Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

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ZMonet
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Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by ZMonet »

My spouse and I are both federal employees, and we’ve always enjoyed our jobs and considered them relatively secure. However, recent changes have made us question that stability. We’re about five to eight years away from voluntary retirement, and this uncertainty has us reevaluating our financial plans.

When we initially set our asset allocation, we factored in the stability of our jobs and the role our pensions would play in covering retirement expenses. We settled on an 80/20 (stocks/bonds) split, which felt right at the time. But now, with the shifting landscape, we’re wondering if it’s time to make our portfolio more conservative as one or both of us might lose our job sooner than we would want.

On one hand, it feels prudent to adjust our allocation to better reflect the current risks. On the other, I worry we might be overreacting to concerns that, while valid, have an unknown long-term impact. Would shifting to a more conservative mix be a rash decision, or is it a reasonable move given the circumstances? Any insights or experiences would be greatly appreciated!
delamer
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by delamer »

What does the 20% in bonds consist of? And how is your portfolio split between taxable and tax-advantaged?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
SmallSaver
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by SmallSaver »

Some federal employees are more at risk than others. You know the particulars of your circumstances better than us. It is reasonable to adjust your asset allocation as your circumstances change. Leaving aside the job (in)security, you are 5-8 years from retirement and that seems like a good time to review your risk tolerance. How would you feel/react if the market drops 50% over the next couple of years? If one or both of you lose you jobs, or your position is relocated?
Big Dog
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Big Dog »

what are the Agencies? (some are likely 'safer' than others)

But yeah, I'd definitely consider increasing the fixed income (prefer intermediate treasuries) in your tax-deferred space to get to something like an AA of 60:40. Any "uncertainty" should be over in two years, at which time you can refund to your previous AA if still employed.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Swansea »

Federal jobs have varied appointment mechanisms, some have greater protection from downsizing than others. Are you and your wife Title 5 employees?
rkhusky
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by rkhusky »

There’s the risk of your jobs themselves, but there’s also the risk that you might get sick or injured, such that one of you can’t work. The latter risk increases as you get older.

Age in bonds is a conservative choice, assuming retirement at 65, while age-20 is on the aggressive side.

The market is near an all time high, and I usually prefer to get my portfolio at the correct level on my schedule, rather than let the market prune it for me at a time when it would be inconvenient, like right before or at retirement.
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ZMonet
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by ZMonet »

delamer wrote: Mon Jan 27, 2025 10:14 am What does the 20% in bonds consist of? And how is your portfolio split between taxable and tax-advantaged?
The 20% is mostly in the TSP G-Fund. The total mix is about 50% pre-tax, 35% after-tax, and 15% Roth
stan1
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by stan1 »

There are many people on this forum who are in their 50s and have 80/20 asset allocations with no pensions.

What I would do to hopefully ease your mind is to get one of the retirement planning tools and do some test runs with different scenarios.

Your situation will be very different if you have $300K or $3M in assets.

If you were to be laid off or resign today, your pensions do not go to zero. Your high 3 or high 5 would freeze, and your years of service would freeze.

We aren't allowed to speculate about future laws, but we do know in the past that Congress has: 1) raised minimum retirement age; 2) reduced COLAs for retirees (CSRS to FERS); 3) raised the employee contribution to FERS; 4) handled law enforcement, air traffic control, and other positions as special cases. You can modify your assumptions in the retirement planner tools to see what the impacts are on your situation.

So my suggestion is to try as best as possible to look at the scenarios objectively if you want to delve into this deeper. You could also decide that events beyond your control will happen and you just have to be flexible if that does happen.
rkhusky
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by rkhusky »

An important factor is your portfolio size as a function of annual expenses needed to be covered by the portfolio. If you are at 25X or less, I would be more conservative. If you are already at 40X or higher, your stock/bond ratio doesn’t matter much.

Another factor is how much you want to retire on time. If the market crashes right before retirement, are you fine working 3-5 more years?
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ZMonet
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by ZMonet »

stan1 wrote: Mon Jan 27, 2025 12:15 pm So my suggestion is to try as best as possible to look at the scenarios objectively if you want to delve into this deeper. You could also decide that events beyond your control will happen and you just have to be flexible if that does happen.
Thanks. I really appreciate this sanity check.
delamer
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by delamer »

ZMonet wrote: Mon Jan 27, 2025 12:06 pm
delamer wrote: Mon Jan 27, 2025 10:14 am What does the 20% in bonds consist of? And how is your portfolio split between taxable and tax-advantaged?
The 20% is mostly in the TSP G-Fund. The total mix is about 50% pre-tax, 35% after-tax, and 15% Roth
Given your concerns, I’d put a couple years of expenses in your after-tax account. You could either reduce your G Fund allocation to keep bonds/cash at 20% or allow the bonds/cash allocation to drift up.

