More feds doing life sentences

[Redbugdave]

Helen...I read the FedSoup forums, also. I'm like you. I think many of the people there just la la along and never gave the future much thought. Almost none of the CSRS folks put into the TSP...and none at my office. Some say because of no matching. Lately, I believe OPM has been slow on processing the new retiree's checks. It was around 6 months before they started. It may be better, now. You need to have some money on the side for unknown events. I think FERS retirements will start around 2014, and there will be fewer and fewer CSRS people kicking around. I missed out on CSRS by about one year. So...I will be one of the first FERS people to go, in 2014.

Hey Marty...2 years and 3 months! I am looking for acreage in the country, now.

[Nords]

Quote:

Originally Posted by Helen I can't believe the amount of stressing people do about having to wait several months post retirement before their pension kicks in. It sounds to me like many of them have no money put aside, or at least not enough to cover their expenses for several months.

When I attended the military's three-day retirement seminar in 2000, one of the presentations was on the mechanics of getting the pension payment from DoD to your checking account. These were all people in their late 30s to late 50s who had accumulated at least 20 years of service. Admittedly most of them were planning bridge careers. No raw recruits in this crowd, and most of them were senior leaders.

95% of the curriculum was about getting a job. That's DoD's mandate. None of it was about financial planning (except possibly the talk on survivor benefits plans). DoD's interest is financial responsibility, not financial planning.

The instructor said that military pay was two weeks in arrears but pensions were a month in arrears. There were occasional setup problems with new retirees, and that a few percent of us would have to wait up to six weeks for that first pension check.

The shock and dismay that rippled across the room was audible. Reactions varied from "Whoa..." to "Wait-- what? But... but... but..." spluttering.

In other words, most of these people already couldn't skip a two-week paycheck. The idea that they might have to skip two of them before getting caught up was simply unfathomable.

A veteran who retired last month confirmed that the same thing happened in his recent transition class, too.

[ziggy29]

Quote:

Originally Posted by Helen I've also read the Fedsoup forum and other federal employee websites. I can't believe the amount of stressing people do about having to wait several months post retirement before their pension kicks in. It sounds to me like many of them have no money put aside, or at least not enough to cover their expenses for several months.

Is that how it works, even under CSRS? It takes several months for the pension to kick in after retirement?

Quote:

Originally Posted by Nords In other words, most of these people already couldn't skip a two-week paycheck. The idea that they might have to skip two of them before getting caught up was simply unfathomable.

Okay, now *that* I find just plain sad.

[Amethyst]

I must move in a different circle of "feds." I get the impression that people I work with - including lower GS grades - are financially responsible, very aware of their benefits, contribute the max to TSP, and LBYM (except in the areas of "kitchen upgrade" and "daughter's wedding," where it's considered OK to boast of large $ layouts). Surely there are exceptions, but those must be the ones who keep their heads down and say nothing.

Amethyst

[ziggy29]

Quote:

Originally Posted by Amethyst I must move in a different circle of "feds." I get the impression that people I work with - including lower GS grades - are financially responsible, very aware of their benefits, contribute the max to TSP, and LBYM (except in the areas of "kitchen upgrade" and "daughter's wedding," where it's considered OK to boast of large $ layouts). Surely there are exceptions, but those must be the ones who keep their heads down and say nothing.

Were these CSRS feds or FERS feds, though? Helen was mentioning CSRS feds above with respect to not using TSP. I can't imagine many feds on FERS who are *not* using TSP will have a very comfortable retirement... or may have to wait until FRA for SS to kick in -- if then.

This would be something much easier for CSRS retirees to ignore than FERS retirees, or at least I'd think.

[Amethyst]

Ziggy,

OPM runs the pension system, and it takes a while for OPM to get a handle on anything. The OPM folks in D.C. whom I've dealt with on the phone, are pretty sharp, but the folks in Boyer, PA are the ones who administer the pensions, and they are not what I'd call bustle-hustlers. Apologies to any of them who may be in this forum, but that's been our experience over the years.

Husband's experience was fairly typical. He retired at the end of December, got his first annuity check in March for ~ 50%, next one was ~75%, and in May he finally was "made whole" retroactively.

The day of the month that one retires, makes a difference. Under CSRS, if one retires within 3 days of the 1st of a month, the annuity starts that month (although one will not see a check from OPM for at least another month). If one retires 4 days into the month, the annuity won't start till the 1st of the following month - making a 2-month wait till the first annuity check.

The final paycheck (we are paid every 2 weeks, in arrears) is supposed to help tide one over. The final check includes any unused annual leave, converted to pay dollars.

Amethyst

Quote:

Originally Posted by ziggy29 Is that how it works, even under CSRS? It takes several months for the pension to kick in after retirement?

