Federal Retirement ?

[intheaircop2]

This is driving me nuts! What does a 6c covered postion get as far as what kind of money am I going to get when I retire? I have been all over the internet trying to find out. I hear we only get 1.7% for every year untill 20 years. So that tells me that I am only going to get 34% of my pay when I depart? What the hell is that. The police department I was in was paying 3% for every year. Please tell me that this is not true!

My close friend will be getting close to $80,000 a year when he leaves the sherrifs department next year. Yes he had to work 25 years but do the math. He gets $80,000 and I get $29,000 a year. What the hell! Please someone help me so I can decide if I should go back to a local police department in my state.

[Piggy]

TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES

PART III--EMPLOYEES

Subpart G--Insurance and Annuities

CHAPTER 83--RETIREMENT

SUBCHAPTER III--CIVIL SERVICE RETIREMENT

Sec. 8336. Immediate retirement

(a) An employee who is separated from the service after becoming 55
years of age and completing 30 years of service is entitled to an
annuity.
(b) An employee who is separated from the service after becoming 60
years of age and completing 20 years of service is entitled to an
annuity.
(c)(1) An employee who is separated from the service after becoming
50 years of age and completing 20 years of service as a law enforcement
officer, firefighter, or nuclear materials courier, or any combination
of such service totaling at least 20 years, is entitled to an annuity.

6(c) applies to federal law enforcement officers only. The definition of an LEO is rather rigorous and excludes many uniformed police officer positions.

FERS LEO employees may retire on an immediate annuity at Age 50 with 20 years of covered 6(c) service or at any age with 25 years of covered service.

Basic pension is 1.7% for the first 20 years, and an additional 1%/year thereafter. Additional supplements will be paid for estimated social security benefits at age 62 based upon your FERS covered service. The percentage is based upon your high three years of service base pay, not necessarily your last three years.

[Piggy]

Get with your HR people and they can estimate your retirment. Here's another .pdf file if you're interested.


http://www.opm.gov/fers_election/facts/ri83-14.htm

[Nole795]

This is driving me nuts! What does a 6c covered postion get as far as what kind of money am I going to get when I retire? I have been all over the internet trying to find out. I hear we only get 1.7% for every year untill 20 years. So that tells me that I am only going to get 34% of my pay when I depart? What the hell is that. The police department I was in was paying 3% for every year. Please tell me that this is not true!

My close friend will be getting close to $80,000 a year when he leaves the sherrifs department next year. Yes he had to work 25 years but do the math. He gets $80,000 and I get $29,000 a year. What the hell! Please someone help me so I can decide if I should go back to a local police department in my state.

The meat of your FRS Retirement is based more on you TSP (Thrift Savings Plan) contribution then your percentage. It is true, you only get 1.7% for the first 20 years, then every year after is only 1%. For me, I was hired when I was 30, so the most I can make on my FRS is 41% (34% for the first 20, and 7 for the last 7 years) of my annual salary. That is why you need to max out your TSP contributions while your young and new. I maxed it at 15% The govt. will match up to 5% if you put in more then 6%.

This plan is not as secure as the old CRS system that was before the FRS. I have agents who work with me that are on CRS who are laughing all the way to the bank, making 80% of their salary. The FRS will be based more on where you invest your money into. I use to do my own investments through the website:

http://tsp.gov/

But now the "G" offers the "L" fund, where your money is distributed among the different funds. I highly recommend this if your not knowledgeable on retirement funds.

The lesson in this post, is to put as much of your contributions into the TSP. There is a calculator on the website and you can see how much your money may rise with your contributions. As long as you put in the max allowed, let it sit, and the market is good, you may be living much better then your counterparts.

[tomahawk134]

intheaircop2:

Piggy is correct ... sit down with your HR people ... calculate your high three years of federal service +your TSP contirbutions +estimated Social Security contributions ... Nole795 also gave a good post ...

If I might suggest, attend a retirement seminar through your agency ... I have attend two of theminthe last three years ... they give you the tools to forecast your retirment picture ...

[Ironhead]

As I understand the system, it is 1.7% of the average of your highest three years of pay times 20. Example:

You end up making 75,000 a year in 20 years. Your retirement pay is 1.7% of 75,000 (1275.00) times 20 years. Or a total of 25,500 per year. For every year after 20 years there is an extra percent added in your retirement.

