Future earnings for pension estimate

[Bimmerbill]

OK, I am getting myself confused. I am a federal employee and my salary is based on longevity. The salary table is published each year and usually reflects a COLA.

If I have 16 years left until I retire, I will be maxed on the payscale. So, how do I estimate my pension? Since my pension and salary are COLA'd, can I take todays max salary from the payscale and figure out the pension? It would be in todays dollars, but could it represent 16 years from now dollars due to the COLA?

Or should I run the math and add 2% a year for 16 years to get a much higher number, then figure pension? That would be in 2026 dollars...

 

[Helen]

Or should I run the math and add 2% a year for 16 years to get a much higher number, then figure pension? That would be in 2026 dollars...

I am a Fed too. Since we are on a GS pay scale and receive annual increases, I plotted my future earnings out in an excel spreadsheet. I use 2% per year then adjust it when I find out the exact increase. I then add my step increases. This gives me a ballpark for my future pension.

While it's still a ballpark I'm thinking it will be pretty close. I have enough padding where a few thousand one way or another in my pension won't matter, but I doubt I will be off by that much.

This is a good start for a spreadsheet by the way. I also add my partner's estimated salary (which is harder to predict), then enter the deductions to TSP/403b, Roths and after tax savings. I increment the savings each year from the increase in salaries. This shows me where I need to increase my savings. It takes a load off my mind as I don't have to sit down and recompute everything each January. I've also added a line to show when I can begin to cut back on my life insurance options. As our net worth increases, I cut back on life insurance.

-helen

 

[donheff]

The simple way to do it is to estimate what grade and step you will be at retirement and calculate it in current dollars (i.e. as if you were retiring today with the number of years of service and age you will actually retire at). There is no good way to determine precisely what Federal salaries will do in the intervening period. They may run a little behind inflation and they may keep up - but you will be in the ballpark. It is also difficult to know precisely what will happen in the grade department -- it is common for people to get promoted shortly before they plan to retire.

 

[Bimmerbill]

Thanks for the ideas. No telling what will happen when we convert to NSPS.

 

[martyb]

NSPS? YIKES!!!!! Bite your tongue! I'm hping the Democrats will toss that bag o crapola into the trash before it gets to me. I'm a WG employee with the Air Force, and so far it's all just talk. I think it's stalled in court someplace for DOD. Hope so, anyhoo!

 

[Nords]

If I have 16 years left until I retire, I will be maxed on the payscale. So, how do I estimate my pension? Since my pension and salary are COLA'd, can I take todays max salary from the payscale and figure out the pension? It would be in todays dollars, but could it represent 16 years from now dollars due to the COLA?

No, keep it in today's dollars and assume that COLA=CPI.

Otherwise you'll be guesstimating your pension in future dollars and then having to do the same with your expenses. That gets to be a painful exercise if your personal spending does not rise at the same rate as the CPI.

You may already be aware that your Reserve/NG longevity payscale will continue to advance if you elect to retire (after meeting your commitment & retirement eligibility) and start drawing a pension at age 60. So if you file your retirement papers at age 50 with 20 years of service, then when your Reserve/NG pension starts at age 60 it'll be at the retired rank's pay scale for 30 years of service. And since the 2007 pay raise also implemented over-30 payscales at some ranks, the deal could be even better.

Why is the govt giving away such a sweet deal? To encourage people to retire and go gray instead of separating. Even when you're gray you're subject to mobilization if things get bad enough.

 

[Bimmerbill]

I have my spearation paperwork in effective 01JUN07. I will be an O3 with 22 years (11 years enlisted). I really would like to stay in a bit longer (I am close to O4), but doing so will guarantee a combat tour overseas (at least one, probaby more).

I may change it to a retirement request. I think I can work on retirement points by doing correspondance courses for the next 20 years until I hit age 60 and can collect my $650 a month.

Anyways, my combination of guard and fed retirement should equal about $25K a year, fully COLA'd. That included the 25% penalty for retiring early at age 56 from the fed side.

 

[Bimmerbill]

Martyb, yeah, I am very weary of NSPS. My cubicle is right next to the NSPS office/cubicle area and they are frequently on teleconferences (very loud, I might add). None of them seem too happy about it either.

