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Federal Employee’s Retirement System Presented by: Tammy Flanagan [email protected] Understanding the Three Parts of FERS

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  • Slide 1
  • Federal Employees Retirement System Presented by: Tammy Flanagan [email protected] Presented by: Tammy Flanagan [email protected] Understanding the Three Parts of FERS
  • Slide 2
  • Resources for YOU www.narfe.org
  • Slide 3
  • Paris, Texas? Planning for your federal retirement can make a world of difference when you retire.
  • Slide 4
  • Paris, France? Planning for your federal retirement can make a world of difference when you retire.
  • Slide 5
  • Your Federal Retirement FERS Basic Retirement and FERS Supplement Social Security Thrift Savings Plan
  • Slide 6
  • 30+ Years of Service: 30 % or more Full 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
  • Slide 7
  • Type of Retirement BenefitAgeService FERS Immediate / Optional Retirement MRA 60 62 30 20 5 Special Provisions for Law Enforcement Officers (and other special groups) 50 Any Age 20 25 FERS Eligibility Rules
  • Slide 8
  • Type of Retirement BenefitAgeService Reduced Immediate or Postponed Optional Retirement MRA10 FERS Eligibility Rules 5 5 Penalty = 5% / year under age 62!
  • Slide 9
  • Type of Retirement BenefitAgeService Voluntary Early Retirement Authority (VERA) or Discontinued Service Retirement (DSR) 50 Any Age 20 25 FERS Eligibility Rules Buyout? VSIP Voluntary Separation Incentive Payment Buyout? VSIP Voluntary Separation Incentive Payment
  • Slide 10
  • Type of Retirement BenefitAgeService Disability RetirementAny Age18 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 Must also apply for Social Security Recalculated at 12 months and again at age 62 No FERS Supplement General formula used if retirement eligible
  • Slide 11
  • Type of Retirement BenefitAgeService Deferred Retirement (Based on service at the time of separation) MRA 60 62 30 20 5 Deferred / ReducedMRA10 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 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
  • Slide 12
  • FERS Basic Retirement Benefit = High- Three Length of Service 1%* *1.1% if age 62+ with at least 20 years of service or 1.7% for first 20 years of Law Enforcement calculation *1.1% if age 62+ with at least 20 years of service or 1.7% for first 20 years of Law Enforcement calculation
  • Slide 13
  • High Three Average Salary Three Consecutive Years Last three years? Basic Pay Includes Locality Pay and Law Enforcement Availability Pay Daily Average todays salary eliminates a day three years ago every day
  • Slide 14
  • What is Basic Pay? Biweekly Salary (Basic Pay) FERS Contribution.8% or 1.3% FERS Retirement Withholding Example: $3,000 x 1.3% = $39 $3,000 x.8% = $24 Example: $3,000 x 1.3% = $39 $3,000 x.8% = $24 If it is subject to retirement deductions, it is basic pay
  • Slide 15
  • 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 doesnt 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
  • Slide 16
  • 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
  • Slide 17
  • 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 = $3,750 Example
  • Slide 18
  • Apply the formula 1% / 1.1% / 1.7%$_______________ In todays dollar value, estimate your high-three: Grade / Step:_______$_______________ Years and Months of Service Retirement Date:______Years____ months____ Your Turn!
  • Slide 19
  • Waitthere might be reductions: Survivor benefit election o 10% to provide 50% to spouse o 5% to provide 25% to spouse o Former Spouse o Court Order o Less than full-time schedule o MRA + 10 age reduction Survivor benefit election o 10% to provide 50% to spouse o 5% to provide 25% to spouse o Former Spouse o Court Order o Less than full-time schedule o MRA + 10 age reduction
  • Slide 20
  • Retirement Withholdings: Taxes o Federal Income Tax o State Income Tax Insurance o FEHBP o FEGLI o FEDVIP o FLTCIP Taxes o Federal Income Tax o State Income Tax Insurance o FEHBP o FEGLI o FEDVIP o FLTCIP
  • Slide 21
  • Most Important The Most Important Thing To Know About Social Security More to those who earn less. Less to those who earn more.
  • Slide 22
  • How Do Benefits Compare to Earnings? Source: Annual Trustees' Report, Social Security Administration, 2013; Table V.C7
  • Slide 23
  • Women with Dual Entitlement 1960-2012 Not married or benefit is higher than spousal Married, not working outside home Married and working outside home
  • Slide 24
  • 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 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 Both file at 62 and live to 79: $581,400 Both file at 62 and live to 87: $855,000
  • Slide 25
  • Social Security Estimate www.socialsecurity.gov
  • Slide 26
  • FERS Supplement = FERS Service 40 Age 62 Social Security Benefit Example: 30/40 x $1,500 = $1,125 / month
  • Slide 27
  • Bottom Line FERS + Social Security = Enough? Then, TSP will provide more income! FERS + Social Security = Enough? Then, TSP will provide more income! While WorkingAfter Retirement Salary$ FERS Retirement$ Supplement or Social Security $ Expenses (up or down?) Clothing Transportation Conveniences (eating out, cleaning service, etc.) Children Travel Volunteering Education Family / Caregiving Healthcare
  • Slide 28
  • Questions?