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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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TheRealOrange  
#21 Posted : Tuesday, September 1, 2020 6:43:20 AM(UTC)
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Originally Posted by: VAer1 Go to Quoted Post
But I still don't quite understand below OPM statement, also mentioned in above post.

Is it saying: For retirements effective between October 28, 2009, and December 31, 2013, for every 2087 hrs of sick leave balance, it can be added as 6 months of annuity calculation?

For retirements effective between October 28, 2009, and December 31, 2013, 50 percent of unused sick leave can be used for additional service credit. For retirements effective after December 31, 2013, 100 percent of unused sick leave can be credited.

Yes. Originally, retirees were permitted to use only half of their accrued sick leave for service credit for annuity calculations. It was a transition period rule. Starting in 2014, retirees could use all of their sick leave for service credit for annuity calculations. As far as I know, using sick leave for retirement eligibility under FERS has never been permitted.
VAer1  
#22 Posted : Tuesday, September 1, 2020 6:55:12 AM(UTC)
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Originally Posted by: EagleDog Go to Quoted Post
The Fine Points of Crediting Unused Sick Leave toward Retirement

There are several fine points of crediting unused sick leave, including one that proves to be a disappointment to many federal employees who are approaching retirement, and another that often proves to be an unexpected bonus.

On the negative side, and to the surprise of many, unused sick leave can’t be used to make you eligible to retire. It can only be added after you have met the age and service requirements to do that.

https://www.fedweek.com/...leave-toward-retirement/


Thanks for the link.

I have read the article in the link, but I don't think the article directly answers my question.

I fully understand that "unused sick leave can’t be used to make you eligible to retire", so I am not able to retire when I am 56 years old (with more than 10 years of service, and more than 2087 hrs of sick leave). But my question is a different scenario: when I am 57 (my MRA), and I am already eligible to retire with 29 years of service, can 2087 hrs of sick leave be calculated as service credit, so that I can be considered to have 30 years of service, then no annuity reduction.

Based on above response, it seems that the answer is NO.

Edited by user Tuesday, September 1, 2020 6:56:28 AM(UTC)  | Reason: Not specified

postalvet  
#23 Posted : Tuesday, September 1, 2020 8:01:54 AM(UTC)
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Originally Posted by: VAer1 Go to Quoted Post


Thanks for the link.

I have read the article in the link, but I don't think the article directly answers my question.

I fully understand that "unused sick leave can’t be used to make you eligible to retire", so I am not able to retire when I am 56 years old (with more than 10 years of service, and more than 2087 hrs of sick leave). But my question is a different scenario: when I am 57 (my MRA), and I am already eligible to retire with 29 years of service, can 2087 hrs of sick leave be calculated as service credit, so that I can be considered to have 30 years of service, then no annuity reduction.

Based on above response, it seems that the answer is NO.


yes if you have 2087 hours when you are eligible to retire they add the 2087 and you get another year.


this was always the way it was for csrs and they made it the same for fers
TheRealOrange  
#24 Posted : Tuesday, September 1, 2020 8:03:38 AM(UTC)
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Originally Posted by: VAer1 Go to Quoted Post
Thanks for the link.

I have read the article in the link, but I don't think the article directly answers my question.

I fully understand that "unused sick leave can’t be used to make you eligible to retire", so I am not able to retire when I am 56 years old (with more than 10 years of service, and more than 2087 hrs of sick leave). But my question is a different scenario: when I am 57 (my MRA), and I am already eligible to retire with 29 years of service, can 2087 hrs of sick leave be calculated as service credit, so that I can be considered to have 30 years of service, then no annuity reduction.

Based on above response, it seems that the answer is NO.

