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On Mar 25, 2016, at 8:49 AM, scott.ross@dhs.gov [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:
Why would someone retire in their 40s under FERS? Don't you lose 5% of your pension for every year under your MRA. You need to save early and often to your tsp to get a big chuck of money to supplement your pension. 5% of 1000000 dollars would give you 50000 dollars a year. Time is your friend, start early.
Under the special provision of the Federal Law Enforcement retirement, we are allowed to retire, without penalty with twenty years at age fifty or with twenty five years at any age. we are also forced to mandatorily retire at fifty seven years of age.
To compensate for our forcibly abbreviated careers, we accrue 1.7% toward our retirement for the first twenty years and then accrue 1% per year for every year after. The common logic with regard to our special circumstance is that, under FERS, starting a new career as soon as you are able, thus building an toward an additional retirement while earning your first pension will net you more retirement income overall than continuing to serve until fifty seven and accruing just the 1% per year. Hence why most retire in their forties.
As I said before, this is reverse from CSRS where the best logic was to go to mandatory age to maximize your retirement benefits.
As for saving early and often, that is often far easier said than done. Try telling that to a young Agent assigned to a high cost location like San Diego where a six figure salary with a family will allow you to barely survive. It is good advice but not always reasonable or practical.
Posted by: Rob Ploe <ploejob@yahoo.com>
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