What’s your target retirement age? 60, 65, or work-till-you drop?

When they retire after a full career with the federal government, many if not most of the former G-persons are just as well off as their private sector friends and neighbors who get by primarily on their Social Security benefit. In many cases better off. For a couple of reasons:

Unlike a growing number of private companies (which have been shedding retirement plans since the 1970s) the government has two basic defined benefit plans: The Civil Service Retirement System which covers most current retirees and the FERS program that replaced it. FERS covers most current workers.

CSRS provides a much more generous civil service annuity that is inflation-indexed unlike most private retirement plans. FERS offers a less generous federal annuity than CSRS. But workers under it get a government contribution of up to 5 percent of an employee’s salary toward their Thrift Savings Plan. That’s Uncle Sam’s in-house 401(k) plan. Most government workers are contributing something to their in-house 401(k) plan. Most private sector workers are not! That, over time, is huge!

FERS retirees also qualify for Social Security, which replaces on average about 40 percent of their income. The TSP — assuming they contribute — is estimated to supply 30 to 50 percent of the income they will have in retirement. Again, huge! And not a gift because they paid for most of it.

But prospects for a happy, well-funded federal retirement, will disappear, fast, if Congress again goes after the CSRS and FERS plans. Last year, it appeared to be on track to whittle both back, making them more costly to workers and less generous to retirees. The idea was to increase the amount of money workers must kick into their plans by up to 6 percent, and reduce benefits by eliminating cost-of-living adjustments for FERS retirees and reducing them for CSRS retirees. In the end, nothing happened thanks in part of heavy lobbying by pro-fed and retirees organizations and unions, and an inability of the House to get its legislative act together.

But that was then, this is now. President Donald Trump has proposed major changes in the federal retirement program. It has also endorsed a foot-in-the-door approach: Asking the quasi-federal U.S. Postal Service to whittle back retirement benefits for its employees based on what Congress and the White House are proposing for workers at the IRS, Defense Department, Homeland Security, the VA and other civil service operations.

What would working for, and retiring from, the government look like if Congress imposes a typical non-federal retirement package on the civil service workforce? According to experts, people would likely wind up working much longer and still have less when they did retire. Atlantic Magazine says that 8,000 to 10,000 Americans turn 65 each day and those retiring on reduced retirement benefits will have a significant impact on the economy. For a gloomy glimpse into what might be your retirement future, click here.

Nearly Useless Factoid

By Michael O’Connell

Saturday Night Live aired seven sketches featuring the character Debbie Downer, as portrayed by Rachel Dratch. An eighth sketch was recorded during dress rehearsal for the May 10, 2010 episode, but it was cut from the live show because of time constraints.

Source: Wikipedia

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THRIFT SAVINGS PLAN TICKER

Jun 14, 2021 Close Change YTD*
L Income 23.0095 0.0085 2.88%
L 2025 11.8724 0.0088 5.61%
L 2030 41.9032 0.0394 7.07%
L 2035 12.5873 0.0127 7.71%
L 2040 47.6439 0.0519 8.36%
L 2045 13.0562 0.0148 8.91%
L 2050 28.6108 0.0347 9.49%
L 2055 14.0685 0.0231 11.70%
L 2060 14.0684 0.0231 11.70%
L 2065 14.0683 0.023 11.69%
G Fund 16.6047 0.0021 0.53%
F Fund 20.8112 -0.044 -2.22%
C Fund 63.7731 0.1312 12.61%
S Fund 84.8888 -0.1586 11.60%
I Fund 39.6529 0.1052 10.58%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.