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Federal Employee’s Retirement System

Federal Employee’s Retirement System. Understanding the Three Parts of FERS. Presented by: Tammy Flanagan Tammy@nitpinc.com. Resources for YOU. www.narfe.org. Paris, Texas?. Planning for your federal retirement can make a world of difference when you retire. Paris, France?.

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Federal Employee’s Retirement System

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  1. Federal Employee’s Retirement System Understanding the Three Parts of FERS Presented by: Tammy Flanagan Tammy@nitpinc.com

  2. Resources for YOU www.narfe.org

  3. Paris, Texas? Planning for your federal retirement can make a world of difference when you retire.

  4. Paris, France? Planning for your federal retirement can make a world of difference when you retire.

  5. Income Replacement

  6. FERS Eligibility Rules

  7. FERS Eligibility Rules Penalty = 5% / year under age 62! 5

  8. FERS Eligibility Rules Buyout? VSIP Voluntary Separation Incentive Payment

  9. FERS Eligibility Rules • Must also apply for Social Security • Recalculated at 12 months and again at age 62 • No FERS Supplement • General formula used if retirement eligible

  10. FERS Eligibility Rules • Cannot reinstate FEHB or FEGLI • No COLA on high-three • Cannot credit sick leave hours • General formula (1%) • Resign from agency and apply later at www.opm.gov

  11. FERS Basic Retirement Benefit = *1.1% if age 62+ with at least 20 years of service or 1.7% for first 20 years of Law Enforcement calculation

  12. High Three Average Salary

  13. What is Basic Pay? If it is subject to retirement deductions, it is basic pay Example: $3,000 x 1.3% = $39 $3,000 x .8% = $24

  14. Length of Service

  15. Formula

  16. Example

  17. Your Turn!

  18. Wait…there might be reductions: • Survivor benefit election • 10% to provide 50% to spouse • 5% to provide 25% to spouse • Former Spouse • Court Order • Less than full-time schedule • MRA + 10 age reduction

  19. Retirement Withholdings: • Taxes • Federal Income Tax • State Income Tax • Insurance • FEHBP • FEGLI • FEDVIP • FLTCIP

  20. The Most Important Thing To Know About Social Security • More to those who earn less. • Less to those who earn more.

  21. How Do Benefits Compare to Earnings? Source: Annual Trustees' Report, Social Security Administration, 2013; Table V.C7

  22. Women with Dual Entitlement 1960-2012 Married, not working outside home Married and working outside home Not married or benefit is higher than spousal

  23. Example: Jan Jean Age 62: $1,350 Age 66: $1,800 Restricted application: 50% of his: $1,000 Delays application to age 70: $2,376 • Age 62: $1,500 • Age 66: $2,000 • File and Suspend • Delays application to age 70: $2,640 • Both live to age 87: $1,071,264 • He lives to 79 and she lives to 87: $843,168 • Both live to age 79: $589,728 Both file at 62 and live to 79: $581,400 Both file at 62 and live to 87: $855,000

  24. Social Security Estimate www.socialsecurity.gov

  25. FERS Supplement = Example: 30/40 x $1,500 = $1,125 / month

  26. Bottom Line FERS + Social Security = Enough? Then, TSP will provide more income!

  27. Questions?

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