One of life’s little ironies is that many federal employees are worth more dead than alive, says Senior Correspondent Mike Causey. Most either will have or are already receiving an annuity for life, and in some cases, then some.

One of life’s little ironies is that most of us are worth more dead than alive. Especially if you are a federal or postal worker. Or a retired fed.

Most of you either will have or are already receiving an annuity for life. And in some cases, then some.

People covered by the old Civil Service Retirement System get benefits based on length of service and salary. A fed retiring at 55 after 30 years service will start out with an annuity equal to about 56 percent of his or her final salary. And that is fully indexed to inflation. Those increases — known as cost of living adjustments — are automatic each January, along with increased military retired pay and the giant benefit program, Social Security. While people contribute toward their retirement while working, the average person gets back — in the form of a monthly annuity — all of his or her contributions in 18 months to three years.

The majority of still-working feds are under the Federal Employees Retirement System. FERS has a less generous annuity, and employees are subject to slightly reduced (diet) COLAs. But Uncle Sam kicks in up to 5 percent to their 401(k) plan. That’s the equivalent of a 5 percent tax-deferred pay raise each year they get the contribution from their employer.

Many private sector companies have long-abandoned pension plans. They moved away from defined benefit plans. Instead, they force employees to pay for more of their retirement nest egg via 401k plans (often without a company-match) and Social Security, which is not as generous as the federal annuity system.

Feds are also eligible to provide survivor benefits (including health insurance for life) for spouses and others who have what is known as an insurable interest.

In addition to the pension, Thrift Savings Plan and life insurance, many feds own their own homes. Maryland and Virginia, which surround Washington, D.C., are home to six of the nation’s richest counties. There is money — if you drive around — here.

So, do you know how much you are worth, dead and alive? Who gets what, when? What about tax shelters? Do they exist for feds.

Today at 10 a.m. on our Your Turn radio show, we’ll talk with Tom O’Rourke. He’s an attorney who works with active and retired feds, steering them through the mysteries of estate planning. Listen if you can at www.federalnewsradio.com or 1500 AM in the D.C. area. If you have questions you can call in, or email me before showtime at: mcausey@federalnewsradio.com.

Estate planning is not fun and it can be somewhat grim. But the only thing worse than doing it now is not doing it, and what comes later …

NEARLY USELESS FACTOID

By Michael O’Connell

Jon Bon Jovi and Richie Sambora wrote the song “Wanted Dead or Alive” for the band Bon Jovi’s 1986 album, Slippery When Wet.

Source: Wikipedia

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