Author Topic: Any gov't FERS retire early - regrets or not?  (Read 1383 times)

Beach_Stache

  • Stubble
  • **
  • Posts: 205
    • This Frugal Father
Any gov't FERS retire early - regrets or not?
« on: December 16, 2020, 05:20:54 AM »
Hi all,
I'm wondering if there are any gov't FERS employees who have retired before MRA, and if you regretted it or not?  I've been in 12.5 years, another 16.5 for MRA, 17.5 for 30 years in and immediate pension/medical.  We could probably make it work within 5-10 years financially, but in 10 years we'll have 2 boys of college age, another right behind them. 

I have really enjoyed my job, but a new boss has made it more difficult, although I still enjoy it.  Don't get me wrong, if I weren't getting paid then I wouldn't do the job, but I don't dread going to work.  I know I have a good gig, but w/the new boss who really needles me for silly stuff that's not that important, it makes me think more about early retirement.

I know plenty who have just gotten out of the public sector and moved to more lucrative private sector jobs, or taken something more relaxed, but wondering how many have retired and taken a deferred and much smaller pension at 62, and if you regret the decision or not?  If you get an "early buy out" option at 50, do you get an immediate pension and get to keep medical, or is that all off the table?

Just wondering what my options are at 50, and if I can "suggest" that they offer me an early retirement option, or if I want to get a pension and medical, if I have to stick it out?  Or maybe I'm putting way too much value in a pension and medical benefits into retirement?

the_hobbitish

  • Pencil Stache
  • ****
  • Posts: 706
Re: Any gov't FERS retire early - regrets or not?
« Reply #1 on: December 16, 2020, 06:55:06 AM »
I wonder about this as well. Inexpensive medical plus the pension starts to feel like a pretty great set of golden handcuffs, particularly if you can get the early out at 50.

simonsez

  • Handlebar Stache
  • *****
  • Posts: 1025
  • Age: 35
  • Location: Midwest
Re: Any gov't FERS retire early - regrets or not?
« Reply #2 on: December 16, 2020, 09:36:26 AM »
I believe @sol did and then his posting frequency went wayyyy down after retirement which seems to be pretty normal FERS or not.  I take that to mean he was/is enjoying his free time!


Poor Rod

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: Any gov't FERS retire early - regrets or not?
« Reply #3 on: December 16, 2020, 10:24:18 AM »
First, there are two programs here that you should understand. The first is VERA, or voluntary early retirement authority. This is the authorization for an agency to offer an early retirement, and sets the conditions for who is eligible, currently at least age 50 with 20 years of service, or any age with 25 years of service. It allows an immediate annuity and continuation of health insurance (note that there are conditions on continuing health coverage, specifically being enrolled in FEHB continuously for 5 years prior to retiring), and you will get the supplement when you do hit your MRA. You won't be offered VERA simply by asking for it, it is a tool for agencies to use for substantial reorganizing of the workforce.  There is no "buy out" provision with VERA only.

If you retire early with a deferred retirement (not a VERA retirement), you won't keep health insurance or get the supplement, and if I recall correctly the annuity payments start at age 62. Deferred retirement is worse than early retirement under VERA.

The second program is VSIP, or voluntary separation incentive payments. This is the "buy out" provision, and currently offers a maximum buyout amount of either $25k or $40k, depending on the agency. Again, you probably won't get it simply for asking. The OPM website has more information for both VERA and VSIP. The VSIP payment is taxable.

I am just a little over 2 years away from MRA, and I am ready to go now, but without a VERA I would not be able to continue health insurance. So I am sticking around until MRA, where I will have 32 years of service. So, yeah, I feel that I need to "stick it out" but overall, with a healthy TSP, I am happy to have stayed in federal service.

Beach_Stache

  • Stubble
  • **
  • Posts: 205
    • This Frugal Father
Re: Any gov't FERS retire early - regrets or not?
« Reply #4 on: December 16, 2020, 10:36:14 AM »
First, there are two programs here that you should understand. The first is VERA, or voluntary early retirement authority. This is the authorization for an agency to offer an early retirement, and sets the conditions for who is eligible, currently at least age 50 with 20 years of service, or any age with 25 years of service. It allows an immediate annuity and continuation of health insurance (note that there are conditions on continuing health coverage, specifically being enrolled in FEHB continuously for 5 years prior to retiring), and you will get the supplement when you do hit your MRA. You won't be offered VERA simply by asking for it, it is a tool for agencies to use for substantial reorganizing of the workforce.  There is no "buy out" provision with VERA only.

