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ThreeJay  
#1 Posted : Saturday, October 12, 2019 8:31:46 AM(UTC)
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Can someone please explain to me what is the difference between Retirement FERS vs TSP? Both are coming out of my check and I’m confused what the differences are.
Hannah Blecter  
#2 Posted : Saturday, October 12, 2019 8:53:16 AM(UTC)
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FERS is a defined benefit pension plan. If you were hired recently you pay 4.4% of your pay and the USPS pays 10% or more. Participants before the change to 3.1% and then 4.4% only pay .8% and the USPS pays 13-15% (you could look it up if you care).

Without getting nerdy, you can retire at your minimum retirement age (generally 57 years of age for recent hires) or later with 30 years of FERS service. And then you would get 1% per year based on your high-3 salary average. Only base pay (not overtime, night differential, etc) counts. If you have 20 years of service at age 60 or 5 years at age 62 you can also retire with an unreduced annuity. If you wait until age 62 and have at least 20 years of service you get 1.1% per year instead of only 1%. There is also a FERS supplement for those who retire before age 62 with the years necessary to qualify.

You can google FERS handbook and find all the nerdy details, but that is a snapshot. An example would be retiring with 30 years of service and a high 3 of $60K. Your retirement would be $18,000 per year ($1500/mo). If you were age 62 or over, you would at 10%. If you want your spouse to get 50% of your annuity upon your death, your annuity is reduced by 10%. Any entitled spouses must sign away that survivor annuity if you (plural) don't want that benefit.

TSP is like a 401K. You may put your money in either a tax-deferred part of the TSP or you may choose to put after-tax dollars in a Roth portion. Basically, the TSP is your big opportunity for a big money retirement. Put at least 5% in so you get the 5% matching from the USPS. But put as much as you can into the TSP. There are lots of ways to learn about the various investments available. Research all you want at tsp.gov. Many who don't know what to do with their money put it into the G fund until they are sure how they want to invest. Or they put it in a lifecycle fund that gives you a mix of investments based upon your target retirement age (longer periods have more investment in risk assets). The lifecycle funds automatically reallocate the investment funds over time, becoming more conservative as you age. You can also do a mix. 50% G fund, 50% lifecycle. Or all C fund (S&P 500 index fund) which does well when the market does well. You can also move the money around. Basically, you can get whatever amount of market risk you want.

FERS retirement is a 3-legged plan--you get the FERS annuity upon retirement, TSP--which you control, and Social Security. The original idea was that each could approximate a third of your pre-retirement income, giving you a retirement at the same pay as when you were working. However, those who do well in the TSP have a much higher income.

Generally, you can view FERS to be about what your SS would be. However, if you start later in life in FERS it won't be much. Generally, older folk who are in FERS mainly want to be sure they have 5 years of FEHB (health insurance) consecutively when they retire so they can keep their health insurance. Some work later in life just for that benefit--they use most or all of their FERS retirement to pay for their insurance premiums in retirement. I know a rural carrier who had $2 left in their retirement check after her insurance deductions. But she and her husband needed the health insurance and that is why she worked under FERS for a while.
thanks 2 users thanked Hannah Blecter for this useful post.
Pinkkittylamp on 10/12/2019(UTC), ThreeJay on 10/12/2019(UTC)
Hannah Blecter  
#3 Posted : Saturday, October 12, 2019 10:00:00 AM(UTC)
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And all should realize that you will get "benefits questionnaires" or retirement surveys in an envelope addressed to you at work. These are sent by companies or salesmen wanting to make a commission off your hard-earned money. It is deceiving because it comes addressed to you at work.

I can send something to your name at your work address because all of our names and work addresses are public information.

Personally, I think our employer should be required to throw away those items. Mail sent to me at my employer's address may be opened by them. When I was a manager at a stock brokerage firm I was required to read all mail addressed to brokers--even if it was marked personal and confidential. They would itch and moan, but their employer had the right to all mail addressed to the business address. (I was looking for SEC violations by the brokers--maybe a client was complaining "confidentially".)

Anyway, don't fall for those salesmen trying to appear they are looking out for you. They are looking out for themselves.

There is nothing wrong with investing you money however you want. But beware of commissioned salesmen and businesses preying on your naivete.
roger.d  
#4 Posted : Saturday, October 12, 2019 10:20:29 AM(UTC)
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I responded to one of those letters to see what the stick was.

I won't go into the details so as not to confuse the OP. As Hannah said, it's a poor program.
Learn to discipline yourself, so someone else doesn't have to
postalvet  
#5 Posted : Saturday, October 12, 2019 6:45:26 PM(UTC)
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Originally Posted by: ThreeJay Go to Quoted Post
Can someone please explain to me what is the difference between Retirement FERS vs TSP? Both are coming out of my check and I’m confused what the differences are.


how long have you been a postal employee?
Postal employee (retired) 38 yrs who helps even if some do not believe me! I was a Steward, officer & trouble maker. Just Sayin'
colty31  
#6 Posted : Saturday, October 12, 2019 7:05:03 PM(UTC)
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Originally Posted by: ThreeJay Go to Quoted Post
Can someone please explain to me what is the difference between Retirement FERS vs TSP? Both are coming out of my check and I’m confused what the differences are.


That FERS amount will stay at 4.4% of your salary for your career (if you're relatively new), as mentioned it will be a set monthly amount in retirement based on on your high 3 years of service.

The TSP is separate, personal retirement account that you control. You can change what percentage you put in on postalease and make changes to how the funds are allocated on tsp.gov. As mentioned make sure you're putting in 5% so you get the full match, and increase it as you see fit.

Those 2 combined with social security will hopefully give you a sizable amount of money to live off of in retirement.

Edited by user Saturday, October 12, 2019 7:06:42 PM(UTC)  | Reason: Not specified

mikelonggggggggg  
#7 Posted : Monday, October 14, 2019 3:54:10 PM(UTC)
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I think I figured it out. I talked with a buddy of mine that was converted to career the same time that I was, and he is now a 40 hour regular and we both get the same amount taken out for our FERS retirement. So my supplemental hours from 36 to 40 are counting towards my FERS. And regarding the out of schedule premium, that only applies to any working hours outside my normal bid UP TO the total hours of my daily work schedule which is 6, so for example, if my schedule is 945 to 445 and I work 7 to 445, I would accrue no out of schedule premium at all.
postalvet  
#8 Posted : Monday, October 14, 2019 4:16:35 PM(UTC)
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Originally Posted by: mikelonggggggggg Go to Quoted Post
I think I figured it out. I talked with a buddy of mine that was converted to career the same time that I was, and he is now a 40 hour regular and we both get the same amount taken out for our FERS retirement. So my supplemental hours from 36 to 40 are counting towards my FERS. And regarding the out of schedule premium, that only applies to any working hours outside my normal bid UP TO the total hours of my daily work schedule which is 6, so for example, if my schedule is 945 to 445 and I work 7 to 445, I would accrue no out of schedule premium at all.


what about the time from 7 to 945??

sounds like out of schedule.


but I believe you posted to the incorrect thread
https://forum.federalsou...s&t=85490#post947676

Edited by user Monday, October 14, 2019 4:17:58 PM(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'
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