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Retirement Planning


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mander57  
#1 Posted : Tuesday, January 31, 2006 6:20:29 AM(UTC)
mander57

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I am curious if any who read this board have retired under civil service offset and have reached age 62 and started receiving Social Security so that the offset has kicked in. I plan to retire in January 2009 at age 60 with 22 years as an offset employee (35 total years of service). When I do calculations both manually and with commercial annuity calculation software, it shows a considerable jump in my monthly annuity at age 62 when the offset is applied and the annuity starts coming from both CSRS and SS. However, I keep reading the "experts" as saying the annuity after the offset is applied will vary only a dollar or so, that there will NEVER be a substantial increase. I'm just curious if that has been the experience of those who have actually reached this stage of the process.
FCHP6  
#2 Posted : Thursday, February 02, 2006 5:50:22 AM(UTC)
FCHP6

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JUst some info, I recently learned that if you are CSRS Offset and have 30 years substantial pay into SS, your CSRS offset retirement is NOT reduced. It is a little known fact that is a small note in the SS information system. Say you are like me. I worked a few months before joining the Federal service. then worked 9 1/2 years, left to raise children, then worked in private industry for almost seven years. have been in the federal system since 1985 as a CSRS Offset employee. If I stay for 2 1/2 more years I will have 30 years significant (per SS guidelines) pay status, I think this year the amount designated as significant is 16,300. SO when I retire at 62 or 63, I will collect the full amount of SS for that age plus my entire CSRS pay. If I hadn't known that I may have retired at 59 and taken the loss of pay from the offset. It doesn't mean you have to stay in the Federal government, you could actually work at something and pay into SS if you wanted to as long as it meets the SS Threshold.
ncsolutions  
#3 Posted : Thursday, February 02, 2006 9:38:04 PM(UTC)
ncsolutions

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FCHP6…

I think you’re confusing the CSRS Offset reduction with the Windfall Elimination Provision. If you are CSRS Offset, you are paying into the Civil Service Retirement and Disability Fund and also paying Social Security taxes.

When you retire, you will be able to get a CSRS annuity and, at age 62 or older, Social Security benefits. However, your CSRS annuity will be “offset” (i.e., reduced) by the amount of Social Security benefits attributable to your years of CSRS Offset coverage. If you retire before age 62, that offset doesn’t start until you reach 62 (your earliest eligibility for SS benefits). If you retire at age 62 or older, the offset starts immediately. Your SS benefits will be subject to an “early” retirement reduction if you begin drawing them before you reach what SS defines as your Normal Retirement Age – I suspect that’s age 66 in your case. But the offset to your CSRS annuity occurs beginning at 62, regardless of whether you apply for SS benefits or not.

The good news is that your SS benefits will not be reduced due to the Windfall Elimination Provision (WEP). The WEP applies to anyone who gets a pension that is based on work that was not covered by Social Security. The reason that you will not be effected by the WEP is that you will have at least 30 years of substantial earnings under Social Security.

When all is combined, you should still come out ahead – i.e., you SS benefits will not be reduced because of your CSRS employment, and your combined CSRS and SS benefits will be higher than a CSRS annuity alone.
peaches  
#4 Posted : Saturday, February 04, 2006 12:34:15 AM(UTC)
peaches

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Let me see if I got this right. I have roughly 20 yrs federal service. I was CSRS for 7-8 yrs and the rest was CSRS-offset. If approved for SS, there won't be an offset until I'm 62? (I'm now 47 and disabled.) Can you tell me where I can verify that? If there is a deduction, who deducts it..SS?
ncsolutions  
#5 Posted : Saturday, February 04, 2006 3:47:13 AM(UTC)
ncsolutions

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Peaches...

From the wording of your post I am assuming that you have been retired for disability under CSRS. Disability annuities for CSRS and CSRS Offset are calculated the same way.

Your CSRS disability annuity payment will be offset (i.e., reduced) when you become eligible for Social Security. The offset is applied when you are entitled to both a disability annuity under CSRS, and to disability benefits under Social Security (or would be entitled on proper application).

