Working longer because you love your work, or because you must?

Although the Federal Employees Retirement System (FERS) was launched in the 1980s, it is still considered the “new” plan by workers who remained in the old Civil Service Retirement System (CSRS).

Back in the day, politicians decided the CSRS plan was too costly and unfair to the majority of people who go to work for the government but don’t retire from it. CSRS was designed for “lifers”. The portability of FERS, with its Social Security and TSP component, worked better for most people who came into government but didn’t stay. Though it was designed in part for people who don’t make a career in government, it has had the effect of forcing many who do to work longer than they might have under the old CSRS system.

Last week we asked people who are or who plan to work longer than necessary to qualify for benefits what’s keeping them on the job. Lots of interesting responses, including this one from a reader who says FERS literally has a hold on people. He writes:

Great article. I have been pondering the same question as it relates to workforce planning. Tough to pinpoint the new emerging “average retirement date” as the workforce transitions from a mostly CSRS workforce to one comprised almost exclusively FERS employees. CSRS employees were almost incentivized to retire early and transition to a private sector job, to earn Social Security credits and leverage 401k matching opportunities. FERS employees have a different factors to consider.

For starters, they don’t hit a ceiling on their defined benefit annuity, like CSRS personnel do at the 80% mark (at ~42 years of service). Second, they get a 10% bump if they stay to age 62. Third, expenses related to taking care of children and paying a mortgage start to decrease at the time that “Catch-up” contributions can be made, enabling senior employees to sock away a lot of money in their TSP in their latter working years. Fourth, staving off retirement until age 70 gives an 8% bump for every year beyond full retirement age, which is currently 66 years and two months for those born in 1955, rising to 67 for those born in 1960 or later (Gen X).

The volatility of the market tells me that many will work just a little bit longer to provide a cushion of savings in event of a 2008-like market downturn. In addition, contracting jobs do not pay as well as they did in the early 2000s, so the opportunities to make more on the outside aren’t necessarily there. So I have told my leadership to expect most members to retire between ages 66 and 70 for the foreseeable future, rather than ages 55-62, which was more common in previous decades. all the best. -Tom G.

Meantime, this Navy Vet and long-time Social Security Administration employee says the luck of the draw, and the fact he likes working for SSA in Oakland are the glue that keeps him bound (also his wife says the idea of twice the husband vs. half the income isn’t very appealing). He writes:

Mike some of us like to work I am just a lad of 73. My service comp date is 12 26 1969 because I passed my pre-induction physical and so went into the Navy because I could inhale and exhale. After 4 years people thought I caused the Vietnam War with my typewriter and so eventually I got hired by SSA in December 1973 and been there ever since. Don’t like change and so I work. Also wife does not want me to at home. Work in a great place east Oakland. My theory is this why not work?? -Navy Vet/SSA in Oakland.

Nearly Useless Factoid

By Alazar Moges

The iPhone is synonymous with the companyApple, and many of you reading this probably have one with you right now. But the original mobile device to have the iPhone name was actually made by Cisco. The original version launched a few weeks before Apple announced their own iPhone. Cisco took Apple to court in 2007 for trademark infringement. The suit was settled out of court and both companies were allowed to continue using the name. Needless to say, Apple go the last laugh.

Source: CNET