You are not eligible for an immediate unreduced annuity at MRA with 29 years of service. You are eligible under the MRA +10 provision. It is my understanding that even if you are a FERS employee who retires under the MRA+10 provision, and even if you defer the receipt of your annuity to a later date to reduce or eliminate the 5 percent per year age penalty, your sick leave cannot be used to meet the eligibility requirements for being at MRA and having at least 30 years of creditable service to receive an immediate unreduced annuity. Everything I have read supports that conclusion. I would be happy to be corrected, as I know some people who would retire tomorrow if their service credit for years of service could be increased by using their sick leave.
VAer1  
#25 Posted : Tuesday, September 1, 2020 8:07:32 AM(UTC)
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Originally Posted by: postalvet Go to Quoted Post
Originally Posted by: VAer1 Go to Quoted Post


Thanks for the link.

I have read the article in the link, but I don't think the article directly answers my question.

I fully understand that "unused sick leave can’t be used to make you eligible to retire", so I am not able to retire when I am 56 years old (with more than 10 years of service, and more than 2087 hrs of sick leave). But my question is a different scenario: when I am 57 (my MRA), and I am already eligible to retire with 29 years of service, can 2087 hrs of sick leave be calculated as service credit, so that I can be considered to have 30 years of service, then no annuity reduction.

Based on above response, it seems that the answer is NO.


yes if you have 2087 hours when you are eligible to retire they add the 2087 and you get another year.


this was always the way it was for csrs and they made it the same for fers


So your answer is: when I am 57, and I have 29 yrs of service and another 2087 hrs of sick leave, then I can retire with 30 years of service, WITHOUT 25% annuity reduction(5% each year till 62 years old)?
TheRealOrange  
#26 Posted : Tuesday, September 1, 2020 8:16:46 AM(UTC)
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Originally Posted by: postalvet Go to Quoted Post
Originally Posted by: VAer1 Go to Quoted Post
Thanks for the link.

I have read the article in the link, but I don't think the article directly answers my question.

I fully understand that "unused sick leave can’t be used to make you eligible to retire", so I am not able to retire when I am 56 years old (with more than 10 years of service, and more than 2087 hrs of sick leave). But my question is a different scenario: when I am 57 (my MRA), and I am already eligible to retire with 29 years of service, can 2087 hrs of sick leave be calculated as service credit, so that I can be considered to have 30 years of service, then no annuity reduction.

Based on above response, it seems that the answer is NO.

yes if you have 2087 hours when you are eligible to retire they add the 2087 and you get another year.

this was always the way it was for csrs and they made it the same for fers

The key is "when you are eligible to retire." Under FERS, sick leave can be used to calculate the annuity but not to add to years of service to qualify for retirement. So, the sick leave is used, but not to become eligible to retire. OPM specifically addresses this is the creditable service information: "Unused Sick Leave under FERS can be used to increase an individual’s total creditable service for annuity computation purposes only." The sick leave even under an MRA+10 retirement would be added for annuity calculations, but the 5% reduction for every year under age 62 would still take place, I believe. Maybe not, but everything I've read seems to indicate that it would.
EagleDog  
#27 Posted : Tuesday, September 1, 2020 8:19:14 AM(UTC)

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Originally Posted by: VAer1 Go to Quoted Post
when I am 57, and I have 29 yrs of service and another 2087 hrs of sick leave, then I can retire with 30 years of service, WITHOUT 25% annuity reduction(5% each year till 62 years old)?

No.
You WILL be penalized. Your annuity WILL be reduced.
Furthermore, you will NOT qualify for the FERS Special Retirement Supplement. A huge financial loss.


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TheRealOrange  
#28 Posted : Tuesday, September 1, 2020 8:26:54 AM(UTC)
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Originally Posted by: VAer1 Go to Quoted Post
So your answer is: when I am 57, and I have 29 yrs of service and another 2087 hrs of sick leave, then I can retire with 30 years of service, WITHOUT 25% annuity reduction(5% each year till 62 years old)?

If you find that to be correct, please let me know. Here is the language from a FedWeek artcle:

While sick leave can be used to increase your annuity, it can’t be used to make you eligible to retire. It can only be added after you have met the age and service requirements to do that. That’s true even if you are a FERS employee who retires under the MRA+10 provision and defers the receipt of your annuity to a later date to reduce or eliminate the 5 percent per year age penalty.

