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walt5420  
#1 Posted : Thursday, October 31, 2019 12:28:19 AM(UTC)

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Hello,

I'm a 55yo that recently began attempting to understand my retirement options and would greatly appreciate if anyone can help me with some questions.

Next year, I will be eligible for a FERS Immediate Retirement but plan on working at least until 62 to obtain the 1.1% pension multiplier. However, I am uncertain how the FERS annuity is affected in these scenarios:


1. If I continue to work to 66 (30years of service) as a federal employee, is there any annuity impact or other financial considerations I should be aware of since I am assuming the math is still the same (years x 0.011 x High3)?

I keep running across the "30years of FERS service" reference but I don't know if 30 is significant for any financial reason, like if I decided to work until I reach my SSA FRA at 67 (with 31 years of federal service).


2. If I retire at 62 and begin receiving my FERS retirement pay, can I stay wait to file for my Social Security benefit at 67 or 70? Or must I file for both FERS retirement and Social Security at the same time?


3. If I must file for both FERS and Social Security at the same time, can I leave federal service at 62 and wait to file for both FERS/SSA at 67 or 70? (By then I hope to have enough TSP saved to cover our RV living expenses from 62-67).

I read that the FERS retirement benefit does not increase with age like Social Security so I'm trying to understand if it would be to my financial advantage to file for both sooner, or later.


Of course, I may feel very different at 62 and just collect both FERS/SSA. In the meantime, I'm trying to figure out what my options could be since I recently learned that my FERS retirement pay included my Social Security benefit as part of the total FERS annuity payment. So any explanation, info, or links to other resources would greatly be appreciated.

Many thanks in advance for your help!
TheRealOrange  
#2 Posted : Thursday, October 31, 2019 2:44:12 AM(UTC)
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Originally Posted by: walt5420 Go to Quoted Post
Hello,
I'm a 55yo that recently began attempting to understand my retirement options and would greatly appreciate if anyone can help me with some questions.
Next year, I will be eligible for a FERS Immediate Retirement but plan on working at least until 62 to obtain the 1.1% pension multiplier. However, I am uncertain how the FERS annuity is affected in these scenarios:

1. If I continue to work to 66 (30years of service) as a federal employee, is there any annuity impact or other financial considerations I should be aware of since I am assuming the math is still the same (years x 0.011 x High3)?

I don't think so. Under a FERS retirement, you are not required to take Social Security at any particular time.

Quote:
I keep running across the "30years of FERS service" reference but I don't know if 30 is significant for any financial reason, like if I decided to work until I reach my SSA FRA at 67 (with 31 years of federal service).

There is no real financial reason. That is the requirement to retire at the Minimum Retirement Age (MRA) with an immediate annuity. If you have fewer than 30 years but at least 10 years of service at MRA and decide to retire, you either take a reduction in the annuity or postpone it under the MRA+10 retirement.

Quote:
2. If I retire at 62 and begin receiving my FERS retirement pay, can I stay wait to file for my Social Security benefit at 67 or 70? Or must I file for both FERS retirement and Social Security at the same time?

Yes to the first question. No to the second question. When you start your FERS annuity has no effect on when you can start Social Security.

Quote:
3. If I must file for both FERS and Social Security at the same time, can I leave federal service at 62 and wait to file for both FERS/SSA at 67 or 70? (By then I hope to have enough TSP saved to cover our RV living expenses from 62-67).

This issue is moot, as you do not have to start your Social Security benefits at any particular time when you retire under FERS.

Quote:
I read that the FERS retirement benefit does not increase with age like Social Security so I'm trying to understand if it would be to my financial advantage to file for both sooner, or later.

The FERS annuity will be increased by the applicable COLA at age 62.

Quote:
Of course, I may feel very different at 62 and just collect both FERS/SSA. In the meantime, I'm trying to figure out what my options could be since I recently learned that my FERS retirement pay included my Social Security benefit as part of the total FERS annuity payment. So any explanation, info, or links to other resources would greatly be appreciated.

Social Security is not "a part of the total FERS annuity payment." They are totally separate systems. Social Security is a separate part of the three-part retirement: FERS annuity (and possibly annuity supplement for some under the age of 62); TSP account; and Social Security. The three parts of the retirement really do not affect one another.
walt5420  
#3 Posted : Thursday, October 31, 2019 4:39:23 AM(UTC)

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TRO,

Thank you very much for the info! And for addressing my concerns as I initially thought FERS and SSA were two separate retirement programs; two different monthly pay checks. But then I ran across the OPM info below that really seemed to suggested that FERS (Basic Benefit) and SSA were a combined benefit (i.e., one monthly pay check), and not separate retirement programs. Good to know that the Basic Benefit Plan is what essentially funds the employee's FERS Annuity, with an expectation that employee will use their TSP Savings and Social Security benefit to cover retirement living expenses. Thank you again for kindly posting your reply.