If you are not entitled to Social Security disability, there is no offset until or unless you later become entitled to Social Security (i.e., at 62).

Note that the reduction is applied to your CSRS annuity by OPM, not Social Security.

You can read more about this topic in Chapter 61 the CSRS-FERS Handbook, available on OPM's website.
gh1  
#6 Posted : Monday, February 06, 2006 2:33:34 AM(UTC)
gh1

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I don't know who those "experts" are, but, if they are sugggesting there's no net increase in your combined (CSRS-Offset and SS) annuity, they don't know how the formula works. Even if you don't have 30 years of SS, there's still a benefit. What the calculators are showing you is likely correct. In my case, I have about 24 years of SS and retired with 30 years of Federal service under CSRS-Offset in 2003. When I turn 62, my SS is projected at about $1200, and my CSRS annuity is projected to be decreased by about $600, for a $600 net gain. I've gone over the formulas for my situation and a number of other folks who are CSRS-Offset, and I've never seen an example where there's not a significant ***p-up in total annuity as a result of how the formula is set up. It's one of those deals where they do two different computations, and you get the one most favorable to you.
peterjcterry  
#7 Posted : Wednesday, February 08, 2006 3:54:12 AM(UTC)
peterjcterry

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Looking at my Social Security Statement. My Estimated taxs paid into SS is $16,755 as of Nov 21, 05. IS this the right number I'm looking at? I'm 56 will be 57 in july and plan to retirer at 62. So does this mean I will get both SS and CSRS OFFSET WITH NO REDUCTION? Thank you for your time and GOD bless
Peter
LSA  
#8 Posted : Wednesday, February 08, 2006 8:47:54 AM(UTC)
LSA

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I am assuming you are a CSRS-OFFSET and not FERS.

At 62 when you retire you will get the a total benefit due you as follows:

(1) Full Social Security based on total years of work in the government and private sectors (reduced by the WEP and you not being at your full retirement age)

plus

(2) the CSRS annuity calculated via the normal CSRS calculation (based on years of government service and high 3 years average salary)

minus

(3) the CSRS OFFSET (generally based on years under government offset service and the Social Security due you in step (1) above.)

See the following pamphlet for a more detailed explanation:

http://www.opm.gov/fers_election/facts/ri83-13.htm

i.e.

The offset reduction is the lesser of-

1. the difference between the Social Security monthly benefit amount with and without CSRS Offset service (service after December 31, 1983, covered under the interim CSRS provisions or the CSRS Offset provisions); or
2. the product of the Social Security monthly benefit amount, with Federal earnings, multiplied by a fraction where the numerator is the employee's total CSRS offset service rounded to the nearest whole number of years and the denominator is 40.
LSA  
#9 Posted : Wednesday, February 08, 2006 6:04:04 PM(UTC)
LSA

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You are 100% right in your post.

Of course I don't see the details of your calculations but from what you say you are right on track about:
... " a considerable jump in my monthly annuity at age 62 when the offset is applied and the annuity starts coming from both CSRS and SS."

The Social Security kick-in to your annuity can be 2x as high (or more) as the CSRS-OFFSET reduction at 62 years of age to your annuity. This is significant!!

The equivalent increased amount in your annuity at age 62 depends on your (a)accumulated average salary for 35 under Social Security (government service private sector employment) which then translates into your Social Security AIME, PIA & finally your Social Security monthly benefit
and
(b) how many years you have worked in government under the CSRS-OFFSET system.

FURTHERMORE

You are also right about what you say about the so-called "experts" in this matter. I get the impression that their opinion is a wrong reading of the OPM benefit in this matter (although I must say the wording in the OPM pamphlet and OPMs example of a calculation seems plain and simple but leaves much to be desired in understanding.)

http://www.opm.gov/fers_election/facts/ri83-13.htm

Another possibility is that the "experts" are just repeating hearsay from newspaper columns. Give them credit though in that they do cover alot of ground in other financial/retirement matters pertaining to the Federal Worker.
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