Annuity Calculators
Pensions for private-sector workers have largely disappeared, replaced by 401(k) plans that require workers to save a portion of each paycheck. In many cases, employers offer a modest company contribution. “To have FERS basic retirement – just for waking up every morning – you get 30 percent of your salary, and it’s not affected by the stock market. That’s golden,” Flanagan says. “Federal employees, for the most part, are in a good place.” But getting to that good place still requires some effort. For example, by contributing to the TSP for 25 years – the maximum contribution is $17,500 for 2014 – government workers can amass a retirement nest egg of more than a half-million dollars, Flanagan says. “That can provide $20,000 to $30,000” a year in retirement income in addition to the FERS annuity. Add Social Security, and “that’s a lot to celebrate,” she says. TSP offers several online calculators, including some designed to estimate the future growth of TSP accounts and the monthly income TSP savings will generate (go to www.tsp.gov and click on Planning & Tools). And there’s a user-friendly online “retirement estimator” on the Social Security Administration website for obtaining a quick estimate of Social Security benefits (www.ssa.gov/ estimator). But other parts of retirement planning often turn out to be troublesome. “The hardest and most tedious part of a retirement calculation is computing the length of service,” Flanagan says. “Many employees have had issues with their service that can make it difficult to compute their service accurately.” The problems are legion. “Files get misplaced; records get scrambled,” Flanagan says. Getting military service counted as part of civilian retirement benefits can be problematic. Federal employees who started out as temporary or part-time workers may be dismayed to discover that time in those jobs is counted differently for retirement purposes than is full-time, permanent employ-
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ment. Breaks in employment, switching from agency to agency, locality pay and overtime can all complicate the process of calculating “creditable” service for retirement, Flanagan says. “I would say that better than half [of federal employees preparing for retirement] have questions about their service. And a lot of those who have problems don’t even know they have problems,” Flanagan says. The rules that govern what does and doesn’t count as creditable service take up four chapters – 282 pages – in the CSRS and FERS Handbook for personnel and payroll offices, she says. “Online calculators are fine to run the numbers,” Flanagan says – but first you need accurate numbers. “I would highly recommend that at least a year before you want to retire you get an estimate [of retirement benefits] from your agency.” That way, the agency has to round up the records. “In the end, it’s the agency that has to submit your paperwork to the Office of Personnel Management anyway,” she says. While online retirement calculators are valuable for federal employees close to retirement, they’re equally helpful for younger workers trying to set realistic retirement goals, says Nevin Adams, director of the American Savings Education Program at the Employee Benefits Research Institute. Consider John Koehler, who hoped to retire from the Department of Homeland Security (DHS) as soon as he became eligible in 2005. He abandoned that plan after building a simple Excel spreadsheet to calculate his retirement prospects. The numbers told him that if he worked for eight more years, his annuity would be substantially larger. Six years passed, and in 2011, as soon as DHS made the retirement calculator FHR Navigator (https://fhrnavigator.com/frbweb/logon. do?operation=index&client=CBP) available to employees, Koehler used it to recalculate his annuity. It was “not as user friendly as it could have been,” Koehler says, but “it actually goes into your electronic record and looks for those anomalies and verifies what your income was.” That’s how Koehler discovered that a long-ago job with