If you retire early with a deferred retirement (not a VERA retirement), you won't keep health insurance or get the supplement, and if I recall correctly the annuity payments start at age 62. Deferred retirement is worse than early retirement under VERA.

The second program is VSIP, or voluntary separation incentive payments. This is the "buy out" provision, and currently offers a maximum buyout amount of either $25k or $40k, depending on the agency. Again, you probably won't get it simply for asking. The OPM website has more information for both VERA and VSIP. The VSIP payment is taxable.

I am just a little over 2 years away from MRA, and I am ready to go now, but without a VERA I would not be able to continue health insurance. So I am sticking around until MRA, where I will have 32 years of service. So, yeah, I feel that I need to "stick it out" but overall, with a healthy TSP, I am happy to have stayed in federal service.

This is great, thanks!  So sounds like I hope for VERA once I reach age 50 (when I will have 22 years in).  I know that they did the VSIP for some older employees who just sat at their desk and were at retirement age, but we haven't had that in 12 years or so, so that may be out the window.  I guess my main things are to make sure we switch Dental to mine w/in 5 years (we're on DW now) just in case at age 50 I do get offered something. 

Then I guess 2nd question, is if I were to make it 30 years in (age 58), at that point does it make sense to push through the next 4 years to age 62 where I get the 1.1%, or is that dumb for even think of that?  I don't want to not enjoy life waiting another 4 years for another $10k in pension per year, but that is a decent chunk of chain to leave on the table.  I guess I have to wait and see if I'm enjoying it at that point or not.

Poor Rod

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: Any gov't FERS retire early - regrets or not?
« Reply #5 on: December 16, 2020, 10:50:15 AM »
Regarding working to 62 to get the 1.1% - only if you love your job. Max out your TSP from now on, contribute to an IRA or Roth IRA, keep both TSP and IRAs invested in equities, and you probably find that the extra 10% isn't worth it.

Note that there are exceptions to the usual retirement rules for some occupations such a fire fighters, law enforcement, and a handful of others. They can retire earlier than other Feds with no penalties. But if you were in such a job, you would probably know it.

Beach_Stache

  • Stubble
  • **
  • Posts: 205
    • This Frugal Father
Re: Any gov't FERS retire early - regrets or not?
« Reply #6 on: December 16, 2020, 10:58:23 AM »
Regarding working to 62 to get the 1.1% - only if you love your job. Max out your TSP from now on, contribute to an IRA or Roth IRA, keep both TSP and IRAs invested in equities, and you probably find that the extra 10% isn't worth it.

Note that there are exceptions to the usual retirement rules for some occupations such a fire fighters, law enforcement, and a handful of others. They can retire earlier than other Feds with no penalties. But if you were in such a job, you would probably know it.

Yes, even before I started in the gov't I had been maxing out 401k & Roth IRA each year from age 23 on.  40 now, so I have a decent chuck, and DW started maxing out years ago, was at a high % before that with some convincing, all in equities now, so we're doing well.  I guess I've always not liked leaving anything on the table, so while we could probably retire now if we were eager (not really eager just yet), I'm sure we could at 50, but if I'm not dreading my job by then I would probably be okay sticking it out until 58.  I've always told myself that I need to max out everything now, as while I enjoy my job today, all it takes is 1 bad boss to make life miserable, so who knows what the future will hold.  I want to fully fund my entire family's weekly (and maybe multi-weekly in the future) vacations for life, including children and grandchildren, which I expect will take a lot of money, so I want to keep the course as long as I am somewhat enjoying my job.    I've always been a worker bee though and enjoy the tasks, but I know that changes over time the closer to FIRE you get, and I feel myself not being so easy going for stupid tasks the more stash we have!  I guess that's pretty typical.

simonsez

  • Handlebar Stache
  • *****
  • Posts: 1025
  • Age: 35
  • Location: Midwest
Re: Any gov't FERS retire early - regrets or not?
« Reply #7 on: December 16, 2020, 02:34:39 PM »
Then I guess 2nd question, is if I were to make it 30 years in (age 58), at that point does it make sense to push through the next 4 years to age 62 where I get the 1.1%, or is that dumb for even think of that?  I don't want to not enjoy life waiting another 4 years for another $10k in pension per year, but that is a decent chunk of chain to leave on the table.  I guess I have to wait and see if I'm enjoying it at that point or not.
If you're already considering working until age 58 (or at least as a possibility), what about the FERS Supplement?  With 30 years of FERS service at that point, you'd receive roughly 75% of the SS benefit as if you were 62 for those four years until you did turn 62.  With maxing your 401k and Roth IRA since you were 23, you would have plenty retire on and since don't like to leave anything on the table, rationalize retiring before 62 as taking advantage of the FERS Supplement.

