In the federal government, a “mixed marriage” is when somebody under the FERS retirement programs legally joins somebody in the CSRS retirement plan.

Many of the CSRS/FERS unions fail, in part because of pension envy. Each thinks the other has got a bigger, better deal.

CSRS employees are getting hard to find. They tend to be older, and closer to retirement than their FERS counterparts. When they do retire, FERS employees receive a smaller federal annuity that CSRS workers. But Uncle Sam gives the FERS folk a 5 percent match (the equivalent of a tax deferred pay raise) to their TSP accounts, if they put in at least 5 percent of their own money.

Despite their differences, when it comes to investing in the federal 401k plan, it is hard to tell a FERS account from one held by a CSRS person.

As of February 2015, the average FERS account balance was $117,584. For CSRS employees, the average balance was $116,963. For members of the uniformed services the average balance was $18,873. Thanks to a rising stock market, all three are probably higher now.

About 40 percent of the money in the TSP is invested in the super-safe (some would say super-dull) G-fund. It is made up of special U.S. Treasury securities. People have mixed views on how much of an individual’s account should be in the G-fund. Many argue that it is the ultimate safe haven during financial downturns. Others say that its return, over time, can be outpaced by inflation. That is especially true, they argue, for feds under the FERS program. While CSRS retirees get full Cost of Living Adjustments, FERS retirees are on a diet COLA plan that doesn’t keep pace with inflation when it tops 2 percent a year.

Many financial planners say that because of their guaranteed defined benefit, which is higher and fully indexed to inflation, that CSRS employees can afford to be bolder when investing. That is putting more money in the higher risk, higher reward stock funds, and less in the G-fund. Because of their higher annuities, many long-time higher-grade CSRS retirees may not ever tap their TSP accounts except to satisfy IRS withdrawal regulations.

Others argue that FERS employees need to be more aggressive with their investments, because they will depend on them more and need to tap them sooner.

Bottom line: Have a plan. Crunch some numbers and know your risk-tolerance (the can-you-sleep-at-night rule) when markets rise slowly or drop dramatically. And before you quit your government job in anger, be sure to check out your next employer’s pension plan, or lack of same. It could be the deciding factor.

Nearly Useless Factoid by Michael O’Connell

The roots of William Shakespeare’s “Romeo and Juliet” can be traced back to an Italian tale that had been translated previously in verse in 1562 by Arthur Brooke as “The Tragical History of Romeus and Juliet” and retold in prose by William Painter in 1567 as “Palace of Pleasure.”

(Source: Wikipedia)

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