Retirement planning: Wisdom of the crowd, when groupthink pays off

Retirement planning is essential for just about everyone but if you work for Uncle Sam, a few things can cost you once you’ve switched from larger biweekly pa...

Retirement planning is essential for just about everyone, but especially if you work for Uncle Sam. That’s because there are so many things you can do right, and a few that can cost you once you’ve switched from larger biweekly paychecks to generally a smaller monthly annuity deposit.

A growing number of private sector companies make it easy. You don’t need to do much because they no longer offer a company pension plan. If they ever did. Your retirement will be financed by Social Security and whatever you’ve saved or invested in the company 401K plan, if they have one. If the company kicks in any matching contributions that is great, but increasingly rare.

For federal and postal workers retirement planning is more complicated. But that’s a good problem to have. The vast majority of people working in government today are under the Federal Employees Retirement System. It consists of a guaranteed defined benefit government annuity — much less generous than the Civil Service Retirement System it replaced — Social Security and your Thrift Savings Plan investments with the government match of up to 5 percent.

Many feds are wise to get individual retirement counseling. But they are also fortunate because many agencies offer them outside help in group sessions paid for by the government. One of them, the National Institute of Transition Planning, presents For Your Benefit each Monday  at 10 a.m. EDT here on

Many people who attend group retirement planning sessions say their biggest and best takeaway came from questions other feds asked. These were things they didn’t think of, but which turned out to be very important in their planning.

For instance, last week on Your Turn the guest was John Grobe from Federal Career Experts. We ran out of time to answer all of the questions we received, some of which are specific to the individual but some fall into the wisdom-of-the-crowd category:

Question from John H.: I may retire this year and I have about six months previous service from over 40 years ago that I need to send a check to the Office of Personnel Management in order to get credit for that time in service. My HR rep said this can be done after I retire and OPM will send me a notice with the amount to be paid. A friend who is retiring next month said this is wrong and that OPM wants this paid up before one retires. Is this correct?

Answer: “If it is a deposit for civilian service, the HR rep is correct,” Grobe said. “OPM will give the retiree an opportunity to pay soon after retirement. His friend may be thinking of a military deposit, which indeed, must be paid before retirement.”

Question from Debra: Regarding the TSP, I need help. I have not been investing the 5 percent in my TSP. I am 63 years old with 29 years of service. Should I immediately invest 5 percent in my TSP or should I do a monetary contribution every pay period? I have met my quarters for Social Security and I will have an annuity but my TSP is in the low $100,000s. I spoke to HR and they did not offer me much help except to looked shocked at me for not wisely investing in 5 percent. I get it but what can I do now? Please advise, I’m scared and also I am a cancer survivor. Thank you.

We also received a question about the CSRS Offset, which was set up briefly between the end of the CSRS retirement program and the start of FERS and which many experts believe is the best all worlds. But it can be tricky.

Question from Maryann: I was wondering if there is a salary cap on the CSRS Offset annuity, as when they did my numbers, they don’t seem high enough. My high-three should be in the 150,000 range, with 38 years of service. HR told me the rules are the same as CSRS for age, time, and salary, just that CSRS pays your annuity before age 62 while Social Security pays after age 62. Is there a cap on the CSRS Offset annuity since it’s linked to Social Security?

Answer: “Like the CSRS system there is an 80 percent cap on the CSRS Offset maximum annuity. But it hits at 41 years [old] and 11 months service, more service than she has,” Grobe said. “She needs to talk to HR about why it is lower than she thinks it should be.”

Nearly Useless Factoid

By Amelia Brust

Throughout history, several states including Missouri, Michigan, California, New Jersey and Montana have imposed or proposed “bachelor taxes” for unmarried men as a way to encourage marriage and an increase in childbirth.

Source: Wikipedia

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