Modeling FERS retirement - COLA question

[goingtotravel]

How do I enter the data for a FERS retirement? There is a FERS supplement from 56-62; there is a non-cola pension from 56-62; and then there is a cola on the pension after 62. I've been including the FERS supplement in the pension number then putting a negative expense for the supplement amount after age 62 to handle losing the supplement.

I do not understand how to model no COLA adjustments for the first 6 years. I don't want to show the pension as inflation adjusted from day 1 and I do not want to model it as never being adjusted for inflation.

As a side note I am also including a mortgage payment as a non-inflated expense so I've used up all the boxes available on that screen.

Thank you

 

[donheff]

Can't you handle the initial 56-62 period as a flat income amount which ends at 62 followed by COLAd Social Security and COLAd FERS annuity starting at 62?

 

[goingtotravel]

This is what I have so far in the Other Income/Expense area:

1) $xx,xxx Mortgage payment as Off Chart Spending with no inflation adjustment (this is entered here as it is a fixed amount and not with the expenses listed on the first screen)

2) $xxx,xxx FERS plus FERS supplement amount as Pension Income beginning on the date we retire (but I have to either check it as always inflation adjusted or not - neither one is correct)

3) $- xx,xxx FERS supplement entered as negative pension income beginning in the year I turn 62 when that portion of our retirement payments end

SS is also entered on that tab. I think I would need another line to break out the FERS payment before 62 (not inflation adjusted) and after 62 (inflation adjusted), right?

 

[MikeWillRetire]

There is no good way to do it in Firecalc.
But you can approximate it somewhat. For the pension, calculate what the pension will be worth in today's dollars at age 62 assuming an inflation rate of say 3%. So let's say your pension is worth 20k at age 56, but will be reduced to 17k in value at age 62. So you would enter your pension as 17k and click the inflation adjusted button.
For the supplement, it is even more difficult. If you expect to take SS at age 62, you can enter the supplement as a pension, and enter SS as a value equal to SS minus the supplement.

 

[ABQ2015]

Another COLA issue is that the FERS pension has a diet COLA that does not always reflect the full CPI-U even starting at age 62. Some other forum members have compensated for this by entering part of the FERS pension as inflation adjusted and part as not inflation adjusted (e.g., 25%). I tried to calculate the actual difference between a CSRS and a FERS pension for the 20 year period between 1999 and 2019 but am not confident of the results for the FERS as I used simple math (e.g., a $54K pension in 1999 was $6K less than CSRS after 20 years using my calculations). But I have a lot of slack in my retirement income so am not overly concerned.

 

[goingtotravel]

ABQ2015 - very good point on the diet COLA factor

Think I've run the FIRECALC every way I can at this point. Even with no inflation adjustment on the FERS pension and including a mortgage payment in the expenses that are inflation adjusted we are still getting an 100% success rate. At this point any data we are gathering is just to refine how much we can pull from our portfolio over and above our current budget/expenses.