2023 (COLA)

[12squared]

https://www.fedweek.com/fedweek/january ... -for-fers/

Looks like the second year that the pension COLA is about twice that of the general pay increase. If inflation keeps running well above 2% maybe it's better to retire earlier than later?

Just remember that you will not get a COLA once you retire until after you turn age 62. And the cola is based on whatever the cola for that year is set at.

I am considering 62 as my earliest practical retirement age, based on the pension bump from 1. to 1.1% per year of service. For every year worked past that, the pension should increase by 1/3 the salary COLA (assuming high 3 is still the rule), plus 1.1%. Therefore, as long as the annual pension COLA exceeds the salary increase by 1.1%, you are losing ground by staying employed.

For example:

Salary ___ Pension COLA
(increase)___ (break even)
0.0%______ 1.1%
0.5%______ 1.3%
1%________ 1.4%
2%________ 1.8%
3%________ 2.1%
4%________ 2.4%
5%________ 2.8%

[ripp002]

Nice write up 12squared. If you’re just talking pension.

Losing ground? It depends. Most of us fall under FERS. So, every year I work past 62, l’m making my regular salary, plus delaying my SS supplement. Also, I can continue to pad my TSP.

The plan you’re considering (l turn 62 in 11 days), as I see it, would work nicely it you plan to retire then work as a contractor, or pursue other personal/career goals that would make you happy. IMOFWIW good medicine/food/lifestyle is keeping us alive too long to consider hanging it up entirely at 62. Although, there’s always Powerball.

[Aitrus]

So, every year I work past 62, l’m making my regular salary, plus delaying my SS supplement. Also, I can continue to pad my TSP.

Correct me if I'm wrong, but isn't the SS supplement only for those who retire between their MRA and age 62 and meet certain service length conditions? Doesn't the SS Supplement stop being available at age 62 since the retiree is eligible to claim their regular SS benefits at that age?

Example scenario as I understand it: a person retires at age 57 with 30+ years of service, making them eligible for the supplement. They receive the supplement every year until the retiree turns 62, at which point it ceases. The retiree then faces a choice: wait to claim SS at age 62, or delay it until later. If delayed, they won't receive either SS or the SS supplement, so there's a gap where they face reduced income (often filled with increased TSP withdraws).

[ripp002]

Good catch Altrus!

Poor choice of wording on my part. Should’ve used “SS benefits,” not “supplement.” And, yes, you’re correct regarding the SS Supplement and how it works.

[evilanne]

I think you guys are overthinking this. Remember the 3 legged stool analogy when they 1st came out with FERS...Pension + SS + TSP. I think looking at just the pension doesn't really make sense...there are many variables and rules. Ripp002 makes a good point, overall you are making more money the longer you work and you are also get 5% TSP match for your contributions. If you start taking SS at 62, you are getting a 30% reduction from Full Retirement Age (FRA) benefit. I understand wanting to maximize things like your pension but I don't see how you can ever really breakeven with a higher COLA adjustment (FERS is 1% lower than CSRS & SS for any adjustment 3% or higher) because your pension will be ~ 60 to 70% lower than your salary under FERS. You need to pull any extra money needed from somewhere.

I think what is more important is to figure out what you really want to do in retirement and how much money you need to fund it. When you retire, start taking SS or withdrawing from your TSP is up to you but your retirement funds should work together.

Happy Trails