3 legs of FERS retirement

[hansenskmb]

Can anyone explain exactly what fers retirees will receive in retirement? I know there is the tsp, fers pension, and social security, but can you get the social security when you retire at 55 or 56?

[tsptalk]

Welcome hansenskmb!

http://www.doiu.nbc.gov/orientation/fers.html

....

"The Federal Employees Retirement System (FERS) became effective in 1987, and almost all new Federal civilian employees hired after 1983 are automatically covered by this new retirement system. The Federal Employees Retirement System is a response to the changing times and Federal workforce needs. Many of its features are "portable" so that employees who leave Federal employment may still qualify for the benefits.

The FERS retirement system is flexible. Covered employees are able to choose what is best for their individual situation.

The FERS retirement system is a three-tiered retirement plan. The three components are:




http://www.doiu.nbc.gov/orientation/images/bullet.gif Social Security Benefits,
http://www.doiu.nbc.gov/orientation/images/bullet.gif Basic Benefit Plan, and
http://www.doiu.nbc.gov/orientation/images/bullet.gif Thrift Savings Plan Benefits.

The first available part of the retirement benefit is Social Security (http://www.ssa.gov/). It provides monthly payments if you are retired and have reached at least age 62, monthly benefits if you become disabled, monthly benefits for your eligible survivors, and a lump sum benefit upon your death.

The basic benefit portion is financed by a very small contribution from the employee and from the Government. Basic Plan Benefits are a monthly payment depending on the employee's pay and length of service. As in most retirement plans, a formula is used to compute the payments under the Basic Benefit Plan. The Government averages the highest 3 consecutive years of basic pay. This "high-3" average pay (http://www.opm.gov/retire/html/glossary.html#high), together with the employees length of service are used in the benefit formula. Generally, the FERS basic benefit formula is 1% of the high-3 average salary x the total years and months of service under FERS. Temporary service (service covered by social security only) after 12/31/88 is not creditable towards a FERS annuity. Employees who meet the criteria also receive a "Special Retirement Supplement" which is paid as a monthly benefit until the employee reaches age 62. This supplement approximates the Social Security benefit earned by the employee while they were employed by the Federal government.

The third part of the Federal Employees Retirement System benefit is the Thrift Savings Plan (http://www.doiu.nbc.gov/orientation/tsp.html). It is essential that FERS employees contribute to the Thrift Savings Plan as it is an integral part of the FERS system. The Thrift Savings Plan is a tax-deferred retirement savings and investment plan that offers the same type of savings and tax benefits that many private corporations offer their employees under 401 (k) plans.

The Federal Employees Retirement System is a flexible plan for a flexible work force - a work force that is more likely to work for several different employers during the course of a career. It allows for the fact that many employees may not retire from the Federal government. It also builds on the Social Security credits that employees already have or may earn in the future from non-Federal work.

The Office of Personnel Management and the Social Security Administration have teamed up to develop the Federal Employees Retirement Calculator (http://www.firstgov.gov/Citizen/Includes/Retirement_Calculator.html). This model gives a very accurate estimate of benefits. HOWEVER, if you have temporary or military service, or took a refund of your retirement contributions that you have not repaid, the estimate may be higher than your actual benefits. Talk to your Servicing Personnel Office to learn how such service may affect your benefits."

[Wheels]

You have to wait until your 62 to collect social security. However one feature of FERS is a Social Security Supplement. It is not paid by Social Security but rather by OPM. You get it from the time you retire until you turn 62. It is a fairly complicated process figuring out how much it is going to be, but if you need to know I will gladly walk you through it.

[tsptalk]

Wheels?? !!

Did you go and get yourself a life or something? :D

Nice to see you back.

Tom

[hansenskmb]

Thanks for the feedback Wheels. That sounds like a pretty good deal, getting that supplement from opm. Do you think it would be approximately the same amount as the SS would be? I still have about 10 yrs until I'm 56, but looking forward to the day. I'm ballparking it right now, but figuring1K/month from fers, 1K/month from SS? and who knows how much from tsp, right now I have around 200K in it. You seem to know quite a bit about this stuff. What do you do at PO? Steve, clerk at Madeira Beach, Fl PO.

[tsptalk]

http://www.opm.gov/fers_election/html/srs.htm (http://www.opm.gov/fers_election/html/srs.htm)

[Wheels]

I'm not with the PO. I'm an air traffic controller in the FAA.

Figuring your supplement can be tough. Many people's first mistake is that they look at the figure on the statement that you get every year from SS and assume that's how much they are going to get. That figure only applies if you work up until you are age 62. If you go the SS website (www.ssa.gov (http://www.ssa.gov)) you can use a good on-line calculator. In the middle of the page near the top click on a link that says "calculate your benefit". Now you'll be on a page with 3 calculator choices. Pick the middle one - On-Line Calculator. Now you have to answer some questions including what age you expect to work to (you'll need your most recent SS statement to type in your earnings history). Now you have the amount of your SS payment but you need to apply a formula to figure out what OPM is going to give you for your supplement. Multiply the above figure by the number of years of FERS service over 40. In other words, if your SS payment works out to 1,000 and your years of FERS service is 30, then you multiply 1,000 by 30/40 = 750.

There, is that muddy enough for you.

[fuzzduzz]

In order to get this SS suppliment you have to meet three requirements:

1. Must be minimum retiremement age (mra)

2. Must have at least 20 yrs. of service

3. Must select an annuity payment for your TSP

[Wheels]

Yes, you do have to be at your mra (this between 55 and 57 for virtually everyone). You have to have 30 years if you are under 60 years old (unless you are retiring under a special provision for FF, LE, or ATC).. There is no requirement that I'm aware of in regards to your TSP. You'd have to show me that one.

[Mike]

So this supplement is only paid between the time you retire and age 62 (assuming you retire before then)? What happens to this money if you retire after 62?

[Wheels]

You don't get it because you are eligible to collect SS. The idea is that since SS is a part of your retirement, then there needed to be something to bridge the gap if you retire before you are eligible to collect SS.