HR can tell you what you would make if you receive no more pay increases, but it will be impossible for them to predict how much you will make with any accuracy because it is so far away.

[chewy]

I know for CBP we don't get a real great retirement but the TSP will put me over the top. with TSP and my CBP retirement pension thing I will be making about $75000 a year +... this is an estimate of course as I have waaayyyy too long to go to acurately figure!

[intheaircop2]

How do you firgure you are going to make $75,000 a year? I just did the whole thing on the retirement calculator and her is my break down.

My current salary as a I band FAM is $81,000
20 years is 34% = $27,540 yearly

I pay only 5% in TSP ($310 a month and they match it($620 total))
After 20 years $316,192 in TSP
TSP will pay out $1332 a month or $15,984 yearly

Social Security (62 years of age) pays me $1,447 a month or $17,365

SO that is a grand total at the age of 62 of $60,889

I do not think that is enough for me. My cousin will make about $80,000 a year from her police department and that does not include her 401K or social security. I just called her and she said that she wil be getting close to $120,000 a year when she is 62. I think I will give the FEDS the finger and go back to BOCA RATON police department.

[ExUSPP]

How do you firgure you are going to make $75,000 a year? I just did the whole thing on the retirement calculator and her is my break down.

My current salary as a I band FAM is $81,000
20 years is 34% = $27,540 yearly

I pay only 5% in TSP ($310 a month and they match it($620 total))
After 20 years $316,192 in TSP
TSP will pay out $1332 a month or $15,984 yearly

Social Security (62 years of age) pays me $1,447 a month or $17,365

SO that is a grand total at the age of 62 of $60,889

I do not think that is enough for me. My cousin will make about $80,000 a year from her police department and that does not include her 401K or social security. I just called her and she said that she wil be getting close to $120,000 a year when she is 62. I think I will give the FEDS the finger and go back to BOCA RATON police department.

I guess you should have asked about the retirement before taking the job.

[intheaircop2]

You are 100 percent correct. But at the time when I was at the assesment center in Atlantic City they were singing to me about how cool this job was. So I believed avry word they told me and took the job. Oh well, I guess you learn form your misstakes.

[Swat1]

How do you firgure you are going to make $75,000 a year? I just did the whole thing on the retirement calculator and her is my break down.

My current salary as a I band FAM is $81,000
20 years is 34% = $27,540 yearly

I pay only 5% in TSP ($310 a month and they match it($620 total))
After 20 years $316,192 in TSP
TSP will pay out $1332 a month or $15,984 yearly

Social Security (62 years of age) pays me $1,447 a month or $17,365

SO that is a grand total at the age of 62 of $60,889

I do not think that is enough for me. My cousin will make about $80,000 a year from her police department and that does not include her 401K or social security. I just called her and she said that she wil be getting close to $120,000 a year when she is 62. I think I will give the FEDS the finger and go back to BOCA RATON police department.

Dude, if you only have $316,192 in TSP in 20 years you definately did something wrong. You are obviously not considering the interest your TSP account accrues. Looks like you just added the $620 a month number for 20 years. You will be earning approximately 9 - 11% on the total amount in the account per year. You should also be increasing your contribution each year until you are comfortable with your contribution or contributing to some other type of retirement account like an IRA or Roth IRA.

I currently only contribute 9% (I up the percent one point a year in January when we get the COLA raise so the bump is transparent to me). I figure at the low end percentage of interest earned over the 20 years I will have just over 1 Million in my TSP account. So if your young in the G even at 5% you should have double what you predicted.

I figure with everything I will be pulling down about $90,000 a year or around $10,000 - $15,000 less than my pre-retirement pay. BUT, you have to remember several things, you will no longer have all of the deductions that you do from your current pay. So instead of seeing all the deductions that you see now, you will be receiving that money instead.

With some planning on your part, there is no reason whatsoever that you cannot do very well for your retirement. My advice to you is go see a financial planner who is familiar with the Government pay schedules, retirement system and TSP.

