“Baby Boomers” are now pondering the realities of retiring from their federal positions. However, based on recent figures acquired from “Partnership for Public Service” (Fed Figures 2014: Federal Departures) compared to the GAO report (01/29/14) many that can retire (600,000 by 2017) aren’t. That raises an intriguing question. If they qualify for a full retirement why aren’t they leaving in the expected numbers?
Centered on an admittedly small sampling of Federal Professionals (43) I interviewed, I found some fascinating explanations. My interviews consisted of; federal professionals with no plans to retire anytime soon, 56 or older and 20 years or more of federal service. I asked each interviewee to provide 3 reasons they weren’t ready to retire. Then I asked them to rank their answers 1 thru 3. Once we discovered their number one reason, I asked them to explain. The information below is based on each person’s number one answer and a compilation of their explanations.
- 12 (28%) of these Federal Professionals, are an exceptional collection of thoughtful and considerate individuals, that genuinely care about those that they would be leaving behind. As managers, executives and leaders in their work environment, they are concerned about the void their departure would likely cause. They hold their colleagues and subordinates in the highest regard and don’t want to leave those they care about in preventable predicaments.
- 8 (18%) felt that they would be bored if they retired too soon. They have no real retirement plan. These are the Federal Professionals that I think of as proverbial workaholics. I recognize this personality trait, since, at 73, my father is a well-known workaholic himself. These people will continue laboring until they are no longer able to work. Their position is what gives them purpose. Nothing wrong with that, but, it will skew the numbers a bit for those that are expecting a certain percent to retire.
- The remaining 23 (53%) don’t believe they will be able to financially survive in retirement. Out of those 23 I was amazed to find that 19 (higher grade Federal Professionals) weren’t aware that they would qualify for not only their TSP savings, but, a federal pension as well. It appears that as many as 44% (19 out of 43) of those not retiring, that could retire, may be staying in place due to a lack of knowledge and education. Oddly, their retirement benefits (along with how to best use them) were unfamiliar to this group.
Kathy is someone that I met during these interviews. She epitomizes that 44% of those under-informed Federal Baby Boomers.
Kathy is a federal employee working for the Internal Revenue Service (IRS). She started in 1982 when she was 27 years old. (Converted to FERS in 1987). When Kathy started out, she opened mail as a part time employee. Back then she only worked for about 4 months out of the year. Early on, Kathy didn’t consider her new position as a start to her career. She thought she would only work there until a “real” career came along.
33 years later, Kathy found herself in charge of an entire branch of over 200 employees. She jokingly refers to her time in federal employment as her, “Accidental Career.”
Kathy is now 60 years old. Kathy and her Husband Dan are both in good physical condition. They have two grown children and are expecting their first grandchild within the next few months.
Kathy worked hard to advance to branch manager. But, both she and Dan (a 62 year old non-federal employee) would like to retire as soon as possible. Kathy cares a great deal about those she works with on a daily basis. However, she feels comfortable that when she retires, her peers wouldn’t miss a beat. She told me, “They are GREAT professionals, well trained and are ready to assume my responsibilities. I have no doubt they will achieve amazing things once I have moved on.”
When Kathy and I first met she explained that she had a rather large “Bucket List.” She wasn’t kidding, some of what Kathy’s Bucket List included was:
- Stay in the Ice Hotel in Sweden.
- Visit the Amazon rainforest.
- See the Pyramids in Egypt.
- Month long, annual road trips across America.
- Annual European trips to visit places such as England (specifically Stone Hinge), Venice, Amsterdam, Florence, Paris, Athens, Milan and Rome…just to name a few.
- Snorkel off the Great Barrier Reef in Australia. Her and Dan are both fond of the ocean and have enjoyed snorkeling in Florida for years.
Additionally Kathy collects antique Bisque (I admit I don’t know what a bisque is) dolls and Dan plays lots of golf and rebuilds cars. They realized this type of retirement would be rather expensive. They were worried that they may not have the financial means to experience their retirement dreams in their entirety. At least not while they were still young and fit enough to enjoy it.
Kathy had $670,000 in her Thrift Savings Plan (TSP). They had read somewhere that they should only use 4% of retirement funds, during retirement, to give them a good chance of not outliving their money.
That was their perceived problem. Kathy and Dan had done some of their homework (estimated annual cost of retirement along with estimated retirement income) and speculated that they needed Kathy’s retirement income to make up about $3,500 per month to realize their retirement dreams. They felt that even using Kathy’s TSP money, they would fall short by about $1,300 a month if they retired immediately. But, as is true with many federal professionals, they didn’t have all the retirement benefit facts.
Kathy and Dan were delighted to find:
- That Kathy would qualify for both a federal pension and a Social Security Bridge payment.
- Kathy’s federal (annuity) pension would bring in – $3,400 per month…now!
- Kathy’s SSA Bridge payment would add another – $1,716 per month (until she turned 62).
- When Kathy’s plan was completed we discovered that she won’t have to touch her TSP savings, until she turns 70 ½. That is the age Required Minimum Distributions (RMD) kicks in.
If my small sampling holds true, over 264,000 (44% of 600,000) of those that could retire will be staying in place. They won’t be holding on because they are workaholics, or because they have greater than normal compassion for their co-workers and subordinates and probably not even because they can’t afford it. This large portion will still be doing their jobs past their earliest “comfortable” retirement dates, because they simply don’t understand their retirement benefits. A hotel made of ice?!? Who knew?
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
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