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Retirement Planning


Whether you are close to federal employee retirement or just starting out in your career, this is the place to share ideas with your federal colleagues on creating a secure financial foundation.


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smithandjones  
#1 Posted : Wednesday, June 26, 2019 7:11:55 PM(UTC)

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I have not seen this discussed anywhere. How do you calculate the dollar value of future health benefits in retirement?

My dilemma is I want to leave my federal employment as soon as possible. The only thing stopping me is I can early retire in one year with some pension and the ability to continue FEHB health benefits. If I leave now, I still get a similar pension in a year but lose the health benefits. Obviously this is huge but I wondered how to value this benefit...through Medicare age, I suppose?

If i leave for another position it would have health benefits also but ithat job would be unlikely to last until Medicare age - and having FEHB would be great if I started my own business.

I also have some access to VA but prefer not to rely on that.

If I could put a value on the FEHB benefit I could weigh whether additional compensation from another employer could rationally outweigh slogging through another year.

Thanks for any thoughts!
postalvet  
#2 Posted : Thursday, June 27, 2019 5:51:57 AM(UTC)
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Originally Posted by: smithandjones Go to Quoted Post
I have not seen this discussed anywhere. How do you calculate the dollar value of future health benefits in retirement?

My dilemma is I want to leave my federal employment as soon as possible. The only thing stopping me is I can early retire in one year with some pension and the ability to continue FEHB health benefits. If I leave now, I still get a similar pension in a year but lose the health benefits. Obviously this is huge but I wondered how to value this benefit...through Medicare age, I suppose?

If i leave for another position it would have health benefits also but ithat job would be unlikely to last until Medicare age - and having FEHB would be great if I started my own business.

I also have some access to VA but prefer not to rely on that.

If I could put a value on the FEHB benefit I could weigh whether additional compensation from another employer could rationally outweigh slogging through another year.

Thanks for any thoughts!


I am not sure the value can be actually calculated unless you get sick and use it more then you are now.

just times the monthly amount by 12 and then to about how long you except to live, 30 or 40 years out.




.
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smithandjones  
#3 Posted : Thursday, June 27, 2019 11:40:58 AM(UTC)

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I'm thinking the benefit is worth at least what the government pays for my premium ($1138 per month) times however many months I might live or want the insurance. Assuming I live 25 years (300 months) past retirement the benefit is worth $341,400. Even if I dropped it after just 10 years (120 months)at age 65 it would be worth $136,560. This doesn't really consider replacement cost either. Assuming FEHB premiums go up (and government contributions) then it is even better. If Trump butchers it in the next 12 months then...well, there's that :(

I guess it will help knowing I'm basically receiving 150-350K more in benefits for the family by sticking it out for another year. Will be my best compensated year yet!

https://www.fedsmith.com...nefit-ability-keep-fehb/


roger.d  
#4 Posted : Saturday, June 29, 2019 4:14:04 PM(UTC)
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Originally Posted by: smithandjones Go to Quoted Post
I have not seen this discussed anywhere. How do you calculate the dollar value of future health benefits in retirement?

My dilemma is I want to leave my federal employment as soon as possible. The only thing stopping me is I can early retire in one year with some pension and the ability to continue FEHB health benefits. If I leave now, I still get a similar pension in a year but lose the health benefits. Obviously this is huge but I wondered how to value this benefit...through Medicare age, I suppose?

If i leave for another position it would have health benefits also but ithat job would be unlikely to last until Medicare age - and having FEHB would be great if I started my own business.

I also have some access to VA but prefer not to rely on that.

If I could put a value on the FEHB benefit I could weigh whether additional compensation from another employer could rationally outweigh slogging through another year.

Thanks for any thoughts!


OP, what age and years of service are you basing your information on?

Learn to discipline yourself, so someone else doesn't have to
smithandjones  
#5 Posted : Saturday, June 29, 2019 4:57:01 PM(UTC)

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54 now. Can retire at 55 with annuity 6/1/2020.
GSBS  
#6 Posted : Tuesday, July 02, 2019 3:44:40 PM(UTC)
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Originally Posted by: smithandjones Go to Quoted Post
I have not seen this discussed anywhere. How do you calculate the dollar value of future health benefits in retirement? If I could put a value on the FEHB benefit I could weigh whether additional compensation from another employer could rationally outweigh slogging through another year.

Thanks for any thoughts!
The value offered will always be an unknown quantity. The benefit offered is of unlimited value!

Edited by user Tuesday, July 02, 2019 3:49:41 PM(UTC)  | Reason: .