Swat1*

[chewy]

Under FERS you take the average of your 3 highest paid years (for our guys it averages about $90-$100K depending on how much OT you work. Most of our officers/inspectors when they get to the 11 step 10 level or whatever is the highest pay step before retirement will max out on overtime for three years straight so that the high three will be high. 11 step 10 in Detroit makes about $73K then Overtime cap is $35K so, not counting night differential and holiday/weekends etc they would make over $100K if they maxed out.)
Averaging the high three at $90,000 times 1% =$900
$900 times 30(years of service)= $27,000 annually from FERS
Then TSP
My TSP is estimated to be $942,187.00 when I get to retirement age. This is assuming my pay stays the same, which obviously it will go up every year so that figure will increase. This is with me currently putting in 15%. When the % allowable changes I always max it out so that will change too.
With the TSP estimated monthly annuities are about $5,600 at age 57 and $7,716 if I wait till 60. As I despise my job I imagine I'll leave at 57 so we'll use that number. So $5,600/month times 12months/year = $67,200/year.
$67,200TSP + $27,000FERS = $94,200 per year.

Obviously the estimates are just that, estimates. The market has a ton to do with the TSP and God knows what the government will do with our retirement system when the bill for Iraq comes due but all in all being that my wife and I will both retire from CBP with our FERS and the maximum allowable putting into TSP plus the fact that we are never going to have kids (therefore no college, weddings, cars, jail bail money etc) I'm confident we will be doing well.


Then of course I could have figured wrong too. I do know at least four people however that did retire recently on FERS that are getting well over $80K a year so I think I figured right. There are a bunch that were on CSRS but that was a whole different thing and I'm not sure how that works but I know they are doing well too. Despite how I feel about my job I do like the pay, especially the double time overtime, that adds up in a hurry.

[chewy]

I also should add that it would be VERY good for you if you max'ed out your TSP contributions. I know several newer Officers I work with that say they can't afford it but realistically it's much better for you to just do it and learn to live without that little extra every month. It really doesn't come to a lot each pay but when you look at the long haul it makes a HUGE HUGE HUGE difference twenty to thirty years down the road. It is soooo important to put as much as you can into TSP and make it work out for you in the end.

[DeltaV]

intheaircop,

Using a compound interest calculator, I came up with these numbers. I'm assuming your current TSP balance is zero, which I'm sure it is not.

You will have $367,627 in your TSP after 20 years of contributing $7,440 per year into the plan. This is counting on a 8% annual return on your investment. Now, this number is far from accurate. As your salary goes up, you'll be contributing more than $7,440 to your TSP. This will make your account balance grow. If you're at the top pay step and will just be getting COLA raises, that number should be more accurate, as the balance will just keep up with inflation.

Your yearly payouts are also way off. I don't know how old you are or what age you plan to retire. That said, if you retire at age 55, you'll probably want your retirement money to last at least 20 years. That means that your yearly payout will need to be $28,094. If you want your money to last 30 years, your yearly payout will need to be $22,775. This is accounting for a growth rate of only 5% of the money in your TSP during this time, as you will want to reallocate your assets to more conservative investments during your retirement.

If you doubled your contribution, you'll have $735,254 in your TSP when you retire. Again, this isn't adjusting for inflation and salary increases. Your annual payout then will be $56,189 over 20 years or $45,551 over 30 years. Again, this is betting on a 5% annual return of the account once you reach retirement.

It's just not possible to retire comfortably if you only will contribute 5% of your salary to the TSP. That's not being very realistic, IMO. But, you need to sit down and look at what your expenses will be during retirement. Most experts will tell you that you'll need anywhere between 70-80% of your pre-retirement income in order to maintain the same lifestyle. You'll need more than that if you plan on traveling all over the place and spending money.

Just as an aside, I would not bet on average annualized returns of 9-11% over the long term. Once the baby boomers start retiring in droves and taking their money out of the stock market, the returns that we've been seeing over the past decade or so are supposed to start averaging out. For retirement planning purposes, it's good to use 8% as a conservative estimate. I also would not bet on receiving Social Security at age 62. With the state of the Social Security program, what (if any) payout and when (if ever) you will begin to receive that payout is quite uncertain.

I guess minoring in accounting and finance was good for something after all. ;)

[Switchback]

You have to ut more than 5% into your TSP! I put in 11%, gov matches 5%, If I decide to stay until I am 57, I will likely make more retired than working! Even if I get out when I am 50, I will still be right about the same as if I were working. That does not sound bad to me at all.

The key is that you need to put a little effort in there no and actually contribute to your TSP.