Federal ‘Boomers’ Fear Insufficient Retirement Income… Are They Wrong?

Many government officials and media types were predicting a virtual avalanche of federal retirement submissions that will lead a massive void that cannot be filled by younger workers. The author says that while he does predict a rise in the rate of federal employee retirements, he does not see the doomsday scenario others are predicting and explains the logic behind his reasoning.

In 2013 (according to the GAO), it was estimated that 30% of the federal workforce would be eligible to retire over a 3 year span (that number has now been extended to include 2017). That would mean that we could expect 150,000 to 200,000 per year to retire from federal service. Many government officials and media types were predicting a virtual avalanche of federal retirement submissions that would leave the entire U.S. infrastructure in shambles.

Well 2015 is nearly half over and for the most part, zilch. Not the mass exodus called for or any great impact on government services.

Throwing some numbers at you – According to the GAO, in recent history prior to 2013, the average annual retirement rate was between 2.5% and 3.6%. The feared rate of departure would be between 7.5% and 10% per year. According to OPM, in 2013 there were 65,258 retirements and in 2014 a slight increase to 68,616. The 2013 retirement rate was approximately 3.3% while 2014 was 3.4%.

But, for many, this fear is still very real, it’s just around the corner. Experienced workers will leave a massive void that couldn’t possibly be filled by younger, less experienced staff.

Hogwash! I understand that nothing can replace experience. The real need in the future, besides replacing leadership, will be to replace blue collar and clerical positions for more technical ones. These are skills that, it appears, the younger generations are better prepared to handle than “Baby Boomers.” They have been raised on it, we weren’t.

I too, predict a rise in the federal retirement rate, just not the doom and gloom that others are calling for. There are certainly a number of good reasons for Baby Boomers to head out the door, such as:

  • The markets have helped many retirement accounts recover from their 2007 and 2008 lows.
  • Being tired of dealing with budget cuts.
    • I work with an IRS employee that, (a few years ago) actually had to bring in paper clips from home because there was no budget to order any.
  • Tired of being embarrassed and demoralized by the “sound bite” media and public assaults waged by Washington officials.
  • Being underpaid compared to comparable private sector jobs.
  • Seeing good jobs being outsourced to contractors.
  • Fed up with the “do more with less” mantra.
  • Furloughs.
  • Hiring freezes.

The list could go on and on. Yet, these dedicated public servants just aren’t leaving at the projected rates!

For crying out loud, why not??? Why won’t they just trade in their keyboards, cubicles and ergonomic chairs for cruise ships, mojitos and sunny beaches?

Don’t get me wrong, I respect and admire the dedication and effort that the unappreciated civil servant delivers on a daily basis. I would never encourage anyone to retire who is not financially and emotionally prepared. But, when it’s time to move on…just move on! Step down and enjoy a long and fruitful retirement. There will be plenty of eager young prospects ready to take on the mantle passed on by our outstanding (if aging) federal work force. Some may even live in my house!!!

Those hungry, job searching (not financially equipped to leave the nest) “youngsters” need to start taking hold of the reigns. They need a shot at good paying positions that could take advantage of their overpriced educations. Maybe they could even afford to leave their parents’ homes and start paying for their own video game addictions. Perhaps they might be able to purchase their own refrigerators that they could place their own cheesecake in. Then they would no longer be tempted to eat the last piece of Dad’s cheesecake (that he had shipped from the Carnegie Deli in NYC to Missouri). The cheesecake that was sitting in Dad’s refrigerator. The last piece that Dad had been dreaming about all day, but, mysteriously disappeared before Dad got home from work.

I digress!

What would cause feds to continue to hang around, if they could be enjoying beaches, gardening, travel or some couch potato indulgences? I have an off the wall theory…MONEY! More precisely, the fear of not having enough.

Penny Dollar (not her real name), was a real federal employee in Kansas City, Missouri. Penny was a 60 year old, GS-13 that worked for the Department of Treasury for 32 years.

Penny had developed an ideal retirement vision. You see, in addition to enjoying time with family and being more involved in her women’s church group, Penny had dreams of traveling to exotic destinations during retirement. But, she had a nervous knot in her stomach whenever she thought about her retirement finances. Penny was concerned that she wouldn’t be able to even handle her most basic needs in retirement. Like most long term federal employees I’ve met, Penny was in much better shape than she knew.

Over the years, Penny worked hard at her profession and at contributing to her TSP. But, Penny was rather uninformed concerning options within her federal retirement benefits. Penny was pointed in my direction by a longtime friend and co-worker.

When I was able to explain to Penny how to properly utilize her full federal retirement benefits (along with enacting some prudent wealth management), she retired 6 years earlier (age 60 not 66) than she had ever hoped. With a little guidance and directions, she now brings home enough to meet her needs, plus a surplus of $4,000 per month. She even enjoys the added bonus, from saving all those years, of having $526,000 in reserves, from her TSP account. She shouldn’t need to touch that money until the IRS makes her take “required minimum distributions”, at age 70 ½.

While Penny is a uniquely wonderful lady, her lack of knowledge and understanding about federal retirement income benefits and proper planning, unfortunately, is NOT unique.

It’s this lack of knowledge that caused the government officials and media types to miscalculate the projected departure rate. They understand how the federal retirement benefits work better than federal employees do. They recognize that many of those staying in place today could easily lead financially comfortable retirements…right now!

The official training concerning federal retirement income benefits is not getting through to the average federal employee. Most that I interview believe TSP and their pension(s) are one in the same. (They are NOT). Yet, as Penny shows us, when all the available income sources and planning options are explained and understood, even a dedicated Feds desire to retire may be quickly embraced.

In closing, I offer a final plea from one boomer to another. If you’re emotionally and financially ready to step down, respectfully, please just go already and start enjoying your retirement. If you make room, my kid may be able to get a great job with awesome federal benefits…and, most importantly, a place of his own!

FYI – Penny checked in with me two weeks ago. She was on a trip with friends in Los Angeles. I guess exotic means different things to different people.

About the Author

Randy Silvey is the published author of You FIRST, Federal Employees Retirement Guide, one of the bestselling books of its kind on Amazon and Kindle. For over 18 years, he’s been educating and guiding Feds in pursuing wealthier retirement lifestyles. Randy can be reached at 816-524-1515 or visit his website at www.silverlightfinancial.com. Securities offered through Infinity Financial Services. Member FINRA/SIPC.