This has been a great discussion. I want to add one more thing:
Earlier you (Jim) said that "Even one day short of age 62 it's 1%." True, but you can get around it by taking a deferred retirement. This defers the annuity, you stop working, and then at age 62, you become eligible for the 1.1% even though you stopped working prior to age 62.
This is similar to the SS tradeoff. I'll skip the math but the bottom line is that a 100% FERS employee will break even 11 times the # of years deferred. (Of course, this doesn't include other factors like the potential to gain by investing immediately, or the potential to lose from a higher tax rate if you take another job, etc.) For people split across FERS and CSRS, the breakeven point is further away. For me personally at 59, I wouldn't break even until 120 because my CSRS earnings dominate.
But it might be attractive to people who have another job lined up, want to escape a few months early, or a couple other situations.
https://www.opm.gov/retirement-services/publications-forms/pamphlets/ri92-19a.pdf
Don
> On Oct 11, 2016, at 8:25 AM, JM Bud jmbud2@gmail.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:
> I was referring to the FERS portion of my annuity going up by 10% the day I turn 62. Your wrote, "...for me anyway, it's just not worth giving up 3 years of my life for 4%." In my case, I don't feel like I'm giving up years of my life for a bonus. I think my last 20 months of my career will actually be quite fulfilling -- a capstone of sorts, and go by quickly.
>
> Yes, your calculation on the CSRS portion is correct and more accurate than the approximate 2% per years of service. There are very few of us "TransFERS" civil servants. But it worked out well for me.
>
> Jim
>
> On Fri, Oct 7, 2016 at 1:09 PM, Don Libes wrote:
> Are you sure of the 9*2% calculation? Based on https://www.opm.gov/retirement-services/csrs-information/computation, I think you get 5*1.5% + 4*1.75% = 14.5%, not 18%.
>
> You mention you "think of that as a 10% bonus" but it makes more sense to think of it in the context of your overall annuity in which case, it's lower than 10%. More like 3.3/(14.5+33) = 7%. Still very significant, of course.
>
> But since you earlier said that you would stay an extra 2 years for the 7% jump at 62, I'm curious if you now feel obliged to stay even longer to make up the 18-14.5 difference you were expecting or you'll be happy with your payout at 62. (I'm guessing that you must have a helluva TSP by now and it's really the enjoyment of your job, not the 7% increase that will truly keep you there for another 2 years.)
>
> As another data point for others, I'm 3 years away from 62 and am coming to the realization that life is too short and there are so many other things I want to do instead. My 10% FERS bonus works out to 4% on my entire annuity and, for me anyway, it's just not worth giving up 3 years of my life for 4%.
>
> Don
>
> > On Oct 7, 2016, at 11:07 AM, JM Bud wrote:
> > That's right, Dan. The age 62 bonus on FERS annuity is 1.1%. Even one day short of age 62 it's 1%. I think of that as a 10% bonus for crossing the finish line!
> >
> > At that point, I'll have 33 years in FERS and 9 in CSRS. So unless I'm mistaken that will be 33 x 1.1% = 36.3% of my high 3 salary for life instead of 33%. Plus I believe I'll get 9 x 2% = 18% of my high 3 from CSRS years.That mix and the TSP match all these years has turned out well for me.
> >
> > Jim
> >
> > On Fri, Oct 7, 2016 at 10:03 AM, Dan danbev6462@yahoo.com wrote:
> > JM u stated a 10% lifetime bonus? Are u referring to the jump from 1% to 1.1% at 62? And what do you mean 3.3% annuity increase?
> >
> >> From: JM Bud
> >> I agree. I'm staying two more years until I reach 62 to take the 10% FERS lifetime bonus on the FERS, With 42 years of service at that point, the ~3.3% increased annuity is worth far more to me than taking the FERS supplement now.
> >>
> >> I'm fortunate though that I really enjoy my position at NASA and the people I work with. Sadly, that's not the case for some civil servants. Everyone's situation is different. The supplement can be a lifeline to get a jump on a new phase of life. You can't always put a price on that.
> >>
> >> Jim
> >>
> >> On Fri, Oct 7, 2016 at 8:52 AM, barbs miandsh2000@yahoo.com wrote:
> >> given the no-COLA on the FERS supp and FERS retirement, anyone already weighed the pros/cons of sticking it out until 62 versus going at MRA?
> >> 10% alone in the FERS supp seems like alot to forego for another 5.5 yrs.
Posted by: Don Libes <don@libes.com>
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