They are currently trying to standardize positions and grades accross several installations. The difference is amazing sometimes.

NSPS is moving forward, for non bargaining unit employees at least. WG and union eligible employees don't have to worry, at least until the court battles clear up.

 

[Nords]

I have my spearation paperwork in effective 01JUN07. I will be an O3 with 22 years (11 years enlisted). I really would like to stay in a bit longer (I am close to O4), but doing so will guarantee a combat tour overseas (at least one, probaby more).

Concur. I've never heard anyone say "Man, that was painful but the extra rank & money made it all worthwhile!" Usually I hear "Geez, if I'd known they were gonna clamp down on O-4 promotions so hard then I would've saved them the trouble..."

I may change it to a retirement request. I think I can work on retirement points by doing correspondance courses for the next 20 years until I hit age 60 and can collect my $650 a month.

Navy Reservists transfer from a paid billet into the Individual Ready Reserve. They don't drill, they can't get orders, and they don't get paid-- but they also don't get mobilized unless they're in a very special skillset. If you're not a Farsi/Pashtu linguist or a U-2 pilot then you're probably safe. And the correspondence courses are great if you can put yourself in a mindset to spend 20 minutes/day on it and just rack them up. It's amazing what you'll learn, too... and if you get tired of it then you can always file a retirement request.

Anyways, my combination of guard and fed retirement should equal about $25K a year, fully COLA'd. That included the 25% penalty for retiring early at age 56 from the fed side.

Exactly-- you've already won the game and it's only the third quarter. Now you're just running up the score!

 

[Tadpole]

If you are going to NSPS and are near the top of a band, do not expect pay raises even if you are the top performer. The bands don't rise by the average pay raise like the GS levels did. Topped out people should plan on continually applying to positions in a higher band or be satisfied with bonuses which won't contribute to retirement. If you are young, well thought of and not near the top of a band, rapidly accelerate (4%) to the top, stall for a couple of years and assume you get in the next band through a job competition, then accerate up that band. If you are not a star, go to the top of the band at a rate of about 2.5% per year and stall yourself for life.

 

[Bimmerbill]

I looked up my NSPS pay band and it tops out way above GS12 pay. I am in a supervisory position, which bumps up the pay quite a bit. Plus, I am only step 1, so have a ways to go.

I plan to keep track of the old GS scale vs NSPS pay when they finally convert us.

Nords, if I joined the Army IRR I'd most likely get pulled for deployment. The Army reserve components are running short of people to mobilize. I expect them to drop the 24 month limit rule shortly and start sending non-volunteers for a second trip.

We have a huge shortage of O1-O3, and there are a ton of vacant O4 positions. After that, things slow down.

 

[ChrisC]

If your agency subscribes to this service, you can get a fairly detailed analysis of your projected federal retirement annuity as well as SS and TSP income. https://frb.econsys.com/frbweb/logoff.do

 

[Nords]

Nords, if I joined the Army IRR I'd most likely get pulled for deployment. The Army reserve components are running short of people to mobilize. I expect them to drop the 24 month limit rule shortly and start sending non-volunteers for a second trip.
We have a huge shortage of O1-O3, and there are a ton of vacant O4 positions. After that, things slow down.

We've seen a lot of pre-emptive Navy Reserve retirements too. People are willing to do the first deployment for country and maybe even a second one, but the retirement is for family...

 

[kaudrey]

Hi,

I'm a fed too. I take my current salary, project it out at a 2% raise each year for 15 years (my retirement date), take the high 3, do the math, and put that number in my spreadsheet starting at age 57 as my pension amount (which I then leave flat until 62, and COLA at 3% thereafter...I'm FERS).

I figure this is probably conservative because I'd like to think I might still get promoted sometime in the next 15 years...

Karen

 

[Bimmerbill]

Thanks for the ideas. I took the current pay scale and used it as a estimate for a pension. It is still 16 years out and a lot can change in 16 years...

 

[Bimmerbill]

Looks like I will get a $20K bump to my max pay under NSPS. I think it is due to my supervisory role. Not sure when we will switch from GS to NSPS tho.