Being able to cover your expenses for awhile with no tax consequences is a good position to be in. And if you are unemployed for a significant amount of time, you can tap the G Fund and pay little in taxes.

Good luck; between the job uncertainty and (for many) the loss of work-from-home opportunities, feds are not in a good place now. I’m expecting to get word that a lot of my former colleagues are retiring ASAP.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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ZMonet
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by ZMonet »

delamer wrote: Mon Jan 27, 2025 12:39 pm
ZMonet wrote: Mon Jan 27, 2025 12:06 pm

The 20% is mostly in the TSP G-Fund. The total mix is about 50% pre-tax, 35% after-tax, and 15% Roth
Given your concerns, I’d put a couple years of expenses in your after-tax account. You could either reduce your G Fund allocation to keep bonds/cash at 20% or allow the bonds/cash allocation to drift up.

Being able to cover your expenses for awhile with no tax consequences is a good position to be in. And if you are unemployed for a significant amount of time, you can tap the G Fund and pay little in taxes.

Good luck; between the job uncertainty and (for many) the loss of work-from-home opportunities, feds are not in a good place now. I’m expecting to get word that a lot of my former colleagues are retiring ASAP.
Thanks for all of this, particularly the humanity surrounding the difficulty. To be clear, it isn't the return to the office mandate; it is that this is all being made purposefully difficult so that people will retire. It's sad because we're likelier to lose the best than the worst.
MnD
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by MnD »

RIF laws still need to be followed and as later career employees with lots of seniority I wouldn't panic.
Rif's come with early out (early retirement) authority, usually cash buy-outs and continuation of healthcare.
Tough talk is cheap but federal employees are a valuable asset to congressional districts because they are good paying jobs that don't compete with private sector positions.

That said, when I was single digit years from federal retirement I went from 80/20 to 70/30 (for life).
Markets have had a great run and I don't see a big downside to moving your asset allocation closer to or at where you plan to have it at retirement.
So don't do anything crazy but if you planned to be for example 67/33 in retirement I can't see much harm from moving to that now.
Bond yields including the TSP G are well above inflation and you've made a lot in the stock market past few years.
It wouldn't be like you were selling some stocks after some big crash and moving into bonds yielding nothing.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
Claudia Whitten
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Claudia Whitten »

ZMonet wrote: Mon Jan 27, 2025 10:09 am When we initially set our asset allocation, we factored in the stability of our jobs and the role our pensions would play in covering retirement expenses. We settled on an 80/20 (stocks/bonds) split, which felt right at the time. But now, with the shifting landscape, we’re wondering if it’s time to make our portfolio more conservative as one or both of us might lose our job sooner than we would want.

On one hand, it feels prudent to adjust our allocation to better reflect the current risks.
Always adjust your portfolio as your life changes and your risk tolerance changes. When I was 5 or so years out, I was certainly not 80/20. I probably had 30 to 40 percent equities. I lived through 2008, and I sure as hell was not going to let another event that like cause me to delay my retirement plans. Plenty of my colleagues at that time did. No, not me. I worked too long and too hard, as you have, to let whatever happens in the markets whip me around.

You have access to the G fund. Use it. It saved my bacon in 2022 (L Income), when both stocks and bonds were losing money. You've been lucky thus far. Don't push your luck by being overly exposed to equities in an environment like this when you're so close to retirement. Also, the G fund is paying 4.625% right now, and stocks are as overvalued as they have ever been in history. What are you expecting after two 20%+ years of gains?

Personally, living well below my means has allowed me at all times to be able to walk away from an employment situation that I did not like, but so has being invested according to my risk tolerance, and that has served me well a couple of times in my life. As someone who knows a lot of feds, I fully sympathize with your desire to re-evaluate your options at this time.
Tundrama
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Tundrama »

I did 33 years with the Feds and endured many shutdowns, restructuring, recessions, twists, turns…you name it.

I was management….led a bunch of ‘The Stuff.’

The answer to your question…”Nope.” If anything, mash your foot on the ‘C Fund’ gas pedal.

