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FERS Deferred Retirement?
Old 11-24-2020, 12:47 AM   #1
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FERS Deferred Retirement?

Are there any federal workers out there that did a deferred retirement? If so, can you please share your story! There are a few threads on here that lightly touch on it but not many - and almost zero instances where a person reached FI early and left their govvie job with a deferred pension.

Thanks!
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Old 11-24-2020, 05:22 AM   #2
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I'm interested... 46 now and can't see w*rking another 11 to "retire" and no chance of VERA/VSIP. Walking away from the security (and FEHB*) is hard, especially with the turmoil in the economy right now. Planned to pull the plug in 2020 but kicked the can to 2021 with COVID driving OMY. Would love to hear from someone who walked away to tell me it will all be ok! If I kept spending the same and worked to 57 I'd likely die rich and miserable.


Most of my assets are in TSP so I'd likely start a SEPP 1-2 years after separating for cash flow and to avoid crazy RMDs later. I'd want to see how my income/expenses shake out after separating before I commit to such a long period of withdrawals (will likely earn some money doing things I want to do) so I stay below the ACA cliff (at current valuations, I'd be only a few $k from losing some subsidy)



* I'm not a high consumer of medical but my current doctors are in the network of an HSA eligible plan in the marketplace, although with higher Deductable/OOP than my current plan; if I manage my MAGI it will cost me less than my portion of my FEHB HDHP premiums I currently pay (but I will budget to pay the full cost). Of course, the wildcard is what will happen to the ACA and/or will a single payer scheme be hatched? Every now and then the idea is floated to open up FEHB to everyone.. that could probably be an appealing development for us civil servant FIRE wannabees.... permanent COBRA?



FLSunFIRE
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Old 11-24-2020, 05:29 AM   #3
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[QUOTE=FLSUnFIRE;2516049 If I kept spending the same and worked to 57 I'd likely die rich and miserable.
FLSunFIRE[/QUOTE]

Lololol this is exactly what I keep telling my wife. "Yes, we will be rich but ill likely be dead not long after at this rate."
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Old 11-24-2020, 10:30 PM   #4
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I guess there isn't anybody! Much like I had expected.
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I did this
Old 11-24-2020, 10:52 PM   #5
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I did this

Not exactly sure what I can share that will be useful, but I took this option several years ago. I retired a couple of years before I was eligible for my annuity...I am currently receiving my pension now. My transition was relatively easy as: (a) while I retired, my wife continued working; (b) she also works for the Feds so we are currently securing health insurance through her, and will carry her plan into her retirement; and (c) we always lived pretty modestly and were able to live comfortably on her salary prior to my drawing my pension. Had my wife not worked for the Feds, and had she not wanted to continue working for a few more years when I decided to hang it up, I doubt I would have left early. If you have any specific questions, Iíd be happy to try and answer them.
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Old 11-25-2020, 04:54 AM   #6
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https://www.reddit.com/r/govfire/


I recently discovered this subreddit. I am not active but skim it when at w*rk. With the government, FIRE is even more rare. Most of my coworkers are miserable but don't even consider leaving federal service (much less FIRE from it). A few know my ambitions but I'm not sure they really believe it... then again, most of them are in debt to their ears and contribute minimally to TSP (when they are not borrowing against it for consumer purchases).
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Old 11-25-2020, 05:06 AM   #7
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Originally Posted by ProGolferWannabe View Post
Not exactly sure what I can share that will be useful, but I took this option several years ago. I retired a couple of years before I was eligible for my annuity...I am currently receiving my pension now. My transition was relatively easy as: (a) while I retired, my wife continued working; (b) she also works for the Feds so we are currently securing health insurance through her, and will carry her plan into her retirement; and (c) we always lived pretty modestly and were able to live comfortably on her salary prior to my drawing my pension. Had my wife not worked for the Feds, and had she not wanted to continue working for a few more years when I decided to hang it up, I doubt I would have left early. If you have any specific questions, Iíd be happy to try and answer them.

Your situation is a bit different than mine as with a FED spouse you can have your cake and eat it too wrt benefits. When I married (now divorced), the plan was for me to FIRE at 50 instead of my original goal of 40 as we allowed some lifestyle creep ("happy wife happy life"... or not ) and she would follow 10 years later around 50 as well. Having a second income/benefit path would make it a no-brainer for me to leave. As it happened, my stable career allowed her to jump career tracks several times and she is in great shape now and probably already close to FI in her mid 30s.

