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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, October 20, 2021 7:40:22 AM(UTC)

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It seems like it would be better to retire before the end of the year and get a COLA increase (4.9% FERS 5.9% CSRS) than wait to retire next year without it?

Anybody good with the math of this? - i.e. how long do you have to work in 2022 to increase an annuity by 4.9%?
Endless Summer  
#2 Posted : Wednesday, October 20, 2021 8:51:29 AM(UTC)
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Originally Posted by: smithandjones Go to Quoted Post
It seems like it would be better to retire before the end of the year and get a COLA increase (4.9% FERS 5.9% CSRS) than wait to retire next year without it?

Anybody good with the math of this? - i.e. how long do you have to work in 2022 to increase an annuity by 4.9%?


Just doing the simple math, I'd say it depends on how much time in service you have. For example, if you're retiring with 10 years service,
you would need to work an additional 6 months to raise your annuity by 4.9%.

The more I think about it, the muddier the math gets. Also, I wonder if you're not chasing nickles.

Assume you are eligible for $1,000/month annuity, 4.9% is going to be $49/month or $588.00 per year. Assuming you're a GS-12 with a bi-weekly take home of $2,500 every additional month you earn is going to equal about 8 years at the 2021 rate. Work 3 months and it would take you 24 years to hit the point where you'd be better off locking in the 2021 rate. This is without even considering the additional time in service and the effect of a 2022 raise on your high 3.

I'd say all the calculations above are meaningless. If you are ready to retire now, do it. If another three months is fine with you, stick around.

Best wishes, I'm out in 11 days.

Edited by user Wednesday, October 20, 2021 9:07:31 AM(UTC)  | Reason: Math is hard...

mengr  
#3 Posted : Wednesday, October 20, 2021 10:00:33 AM(UTC)
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Cola is prorated for the year you are retired. You will not get anywhere near the full cola now.

see Cola January 2022 under Federal Retirees
smithandjones  
#4 Posted : Sunday, October 24, 2021 8:18:03 AM(UTC)

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Originally Posted by: mengr Go to Quoted Post
Cola is prorated for the year you are retired. You will not get anywhere near the full cola now.

see Cola January 2022 under Federal Retirees


Wow! Thanks for that information - that makes it even more twisted for new retirees. Can’t imagine the justification for them getting so much less as they are just as affected by inflation.
Raoul  
#5 Posted : Sunday, October 24, 2021 8:48:22 AM(UTC)

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Well no, the newly retired aren't affected the same.
The COLA figure represents inflation that occurred in a period of 2021 in regard to 2020.

Someone retiring January 2021 had 12 months of that affected inflation
Someone retiring December 2021 had one month affect.
Someone the end of June half year/ half ration.

There may be zero inflation/COLA in 2022.
It's unknown until compared with the 2021 numbers.
Retired July 2011
GordonG  
#6 Posted : Tuesday, October 26, 2021 7:46:15 AM(UTC)
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Originally Posted by: Raoul Go to Quoted Post


There may be zero inflation/COLA in 2022.


Thank you. That was a good one!!

Flooding the economy with even more money in search of fewer goods like what's happened for the past 9 months is a recipe for more inflation, not zero.

But perhaps you're right, there may be zero inflation in 2022.


#Build Back BANKRUPT
Raoul  
#7 Posted : Tuesday, October 26, 2021 8:27:36 AM(UTC)

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I was just pointing out that even though the 5.9% cola is applied Jan 2022 it is for a past event, the year 2021.

Someone subject to possible promotions, step increases and overtime for some portion of the year aren't in the same boat as those on a fixed income for 12 months.

Retired July 2011
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