[Amethyst]

Judging by age, the vast majority of my cow-orkers are under FERS. I would be very surprised if any of them weren't contributing everything they could get their hands on to TSP. I would also be very surprised if any of my CSRS contemporaries weren't contributing to TSP - it's such an obvious thing to do. But I've long since learned that people censor themselves (when was the last time you heard someone admit to having an accident where THEY were at fault?) so who knows.

Amethyst

Quote:

Originally Posted by ziggy29 Were these CSRS feds or FERS feds, though? Helen was mentioning CSRS feds above with respect to not using TSP. I can't imagine many feds on FERS who are *not* using TSP will have a very comfortable retirement... or may have to wait until FRA for SS to kick in -- if then. This would be something much easier for CSRS retirees to ignore than FERS retirees, or at least I'd think.

[ziggy29]

Quote:

Originally Posted by Amethyst Judging by age, the vast majority of my cow-orkers are under FERS.

Yeah, I'd imagine they *need* to be more aware of the need for personal savings; a FERS pension isn't really going to be enough for most of them, even when SS is added into the mix.

[GregLee]

Quote:

Originally Posted by Bestwifeever I know only a couple of people with fed jobs, ...

I have never in my life met a civilian fed in person, so far as I know. Just some brief conversations on the phone with IRS or SS people, and of course I read posts here. It seems odd.

[happy2bretired]

Quote:

Originally Posted by GregLee I have never in my life met a civilian fed in person, so far as I know. Just some brief conversations on the phone with IRS or SS people, and of course I read posts here. It seems odd.

Maybe they are in hiding... I know for the last few years of my working life, I didn't advertise the fact that I worked for the federal government.

[ChrisC]

Hmmm, I think there are far too many generalizations about the federal civilian workforce here. Let me add a few other dubious ones. I would expect many higher-graded employees to stay well beyond initial eligibity to retire because many of these managers might really like their jobs and the feeling of authority or power they might have over programs they're responsible for implementing. But there are some positions in the federal workforce that call for mandatory retirement at certain ages (I believe this is the case for law enforcement positions or air traffic controllers). There are some agencies where most employees there actually like their work (NRC is typically rated the best federal workplace) and other agencies where most employees are challenged to work there (the Postal Service), so I bet most retirement eligible employees stay a few years beyond initial eligibility at NRC and others at the Postal Service head for the retirement hills as soon as eligible.

I don't know whether the anecdotal evidence of CSRS employees not participating in TSP is suported by any real hard data. It's been my observation that higher-graded employees generally have higher contribution rates than lower graded-employees and I think this cuts across CSRS and FERS employees.

I think you will see a major run to the retirement hills in many agencies the next few years for the following generalized observations: (1) FERS employees will have all of their sick leave counted for retirement service credit purposes in January 2014 so many of these employees sitting on a year of sick leave creditable in 2014 will wait until then; (2) on top of the recently legislated freeze on pay, there's a strong likelihood that Congress and the Administration (who ever that might be in 2012 and beyond) will pass additional legislation that will pare down retirement and health benefits such as the "high-5" proposals on annuity pension/annuity calculations; (3) many retirement eligible employees are hanging on for the next "buy-out" they think is around the corner; and (4) the federal workforce has many older workers and many of the old folks are really at the KMA stage of their careers -- they are literally 3 bad days from retirement, which will probably coincide when new pension reforms like the "high-5" is legislated.

I think there will be a tsunami in the next few years.

[zinger1457]

Quote:

Originally Posted by Redbugdave Khan...Your EX will retire with about 80 to 82 percent of salary. Adding sick leave will push the retirement above 80 percent. That's pretty good...a 13...step 10...makes around $106,000.

Which means they are really getting paid about $20K/year to continue working. The additional years don't really increase the pension that much, these folks are usually at the highest GS step and salary increases have been frozen so the high-3 doesn't change much. I worked for the Army in a department of mostly engineers. Almost all the ones under CSRS would retire at 30 years and if they wanted to continue working come back as a contractor.

[Amethyst]

Quote:

Originally Posted by ChrisC Hmmm, I think there are far too many generalizations about the federal civilian workforce here.

As there would be about any large diverse group of 2 million (or thereabout) folks...

One thing to throw into the mix, if I may: Pension income is fully taxable. Years before joining this forum, I had the "bright" idea that due to our tax system, it would take less investment income, than pension income, to arrive at the same net income (please correct me if my terminology is off). In other words, a $50K pension plus $50K in investment income, would be taxed less than $100K in pension income.

Knowing that, I reckoned (not calculated; back then, I didn't yet know how) that if we could just increase our investment income, I would have to spend fewer years beyond retirement eligibility, trying to maximize pension income.

