Ever since the late ’90s, experts — both real and self-anointed — have been predicting a retirement tsunami. A tidal wave of office farewell parties that would leave Uncle Sam light in the brains, experience and competence department. The predictors — which even included some directors of the Office of Personnel Management — had good reasons. The workforce is aging so it stands to reason many more people would have pulled the plug by now than have actually done so. Not long ago, a fed in his 70s, remarked that “when we spot a young, under 30 person walking down the halls, we call colleagues in other offices just to look at them.”
Given the number of candles that keep increasing on Uncle Sam’s workforce birthday cake, it’s got to happen sooner or later. It statistically has to happen. Even Nostradamus made a few bad calls. Or at least predictions that are still pending.
Whether you are a newcomer, at mid-career or one of the hundreds of thousands who could retire right now, the question is what would a retirement tidal wave mean to you. For many, it could open of the promotion pipeline. For others it could mean extra work, at least temporarily. For those who are retirement eligible, it might mean the retirement backlog, which is increasing, will get even worse. What would happen to your finances if your first full retirement payment was delayed for weeks? Or months?
We asked Tammy Flanagan, a bona fide expert in all things retirement related. She’s a familiar byline to GovExec readers. And a frequent (though not frequent enough) guest on Your Turn. After a career in government, she’s “retired” and now works more-than-full-time as a consultant to folks who are planning their retirements. She responded in style with a look at the numbers. Why does she think the tidal wave may be coming? Reluctance of some retirement eligible employees to return to the office, the fact that so many people may have delayed retirement because of uncertainty about the impact and aftermath of the pandemic and the sheer numbers themselves. This is what she said:
The number of retirements in 2021 are already beginning to rebound as the restrictions on travel begin to be lifted and the restrictions on telework begin to change.
2021: 7,684 up from 2020
2020: 6,648 down from 2019
2021: 9,414 up from 2020 and 2019
2020: 6,740 down from 2019
2021: 9,664 up from 2020
2020: 6,566 down from 2019
The top reasons, as I see it, for an increase in the number of retirements in 2021 can be attributed to at least three factors:
The reductions in teleworking.
Employees who postponed 2020 retirements due to the pandemic.
The substantial number of federal employees who are eligible to retire.
Employees Eligible for Retirement:
Let’s start with the size of the federal workforce who are covered by the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS).
CSRS: 108,000 (4% of total)
FERS: 2,585,000 (96% of total)
Interesting fact #1: Between 1985 and 2018, the number of civil service annuitants rose from just under 2 million to just over 2.6 million.
Interesting fact #2: There were no CSRS employees under the age of 45 as of September 2018.
Interesting fact #3: As of September 2018, 39% of FERS employees were under the age of 45.
Interesting fact #4: Approximately 4% of CSRS employees and 31% of FERS employees were between the ages of 45 and 54.
Interesting fact #5: Although most CSRS employees (96%) were aged 55 or older, only 30% of FERS employees were aged 55 or older.
For CSRS, normal retirement can occur as early as the age of 55 for an employee with 30 years of service.
For FERS, the minimum retirement age is currently 56 years and 2 months for individuals born in 1965, 56 for those born from 1953-to-1964 and will increase to 57 years old for workers born in 1970 or later.
Under both programs, normal retirement can be taken at the age of 60 with 20 years of service or the age of 62 with five years of service.
The average age of workers taking voluntary, normal retirement in FY 2018 was 63.1 for employees under CSRS and 63.0 for those under FERS. Workers taking normal retirement under CSRS in FY 2018 had completed an average of 38.7 years of service, whereas those retiring under FERS had an average of 24.7 years of service.
There are more people eligible to retire today than there were a few years ago. According to a 2018 column in GovExec, about 14% of federal employees were eligible to retire that year, based on data provided by the Office of Personnel Management. That is expected to jump to 30% by 2023. NASA is set to face the largest growth of any agency in employees who can separate from federal service with full benefits by 2023, when 44% of workers will be eligible.
Definitely food for thought! If you want more personal retirement advice you can reach her at Tammy@retirefederal.com.