Wanna be the richest person in the retirement home?

Retirement, for growing number of workers, is a long-way-off dream. Or increasingly a nightmare. Many companies that once offered pensions have switched to fund-your-own retirement plans. According to the Employee Benefits Research Institute, only 14 percent of private sector workers had defined pension plans in 2011. Since then, a number of companies have dropped pension plans. Only half of all companies, EBRI said, offer employees 401(k) plans.

Money that many, if not most, future non-federal retirees will have will come from Social Security and 401(k) plans, often without any sort of matching contribution from the employer.

For most feds, retiring as opposed to being carried out in a box is still a happy prospect.

Whether you move to a retirement community, downsize to an apartment or shelter-in-place in your (hopefully) paid-for home, many former feds will find themselves in relatively-to-very-very good shape. At least compared to their neighbors.

While retirement looks bleaker every year for a growing number of American workers, it should be much brighter (and in many cases come much earlier) for many long-time federal and postal workers. Because …

Uncle Sam offers what many believe is the best, most generous 401(k) plan in the nation. The Thrift Savings Plan. The TSP has the lowest administrative fees in the business. And the majority of workers (under the FERS retirement plan) are eligible for a total 5 percent match from Uncle Sam. According to the Federal Thrift Investment Retirement Board,74.3 percent of FERS employees are investing 5 percent or more in the TSP, making them eligible for the full 5 percent government match, the equivalent of a 5 percent tax-deferred pay raise. Over years of investing (and compounding), that match can translate into lots of money to have in retirement.

The jewel in the crown for federal workers is the retirement plan. The old CSRS offers the best benefits plus annual COLAs fully indexed to inflation. Retirees got a 1.7 percent COLA last year. There was no COLA this year — for feds or Social Security — because the government said inflation was flat.

The majority of still-working feds are under the less generous FERS program. It’s civil service benefit is lower than for CSRS retirees. And COLAs for FERS workers don’t start until they are age 62. Also, they get so-called Diet COLAs (less than the full inflation rate) when living costs rise by a lot.

For many people approaching retirement is a scary time. And for many it should be. In December, the Los Angeles Times published an excellent (if depressing) story. The headline Your Retirement Prospects Are Bleaker Than Ever should be a tip off. It is not a fun read, but it’s got some good numbers. And it is a lot more fun to read if you are a federal worker/retiree as opposed to a current or former staffer with Acme RoadRunner Inc.

Nearly Useless Factoid

By Michael O’Connell

Wile E. Coyote debuted in the 1949 Warner Brothers cartoon “Fast and Furry-ous”.

Source: Wikipedia

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