FERS retirement at 62?

[DrDetroit]

I've run the math too. for me it's worth it to stay in til 62, bc I can stack another almost 75K into my tsp in those 3 years, not to mention deferring taxes on the same.

This is a pretty good point. The difference in retiring at 57 and 62 in today's money is $120k in TSP contributions, and that certainly isn't an opportunity to dismiss lightly. It all depends on a myriad of variables for each individual, but this one would be very high on my reasons to stay past 57.

Additionally, if you qualify for MRA+30 for FERS retirement <62 and qualified with significant Active-Duty Military time you bought back, well, the "supplement" equation Does Not allow those military years to count (yes, even though we paid SS out of our Military Paychecks... its part of the law with Congress created/enacted FERS). So I'm MRA eligible at 34-years (with 9.3 years of that from US Army time I bought back), so I'd take about a 30% cut to my SS-Supplement payments till age 62 (compounded of course).

And this is why I asked if there was anything I was missing, I did not know this. Pretty huge for me since I bought back 12 years. I did already get an estimate however from my HR department and I was satisfied with the amount, although I have never seriously crunched those numbers since I am so far away from retirement (13 years).

To get a rough estimate of what your SRS would be, use the following formula:

Take your Social Security benefit estimate available from the Social Security Administration, divide it by 40, and multiply the product by your total years of actual FERS service rounded to the nearest whole number.
For example, if your Social Security benefit at age 62 is estimated to be $6,000 and you have 30 years of service, you’d plug those numbers into the following formula to get your answer:
Social Security benefit at age 62 x 30 ÷ 40 or, in this example,
$6,000 x 30 ÷ 40 = $4,500
The amount of your SRS is set on the day you retire. It isn’t increased by cost-of-living adjustments, regardless of how long you receive it, unless you are a special category employee, such as a law enforcement officer or firefighter. Their SRSs are increased by COLAs.

 

[Maricar19]

The way I Look at supplement vs 62 yrs:
Example:
supplement at 57=$1200/month X 12 months X 5 years=$72,000
If one decides to stay until 62, you get an extra 10% plus salary increases which would be between $300-$500 depending on your salary base.
@62 = $500 extra every month X12 months X 12 years =$72,000
You need to be alive past 74 years old (62+12) to break even vs what you would have received from 57-62 years old.

However, one must consider additional info:
Supplement- you can work part time as additional income for under the annual max - $15, 720
15720 X 5yrs = $78600
@62 - you get extra 5% a year (TSP gov't matching)from 57-62 years plus your contributions.
$18500X5=$92,500 plus 5% matching.

so, retiring is really dependent on your current financial situation, and how much you enjoy your job, coworkers and mgmt.

supplement is calculated by what your SS would be at 62 e,g. $2500
If you worked 30 years(less any military buyback), you divide 30/40=75%.
$2500 X.75 =$1875.00, your supplement

if your 30 years include 10 years MBB = 30-10=20; 20/40=.50
$2500X.50= $1250.00

 

[alevin]

now you got me wondering about the temporary time I bought back, not quite half a year's worth, but I didn't have a clue it wouldn't count for supplement calculations. I didn't buy back the time for that, more to get me to 30yrs a little faster, an give me an edge over someone in another position if it came to a RIF. which it might yet before I get to 62. We're hardpressed financially. they'll be counting the days til I retire, wishing I'd go out sooner so they can hurry up and combine my vacated position with someone else's halftime position into a single position. We all know that will be the plan when I leave.

 

[Maricar19]

Are you talking about Military Buyback? If you are talking about federal work, it is included in your supplement.
Only MBB an non fed time are excluded

now you got me wondering about the temporary time I bought back, not quite half a year's worth, but I didn't have a clue it wouldn't count for supplement calculations. I didn't buy back the time for that, more to get me to 30yrs a little faster, an give me an edge over someone in another position if it came to a RIF. which it might yet before I get to 62. We're hardpressed financially. they'll be counting the days til I retire, wishing I'd go out sooner so they can hurry up and combine my vacated position with someone else's halftime position into a single position. We all know that will be the plan when I leave.

