IT PAYS TO KEEP ON WORKING AFTER 30 YEARS

If you as a Federal employee are healthy, are comfortable in and/or enjoy your Federal job it pays to keep on working at it:

(1) Annual pay is more than 50% of the Federal annuity benefit. (annuity benefit upon retirement is based on 56% (CSRS) and 30% (FERS)of the high three average salary).

(2) Federal employees get up to 2% more in annuity benefits each year for every year they work over 30 years.

(3) Throw in an extra step or two on the GS schedule or the equivalent for the other pay systems

(4) Working longer allows the Federal Employee to convert the balance of unused sick leave into additional Federal service time and thus increase the Federal Annuity further.

(5) Between 1993 and 2008 the AVERAGE PAY for federal workers has increased 1% more than the COLA for retirees (2% more than the COLA for FERS retirees)

(6)Depending upon how long one works after 30 years the Federal employees annuity can range from 30% to over 80 % of their high 3 average salary.

(7) Federal employees can build up an additional tidy sum through their contributions and/or the Federal government's match to the TSP.

(8) The Federal employee, with 30 years of service, gets 5 weeks of vacation to take that cruise or travel as they might want to do as a retiree anyway.

(9) The Federal Employee who retires after 30 years,or who must work to make ends meet or just wants to keep on working in the private sector to sock the money away is subjected to an unfamiliar work environment and/or getting fired/laid off quickly in the economy.

SO IN CONCLUSION:

If you the Federal employee wants a solid annuity when you finally retire, with the future COLAS, you should keep on working in your Federal job.

A few more years at your Federal job, makes a very big difference in the annuity, and you as a Federal employee/retiree can then really kiss the need to work good buy forever and not worry about cash flow if you don't do really foolish things in retirement in their 50s 60s 70s 80s and 90s.

PROOF:
If anyone wants to see the proof of my assertions use the Compound Interest Formula:

A = P(1 r/n)exponent(nt)

A = Federal Annuity after t years in retirement
P = High three year average salary
r = Average COLA over time period t
n = 1 (since the COLA comes once per year)
t = Is the number of years over 30 years.

Note:
(1) Use the Federal Pay Scale charts available for any year in the past and up to the present available from the OPM website.

(2) Use the Federal COLA charts available for any year in the past and up to the present available from the OPM or Social Security website. (COLAS are basically calculated the same for Federal Annuities (OPM) and Social Security Benefit (Social Security)

[This message was edited by LSA on October 11, 2009 at 07:56 AM.]

quote:

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Originally posted by TwoUnderPar:
What you say is correct.... except I don't want to keep working.

I'll be eligible to retire in 2 years with 32 years of service at age 55. My CSRS retirement annuity, plus my TSP monthly payments, will exceed my present net income.

Why would I want to continue working??

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Good for you for contributing generously to your TSP!! I think working past 30 years is for those who didn't save enough to retire comfortably or lost alot in their TSP due to market conditions.

quote:

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Originally posted by LSA:
Firstly, please be aware (and cautious) that the TSP is subject to all the stock market fluctuations (volatility) while you are working and more critically after you are retired. Witness the volatility over this past year.

Secondly, if you opt for an annuity with your TSP balance there is no associated COLAS from year to year thus after a few years in retirement your nest egg is seriously eroded.

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After you retire, your TSP balance does not have to be "subject to the stock market fluctuations" if you don't want it to. There are choices of the G fund or the F (bond) fund after retirement.

In addition, interfund transfers can still be done after retirement and as long as you have a TSP account.

Lastly, monthy payments from the TSP can be adjusted each year. If you plan ahead and live prudently, you can start taking TSP monthly payments in such a manner that you can increase the size of the payment by 3% or 4% each year and in essence..... have your payments increase to account for inflation.

Substantial additional information

First of all you don't have to put your money in the stock market. That is the world's biggest casino. You can keep your money in the G fund and CD's and sleep good at night. My recommendation is don't follow the herd mentality, wall street, stock brokers and financial analysts. They want to make themselves rich, not you. Don't buy that same mentality that they put out that you make more money in the long term by keeping your money in the stock market, rather than plain vanilla treasury FDIC insured accounts or the G fund. That is the biggest myth going around. In addition LSA, you must not be a federal retiree. If you are and don't like it, quit telling other people what to do. Go back to work!!

"Quote from LSA"

BENEFITS OF BUILDING ON SOLID FEDERAL ANNUITY
Firstly, please be aware (and cautious) that the TSP is subject to all the stock market fluctuations (volatility) while you are working and more critically after you are retired. Witness the volatility over this past year.

Secondly, if you opt for an annuity with your TSP balance there is no associated COLAS from year to year thus after a few years in retirement your nest egg is seriously eroded.

In staying at work on your Federal job beyond the thirty years you are building up your solid FERS or CSRS annuity as pointed out in my first post above.

Its a tradeoff between sticking with your Federal job for a few more years or facing a situation in retirement with the worry of day to day cash flow not being adequate and there is little you can do about it in your 50s 60s 70s 80s or 90s while looking for a carefree retirement."