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Planning for a Delayed Retirement

According to the 17th Annual Transamerica Retirement Survey, workers’ expectations regarding when they will retire have shifted dramatically from an earlier era, when most people expected to retire at age 65, the original full retirement age for Social Security. According to the Office of Personnel Management, the average retirement age for a federal employee between 2005 and 2014 was 60.2 years and average length of service was 27.8 years; 54 percent of those were age 60 or older; and half of retirees had 30 or more years of service. According to the Transamerica study, the majority of American workers (54 percent) plan to work past age 65, including 13 percent who do not plan to retire at all.

While most federal employees probably do plan to retire at some point, the top three largest federal agencies all have experienced a slight increase in the average retirement age, OPM reports. Of the 1,860,702 full-time permanent federal employees in 2015, 75,891 of them already were age 65 or older—a little over 4 percent of the workforce.  

Ace, a regular reader of this column recently wrote: Something I have never seen discussed in your Government Executive column...

Don't Make These Common Mistakes

I don’t take lightly the trust that I’ve earned from federal employees and retirees when providing information about federal retirement benefits. I received a well-deserved storm of criticism for careless errors initially included in my column last week (they’ve been corrected). It reminded me of the old adage “measure twice and cut once” before sending off a draft that will be read by employees trying to find the key to meeting their retirement planning goals.     

Since we’re on the topic of mistakes, this seems like a good time to share three common errors that can cost you more than just your pride after retirement:

Mistake No. 1: Misunderstanding the value and the cost of the spousal survivor benefit election.

When completing the CSRS and FERS retirement application, you must elect the type of retirement that you want. Your choices include the election of a:

  • reduced retirement benefit to provide the maximum survivor annuity for your current spouse equal to 50 percent of your unreduced FERS retirement or 55 percent of your unreduced CSRS retirement;
  • partial survivor annuity for your current spouse of 25 percent of your unreduced FERS retirement or 55 percent of something less than...

Pay Raise Considerations

On Dec. 27, 2016, President Obama signed into law the 2017 pay increase for federal employees who are paid under the General Schedule, Foreign Service Schedule, and other pay systems for executive, legislative and judicial branch employees. You can find the new pay charts at the Office of Personnel Management’s website--if you haven’t already downloaded them.

Pay raises vary according to locality, and also raise long-term considerations about Social Security and other retirement planning issues.

For example, if you’re a General Schedule employee in the Washington, D.C. locality pay area, you received 2.88 percent more money in your paycheck for the pay period that began on Jan. 8. So a GS-9, Step 6 employee who was earning $62,338 in 2016 gets basic pay of $64,136 in 2017. That’s an increase of nearly $2,000 per year, or $166 a month before taxes. A GS-14, Step 10 employee who earned $141,555 in 2016 will get $145,629 in 2017. This is an increase of a little more than $4,000 in gross pay, or $339 per month.

As I noted in last week’s column, the maximum taxable earnings for for the...

Annual Benefit Adjustments

At the beginning of each year, certain automatic increases to federal employee and retiree benefits go into effect. Many of the increases take place under established formulas and are driven by indexes such as the rate of inflation or the increase in average wages in the United States.

Here is a recap of key increases for 2017:

The 2017 interest rate for service credit payments for civilian and military service credit deposits under the Civil Service Retirement System, Federal Employees Retirement System, refunds from the retirement fund, and voluntary contributions under CSRS is 1.875 percent (down from 2 percent in 2016).

The annual elective deferral limit for Thrift Savings Plan contributions remains unchanged at $18,000 for 2017. This applies to combined total of traditional and Roth contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay and bonus pay, but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone. In addition, the “catch-up contribution” limit — the maximum amount of contributions that can be contributed in a given year by participants age 50 and older — remains unchanged at $6,000 for...

So You Want to Retire Overseas

The inspiration for this week’s column has nothing to do with this week’s presidential inauguration. Rather, it came from a recent email from a federal employee who is married to a German citizen and plans to spend much of her time as a resident of Germany. She will join thousands of federal employees and retirees who retire outside the United States.

According to a recent Congressional Research Service report, a little less than 30,000 civilian employees live abroad. But that number doesn’t include employees of several agencies, including the State Department. It also doesn’t include the military. As of 2010, there also were almost 29,000 retirees and survivor annuitants living in foreign territories.

Here’s part of  the email from the employee who plans to retire in Germany:

I’ve been reading your posts for about 10 years now, but diligently for the past two years since planning my retirement for June 30. I have learned a lot, especially since I am married to a German citizen with a green card and a Social Security number. I will be living in Germany for at least six months and one day out of the year...

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