The US Federal government jobs are the most safe and secure jobs on the planet. Jobs, skills necessary, whatever, they can change but the Feds will always offer some type of position for those at risk of elimination.

First, and foremost, spend more time away from the copy machine, break rooms and the chatty ones who contend the world is ending. It ain’t. And they are no fun the be around anyway. Negative atmospheres with huddled, disgruntled employees who are never happy about anything, Will burn you out and talk you into retirement early and possibly making a mistake.

Be positive. Do great things. Stand out in your job.

My motto is, this is the best country on the planet, with the best companies on the planet, so I bet on them. Folks don’t flock out, they flock in.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by VanityPlate »

How old are you? Does "nearing retirement" mean approaching your MRA or your goal retirement age?
delamer
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by delamer »

ZMonet wrote: Mon Jan 27, 2025 12:43 pm
delamer wrote: Mon Jan 27, 2025 12:39 pm

Given your concerns, I’d put a couple years of expenses in your after-tax account. You could either reduce your G Fund allocation to keep bonds/cash at 20% or allow the bonds/cash allocation to drift up.

Being able to cover your expenses for awhile with no tax consequences is a good position to be in. And if you are unemployed for a significant amount of time, you can tap the G Fund and pay little in taxes.

Good luck; between the job uncertainty and (for many) the loss of work-from-home opportunities, feds are not in a good place now. I’m expecting to get word that a lot of my former colleagues are retiring ASAP.
Thanks for all of this, particularly the humanity surrounding the difficulty. To be clear, it isn't the return to the office mandate; it is that this is all being made purposefully difficult so that people will retire. It's sad because we're likelier to lose the best than the worst.
You are welcome, and I agree with your comments.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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ZMonet
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by ZMonet »

I'm grateful for all the advice everyone has provided. It's truly appreciated. I recognize the importance of not dwelling on negativity, and I'll strive to concentrate on what I can do to improve the situation. Things could certainly be worse. Thanks to my past efforts and the valuable input from this board, my family is in a secure position where we could comfortably retire today if needed. Thank you, again, to everyone.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by tigermilk »

I am 14 months from my MRA. For thr longest time I was 100/0 but over the last couple of years have been slowly upping the G fund. Basically 5 years ago I put one year's expenses in G fund, accounting for pension but not the SS supplement. Each year I added another year of $ to that allocation. This past December I finally went all in - captured those 2024 market gains and put enough cash in the G fund to fully fund our expected income gap until age 70, when we expect to start SS. So today roughly 40% of my TSP is in G and with enough $ to cover 13 years of expenses minus 13 years of pension and 5 of SS supplement (note, saw an article on govexec yesterday that some Rs in Congress are setting sights on that). When SS kicks in, even accounting for a reduction in benefits we would not have to tap the TSP to meet historical annual spending.

I sleep well at night knowing I am fully covered for the bridge years in a very stable position (G fund). And we still have around triple that in the rest of the TSP, Roth IRA, HSA, and taxable. A year ago the plan was to stick around until the end of the year of my MRA and punch out if the inflation landscape was looking good (since the pension is not COLAed until 62). In the last couple of days my attitude has changed, and not for staying longer.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Claudia Whitten »

tigermilk wrote: Tue Jan 28, 2025 7:53 am So today roughly 40% of my TSP is in G and with enough $ to cover 13 years of expenses minus 13 years of pension and 5 of SS supplement
I just use the L Income, which is currently 67.99% G. It's a pity that TSP requires proportional withdrawals, so that one cannot, say, just take from G when the market is down. On the other hand, maybe it's a feature, not a bug. Prevents tinkering.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by DCChak »

delamer wrote: Mon Jan 27, 2025 12:39 pm
ZMonet wrote: Mon Jan 27, 2025 12:06 pm

The 20% is mostly in the TSP G-Fund. The total mix is about 50% pre-tax, 35% after-tax, and 15% Roth
Given your concerns, I’d put a couple years of expenses in your after-tax account. You could either reduce your G Fund allocation to keep bonds/cash at 20% or allow the bonds/cash allocation to drift up.

Being able to cover your expenses for awhile with no tax consequences is a good position to be in. And if you are unemployed for a significant amount of time, you can tap the G Fund and pay little in taxes.