https://www.opm.gov/retirement-services/fers-information/types-of-retirement/#url=Annuity-Supplement

mcneally

  • Stubble
  • **
  • Posts: 196
Re: Any gov't FERS retire early - regrets or not?
« Reply #8 on: December 16, 2020, 02:47:20 PM »
I'm 35 and started with with the feds right out of college. As a GS12 in a fairly low cost area who doesn't want kids, I expect I'll have enough to retire by my early 40s even without being super frugal. Whether I want to TBD. But I've decided I'll either quit by 45 or stay til 57. The pension loses most of its value by retiring just a bit before MRA. If I worked til MRA at 57, I'd work 34 years, at which time I estimate its net present value would be around $1mm (including health benefits and supplement). If I worked half as long, I'd estimate its NPV at retirement at age 40 at ~$90k. It depends what assumptions you make on investment returns and inflation, but I estimate that if you compare retiring at 50 vs 57, the increase in pension value is equivalent to the gov putting $70k/ yr in your TSP for those 7 years. There isn't much value in staying beyond MRA though unless you're a big spender and need it.

Beach_Stache

  • Stubble
  • **
  • Posts: 205
    • This Frugal Father
Re: Any gov't FERS retire early - regrets or not?
« Reply #9 on: December 16, 2020, 03:20:20 PM »
Then I guess 2nd question, is if I were to make it 30 years in (age 58), at that point does it make sense to push through the next 4 years to age 62 where I get the 1.1%, or is that dumb for even think of that?  I don't want to not enjoy life waiting another 4 years for another $10k in pension per year, but that is a decent chunk of chain to leave on the table.  I guess I have to wait and see if I'm enjoying it at that point or not.
If you're already considering working until age 58 (or at least as a possibility), what about the FERS Supplement?  With 30 years of FERS service at that point, you'd receive roughly 75% of the SS benefit as if you were 62 for those four years until you did turn 62.  With maxing your 401k and Roth IRA since you were 23, you would have plenty retire on and since don't like to leave anything on the table, rationalize retiring before 62 as taking advantage of the FERS Supplement.

https://www.opm.gov/retirement-services/fers-information/types-of-retirement/#url=Annuity-Supplement

Yes, I have thought of that, and w/that supplement from 58-62 it would probably be roughly the same pension as at 62 w/those 4 years, however at 62 the pension would be around $10k less/year.  I guess I have a hard time coming to grips with not working a few extra years for big gain, but hopefully at that point an extra $10k/year is a drop in the bucket compared to what I have in the TSP.  I guess it's good to plan ahead, but I'm probably trying to chart out the unknown, which is how I'm feeling about work and life between ages 58-62, and that's probably a decision to make in another 15 years (assuming I can hang on that long).

Beach_Stache

  • Stubble
  • **
  • Posts: 205
    • This Frugal Father
Re: Any gov't FERS retire early - regrets or not?
« Reply #10 on: December 16, 2020, 03:25:48 PM »
I'm 35 and started with with the feds right out of college. As a GS12 in a fairly low cost area who doesn't want kids, I expect I'll have enough to retire by my early 40s even without being super frugal. Whether I want to TBD. But I've decided I'll either quit by 45 or stay til 57. The pension loses most of its value by retiring just a bit before MRA. If I worked til MRA at 57, I'd work 34 years, at which time I estimate its net present value would be around $1mm (including health benefits and supplement). If I worked half as long, I'd estimate its NPV at retirement at age 40 at ~$90k. It depends what assumptions you make on investment returns and inflation, but I estimate that if you compare retiring at 50 vs 57, the increase in pension value is equivalent to the gov putting $70k/ yr in your TSP for those 7 years. There isn't much value in staying beyond MRA though unless you're a big spender and need it.

