Just what am *I*

GOING to GET

Anyway?And When?

What’s in this presentation?

Overview

When can I retire?

What will be my FERS Retirement Benefit?

How much will my Social Security payment be?

What about Thrift Savings?

What I will be living on combining these?

Summary

This presentation is meant to be

general explanation.

Please see your HR professional for an actual estimate.

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 retirement system is a three-tiered retirement plan:

•1. Basic Benefit Plan financed by a very small contribution from the employee and Government. Monthly payments depend on the employee's pay and length of service.

2. Thrift Savings Plantax-deferred retirement savings

3. Social Security Benefit provides monthly payments if you are retired and have reached at least age 62.

Note the sick leave ofover 1,000 hours-

more on that creditlater….

This pay stub is a few years

old, so the amounts seen here may be more.

The FERS retirement deduction for 2 week pay is 19.37 (Circled)

OASDI= Old age survivor disability insurance – (Social Security), is $147.00

Note the TSP deduction- this is now increased with an additional after 50 deduction.

Here’s where the money is coming from!

Age Service

MRA 30 years Full Benefit

60 20 years Full Benefit

62 5 years Full Benefit

MRA 10 years Reduced Benefit

50/20 may be offered – “ reduction in force”

YOUR Minimum Retirement Age (MRA)If you were born… …then your MRA is:

Before 1948 55 years

In 1948 55 years + 2 months

In 1949 55 years + 4 months

In 1950 55 years + 6 months

In 1951 55 years + 8 months

In 1952 55 years + 10 months

Between 1953 -1964 56 years

In 1965 56 years + 2 months

In 1966 56 years + 4 months

In 1967 56 years + 6 months

In 1968 56 years + 8 months

In 1969 56 years + 10 months

In 1970 or later 57 years

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.

The Government averages the highest 3 consecutive years of basic pay. This high 3 average pay, together with the employees length of service are used in the benefit formula.

1. Basic Benefit Plan

Example of age 60 with 20 years:

70,000 x 20 x 1% = $14,000

70,000 x 20.5 x 1% - $14,350

(Sick Leave credit added on)

Example of age 62 with 20 years:70,000 x 20 x 1.1% = $15,400

Basic Benefit Plan As in most retirement plans, a formula is used to compute the payments under the Basic Benefit Plan.

Income x Years x 1% = Annual Income (High 3 average) (credible) (or 1.1%) (Just the Basic Income)

“Credit” is given

For unused sick leave.

For Example- the 20 years

Would be changed to

20.5 years if approx 1,044 hours were available.

At 60 (if you have at least 20 years)

At 61 (if you have at least 10 years)

Subtract 5%

At 60 (if you have at least 10 years)

Subtract 10%

At 59 (if you have at least 10 years)

Subtract 15%

At 58 (if you have at least 10 years)

Subtract 20%

At 57 (if you have at least 10 years)

Subtract 25%

At 56 (or MRA)

(if you have at least 10 years)

Subtract 30%

What is your Benefit?

I am estimating my “high 3” to be:

A _______________

I want to retire at age:

B _______________

By that time, I will have

C ____________ years

1% or 1.1% if 62 or more.

D ______________

A x C x D =$________________Subtract 5% per yearFor each year under 62, (unless you have20 at 60 or 30 by MRA)

$_______________

Divide by 12 =$_______________Your monthly paycheck

I am estimating my “high 3” to be:

A $76,200.00

I want to retire at age:

B 56

By that time, I will have

C 24 years

1% or 1.1% if 62 or more.

D $18,288.00

A x C x D =$5,484.00Subtract 5% per yearFor each year under 62, (unless you have20 at 60 or 30 by MRA)

$12,804 (What’s left)

Divide by 12 =$1067.00MY monthly paycheck

What still has to come out:A Taxes

B Health Insurance

C Life insurance ?

D Long Term/ disability

By that time, I will net

??? $700 ???

$1067.00MY monthly

GROSSpaycheck

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.

5 years + 62= Full Basic, NO Supplement

10 years + 56= Basic (minus 5% reduction for each year under 62)- up to 30% LESS

NO Supplement

20 years + 60= Full Basic + Supplement

30 years + 56= Full Basic + Supplement

(or your minimum retirement age)

1. Basic Benefit Plan

(part B)…

Little Known Fact!

FERS MAGIC NUMBERS!

2. TSP – A Lifetime of Savings2. TSP – A Lifetime of Savings

How much can I contribute?

How much can I contribute?

You may contribute any percentOf your pay, but once you have exceeded $15,000 annually, (or $20,000 if you are at least 50 years old), you may not contribute for the rest of the year.

This may cause you to loose your matching money for your remaining months. Try to hit your limit by your last pay for the year.

TSP INVESTING Salary: $30,000

5% Contribution into TSP 5% Contribution to Savings Account5% Government Match No Government Match5% Annual Interest Rate 2.5% Annual Interest Rate (CD)

Year Contribution Gov't Match Total Year Contribution Total1 1500 1500 3000 1 1500 15002 1500 1500 6150 2 1500 3037.53 1500 1500 9457.5 3 1500 4613.444 1500 1500 12930.38 4 1500 6228.785 1500 1500 16576.9 5 1500 7884.56 1500 1500 20405.74 6 1500 9581.61

7 1500 1500 24426.03 7 1500 11321.158 1500 1500 28647.33 8 1500 13104.189 1500 1500 33079.7 9 1500 14931.7810 1500 1500 37733.68 10 1500 16805.07

Take Home less 30%Taxes/Penalty: $26413.58 versus $16805.07

What to do with TSP Funds?What to do with TSP Funds?

Leave it in until 70 years old

Cash all or some of it out – 59 1/2

Buy an Annuity

Roll it over

OR - Any combination of the above

Before 1984, the law excluded from Social Security coverage all federal civilian employment that was covered under a retirement

system established under the laws of the United States, such as the Civil Service Retirement System

(CSRS).

Federal employees newly hired after December 31, 1983, are

covered by Social Security and they therefore pay Social Security

taxes (currently 7.65 percent of pay).

FICA contributions consist of Medicare + OASDI taxes.

3. Social Security

Possible monthly benefit at age 62http://www.ssa.gov/cgi-bin/benefit6.cgi

Don’t forget to consider:

My new monthly income may eventually consist of

1. Basic Benefit $ 750 (net pay after tax, insurance)

2. + Tsp payment (What ever I withdraw, should have a total around $250,000 by 2011)

3. + Social Security $1,000 (guesstimate) starts at age 60 if you count the Social Security Supplement.

Longer life expectancy.Income from casual employment

Summary

If you retire without 56 years (MDR) + 30 years service…

If you retire without 60 years + 20 years service…..

You may need to work again in another job!

….your chances are less with an early out plan.

SEE HR SpecialistTo discuss your unique

situation.

This presentation is forgeneral information only.

Prepare for take off!

Aren’t you glad your eyes are opened up to this NOW?