HillCountry
Recycles dryer sheets
Me: 47
DW: 40
Me: 28 years @2023
DW: 8
Pension: Nada
DW: 40
Me: 28 years @2023
DW: 8
Pension: Nada
As for a pension, I would be eligible for one if I continued working another 3 years, but I wouldn't get it for 30 years (when I turn 65) and inflation would eat away most of the value by the time I could take it. Hence I will be cashing out the ~$25,000 lump sum value regardless of whether I hit the 5 year vesting schedule to be eligible for the pension. If I took it, it would pay around $100/month in 2012 dollars (at age 65), and once I start drawing it, it would be partially indexed for inflation (COLAs by fiat of the lawmakers which have proven to be less than CPI lately).
Hmm, that sounds like FERS. I am actually in the exact same position I believe, so this is interesting to me. As far as I know, you only get the 0.8% each year you put into it, plus the interest rate on the amount based on government securities (1.6% right now). So it would be basically be impossible to hit $25,000 in eight years or less unless you voluntarily put more into it. In my case it will be something like $8,000 after eight years. I would then get a benefit of about $225/month in today's dollars with "inflation protection". The thing is, $8,000 in the market for 26 years would result in ~$75,000, or $29,000 in inflation adjusted dollars. A $29,000 inflation adjusted SPIA would have a rate of 4.2%, and would pay $101/month. So, leaving it in is actually a better idea, for people who started working before 2013. That is you and me.
In 2013 a big change happens, the contribution rate skyrockets to 3.1%, for the same benefit, so a new employee after that would have to pay 3.875x more to get the same benefit, that means with someone with my numbers, $101/month would suddenly get multiplied by 3.875x, equaling $391/month. This makes a lump payment suddenly a big winner, and the new federal employees starting 2013 will be basically getting screwed if they keep their money in FERS. Frankly, at that contribution rate, they would be doing government employees a favor by just abolishing the FERS annuity for new employees. This seems to be going the same way of pensions in the private sector, I would not be surprised if a "buyout" occurs in 10-15 years for all federal employees from 2013+, in which there won't be much grumbling, since the pension payout will be so poor compared to the lump sum payout.
Current Age: 45
Projected/Goal Retirement Age: 50
Total working years: 32
Pension: No, but 7 figure 401k, as well as ira, annuity, income from various rental properties, & taxable accounts.
Ah, I see. 60% does sound like a nice top end, after 30 years under FERS, it is 33%, you can also use sick leave to spike it a bit, but it is definitely not worth it. On the other hand, they don't make it ridiculously painful pulling out early, if you want. Definitely sounds like the best idea to cash out under a 6% contribution rate, it sounds like they penalize you for doing anything less than selling your soul to the company.
Age= 48
Planning to head out = 55
Pension = Yes (but very meagered @ 55, probably enough to just pay for property tax)