FERs Retirees, anyone?

[nasa1974]

so waiting for the end of January after the COLA really doesn't help much? I know some who have done this.
seams like its better to acquire as much annual leave as possible and leave at the end of December. Sound right?
thanks

Valkyrie,

Retiring at the end of January to get your COLA only helps for January and not your high 3.

I always found Tammy Flanagan's articles helpful. Here is a link to her article about the best days of the month to retire for CSRS and FERS. There is also a download for the best dates to retire for 2015.
Best Dates to Retire 2015 - Retirement Planning - Pay & Benefits - GovExec.com

 

[Skorcher]

so waiting for the end of January after the COLA really doesn't help much? I know some who have done this.
seams like its better to acquire as much annual leave as possible and leave at the end of December. Sound right?
thanks

The only reason to retire at end of January is
1- Your MRA is in January OR
2- Your annual leave is under 240 hrs at year end and it does not matter to you.

 

[clester]

I retired at the end of May and incurred a high tax bracket. I would say retire on December

 

[Maricar19]

Valkyrie,
I tend to agree with Clester, SLight, NASA, Skorcher, and Cactus.
Depending on when you hit your MRA, FERs pensioners are almost always advised to retire at the end of the year , some say at the end of the month.

1. Accrued Annual Leave - this will tide you over until you get the full FERs annuity.From reading other TSPTalkers, the first few months is not a full pension.
2. Retiring sometime in the month, you don't get next month's pension e.g.,retire in January 7, you don't get your 1st annuity until March. Can somebody confirm this, please?
3.not familiar with Cola,but from what I understand, you don't get Cola until 62.
4. Tax bracket

I know others who wait in January for the pay increase. Their reasoning, their annual leave will have more $value per hour.

 

[Maricar19]

If I can ever find that story I'll post it here. The moral of the story is: if you are within 5 years of retirement don't open a Roth TSP.

That is exactly my dilemma. My spouse and I had more than 5 years since we started contributing to Roth. We originally intended to retire at 60, but something happened and we had to advance it to 57,end of next year. So the 59 1/2 rule will impact our planned - full withdrawal (1 lump sum and series of monthly payments) Now, we will have 10% penalty because of prop. distribution.

But I read somewhere,(which of course, I can't find anymore), that We can have our Roth ( only) be rolled over to an IRA, that way, we can avoid the 10% penalty. Now, what I am not sure of is the treatment of the roll over, will that be considered my one time lump sum withdrawal?

Well, I'll have to consult a financial advisor...but Of course, I will procrastinate until june next year. LOL..

 

[Maricar19]

Maricar19, I ran into this on Consuelo Mack WealthTrack: Consuelo Mack WEALTHTRACK: The right track to your financial health. : WealthTrack which I watch on PBS. More of her guests started espousing this after the 2008 crash. The context is people who were already retired with the standard 60/40 bond/stock split. With the lowering interest rates on their fixed income investments, these retirees weren't receiving enough income to live on. They were being encouraged to take on more risk to make up the difference while keeping 5 years of living expenses in safety.

The last time I saw one of her guests talking about this was last fall, but unless you subscribe to her service you can only get transcripts from the last couple of shows. Here is a transcript I found still available of when Mary Beth Franklin was on: Fidelity Funds | Stock Discussion Forums

Here are some links I found online talking about these buckets of money as they call them.

How Much Stock Should You Own in Retirement? - WSJ

Reduce Stock Exposure in Retirement, or Gradually Increase It?

Increase Stock Allocations In Retirement? Maybe, Maybe Not

Cactus, excellent reading on the five year cushion. I think my plan is almost similar with that...however, I just have an arbitrary amount..not based on 5 years. Using 5 years worth of expenses as the yardstick for my one time lump sum payment makes a lot of sense than my original plan of withdrawing a dollar amount out of the blue.

Thanks, Cactus. I hope a lot of Tsptalkers will get a chance to read it..

 

[alevin]

WW,

That's a great question, that I haven't seen asked before !!!

I've often thought...IF your high-3 comes at the end of your career (mine didn't !), one might consider taking a lateral into a higher locality pay area for 3 years, if your Agency allows it...bite the bullet for 3 years, then retire back to where you WANT to live !!!

Never crunched the numbers to see if that would even make sense, with PCS expenses, cost of living, etc etc...but it's an interesting thought !!! :smile: Talk about gaming the system !!! Stoplight...

I've seen quite a few people in my agency do the high-3 back in DC just before retiring back to wherever they really want to retire. Or they may at least do last few years in a regional office to get high-3. Not for me. I grew up in DC area, watched my dad do that daily commute from the burbs. ugh. Watched the traffic jams on the interstate on Sunday evenings for years as people came back from the mountains to their homes closer in to DC. Inner beltway apartment living not for me either. Ugh. Kudoes to those who are willing to do that. They have more fortitude than I.