 

[RazorCat]

now you got me wondering about the temporary time I bought back, not quite half a year's worth, but I didn't have a clue it wouldn't count for supplement calculations. I didn't buy back the time for that, more to get me to 30yrs a little faster, an give me an edge over someone in another position if it came to a RIF. which it might yet before I get to 62. We're hardpressed financially. they'll be counting the days til I retire, wishing I'd go out sooner so they can hurry up and combine my vacated position with someone else's halftime position into a single position. We all know that will be the plan when I leave.

I bought back about 5 months of temp. appointment time before I retired. It's included in all my retirement comps. Buyback costs were almost nothing. Interest on the other hand was ridiculous. The usual HRM crap when I asked why someone didn't explain buying back temp. time shortly after I was hired on permanently. "That's not really our job". Really? What is? Anyway, I estimated it would take me just over 5 years to recoup it. Worth it in the long run.

 

[alevin]

I was talking about federal civil service temporary time I bought back. Pre-1984 era.

 

[jimijr]

60 or 62? You'll have to answer this question five years prior, in order to do what you gotta do in either case. I went at 60.

I estimated a 20+% increase in my pension if I stayed to 62 but that didn't sway me (10% from the 1.1, 5% from better hi-3, 7.5% from length of service). For me it hinged on the value of my TSP. When it hit the target I pulled the rip cord. Five years out I cleaned up my commercial debt and had much work done on my teeth, bought new eyeglasses, dialed down my allocations (65G, 35CSI). Three years out I got my annual leave together so as to carry 240 into my final year, and maintaining that allocation enabled me to survive The Crash through bi-weekly rebalancing. Gradually I went more heavily into G-fund (85%) in my final year, took zero leave and worked everybody else's leave instead; final pay period I worked three holidays and twelve hours overtime, best paycheck I ever got. :smile:

I went on Jan 1, 2011 so all that $$ plus $20k a/l went on next year's 1040. It got me through the 9 months it took OPM to process my paperwork and give me all my back-pay. The Supplement was about half my eventual SS due to my work history, got a nice raise at 62 and now SS approximately equals my (net) pension. I transferred my TSP to a pre-existing IRA at RBC Wealth Management out of St Paul MN where I lived when I opened the account in the 80's. It pays my mortgage and incidental expenses, its own expenses and the taxes. After 5 years and over $100,000 withdrawn it has held its value so I'm very happy. I've had the same account executive for as long as I can remember, just call and tell him how much I need, he does the rest.

If you can swing it, go at 60. I had a hi-3 just this side of $100k which helped a lot all 'round, both ends. You have to plan for it, though and I needed some luck which came under the name of "March 14th, 2009", the day the market rebounded.

 

[flalaw97]

I went on Jan 1, 2011 so all that $$ plus $20k a/l went on next year's 1040.

If you retire on December 30, 2020 does the annual leave payout count on 2020 taxes or 2021? I am assuming you won't actually recieve the $ for a/l until 2021. correct?

 

[papahotel66]

It would be 2021 income. My understanding is you receive the leave payout just like a paycheck with the normal withholding. If you don't want the taxes withheld at the higher rate go into Employee Express and set your exemptions to 99. Congratulations if you are going his year! Trying to decide what to do myself...

 

[flalaw97]

Thanks for the info. Not going this year (absent some major windfall) but seriously considering going in 2023 when I turn 57 (MRA is 56 & 4 months). I had read that December is the best time to retire because if you wait until Jan 1, you won't get any pension or supplement in January (because you only get full months) but I hadn't seen the tax comment before. So still seems like December (to max out annual before use or lose) is best. Just finished buying my 6.5 years of Navy time so 57 will be 31 years.

 

[papahotel66]

We are the same age so I am trying to decide what to do as well. I am ATC so forced out June 2022 at 56. If I can find something to do until October 2022 off the control boards I can get the vision 100 retirement which ups pension in a huge way. Either need to go ahead and bail now or find something else to get me to Oct. 2022. I still enjoy work so I will probably stay around. Good luck with the last few years!

 

[flalaw97]

I know nothing about the vision 100 and ATC provisions. Do you have to remain in FAA? I keep seeing Aviation safety inspector jobs popping up in my USAJobs feed - not sure if your ATC experience would lend itself to that type of job. It is always something. I enjoy my job but would love to be able to do something different on my own schedule. I am not going to chase the numbers (1.1%) like some of my colleagues - it seems like more years that I won't have to enjoy it. Good luck to you also.