Guts  
#7 Posted : Tuesday, July 09, 2019 10:17:58 AM(UTC)

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The MRA for your age is at least 56. If you are taking an MRA+10 retirement, you will be penalized 5% for each year under 62, unless postponed. I would, at a minimum, stay until you can at least keep FEHB and get an annuity, and THEN retire and postpone the actual date of collecting the annuity/insurance at a DATE OF YOUR CHOICE. Get something for your past service, especially if your new job won't even last 10 years!
Grammar: the difference between knowing your **** and knowing you're ****
Raoul  
#8 Posted : Tuesday, July 09, 2019 11:35:23 AM(UTC)

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smithandjones  
#9 Posted : Wednesday, July 10, 2019 11:49:40 AM(UTC)

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My minimum retirement is 55 as stated. Fed Reserve Plan.
postalvet  
#10 Posted : Wednesday, July 10, 2019 4:14:44 PM(UTC)
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Originally Posted by: smithandjones Go to Quoted Post
My minimum retirement is 55 as stated. Fed Reserve Plan.


you probably should not be posting here then as it appears the Federal Reserve System Retirement Plan is very different then the government run fers and csrs.


https://arc.fiscal.treas..._retirementfedressys.htm
Postal employee (retired) 38 yrs who helps even if some do not believe me! I was a Steward, officer & trouble maker. Just Sayin'
smithandjones  
#11 Posted : Thursday, July 11, 2019 7:48:38 AM(UTC)

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"you probably should not be posting here then as it appears the Federal Reserve System Retirement Plan is very different then the government run fers and csrs."

Thank you for your concern. However, I am not asking about the retirement plan. My question was about the value of FEHB benefit as the choices and requirements i.e., to take an immediate annuity, and be enrolled 5 years continuously are the same as other federal plans.

I think I answered my own question that it is worth 150K to 350K in the current market. However, someone else offered it was "of unlimited value" and that may be true too. Any other perspectives or thoughts on the value of this benefit would be appreciated. This exercise helps to make that decision to stay and fend off private offers another year. I appreciate the concern about other aspects of the plan but I understand those well enough for now.
Guts  
#12 Posted : Thursday, July 11, 2019 10:19:44 AM(UTC)

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Originally Posted by: smithandjones Go to Quoted Post
My minimum retirement is 55 as stated. Fed Reserve Plan.


Interesting Plan. 55 is a good age to retire. For most Federal Employees/Retirees, keeping the FEHB is one of the most beneficial options we have. Retirement plan benefits DO calculate into their worthiness at retirement, so our replies are based on our benefits. FEHB/Insurance would take a chunk out of your annuity, so only you can judge if it's worth it.You are in a very interesting position, and I hope for you the best!
Grammar: the difference between knowing your **** and knowing you're ****
postalvet  
#13 Posted : Friday, July 12, 2019 6:55:03 AM(UTC)
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Originally Posted by: smithandjones Go to Quoted Post
"you probably should not be posting here then as it appears the Federal Reserve System Retirement Plan is very different then the government run fers and csrs."

Thank you for your concern. However, I am not asking about the retirement plan. My question was about the value of FEHB benefit as the choices and requirements i.e., to take an immediate annuity, and be enrolled 5 years continuously are the same as other federal plans.

I think I answered my own question that it is worth 150K to 350K in the current market. However, someone else offered it was "of unlimited value" and that may be true too. Any other perspectives or thoughts on the value of this benefit would be appreciated. This exercise helps to make that decision to stay and fend off private offers another year. I appreciate the concern about other aspects of the plan but I understand those well enough for now.


with a different retirement plan there could be different benefits with FEHB that people here may not know about.

I have been posting here since 2009 and had never heard of this retirement plan.

just like I have never seen anyone post about the railroad retirement plan.

so many different rules.

Edited by user Friday, July 12, 2019 6:57:09 AM(UTC)  | Reason: Not specified

Postal employee (retired) 38 yrs who helps even if some do not believe me! I was a Steward, officer & trouble maker. Just Sayin'
OUtside  
#14 Posted : Saturday, July 13, 2019 10:10:03 AM(UTC)

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If you're really going to figure out this decision, I think you have to decide now whether at age 65 under FEHB you would enroll in Medicare Part B which, under current rules anyway, you would have the option but not the necessity to do. And you would have to contrast this with your other possible employment situation whether it has a similar option or just the assumption you would enroll in Medicare Parts A, B, or C, and/or D and/or a Medicare Supplement plan.

As health care is one of the biggest expenses in retirement, I guess you would have to run those numbers all the way to the expected 'end' to make the best analysis of what I think it is you are trying to do.
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