Yes, I think that's what I've been afraid of and the math that I've done is similar in that retiring at 22 years in and you're reducing your pension a lot by that 5%/year for early retirement, so while the gov't makes it sound like you get a pension after 3 years, and while that is true, really it's only a good deal to not have your 30 years in if you start in the gov't later in your career and work until 62.  We have a decent number of people in our office who are older and have not been career gov't employees (well, some are), but plenty who didn't start working in the gov't until 50+, at which point retiring at 62 w/12 years in is actually a really good deal if you can carry medical into retirement and the pension.  I guess the quality of the job and the mission is probably what'll have to determine when I hang up the gov't career.  I guess that's a great plus of having FU money, is that I get a choice vs those who have to stick it out.

DeniseNJ

  • Pencil Stache
  • ****
  • Posts: 524
Re: Any gov't FERS retire early - regrets or not?
« Reply #11 on: December 17, 2020, 06:44:40 AM »
The value of your pension if you stay to MRA or 30 yrs or any other math doesn't matter. Do you have enough? Once you have enough, any extra doesn't make a real difference. So let's say you stay another 7 yrs and your pension triples. If you already had enough, then the extra cash doesn't matter. It sounds like a financial decision and 7 yrs for triple the dough sounds like a good trade, but consider that you aren't getting those 7 yrs back EVER, so if you are selling them bc you need to then fine, but if you are selling 7 yrs of your life for money you don't even need, then it wouldn't matter if it was a billion dollars. Like if I had $5m, then I wouldn't work even one day for another million bc I wouldn't need another million.

Obviously, stuff that you WANT to do and happen to get paid for isn't really work. But when we're talking about retirement, selling another 7 or 5 or 20 or even 1 yr of your life for money you don't need is a waste and a bad deal. Figure out your FIRE number, re-evaluate your situation when you get there, and if you have what you need then bail.

Beach_Stache

  • Stubble
  • **
  • Posts: 205
    • This Frugal Father
Re: Any gov't FERS retire early - regrets or not?
« Reply #12 on: December 17, 2020, 07:37:20 AM »
The value of your pension if you stay to MRA or 30 yrs or any other math doesn't matter. Do you have enough? Once you have enough, any extra doesn't make a real difference. So let's say you stay another 7 yrs and your pension triples. If you already had enough, then the extra cash doesn't matter. It sounds like a financial decision and 7 yrs for triple the dough sounds like a good trade, but consider that you aren't getting those 7 yrs back EVER, so if you are selling them bc you need to then fine, but if you are selling 7 yrs of your life for money you don't even need, then it wouldn't matter if it was a billion dollars. Like if I had $5m, then I wouldn't work even one day for another million bc I wouldn't need another million.

Obviously, stuff that you WANT to do and happen to get paid for isn't really work. But when we're talking about retirement, selling another 7 or 5 or 20 or even 1 yr of your life for money you don't need is a waste and a bad deal. Figure out your FIRE number, re-evaluate your situation when you get there, and if you have what you need then bail.

Yes, great points, that's the way I "talk", but not necessarily the way I "walk".  I guess I have to get my mind around that, and really I'm just buying time to figure out what I want to do w/my days if I were not working.  I enjoy working (right now - for the most part anyways, there are certainly things I could do without), and when the kids are in school I would be bored if I weren't working, so I guess when I get to that point where I'd rather be filling my day w/other stuff is when I should make that decision, and hopefully at that point I'll have enough money that whatever pension there is doesn't matter at all and I can just pull the trigger based on what I want to do rather than based on having enough money (which hopefully won't be a factor in another 10 years).  It's good to get things in perspective.

Sugaree

  • Handlebar Stache
  • *****
  • Posts: 1090
Re: Any gov't FERS retire early - regrets or not?
« Reply #13 on: December 17, 2020, 09:00:16 AM »
First, there are two programs here that you should understand. The first is VERA, or voluntary early retirement authority. This is the authorization for an agency to offer an early retirement, and sets the conditions for who is eligible, currently at least age 50 with 20 years of service, or any age with 25 years of service. It allows an immediate annuity and continuation of health insurance (note that there are conditions on continuing health coverage, specifically being enrolled in FEHB continuously for 5 years prior to retiring), and you will get the supplement when you do hit your MRA. You won't be offered VERA simply by asking for it, it is a tool for agencies to use for substantial reorganizing of the workforce.  There is no "buy out" provision with VERA only.

If you retire early with a deferred retirement (not a VERA retirement), you won't keep health insurance or get the supplement, and if I recall correctly the annuity payments start at age 62. Deferred retirement is worse than early retirement under VERA.