"FERS is a retirement plan that provides benefits from three different sources: a Basic Benefit Plan, Social Security and the Thrift Savings Plan (TSP). Two of the three parts of FERS (Social Security and the TSP) can go with you to your next job if you leave the Federal Government before retirement. The Basic Benefit and Social Security parts of FERS require you to pay your share each pay period. Your agency withholds the cost of the Basic Benefit and Social Security from your pay as payroll deductions. Your agency pays its part too. Then, after you retire, you receive annuity payments each month for the rest of your life.

The TSP part of FERS is an account that your agency automatically sets up for you. Each pay period your agency deposits into your account amount equal to 1% of the basic pay you earn for the pay period. You can also make your own contributions to your TSP account and your agency will also make a matching contribution. These contributions are tax-deferred. The Thrift Savings Plan is administered by the Federal Retirement Thrift Investment Board."

https://www.opm.gov/reti...rvices/fers-information/
postalvet  
#4 Posted : Thursday, October 31, 2019 6:22:37 AM(UTC)
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you are over thinking this.

a person I know has been on fers for several years and just this month started getting social security. fers is deposited near the first of the month and the social security is deposited around the 15th (because of their birthday).

the tsp will be taken when they need it.
Endless Summer  
#5 Posted : Thursday, October 31, 2019 12:51:12 PM(UTC)
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The only thing I can add is that if you want to continue your health benefits after retirement you have to take an immediate annuity. It's my understanding that you cannot delay taking fed retirement and keep the health benefit.

As for SSA, as has been said, you can take it at any time. My plan is to take the immediate retirement pay and delay SS until 67 or so.

good luck
walt5420  
#6 Posted : Thursday, October 31, 2019 3:33:44 PM(UTC)

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Posts: 4

Thanks everyone!

And yes, I'm sure I'm overthinking these issues, but you have to admit there are so many options/variations, and I'm not a big fan of surprises when it comes to financial planning. And for all you experienced retirees and experts, please know that sharing your thoughts and experience are of great value to newbies when we don't have subject matter experts or financial advisors readily available. So I am grateful for your feedback, along with many newbies out there. Have a great holiday season!
TheRealOrange  
#7 Posted : Friday, November 1, 2019 2:58:41 AM(UTC)
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Originally Posted by: Endless Summer Go to Quoted Post
The only thing I can add is that if you want to continue your health benefits after retirement you have to take an immediate annuity. It's my understanding that you cannot delay taking fed retirement and keep the health benefit.

As for SSA, as has been said, you can take it at any time. My plan is to take the immediate retirement pay and delay SS until 67 or so.

good luck

The part in bold is true for a deferred retirement, but not for a postponed retirement under the MRA+10 rules. Under a deferred retirement, you delay the payment of the annuity until you are eligible for retirement. For instance, if I am 48 years old and have 15 years of service, I do not qualify for any type of voluntary retirement. If I leave the service, I can later receive an annuity once I qualify. In this example, I would qualify at age 62, since I have at least 5 years of service. You can also qualify to start the annuity at age 60 if you have 20 or more years of service. Under the MRA+10 retirement, you would qualify for an immediate voluntary retirement, but the annuity would be reduced by 5 percent a year for each year you are under age 62, unless you have at least 20 years of service and your benefit starts when you reach age 60 or later. To avoid the reduction, you are able to postpone the receipt of your annuity. Under the MRA+10 retirement option with a postponed annuity, you are eligible to continue healthcare coverage at your own cost for a while, and FEHB benefits can be restarted once you start receiving your annuity. Here is the information from OPM:

Health Insurance

If you postpone the beginning date of your annuity, you will be eligible to temporarily continue your health benefits coverage for 18 months from the date of separation from your employing agency; however, you must contact your agency within 60 days and pay the total premium, plus a 2% administrative charge. When your annuity payments begin, if you had Federal Employees Health Benefits (FEHB) coverage for the 5 years of service immediately before you separated, you will again have the opportunity to enroll in a health benefits plan under the regular FEHB program, and OPM will pay the Government share of the premium.

https://www.opm.gov/reti...url=Voluntary-Retirement [See, "MRA (Minimum Retirement Age) + 10 Retirement" toward the botom of the page.]
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