One question, have you withdrawn from TSP yet (particularly SEPPs directly from), if so, how as your experience been? Looks like it will be reported to the IRS as qualified and I won't need to worry about screwing it up. My only experience directly with TSP was taking out a loan (to manage taxable income) and I found the customer service experience to be horrible.


Thanks
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Old 11-25-2020, 05:57 AM   #8
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Originally Posted by FLSUnFIRE View Post
Your situation is a bit different than mine as with a FED spouse you can have your cake and eat it too wrt benefits. When I married (now divorced), the plan was for me to FIRE at 50 instead of my original goal of 40 as we allowed some lifestyle creep ("happy wife happy life"... or not ) and she would follow 10 years later around 50 as well. Having a second income/benefit path would make it a no-brainer for me to leave. As it happened, my stable career allowed her to jump career tracks several times and she is in great shape now and probably already close to FI in her mid 30s.

One question, have you withdrawn from TSP yet (particularly SEPPs directly from), if so, how as your experience been? Looks like it will be reported to the IRS as qualified and I won't need to worry about screwing it up. My only experience directly with TSP was taking out a loan (to manage taxable income) and I found the customer service experience to be horrible.


Thanks
I have not yet withdrawn anything from the TSP, and for now atleast, have no immediate plans to do so. So, I canít really speak to any customer service issues involved with withdrawing funds. On a somewhat related note, I did find the people at OPM who were responsible for doing my final pension calculations and starting my annuity to be remarkably unhelpful. Very poor communication, difficult to talk to someone, etc. in the end, it all worked out ok, but I would have appreciated a bit more hand holding.
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Old 11-25-2020, 06:41 AM   #9
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Interested as well. Financially we are set and can go, but its the FEHB that have us still working.
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Old 11-25-2020, 07:15 AM   #10
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Interested as well. Financially we are set and can go, but its the FEHB that have us still working.
Had my still working spouse not had FEHB access, I would have been exactly in your situation. I donít know if there really is a solution/alternative that is as attractive as keeping your FEHB. I suppose you could look at ACA plans, maybe utilize COBRA for a relatively short period of time....but these solutions are not likely going to be attractive from a a cost standpoint.
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Old 11-25-2020, 08:28 AM   #11
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Unless I'm mistaken, I don't believe you can set up a 72t distribution directly through the TSP...you would need to rollover funds to a tIRA beforehand. That said, you CAN make withdrawals penalty-free from TSP if you are age 55 or older when you separate/retire.

Regarding OP's question, I plan on doing a deferred retirement at age 62 (I'm 50 now). I currently have no inclination to return to federal service so I initially was just going to withdrawal what I'd put in and invest it elsewhere...but then after using a FERS calculator, I realized I had about a .00001% chance of getting the return(s) needed to match what I'd get with the annuity.
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Old 11-25-2020, 09:49 AM   #12
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Originally Posted by jimbohoward69 View Post
Unless I'm mistaken, I don't believe you can set up a 72t distribution directly through the TSP...you would need to rollover funds to a tIRA beforehand. That said, you CAN make withdrawals penalty-free from TSP if you are age 55 or older when you separate/retire.

You can using the life expectancy method (which I want to use anyway) and is addressed in the official TSP literature (TSP-536) and I have read in several places that the 1099 will even report them as qualified (FedSmith, etc) as they calculate the withdrawal using the IRS tables.


More info: https://www.fedweek.com/tsp/tsp-with...fe-expectancy/
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Old 11-25-2020, 09:56 AM   #13
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Originally Posted by jimbohoward69 View Post
Regarding OP's question, I plan on doing a deferred retirement at age 62 (I'm 50 now). I currently have no inclination to return to federal service so I initially was just going to withdrawal what I'd put in and invest it elsewhere...but then after using a FERS calculator, I realized I had about a .00001% chance of getting the return(s) needed to match what I'd get with the annuity.

