federal employee’s retirement system presented by: tammy flanagan [email protected] presented by:...
TRANSCRIPT
Federal Employee’s Retirement System
Presented by:Tammy Flanagan
Understanding the Three Parts of FERS
Resources for YOU
www.narfe.org
Paris, Texas?
Planning for your federal retirement can make a world of difference when you retire.
Paris, France?
Planning for your federal retirement can make a world of difference when you retire.
Your Federal
Retirement
FERS Basic Retirement and FERS Supplement
Social Security
Thrift Savings Plan
30+ Years of Service: 30 %
or moreFull Career
(LEO): 34% or more
Low Wages: 50%+
Medium Wages: 35 –
40%High Wages: 25% or less
$200,000: $8,000 /year
$500,000: $20,000/year$1,000,000:
$40,000/year
Income Replacement
Type of Retirement Benefit Age Service
FERS Immediate / Optional Retirement
MRA6062
30205
Special Provisions for Law Enforcement Officers (and other special groups)
50Any Age
2025
FERS Eligibility Rules
Type of Retirement Benefit Age Service
Reduced Immediate or Postponed Optional Retirement
MRA 10
FERS Eligibility Rules
5Penalty = 5% / year under age 62!
Type of Retirement Benefit Age Service
Voluntary Early Retirement Authority (VERA) or Discontinued Service Retirement (DSR)
50Any Age
2025
FERS Eligibility Rules
Buyout? VSIP
Voluntary Separation Incentive Payment
Type of Retirement Benefit Age ServiceDisability Retirement Any Age 18 months
FERS Eligibility Rules
• Must also apply for Social Security
• Recalculated at 12 months and again at age 62
• No FERS Supplement• General formula used if
retirement eligible
Type of Retirement Benefit Age Service
Deferred Retirement (Based on service at the time of separation)
MRA6062
30205
Deferred / Reduced MRA 10
FERS Eligibility Rules
• Cannot reinstate FEHB or FEGLI• No COLA on high-three• Cannot credit sick leave hours• General formula (1%)• Resign from agency and apply
later at www.opm.gov
FERS Basic Retirement Benefit =
High-Three
Length of
Service1%*
*1.1% if age 62+ with at least 20 years of service or 1.7% for first 20 years of Law Enforcement calculation
High Three
Average Salary Three Consecutive Years
• Last three years?
Basic Pay• Includes Locality Pay and• Law Enforcement Availability Pay
Daily Average• today’s salary eliminates a day three
years ago – every day
What is Basic Pay?
Biweekly Salary
(Basic Pay)
FERS Contributio
n.8% or 1.3%
FERS Retirement
Withholding
Example: $3,000 x 1.3% = $39 $3,000 x .8% = $24
If it is subject to retirement deductions, it is basic pay
All Federal and Military Service• Must be documented• Might not be the same as “Leave” SCD• Unused Sick Leave
Deposits and Redeposits• Temporary Service• Refunded Retirement Contributions• Military Deposit
It all adds up!• Be sure you understand what counts… and what doesn’t• 1 month = 1/12 of 1% of your high-three• Example: 1/12 x 1% x $75,000 = $62.50 / year or $5.20 / month• 1 year = 1% of high-three• Example: 1% x $75,000 = $750 / year or $62.50 / month
Length of
Service
General FERS • 1% x high-three x length of service• 1.1% x high-three x length of service• Age 62+ with 20+ years of service
Law Enforcement FERS• 1.7% x high-three x 20 years• 1.0% x high-three x remainder of
service
Formula
General FERS • 1% x $75,000 x 35 = $26,250• 1.1% x $75,000 x 35 = $28,875
Law Enforcement FERS• 1.7% x $75,000 x 20 = $25,500• 1.0% x $75,000 x 5 = $3,750
Example
Apply the formula
1% / 1.1% / 1.7% $_______________
In today’s dollar value, estimate your high-three:Grade / Step:_______ $_______________
Years and Months of ServiceRetirement Date:______ Years____ months____
Your Turn!
Wait…there might be reductions:
• Survivor benefit electiono 10% to provide 50% to spouseo 5% to provide 25% to spouse
o Former Spouseo Court Order
o Less than full-time scheduleo MRA + 10 age reduction
Retirement Withholdings:
• Taxeso Federal Income Taxo State Income Tax
• Insuranceo FEHBPo FEGLIo FEDVIPo FLTCIP
The Most Important Thing To Know About Social Security
It is TILTED! • More to those who earn less.
• Less to those who earn more.
How Do Benefits Compare to Earnings?
Source: Annual Trustees' Report, Social Security Administration, 2013; Table V.C7
Women with Dual Entitlement 1960-2012
Not married or benefit is higher than spousal
Married, not working outside home
Married and working outside home
Both live to age 87: $1,071,264
He lives to 79 and she lives to 87: $843,168
Both live to age 79: $589,728
Example:
Jan • Age 62: $1,500• Age 66: $2,000• File and Suspend• Delays application to age
70: $2,640
Jean• Age 62: $1,350• Age 66: $1,800• Restricted application: 50%
of his: $1,000• Delays application to age
70: $2,376
Both file at 62 and live to 79: $581,400
Both file at 62 and live to 87: $855,000
Social Security Estimatewww.socialsecurity.gov
FERS Supplement =FERS
Service
40
Age 62 Social
Security Benefit
Example: 30/40 x $1,500 = $1,125 / month
Bottom Line
FERS + Social Security = Enough?Then, TSP will provide more income!
While Working After Retirement
Salary $
FERS Retirement $
Supplement or Social Security
$
Expenses (up or down?)
ClothingTransportationConveniences (eating out, cleaning service, etc.)Children
TravelVolunteeringEducationFamily / CaregivingHealthcare
Questions?