That is similar to other articles I have read that indicate that retiring under the circumstances you describe, you would be retiring under the MRA+10 provision. So, you would receive a reduced annuity (-25%) with the sick leave then added to the annuity calculation. The sick leave could not be used to get to 30 years of creditable service for eligibility for an immediate unreduced annuity. That's the way I understand it, but I would be happy to be proven incorrect.
postalvet  
#29 Posted : Tuesday, September 1, 2020 11:31:13 AM(UTC)
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Originally Posted by: VAer1 Go to Quoted Post
Originally Posted by: postalvet Go to Quoted Post
Originally Posted by: VAer1 Go to Quoted Post


Thanks for the link.

I have read the article in the link, but I don't think the article directly answers my question.

I fully understand that "unused sick leave can’t be used to make you eligible to retire", so I am not able to retire when I am 56 years old (with more than 10 years of service, and more than 2087 hrs of sick leave). But my question is a different scenario: when I am 57 (my MRA), and I am already eligible to retire with 29 years of service, can 2087 hrs of sick leave be calculated as service credit, so that I can be considered to have 30 years of service, then no annuity reduction.

Based on above response, it seems that the answer is NO.


yes if you have 2087 hours when you are eligible to retire they add the 2087 and you get another year.


this was always the way it was for csrs and they made it the same for fers


So your answer is: when I am 57, and I have 29 yrs of service and another 2087 hrs of sick leave, then I can retire with 30 years of service, WITHOUT 25% annuity reduction(5% each year till 62 years old)?


no, my answer was "when you are eligible to retire" it will be credited with another year

if you are not eligible you do not get it.
VAer1  
#30 Posted : Tuesday, September 1, 2020 1:42:03 PM(UTC)
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Another question: Early Retirement & COLA

If I have chance for early retirement at age 50, for example, the first year of annuity is $15k, will the 12K be adjusted based on COLA?

That is too bad if I receive flat $15k for each year before I reach 62 years old. $15k may be something this year, but $15k has much less buying power in 12 years.

Normally, what is the average annual COLA percentage(for past 5 years)?

Thanks.
EagleDog  
#31 Posted : Tuesday, September 1, 2020 1:50:40 PM(UTC)

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Originally Posted by: VAer1 Go to Quoted Post
Another question: Early Retirement & COLA...If I have chance for early retirement at age 50

No penalties for FERS employees.
COLA at 62.
FERS Special Retirement Supplement payments at 57.
Penalty-free TSP withdrawal options at 50 (TSP annuity or life-expectancy payments).

Edited by user Tuesday, September 1, 2020 1:52:58 PM(UTC)  | Reason: Not specified

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postalvet  
#32 Posted : Tuesday, September 1, 2020 2:12:31 PM(UTC)
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Originally Posted by: VAer1 Go to Quoted Post
Another question: Early Retirement & COLA

If I have chance for early retirement at age 50, for example, the first year of annuity is $15k, will the 12K be adjusted based on COLA?

That is too bad if I receive flat $15k for each year before I reach 62 years old. $15k may be something this year, but $15k has much less buying power in 12 years.

Normally, what is the average annual COLA percentage(for past 5 years)?

Thanks.


everything you have been told so far is fact

but whatever department you work at could get permission to change it all


you should not worry in advance because that never comes out ok.


take each day as it comes and if an early out happens that is the time to prepare.



VAer1  
#33 Posted : Tuesday, September 1, 2020 2:13:34 PM(UTC)
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Originally Posted by: EagleDog Go to Quoted Post
Originally Posted by: VAer1 Go to Quoted Post
Another question: Early Retirement & COLA...If I have chance for early retirement at age 50

No penalties for FERS employees.
COLA at 62.
FERS Special Retirement Supplement payments at 57.
Penalty-free TSP withdrawal options at 50 (TSP annuity or life-expectancy payments).


Thanks.

I am more concerned about COLA. What does COLA at 62 mean?

