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Post by HallmarkFan on Feb 3, 2015 9:36:19 GMT -5
Special thanks to gary, Pixie, saaao, finch, southerner, and recalcitrantone for the thread re: locality pay, the ALJ pay system, and the FERS retirement system -- aljdiscussion.proboards.com/thread/3253/salary-question-locality-rate-increaseSo let's assume we get the job, work 15 years, and retire after the age of 62. Is my math right, and your benefits are only $25,305/yr? (168,700 x .01 = 1687, x 15yrs = 25,305) Am I missing something? That number seems low to me.
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Post by Sea&Ski on Feb 3, 2015 9:41:18 GMT -5
The number seems low because you are required to pay into social security and are also expected to save money in your TSP. Thank Ronald Reagan and Tip O'Neill for that fix.
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Post by sealaw90 on Feb 3, 2015 10:10:31 GMT -5
Right, that's why you also might want to stay until 67 and get your 20 years in. Max out your TSP contribution too.
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Post by Pixie on Feb 3, 2015 10:20:38 GMT -5
I believe if you should stay 20 years, rather than the 15, which is your present model, the percentage would be 1.1% at age 62. A little better bump, but not much.
Hopefully, you would have been putting the maximum into the Government's 401(k) (known as the TSP) for 20 years, and getting the maximum agency contribution of $5,000 or so per year. Invested in the C and S funds, with perhaps a bit in the I fund, and rebalanced each year, your TSP should realize substantial growth over the years.
Those three sources (retirement, TSP and social security), along with other personal savings, should provide one with a decent retirement.
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Post by gary on Feb 3, 2015 10:22:25 GMT -5
Your computation looks right assuming the $168,700 is the average of your top 3 salaries in the last 5 years of employment with the Feds.
If you go to a federal retirement planning session, they will tell you that your retirement income depends on 1) your FERS pension; 2) your TSP; and 3) your social security.
As was recommended you should absolutely max out your TSP contributions. You will also want to learn about the various TSP funds and select the right one or ones for you. Also, you should be prepared to change your fund selections as your circumstances change to reflect how tolerant of risk you are prepared to be.
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Post by Gaidin on Feb 3, 2015 10:27:50 GMT -5
Or you can abandon this mad dream and stay where you are and put some serious money in the bank for that retirement on the French Riviera. Just kidding - well sort of - these are good questions to ask HallmarkFan and I appreciate as we get closer to having to possibly having to make a decision you have to put pencil to paper. My only hope is that if you get the offer you have figured it out enough to answer on the spot and not need 24 hours to mull it over.
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Post by thankful1 on Feb 3, 2015 10:44:55 GMT -5
Please forgive this parochial question: In june i'll have 20 years in as a fed, hope to get another 15 in, (either as an alj, or not). Yes I should know how fers works, but I just don't pay close attention to it--on my first day, our HR person said Fers is miniscule, and that TSP and Social Security were the important retirement vehicles. So the thought of multiple thousands of dollars a year sounds fantastic to me -- almost like found money because of my willful ignorance!
anyway -- the question -- Does that years of service multiplier just continue to grow? or does it max out at some point? because a 35 multiplier sounds amazing to these ears!
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Post by Pixie on Feb 3, 2015 10:53:01 GMT -5
Live an amazing life as the multiplier continues to grow. Stay 35 years, and your multiplier will be 35. Pixie.
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Post by gary on Feb 3, 2015 11:01:15 GMT -5
I agree with Pixie. A FERS pension is not minuscule. It may be the biggest of the three parts of your retirement income, especially for someone with a lot of years of service. Here's a link to OPM's handbook on the two retirement systems for federal employees: www.opm.gov/retirement-services/publications-forms/csrsfers-handbook/In reading it be sure what you are looking at applies to FERS. You will not get a CSRS pension unless you are a very longtime federal employee grandfathered in at the time they decided to phase that system out.
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Post by thankful1 on Feb 3, 2015 11:07:15 GMT -5
Happy Day!