As we are all painfully aware, investments are not generating income as easily as they were a few years ago; so I will be staying on at work longer than I'd planned. Thank goodness that option exists for me.

Amethyst

[ChrisC]

Quote:

Originally Posted by Amethyst One thing to throw into the mix, if I may: Pension income is fully taxable.

Well, it's not fully taxable from both the Federal or State standpoint. The pension annuity you receive includes a return of your contributions, which has already been taxed before from your prior earnings. So, a portion of that annuity is not taxed for Federal and State income tax purposes. Also, many States exempt Federal pension annuities from State income taxes (Pennsylvania, for example) and several States also exempt TSP drawdowns (North Carolina, for example) or other Federal defined contribution plans from State income taxes, as well.

[Redbugdave]

Quote:

Originally Posted by ChrisC Hmmm, I think there are far too many generalizations about the federal civilian workforce here. Let me add a few other dubious ones. I would expect many higher-graded employees to stay well beyond initial eligibity to retire because many of these managers might really like their jobs and the feeling of authority or power they might have over programs they're responsible for implementing. But there are some positions in the federal workforce that call for mandatory retirement at certain ages (I believe this is the case for law enforcement positions or air traffic controllers). There are some agencies where most employees there actually like their work (NRC is typically rated the best federal workplace) and other agencies where most employees are challenged to work there (the Postal Service), so I bet most retirement eligible employees stay a few years beyond initial eligibility at NRC and others at the Postal Service head for the retirement hills as soon as eligible. I don't know whether the anecdotal evidence of CSRS employees not participating in TSP is suported by any real hard data. It's been my observation that higher-graded employees generally have higher contribution rates than lower graded-employees and I think this cuts across CSRS and FERS employees. I think you will see a major run to the retirement hills in many agencies the next few years for the following generalized observations: (1) FERS employees will have all of their sick leave counted for retirement service credit purposes in January 2014 so many of these employees sitting on a year of sick leave creditable in 2014 will wait until then; (2) on top of the recently legislated freeze on pay, there's a strong likelihood that Congress and the Administration (who ever that might be in 2012 and beyond) will pass additional legislation that will pare down retirement and health benefits such as the "high-5" proposals on annuity pension/annuity calculations; (3) many retirement eligible employees are hanging on for the next "buy-out" they think is around the corner; and (4) the federal workforce has many older workers and many of the old folks are really at the KMA stage of their careers -- they are literally 3 bad days from retirement, which will probably coincide when new pension reforms like the "high-5" is legislated. I think there will be a tsunami in the next few years.

Good points and great post Chris. I also think there will be a tidal wave of retirements in the coming 4 years or so. However, with the stock market down many FERS people may not afford to retire. Just in my workplace, probably 60 percent of the employees will be retired within 3 years...almost all of them are CSRS.

So far, there have been no changes to our pay or benefits...except no cola for another year. And that could be extended by Congress. That not only affects our pay but also our high 3. I think many new changes will come for the new employees, though.

[Bimmerbill]

I know a lot of folks who say they will retire if the pension calculation gets changed from High-3 to High-5. I don't know if they are at the max step on their pay scale or not. I would guess not, and that they are probably working their way up the steps.

[Amethyst]

True; and I know from earlier posts of yours, that you are aware of civil service benefits that I am not (since they do not apply to my career service).

In husband's case, and eventually mine, the portion of annuity that is a return of contributions is small. For us, its effect on calculations of pension vs. investment income is negligible.

Amethyst

Quote:

Originally Posted by ChrisC Well, it's not fully taxable from both the Federal or State standpoint. The pension annuity you receive includes a return of your contributions, which has already been taxed before from your prior earnings. So, a portion of that annuity is not taxed for Federal and State income tax purposes. Also, many States exempt Federal pension annuities from State income taxes (Pennsylvania, for example) and several States also exempt TSP drawdowns (North Carolina, for example) or other Federal defined contribution plans from State income taxes, as well.

[East Texas]

I retired from the private sector so I can't add anything to the federal retirement discussion. However, I might note, once I start collecting social security in 18 months the net (of taxes) of my pension plus social security is more than I took home when I w*rked. And retirement is so much better!

[Amethyst]

Not to nit-pick, but you know there is no "COLA" (cost of living allowance) with respect to salary, right? COLA applies to annuities. The yearly salary raise is just that - a pay raise.

I predict we'll end up contributing more to our pensions.

Amethyst

Quote:

Originally Posted by Redbugdave G So far, there have been no changes to our pay or benefits...except no cola for another year. And that could be extended by Congress.

[Amethyst]

Yay!

Amethyst

Quote:

Originally Posted by East Texas However, I might note, once I start collecting social security in 18 months the net (of taxes) of my pension plus social security is more than I took home when I w*rked. And retirement is so much better!