If I retire at 50 (early retirement) in 2020, and receive $1000 pension monthly. Before I turn to 62 in 2032, I will still receive only $1000 pension monthly? That is 12 years, $1000 has much less buying power then.

Thanks.
EagleDog  
#34 Posted : Tuesday, September 1, 2020 2:22:20 PM(UTC)

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Originally Posted by: VAer1 Go to Quoted Post
If I retire at 50 (early retirement) in 2020, and receive $1000 pension monthly. Before I turn to 62 in 2032. I will still receive only $1000 pension monthly?

Yes and no.
The original $1000 will not change until you reach age 62 (at which time it would be eligible for COLAs).
However, at age 57 (MRA), your payment from OPM will increase significantly (due to the FERS Special Retirement Supplement).

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VAer1  
#35 Posted : Tuesday, September 1, 2020 2:31:32 PM(UTC)
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Originally Posted by: EagleDog Go to Quoted Post
Originally Posted by: VAer1 Go to Quoted Post
If I retire at 50 (early retirement) in 2020, and receive $1000 pension monthly. Before I turn to 62 in 2032. I will still receive only $1000 pension monthly?

Yes and no.
The original $1000 will not change until you reach age 62 (at which time it would be eligible for COLAs).
However, at age 57 (MRA), your payment from OPM will increase significantly (due to the FERS Special Retirement Supplement).



Thanks. How about at age 62 and beyond? In this case, how to calculate pension? The first month of age 62: I receive $1000 (which will be increased for COLA) & Social Security Retirement?

If I retire early, I can make money before I turn to 62. I am more concerned about age 62 and beyond (when I am old). I don't really care much about how much I collect before 62, I am more concerned about how much I collect after age 62.

Edited by user Tuesday, September 1, 2020 2:35:35 PM(UTC)  | Reason: Not specified

EagleDog  
#36 Posted : Tuesday, September 1, 2020 2:36:30 PM(UTC)

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Originally Posted by: VAer1 Go to Quoted Post
How about at age 62 and beyond?

At age 62, the FERS Special Retirement Supplement payments would stop.
Your $1000 FERS pension would be eligible for COLA's.
You could choose to start collecting Social Security.


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VAer1  
#37 Posted : Tuesday, September 1, 2020 2:48:22 PM(UTC)
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Originally Posted by: EagleDog Go to Quoted Post
Originally Posted by: VAer1 Go to Quoted Post
How about at age 62 and beyond?

At age 62, the FERS Special Retirement Supplement payments would stop.
Your $1000 FERS pension would be eligible for COLA's.
You could choose to start collecting Social Security.




Thanks for detailed information. Now I have some basic ideas about how it works.

Now I have some conclusions.

If early retirement at age 50 with 20 years of service, there is not much annuity(not too many years of service). And it is even worse that no COLA for whole 12 years, if CPI is high during those years, then my initial annuity will become almost nothing when I turn to 62 yrs old.

Unless they change policy and let annuity to be increased for COLA every year before age 62, it is hard for people to accept early retirement at age 50. Not sure what kind of people wants to retire at age 50 while annuity cannot be increased for 12 years.
EagleDog  
#38 Posted : Tuesday, September 1, 2020 3:01:41 PM(UTC)

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Originally Posted by: VAer1 Go to Quoted Post
it is hard for people to accept early retirement at age 50

Yes it is.
It is very hard to retire at age 50. Very few people are able to do it.


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VAer1  
#39 Posted : Tuesday, September 1, 2020 3:17:34 PM(UTC)
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Originally Posted by: EagleDog Go to Quoted Post
Originally Posted by: VAer1 Go to Quoted Post
it is hard for people to accept early retirement at age 50

Yes it is.
It is very hard to retire at age 50. Very few people are able to do it.




Thanks. Is pension taxable?
VAer1  
#40 Posted : Tuesday, September 1, 2020 3:46:39 PM(UTC)
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Does government announced CPI match actual inflation? Even if retire at age 62, is it possible that the buying power of pension (increased with COLA) has also decreased a lot when you are 82 years old?

Do some retirees feel decreased buying power of pension?
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