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Post by hopefalj on Feb 3, 2015 11:08:39 GMT -5
Please forgive this parochial question: In june i'll have 20 years in as a fed, hope to get another 15 in, (either as an alj, or not). Yes I should know how fers works, but I just don't pay close attention to it--on my first day, our HR person said Fers is miniscule, and that TSP and Social Security were the important retirement vehicles. So the thought of multiple thousands of dollars a year sounds fantastic to me -- almost like found money because of my willful ignorance! anyway -- the question -- Does that years of service multiplier just continue to grow? or does it max out at some point? because a 35 multiplier sounds amazing to these ears! Actually, I think 35 years would get you a multiplier of 38.5, which would be about $65k per year based on three years of today's capped salary ($168,700) and today's dollars.
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Post by sealaw90 on Feb 3, 2015 11:31:07 GMT -5
That is also why any reservist, or retired reservist, who works for the federal government should 'buy' their active duty time to add years to their FERs retirement. Any military academy grads should buy their 4 years at the academy too - those few years makes a nice difference every month when the annuity check hits the bank account!
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Post by Pixie on Feb 3, 2015 11:32:01 GMT -5
Let's not mix apples and oranges and confuse people. Yes, the short hand version can be expressed as 38.5 X the high three. But that doesn't mean 38.5 X 1.1% X high three. It is still officially expressed as 35 X 1.1% X high three.
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Post by Pixie on Feb 3, 2015 11:46:48 GMT -5
That is also why any reservist, or retired reservist, who works for the federal government should 'buy' their active duty time to add years to their FERs retirement. Any military academy grads should buy their 4 years at the academy too - those few years makes a nice difference every month when the annuity check hits the bank account! Also, enlisted service, as well as officer time (up to 0-3 or 0-4) may be "bought back." So, if one is prior service, and retires after 16 years with the agency, and 4 years has been bought back, the veteran would have a full 20 years for retirement purposes. The buy back is figured only on base salary, so all the extra allowances aren't charged. Buy it back within a certain time period, and no interest is charged. It can be bought back on the "installment method." That is one can pay, say, $25 a pay period which wouldn't even be missed. An all around good deal with no downside. Pixie.
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Post by Ace Midnight on Feb 3, 2015 12:04:06 GMT -5
If you stay to 62, you get a 10% kicker, or 1.1% per year of your average Top 3.
If you sock away the max (and get matched 5%) - 15 years, you should be in the $300k, $400k range in your TSP, which will generate 20 year income of over $24k, and you should also get social security retirement about $24k (today's dollars). $80k to $90k would be my best estimate for your hypo. Not bad working a job 15 years and retiring relatively young at 62.
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Post by Pixie on Feb 3, 2015 12:25:41 GMT -5
If you stay to 62, you get . . . 1.1% per year of your average Top 3. In order to get the 1.1% the individual must be at least age 62 and at least 20 years of service. That is called the Enhanced Formula. If one isn't both age 62 and 20 years of service, the General Formula is in effect (1% X High 3 X Years of Service). Pixie.
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Post by Ace Midnight on Feb 3, 2015 12:38:01 GMT -5
Oh - yeah. I always skip that part (the 20).
BTW. I am buying back my active duty time and I recommend it highly for any reservist or even someone with a several years of active duty. Now, I cannot recommend it if you are eligible (or will be) eligible for an active duty retirement check. But it will not affect ordinary reserve retirement at 60 (and, in effect, you get to double dip for your active duty time in both retirement benefits).
If you were junior enlisted - that's pennies on the dollar for your return. I figure I only have to receive FERS retirement for about 1 year to recoup my buy back and that's only because I had that 1 year as a field grade officer in Iraq. I could have written a check for the entire deposit, but for those first couple of years of initial entry training back in the 1980s 1990s, it was just a few hundred dollars.
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linky
Full Member
Posts: 88
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Post by linky on Feb 3, 2015 16:08:53 GMT -5
Do retired military get this FERS pension in addition to their military retirement or is that double dipping?
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Post by Pixie on Feb 3, 2015 16:25:55 GMT -5
Double dipping.
In his post above Ace said the buyback for junior enlisted is only pennies on the dollar. That is absolutely correct, and the same is true, to a lesser extent, for junior officers. Doesn't cost much to get those extra years added to the retirement package. Pixie.
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Post by bartleby on Feb 3, 2015 16:43:25 GMT -5
I heard "they" are talking about changing it to high 5. Any idea if we would be grandfathered in under the high 3 or would they change it to high 5 on us. That could make a big difference during the first 10 years of Judgeship..
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