The second program is VSIP, or voluntary separation incentive payments. This is the "buy out" provision, and currently offers a maximum buyout amount of either $25k or $40k, depending on the agency. Again, you probably won't get it simply for asking. The OPM website has more information for both VERA and VSIP. The VSIP payment is taxable.

I am just a little over 2 years away from MRA, and I am ready to go now, but without a VERA I would not be able to continue health insurance. So I am sticking around until MRA, where I will have 32 years of service. So, yeah, I feel that I need to "stick it out" but overall, with a healthy TSP, I am happy to have stayed in federal service.

There's also an option for a postponed retirement (as opposed to deferred).  There are a few specialized cases where it would be beneficial, but some drawbacks as well. 

mcneally

  • Stubble
  • **
  • Posts: 196
Re: Any gov't FERS retire early - regrets or not?
« Reply #14 on: December 17, 2020, 04:41:12 PM »
The value of your pension if you stay to MRA or 30 yrs or any other math doesn't matter. Do you have enough? Once you have enough, any extra doesn't make a real difference. So let's say you stay another 7 yrs and your pension triples. If you already had enough, then the extra cash doesn't matter. It sounds like a financial decision and 7 yrs for triple the dough sounds like a good trade, but consider that you aren't getting those 7 yrs back EVER, so if you are selling them bc you need to then fine, but if you are selling 7 yrs of your life for money you don't even need, then it wouldn't matter if it was a billion dollars. Like if I had $5m, then I wouldn't work even one day for another million bc I wouldn't need another million.

I get that this is an early retirement forum forum and not a finance or effective altruism forum, but too often I get them impression that people think nothing matters more than not working. If working a few extra years can give several hundred thousand dollars to give to a cause that matters to you, or your grandkids college or whatever, if a 40 hour/wk gov job with 5 weeks vacation and 10 holidays can give you that, I think you'd get more satisfaction out of that than more days to go hiking or whatever.

DeniseNJ

  • Pencil Stache
  • ****
  • Posts: 524
Re: Any gov't FERS retire early - regrets or not?
« Reply #15 on: December 18, 2020, 04:36:15 AM »
The value of your pension if you stay to MRA or 30 yrs or any other math doesn't matter. Do you have enough? Once you have enough, any extra doesn't make a real difference. So let's say you stay another 7 yrs and your pension triples. If you already had enough, then the extra cash doesn't matter. It sounds like a financial decision and 7 yrs for triple the dough sounds like a good trade, but consider that you aren't getting those 7 yrs back EVER, so if you are selling them bc you need to then fine, but if you are selling 7 yrs of your life for money you don't even need, then it wouldn't matter if it was a billion dollars. Like if I had $5m, then I wouldn't work even one day for another million bc I wouldn't need another million.

I get that this is an early retirement forum forum and not a finance or effective altruism forum, but too often I get them impression that people think nothing matters more than not working. If working a few extra years can give several hundred thousand dollars to give to a cause that matters to you, or your grandkids college or whatever, if a 40 hour/wk gov job with 5 weeks vacation and 10 holidays can give you that, I think you'd get more satisfaction out of that than more days to go hiking or whatever.

If you are working bc you want to, then keep working. If you are working to give the money to charity, then that's volunteer work, and fine with me.

But if you are working 17 rather than 10 yrs bc your pension will be higher or to 62 instead of 60 for a 1% bump, then, no it's not worth it at all. If you are planning now, you should have enough in 10 yrs that working another 7 shouldn't matter. At the very least you should be re-evaluating your stash in 10 yrs to see if you still need to work. How much higher your pension is won't have much to do with it, IMO. If you have your stash, then you don't need to work, so selling your time is stupid. Giving your time for charity is another story entirely. Work to give the cash away if you want, but don't sell an irreplacable resource like your time if you don't really want/need the dough, no matter how much more your pension would be.

RainyDay

  • Stubble
  • **
  • Posts: 117
Re: Any gov't FERS retire early - regrets or not?
« Reply #16 on: January 04, 2021, 08:28:00 AM »
I'm hoping to do a deferred FERS retirement in 2 years, so I won't have reached my MRA, but I will have 20 years in (and be over the age of 50).  Thus, I won't get the FEHB benefit.  I'd be interested in hearing from folks who did something similar, and whether they wished they had stayed longer for the FEHB benefit.  Like @DeniseNJ has said, I don't think the extra 7.5 years of service is worth it.