally Posted by David1961 For what it's worth, I retired recently and got my first retirement check the next month. However, it was about 80% of what I ended up getting. It can take OPM up to 8 months to calculate your pension amount accurately and in the meantime, they estimate what it will be and pay you about 80% of what they expect you to get.

excellent point. This was made at the very end. As you get ready to retire it will be important to save up your leave and get that as a lump sum. Long term FERS employees usually can carry 240 plus hours into your retirement years. This can equal 2 months of pay if saved judiciously. This pay will be needed to carry you for the wait. Also very true is that they will pay you about 80% when you do start for about 8 months until OPM has settled the years and months count and your final high three years. A last point if you are retiring like I will due to mandatory service age and losing my position because it requires military service at age 60 a suppliment equating to a portion of your age 62 SS income will be paid but only when you get your full pay. It will be brought up in a lump sum catch up pay check. Then you will collect your normal pay. The SS is only paid out until you reach 62 when you become eligible to collect SS.

These are great points to make David thanks for pointing them out.

[Greg V]

Here's my FERS retirement process experience in case it helps; Retirement date 6/30/12 from Air Force Reserve Command (Air Reserve Technician):

I put in the application to my Agency 90 days out. Online checklists and application were OK. You have to print out the application and mail it in...no online ability to send ‘trons. I recommend filling out the forms in draft, saving and getting a counselor on line to finish up the paperwork. I talked to 3 different counselors. All were very good and they estimated it would take 8-9 months for me to get finalized. Be sure your org puts in a retirement personnel action. Also, OPM will only accept a memo from DFAS as proof that you bought back military time.

Approval and Agency estimate arrived a month before my retirement date. An item that is not well estimated with the online calculators is the FERS Annuity Supplement, if you bought back significant military time. The online program assumes all your qualifying retirement time is as a FERS employee and gives too high an estimate for the ex-military guy or Technician. A reasonable estimate for your planning is:

Your years purely as a FERS guy divided by 40 times your age 62 Soc Sec benefit.

In my case, I had 16.5 yrs in FERS when I retired. 16.5/40 X My Age 62 Soc Sec benefit got me within ~$30 of the actual number.

After retiring, got the last paycheck the following week, including both salary and accrued leave. I was approved for interim pay within a week after retirement and got the first check on Aug 1. Net interim pay was about 65% of my finalized pay (FERS Annuity Supp included). FEHB stayed in effect with premiums recouped after I was finalized and I was direct billed for Vision and Dental under Benefeds.

I was notified the last week in Oct that OPM was working my case and finalized third week in Nov. The OPM specialist did a good job. I had military time in question that was not listed on a DD 214, so it was good that I had orders, etc to back up my claim. “Back pay” for the difference between interim and finalized annuity was deposited within a week after I was finalized. First “real” paycheck as a finalized FERS retiree arrived 1/1/13. So…5-6 months for the process to happen vice the estimated 8-9 months, but your time will depend on the OPM backlog when you make the leap.

Thoughts based on my experience:

1. Talk to the counselors and take advantage of seminars.
2. Get an early start on applications, confirming bought back time, etc and doing research for FERS Survivor Annuity, FEHB and FEGLI decisions…to mention a few.
3. If you don’t plan on immediately getting another job, put aside funds and/or accrue maximum leave to supplement your interim annuity. I’ve heard of folks with complex issues receiving only 25-30% of their final annuity for an extended time.

A final note relating to an earlier post…COLA kicks in FERS folks at age 62 except for disability and survivor benefits. Best of luck.

[GolfingDuo]

Thanks for filling in some of the gaps. On the COLA I thought that they had said 65 but that is okay.

I did want to add something in your post so please see the colored words.

Everything else is spot on as what I have heard from my friends.

Last thing on here is this.

If you do get a new job in federal service do not start until after you have used up the leave you cashed in. If you cashed in say 1 month of leave do not start to work within that time frame after you retire or they will be looking for that money back for the time. Your leave carries over year to year, job to job.

Quote:

Originally Posted by Greg V Here's my FERS retirement process experience in case it helps; Retirement date 6/30/12 from Air Force Reserve Command (Air Reserve Technician): I put in the application to my Agency 90 days out. Online checklists and application were OK. You have to print out the application and mail it in...no online ability to send ‘trons. I recommend filling out the forms in draft, saving and getting a counselor on line to finish up the paperwork. I talked to 3 different counselors. All were very good and they estimated it would take 8-9 months for me to get finalized. Be sure your org puts in a retirement personnel action. Also, OPM will only accept a memo from DFAS as proof that you bought back military time. Approval and Agency estimate arrived a month before my retirement date. An item that is not well estimated with the online calculators is the FERS Annuity Supplement, if you bought back significant military time. The online program assumes all your qualifying retirement time is as a FERS employee and gives too high an estimate for the ex-military guy or Technician. A reasonable estimate for your planning is: Annuity Supplement Your years purely as a FERS guy divided by 40 times your age 62 Soc Sec benefit. In my case, I had 16.5 yrs in FERS when I retired. 16.5/40 X My Age 62 Soc Sec benefit got me within ~$30 of the actual number. After retiring, got the last paycheck the following week, including both salary and accrued leave. I was approved for interim pay within a week after retirement and got the first check on Aug 1. Net interim pay was about 65% of my finalized pay (FERS Annuity Supp included). FEHB stayed in effect with premiums recouped after I was finalized and I was direct billed for Vision and Dental under Benefeds. I was notified the last week in Oct that OPM was working my case and finalized third week in Nov. The OPM specialist did a good job. I had military time in question that was not listed on a DD 214, so it was good that I had orders, etc to back up my claim. “Back pay” for the difference between interim and finalized annuity was deposited within a week after I was finalized. First “real” paycheck as a finalized FERS retiree arrived 1/1/13. So…5-6 months for the process to happen vice the estimated 8-9 months, but your time will depend on the OPM backlog when you make the leap. Thoughts based on my experience: 1. Talk to the counselors and take advantage of seminars. 2. Get an early start on applications, confirming bought back time, etc and doing research for FERS Survivor Annuity, FEHB and FEGLI decisions…to mention a few. 3. If you don’t plan on immediately getting another job, put aside funds and/or accrue maximum leave to supplement your interim annuity. I’ve heard of folks with complex issues receiving only 25-30% of their final annuity for an extended time. A final note relating to an earlier post…COLA kicks in FERS folks at age 62 except for disability and survivor benefits. Best of luck.

[marc515]

All you government guys nearing retirement need to request to see you official 201 file a minimum of least 18 months year prior to retiring.

Your local personnel office will get it for you, and then you can sit in one of their offices and go through it to insure everything that's supposed to be there is.

When I got one of my retirement estimates about 2 years out, my post 56 military payback was not included; when I reviewed my 201 file I saw why- there was no documentation showing I paid back my military years. Good thing I kept the records, and I personally put copies in my 201 file before it was sent back.

Just sayin!

[GolfingDuo]

Quote:

Originally Posted by marc515 All you government guys nearing retirement need to request to see you official 201 file a minimum of least 18 months year prior to retiring. Your local personnel office will get it for you, and then you can sit in one of their offices and go through it to insure everything that's supposed to be there is. When I got one of my retirement estimates about 2 years out, my post 56 military payback was not included; when I reviewed my 201 file I saw why- there was no documentation showing I paid back my military years. Good thing I kept the records, and I personally put copies in my 201 file before it was sent back. Just sayin!

An excellent point. It isnt a 201 file any more but the point is made well. Each year on your aniversary of your employment you get a summary of your time. Also we have ebis and my biz now that we can look at on line to ensure that everything is up to par.