Taking a Buyout - FERS

[tsptalk]

Have any of you FERS folks taken an early out, or looked into one? My wife qualifies and is considering it but I noticed something that doesn't make sense.

They still offer the $25,000 (which seems low since it's been $25,000 since I can remember). In addition, we know FERS is a 3 tier system consisting of a percentage of your high-3 salary pension, your TSP, and social security.

In FERS, if you retire before age 62 they offer an SRS (special retirement supplemental) until your SS kicks in. According to the retirement experts at her work, this SRS is not available until you reach age 56 (she's 50). That sounded strange to me since they offer an early retirement, but only give you 2 of the 3 tiers?

Does this sound correct? Thanks!

 

[Frixxxx]

In FERS, if you retire before age 62 they offer an SRS (special retirement supplemental) until your SS kicks in. According to the retirement experts at her work, this SRS is not available until you reach age 56 (she's 50). That sounded strange to me since they offer an early retirement, but only give you 2 of the 3 tiers?

Does this sound correct? Thanks!

It's all about the MRA.

http://www.opm.gov/employ/vera/vera01.asp

A FERS Annuity Supplement is payable to an employee who has completed at least one calendar year of FERS service when he/she reaches Minimum Retirement Age (MRA). MRA is age 55 to 57, depending on date of birth. The annuity supplement is payable until eligibility for Social Security begins at age 62, subject to an earnings limitation.

 

[tsptalk]

Thanks. That seems to confirm it. I would have thought they'd waive that if they were trying to get people to retire early. I wonder if anyone has actually taken an offer like this (2/3 of their retirement). My guess is it would have to be someone who plans to keep working somewhere else.

 

[Boghie]

Tom,

Most folks think we get a pension after twenty years. Those days are long gone. I think folks conflate government civilian employees with military personnel.

Before making this deal I would check (actually ensure) that your wife will get her FERS pension at retirement age (deferred). $25K seems a bad deal if she is on the hook for a lifetime baseline benefit. If her pension will still be in force (maybe a bit reduced) and all they want is to reduce current salary structure it might be a great deal.

Anyway, maybe you could wait them out. They might sweaten the deal. Kinda like patient investing

 

[Frixxxx]

Thanks. That seems to confirm it. I would have thought they'd waive that if they were trying to get people to retire early. I wonder if anyone has actually taken an offer like this (2/3 of their retirement). My guess is it would have to be someone who plans to keep working somewhere else.

In Alabama, as in some other states, I knew some people that would take the VERA and then rehire with the offset. Laws forbid state taxes on federal retirement income. Other than that, unless you know you can make substantially above your current salary in the outside world and be somewhat protected, it wouldn't make sense unless you were absolutely ready to call it quits.

 

[alevin]

Boghie has it right, it's all about the MRA. Other thing to think about, Tom, is that the most recent budget wrangling included idea of discontinuing FERS supplement after 2013, even for FERS retirees meeting MRA. that idea isn't going to go away, I don't think.

One last thought, Involuntary early retirements (RIF) allows retirement at 20 years and 50 for us FERS types. I met that criterion 4 years ago. my hole card. still got 2 years to go before meet MRA for Voluntary early retirement, even if I was interested, which I'm not particularly.

 

[tsptalk]

Thanks for the info. She's thinking won't take the deal, but I was surprised about the lack of SRS. That kind of seals the deal.

 

[Show-me]

SRS won't be there if the House gets their bill passed. HR3630 The Senate did the right thing by leaving DC.

 

[Boghie]

Tom,

This Federal Times commentary is also important.

Basically, it appears that those who take a deferred retirement cannot re-enroll in the FEHB (Health Benefits). I didn't know that...