What is or should be the deciding factor in when and if you retire?
Are you leaving at the first opportunity? Or are you planning to work extra because you like the job or your coworkers and want to build your annuity? Are you planning a December or January departure to get the best tax break and carry over the maximum amount of annual leave? Does your departure date depend on your spouse, your health or college bills?
Or you may be one of a growing number of nervous-in-the-civil-service folks who plan to beat a hasty retreat and retire before politicians change the rules surrounding the Civil Service Retirement System and Federal Employees Retirement System plans.
For each of the past five to seven years Congress, and now the White House, have presented plans to change the retirement package. Dozens of proposals have come and gone. Last year it appeared at least one, maybe two changes would hit the FERS program. But Congress ran out of steam and did nothing.
There have been so many proposed changes, some of them decades old, that it is hard for people who care to keep track. There is the “high-5” — basing annuities on the employees highest five-year salary average instead of the current “high-3” formula. If enacted most feds would have to work longer to get the same starting annuity.
Other proposals range from using a different index that would reduce future cost of living adjustments for retirees, thus forcing FERS workers to pay an additional 6 percent for benefits that would be reduced when they retired. There is also the plan to eliminate all future COLAs for FERS retirees and to reduce them slightly for people under the FERS program.
Threats to the retirement system have left some people numb or immune to worry. Others worry a lot, and say their Departure day is based on getting out before any changes are made — if that would do any good.
Typical is this email from a reader who describes himself as a federal employee looking to retire this year. The question is whether that will happen Sept. 30 or Dec. 30:
“I would like to know if the president’s plan to change the retirement system from the high-3 to the high-5 formula … is in the fiscal 2019 budget? And if so, is it likely to pass? This information will help me decide which date I should pick.
“Unfortunately, nothing in Washington is easy. Remember Mike, the high-3 to high-5 proposal has been around forever and it hasn’t happened yet. Also it is probably the least financially harmful of all the other proposals.” — Mike S.
So we punted and asked Jessica Klement, the top lobbyist for the National Active and Retired Federal Employees. Most of NARFE’s members are retirees, so protecting the CSRS and FERS programs is at the top of its agenda. So far, working with a coalition of federal and postal unions, and groups representing supervisors, managers and career executives — to good!
Her first suggestion to Mike S., not surprisingly, was to urge him to join NARFE in order to “get answers to these and more questions for the low membership fee of $40 a year.” Then she pointed out that “a change in the retirement calculation will require congressional action” because the president cannot do so unilaterally.
“We recommend that people do not change their retirement plans based on something Congress might do” she said.
So before you decide speak to one of our retirement consultants today. Schedule your retirement review today!