Upload
burton
View
47
Download
3
Embed Size (px)
DESCRIPTION
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 - PowerPoint PPT Presentation
Citation preview
Just what am *I*
GOING to GET
Anyway?And When?
What’s in this presentation?OverviewWhen 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 yearsold, 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 Benefit62 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 yearsIn 1948 55 years + 2 monthsIn 1949 55 years + 4 monthsIn 1950 55 years + 6 monthsIn 1951 55 years + 8 monthsIn 1952 55 years + 10 monthsBetween 1953 -1964 56 yearsIn 1965 56 years + 2 monthsIn 1966 56 years + 4 monthsIn 1967 56 years + 6 monthsIn 1968 56 years + 8 monthsIn 1969 56 years + 10 monthsIn 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% = $14,00070,000 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% LESSNO 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 Savings
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: $30,0005% 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?
Leave it in until 70 years old
Cash all or some of it out – 59 1/2
Buy an Annuity
Roll it overOR - 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 Specialist
To 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?