 

[Maricar19]

Maricar19, I ran into this on Consuelo Mack WealthTrack: Consuelo Mack WEALTHTRACK: The right track to your financial health. : WealthTrack which I watch on PBS. More of her guests started espousing this after the 2008 crash. The context is people who were already retired with the standard 60/40 bond/stock split. With the lowering interest rates on their fixed income investments, these retirees weren't receiving enough income to live on. They were being encouraged to take on more risk to make up the difference while keeping 5 years of living expenses in safety.

The last time I saw one of her guests talking about this was last fall, but unless you subscribe to her service you can only get transcripts from the last couple of shows. Here is a transcript I found still available of when Mary Beth Franklin was on: Fidelity Funds | Stock Discussion Forums

Here are some links I found online talking about these buckets of money as they call them.

How Much Stock Should You Own in Retirement? - WSJ

Reduce Stock Exposure in Retirement, or Gradually Increase It?

Increase Stock Allocations In Retirement? Maybe, Maybe Not

I just wanted to re-post this because it is a great read...

 

[Maricar19]

SS is based on your highest 35 years of income. If you retire on your pension and TSP only, and put off taking your SS till your FRA, the 'basis' will still be on the same highest 35 yrs (since the 62 yr old said they would not work between 62 and FRA). However, you will not be docked 27% for taking SS at 62. You will get the full retirement amt, but still based on the same highest 35 yrs. So yes, you would get 27% more (or whatever the actual deduction it would have been), but it will still have the same 'high 35 :

Hi USC, you might know the answer to my my spouse's dilemma.
Spouse is 57 y.o., at MRA, 30 years work. Plans to retire next year at 58 with 31 yrs. of service
As of today, SS estimated benefit says, if you continue to work until 62, you will get $1628.

I guess our question is if spouse stops working upon retirement at 58, spouse will not get $1628, but will probably be lower?
I saw a formula before where it showed SS still computes at 40, but adds zero, "0" for every non work years.

Will appreciate your input.

 

[Kaufmanrider]

Hi USC, you might know the answer to my my spouse's dilemma.
Spouse is 57 y.o., at MRA, 30 years work. Plans to retire next year at 58 with 31 yrs. of service
As of today, SS estimated benefit says, if you continue to work until 62, you will get $1628.

I guess our question is if spouse stops working upon retirement at 58, spouse will not get $1628, but will probably be lower?
I saw a formula before where it showed SS still computes at 40, but adds zero, "0" for every non work years.

Will appreciate your input.

SS uses 35 years of earnings. As his last few years would probably be higher than his early years of employment I'd expect he'd get slightly less.

Here is an IRS form with worksheet. Not sure if it will help. http://www.ssa.gov/pubs/EN-05-10070.pdf

 

[Maricar19]

SS uses 35 years of earnings. As his last few years would probably be higher than his early years of employment I'd expect he'd get slightly less.

Here is an IRS form with worksheet. Not sure if it will help. http://www.ssa.gov/pubs/EN-05-10070.pdf

Thanks Kaufmanrider! So it looks like he'll get zero earnings from the time he retires, age 58 ( 31years) until he reaches age 62, (35years).

 

[DreamboatAnnie]

For those folks talking about our high 3 years, remember those aren't actual calendar or even fiscal years. The FERS pension is calculated on our highest 36 consecutive months.

Thanks Cactus.....I'd never heard that so it's good to know. So keeping each W-2, or each year's Leave and Earnings statement that shows your Year-to-date totals is not good enough if you want to ensure HR gets it right. Gotta keeps copy of each LES.

That's especially true if you have a prior period when you earned higher pay...like if you lived in area with higher locality pay.

 

[DreamboatAnnie]

This is a link to site that has tips on helping you find a "Private" pension plan that you may have "vested" in many years ago during your early work years.

The Pension Benefit Guarantee Corporation (PBGC) helps find lost pensions, and has some funds it takes over from terminated /bankrupt company pensions that had defined benefit plans, etc. This is a Federal corporation established under the ERISA law passed in 1974 to protect pension plans. It tracks current pension plans as well.

http://www.pbgc.gov/documents/finding-a-lost-pension.pdf

I worked for Kroger back in the early 1980s while going to school. I think I vested in at 5 years just before I came to work civil service. So now I will be looking into that, and contacting the union as well. Quick searches on Internet show there have been lots of consolidations of Kroger's various plans over the years. It might not end up being much but every bit helps!!