Anyone in before they increased the employee contribution would be foolish to take it out! The NPV of the income stream (starting at 60 for me if I separate around 47 as I hope to) is way more than the payment I would get back for my contributions with ~23 years of service. -Especially if discounted at a rate that would account for the near-zero level of risk. I'm happy with the compensation package but can't tolerate another 10 years of bureaucracy and boredom required to reach MRA.
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Old 11-25-2020, 09:58 AM   #14
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Here's what I did. It may sound complicated but it really isn't. I spent a fair of time on the phone with our Benefits Center and OPM but if I've gotten something wrong, please correct me.

I retired from FERS at 54 (Rule of 55) with 8 years of service. I opted to chose deferred retirement since I had more than 5 years of service. As I was told, 3 months prior to turning 62, I need to turn the deferred retirement paperwork into OPM and the amount at 62 will be the average of my highest 3 years of pay times the number of years (8). The deferred retirement is COLA'ed.

Had I waited 2 years, I would be eligible for early retirement (10 years of service) which would start the month after I retired but is NOT COLA'ed.
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Old 11-25-2020, 07:01 PM   #15
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I retired from FERS at 54 (Rule of 55) with 8 years of service.
So you lost your access to FEHB correct?
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Old 11-25-2020, 07:11 PM   #16
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So you lost your access to FEHB correct?
I've got Tri-Care so I never participated in FEHB.
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Old 12-02-2020, 08:54 PM   #17
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A little late to the discussion but I’ll add my experience, I did a deferred FERS retirement last year. Left the Feds about 10 years ago and submitted the paperwork to start collecting my pension in Nov 2019. The FERS paperwork states to submit the required forms 60 days before you want to start collecting so I submitted the forms in Aug 2019. About a month after submitting the forms I hadn’t heard anything from OPM, didn’t even know if they received them, so placed a call to OPM. Was told they received them but might be 2-3 months before they would get around to reviewing them. Called them again in Dec 2019 and was told it might be April 2020 before they could process it. Received a letter from OPM in early Feb 2020 with my account number and password to access the OPM online web site. About a week later got my first check, it included the money owed back to Nov 2019. Started getting my regular monthly check on 1 March 2020.

I think deferred retirees get pushed to the end of the line when it comes to processing retirement paperwork. Had a friend who retired in Nov 2019 on an immediate retirement and his paperwork went through right away and he received his first check in Dec 2019. The delay wasn’t a major issue for me, my pension is relatively small and I’m not dependent on it, just wished the communication was a little better during the start.
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Old 12-02-2020, 09:04 PM   #18
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Interested as well. Financially we are set and can go, but its the FEHB that have us still working.
It's part of the reason we are FIretiring overseas until the US can get universal healthcare. Without having to worry about monthly medical payments, you would be shocked at how easy it is to FIRE.
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Old 12-02-2020, 09:04 PM   #19
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My spouse also had the same experience. Worked for the feds for a little less than 10 years. Nearly 20 years later, filed the paperwork relatively easily to start the small pension at 62. Took a few months to even confirm the receipt of the paperwork and several more months before payments actually started and the first check included the back pay.
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Old 12-02-2020, 09:07 PM   #20
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Originally Posted by zinger1457 View Post
A little late to the discussion but Iíll add my experience, I did a deferred FERS retirement last year. Left the Feds about 10 years ago and submitted the paperwork to start collecting my pension in Nov 2019. The FERS paperwork states to submit the required forms 60 days before you want to start collecting so I submitted the forms in Aug 2019. About a month after submitting the forms I hadnít heard anything from OPM, didnít even know if they received them, so placed a call to OPM. Was told they received them but might be 2-3 months before they would get around to reviewing them. Called them again in Dec 2019 and was told it might be April 2020 before they could process it. Received a letter from OPM in early Feb 2020 with my account number and password to access the OPM online web site. About a week later got my first check, it included the money owed back to Nov 2019. Started getting my regular monthly check on 1 March 2020.

I think deferred retirees get pushed to the end of the line when it comes to processing retirement paperwork. Had a friend who retired in Nov 2019 on an immediate retirement and his paperwork went through right away and he received his first check in Dec 2019. The delay wasnít a major issue for me, my pension is relatively small and Iím not dependent on it, just wished the communication was a little better during the start.
Did you start withdrawing at your MRA, or one of the other FERS milestones (60 & 62)? How many years did you have in?
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