Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Not Quite Right

Last week, I wrote about the importance of getting an estimate of your retirement annuity as you plan for life after government. But here's the problem: Some estimates are incomplete and some have errors. It's very important that you have some idea of how your service history should be used to compute your estimate. The Office of Personnel Management provides some information online to help you understand the computation of your retirement, and this information is covered in great detail when you attend a pre-retirement seminar.

Sometimes when I conduct such seminars, employees share estimates they've received from their agencies. On occasion, I've had reason to question some of the information presented, and have told employees to go back to the person who prepared the estimate with a list of questions about potential inaccuracies.

Here's an example of a situation in which a retirement estimate that I reviewed didn't seem quite right. It showed a period of service for an employee, "Georgia," as follows:

Department of State 6/15/81-5/25/83 FICA
Unpaid deposit: $11,000
Reduction to the retirement for this unpaid deposit: $1,100/year
To the untrained eye, this looks like Georgia owes a deposit of $11,000 for a period during which she was a federal employee without retirement coverage. (The deposit would cover the amount she would have paid into the Civil Service Retirement System, plus interest.) It also appears that if she doesn't pay this money back, her retirement will be reduced by $1,100 per year, or a little less than $100 a month.

But I noticed a problem: There's a difference between crediting FICA-covered federal service that was performed before Oct. 1, 1982, and service after Sept. 30, 1982, under CSRS. The software used to prepare this estimate did not break this service down automatically; it was up to the retirement specialist to know this important detail. The two different kinds of service should have been listed separately on the estimate.

The service after Sept. 30, 1982, will not be used in the computation of Georgia's retirement unless the CSRS deposit is paid. Also, different interest rates need to be computed on the post-Sept. 30, 1982, service. A correct estimate would show less of a total deposit because of the difference in the interest rates, but a greater reduction in the retirement benefit if left unpaid.

In this case, the retirement specialist who prepared the estimate had only two years of experience and had never received formal training on manual retirement calculations. Georgia didn't catch the error, because she had even less knowledge of the ins and outs of the retirement system than the specialist. So most likely, the earliest this error would have been caught would have been at OPM after Georgia had retired.

Until there's a completely electronic system for retirement processing, retirement specialists need to understand the complex rules for crediting service. They also need to have a basic grasp of the manual calculations so they can spot errors in estimates.

Arm Yourself

For employees, the old adage that knowledge is power applies. Arm yourself with as much information as possible. The system shouldn't be as complicated as it is, but the reality is that it will probably get even more complex in the years ahead.

The FedBens website offers a do-it-yourself calculator for computing your retirement benefits. Robert Benson, a 35-year veteran of federal service, designed the software to help employees understand the factors that influence their retirement benefits and run calculations that can be compared to those prepared by agency human resources offices. I recommend using this as a second opinion.

Over the long haul, the solution to inaccurate estimates is for OPM to finally achieve its goal of automation and integration of information that flows between employee personnel folders and federal payroll systems using standardized software. This won't be easy, though. Information needs to be gleaned from employee records originally stored on paper. Some of these records include handwritten notes with highly relevant information. Add in the fact that some records have been lost, misfiled, shredded or burned -- or simply have faded -- and you can understand why errors creep in.

That's why it pays to keep your own copies of your records and be prepared to do your own estimate.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Mondays at 10 a.m. EDT on, or on WFED AM 1500 in the Washington-metro area.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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