They have a link for unclaimed pensions, but if your name is not listed this does not mean you do not have a pension due to you. Their list is not complete. They also have search links to find the name of the plan and POC.

Here is link to their home page.

Pension Benefit Guaranty Corp - PBGC Protects America's Pensions

 

[Kaufmanrider]

][/QUOTE]

Thanks Kaufmanrider! So it looks like he'll get zero earnings from the time he retires, age 58 ( 31years) until he reaches age 62, (35years).[/QUOTE]

Did he work prior to starting Federal Service, serve in the military, have part time work in college or high school etc ? Those years will count. Something, however small, is better than 0.

 

[uscfanhawaii]

]

Thanks Kaufmanrider! So it looks like he'll get zero earnings from the time he retires, age 58 ( 31years) until he reaches age 62, (35years).[/QUOTE]

Did he work prior to starting Federal Service, serve in the military, have part time work in college or high school etc ? Those years will count. Something, however small, is better than 0.[/QUOTE]

Maricar,
Yes, but don't get confused. Your example, Retire at 58 (completely stop working). Your 'top 35 years' are in the books. 0's will be put in for SS earnings for years 59-62. If you look closely at the form that Kaufmanrider linked, you will see that the 'top 35 years' do not need to be consecutive. Your Zero years will only be added in if you don't have a total of 35 other years with at least SOME income. Also note that the form 'indexes' every year of earnings, based on inflation, so comparing all the top 35 years will be done on a Current Equivalent Dollar basis. So while your latest years are usually your highest years, that may not be so when you are indexing the years. Especially if you are a recent Federal worker....we had a 0% increase followed by 2 years of 1% increases while inflation marched along at, what, 2% per year? Earlier years could be somewhat higher.

Then, if you wait till FRA instead of starting at 62, again the 35 top years are the same, but now you don't get the ~27% deduction for starting withdrawals at 62. Furthermore, if you wait till 70 years old, the 35 top years are still the same, but you get an additional ~ 30% added on to what you got at FRA (not sure of the exact %'s off the top of my head).

I am not a SS expert by any means, but I am looking ahead to retiring in a couple of years, so I have been looking at the same scenarios that you are looking at.

Good Luck!

 

[Cactus]

Thanks Cactus.....I'd never heard that so it's good to know. So keeping each W-2, or each year's Leave and Earnings statement that shows your Year-to-date totals is not good enough if you want to ensure HR gets it right. Gotta keeps copy of each LES.

That's especially true if you have a prior period when you earned higher pay...like if you lived in area with higher locality pay.

Here is an article showing you how to compute your highest 36 months: Calculating Your “High-Three” Average Salary : FedSmith.com

It looks a little complicated so if you'd rather use an on line calculator give this one a try: FedBens.us: Fast, accurate retirement planning. It should be the 3rd one in the menu.

Another point to consider is that even though your highest 36 months need to be consecutive, the service does not need to be uninterrupted. You can have a break in service.

 

[Maricar19]

Kaufmander and uscfanhawaii,

Thank you both for taking time answering my q's.
Fact: Spouse has only total of 31 work years (1 year civilian, 8 years military, 22 fed years by 2016).
We used the worksheet, it looks like it will be reduced by less than $100 for not working between ages 58-62.
Depending on TSP, might wait till FRA..

 

[Cactus]

Here is an informational article on phased retirement for anyone considering that: Phased Retirement: Just the Facts : FedSmith.com

 

[Skorcher]

I thought FERS SS is based only on the top 35 years wages earned in federal service (including military if you're combining those years). I will have 33 years of fed service at MRA. My five years civilian wages before federal won't count at all for FERS SS, but they will count for computing regular SS at age 62 or later.

 

[uscfanhawaii]

I thought FERS SS is based only on the top 35 years wages earned in federal service (including military if you're combining those years). I will have 33 years of fed service at MRA. My five years civilian wages before federal won't count at all for FERS SS, but they will count for computing regular SS at age 62 or later.

whenever talking FERS, be sure to use correct terminology, or you will confuse yourself and others. There is no such thing as FERS SS. There is a thing called FERS Supplement. Yes, the FERS Supplement is only based on FERS wages. Rules governing the Supplement can be found in the FERS literature.

Regular Retirement is at your FRA, for most of us either 66 or 67. Early SS is anywhere from 62 up to the FRA, and it is a sliding % scale. Delayed SS starts from FRA to 70, and is also a sliding % scale.

I am pretty sure Maricar has been talking all along about early SS at age 62, and that indeed does count ALL previous SS wages from any source.

checkout this SS link: Early or Late Retirement

Hope this helps! ......and happy retirements all!! :alcoholic: