Where’s the Retirement Wave?
It’s happening, but the tides ebb and flow.
In fiscal 2018, the number of federal employees who filed for retirement jumped a dramatic 24%, from about 85,000 to 105,000. The sudden increase set off alarm bells that the long-awaited retirement wave was hitting with full force.
Then, last week, the Office of Personnel Management reported the fiscal 2019 retirement numbers. A little less than 104,000 feds filed their retirement papers—a decrease of 1.4%.
So what’s up? Is the retirement wave a myth? Not exactly. It’s just that it’s not a tsunami, crashing ashore and destroying everything in its path, but more of a tidal phenomenon, with ebbs and flows over time, and substantial variations from agency to agency.
A couple of things to remember: First, the number of employees who file retirement applications has in fact been steadily increasing over time, and is higher now than in the recent past. From fiscal 2008 to fiscal 2017 the number of retirements averaged a little over 61,000 per year, substantially less than today’s rate.
Second, the increase in the percentage of federal employees who are eligible to retire continues to go up. As of June 2018, 14% of the workforce was retirement-eligible, and OPM projects that figure to increase to 30% in just a few years.
Retirement eligibility rates vary widely from agency to agency. At the Housing and Urban Development Department, more than 23% of employees were eligible to retire in 2018, a figure that will rise to almost 45% in four years. At the Homeland Security Department, by contrast, only about 10% of employees were eligible to retire last year. That percentage will go up up to 25% in the near future.
The good news is that federal agencies have had plenty of time to prepare for the slow, inexorable demographic change in their workforces. So—theoretically—they should have effective plans in place for for recruiting the next generation of workers and retaining the institutional memory of those who are departing.
It's good that we haven't seen a full-scale wave, because OPM is still struggling with a substantial backlog of retirement applications awaiting processing. The backlog fell from 17,576 applications in August 2019 to 17,376 last month, but that’s still a mountain of paperwork to move through the system.
And it literally is paperwork, with hard-copy federal employee records stored deep beneath the earth at a secure location in Pennsylvania. Tammy Flanagan, your regular retirement planning columnist, will describe the processing system—and ongoing efforts to finally modernize it—in more detail in a future column.