Good luck; between the job uncertainty and (for many) the loss of work-from-home opportunities, feds are not in a good place now. I’m expecting to get word that a lot of my former colleagues are retiring ASAP.
8 months salary (through 9/30) for the current buyout appears to be multiples higher than prior iterations. https://www.opm.gov/fork
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by whodidntante »

In zombie movies, the survivors seem to have a lot of opportunities in the sense they can just take the things they want, and they can do what they want. But also, the environment is pretty hazardous, because there are zombies. I imagine this is similar.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by THY4373 »

DCChak wrote: Tue Jan 28, 2025 7:42 pm 8 months salary (through 9/30) for the current buyout appears to be multiples higher than prior iterations. https://www.opm.gov/fork
That isn't a buyout it is basically a we will let you telework until September if you agree in advance to resign then. They aren't letting you leave in February and take the next six months off.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by stan1 »

THY4373 wrote: Tue Jan 28, 2025 8:05 pm
DCChak wrote: Tue Jan 28, 2025 7:42 pm 8 months salary (through 9/30) for the current buyout appears to be multiples higher than prior iterations. https://www.opm.gov/fork
That isn't a buyout it is basically a we will let you telework until September if you agree in advance to resign then. They aren't letting you leave in February and take the next six months off.
Actually it reads like they are trying to structure it like corporate severance pay, the people who take this will generally be on admin leave according to the FAQ and not expected to work for 8 months with the exception of small turnover type actions.
Q: Am I expected to work during the deferred resignation period?
A: No. Except in rare cases determined by your agency, you are not expected to work.
There will be an avalanche of additional information in the next week and litigation past 30 Sept, but I would be wary of this unless someone is eligible for early or voluntary retirement and planning to go before 30 Sept or planning to resign anyways.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by delamer »

stan1 wrote: Tue Jan 28, 2025 8:48 pm
THY4373 wrote: Tue Jan 28, 2025 8:05 pm

That isn't a buyout it is basically a we will let you telework until September if you agree in advance to resign then. They aren't letting you leave in February and take the next six months off.
Actually it reads like they are trying to structure it like corporate severance pay, the people who take this will generally be on admin leave according to the FAQ and not expected to work for 8 months with the exception of small turnover type actions.
Q: Am I expected to work during the deferred resignation period?
A: No. Except in rare cases determined by your agency, you are not expected to work.
There will be an avalanche of additional information in the next week and litigation past 30 Sept, but I would be wary of this unless someone is eligible for early or voluntary retirement and planning to go before 30 Sept or planning to resign anyways.
It will be interesting to see how this is integrated with retirement for individual workers. If I am currently eligible to retire or will be by September 30, can I resign and then take retirement effective September 30?

Win-win.

(Not me personally; I’ve been retired for almost 10 years.)
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by THY4373 »

stan1 wrote: Tue Jan 28, 2025 8:48 pm Actually it reads like they are trying to structure it like corporate severance pay, the people who take this will generally be on admin leave according to the FAQ and not expected to work for 8 months with the exception of small turnover type actions.
Q: Am I expected to work during the deferred resignation period?
A: No. Except in rare cases determined by your agency, you are not expected to work.
There will be an avalanche of additional information in the next week and litigation past 30 Sept, but I would be wary of this unless someone is eligible for early or voluntary retirement and planning to go before 30 Sept or planning to resign anyways.
The FAQ (which I missed) says that but the email itself says:
If you resign under this program, you will retain all pay and benefits regardless of your daily workload and will be exempted from all applicable in-person work requirements until September 30, 2025 (or earlier if you choose to accelerate your resignation for any reason).
Which seems to imply you'd still be working. That said I agree outside of some edge cases I don't know why anybody would touch this with a barge pole.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by stan1 »

delamer wrote: Tue Jan 28, 2025 9:09 pm It will be interesting to see how this is integrated with retirement for individual workers. If I am currently eligible to retire or will be by September 30, can I resign and then take retirement effective September 30?

Win-win.

(Not me personally; I’ve been retired for almost 10 years.)
The FAQ (which may not be legally binding, if any of it is) does indeed say that someone could sign up, be put on admin leave, and then do a voluntary retirement prior to 30 Sept. And the FAQ even holds out the possibility of an extension past 30 Sept by exception for someone to reach their MRA. But all of this is being made up on the fly without legal authority so I'm not sure I'd trust any of it. Probably should stop there to keep our mods happy.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Weathering »

2028 (greatly enjoying the projects between now and then) is my target retirement and none of the current chatter is distracting me from that plan.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by DCChak »

stan1 wrote: Tue Jan 28, 2025 8:48 pm Actually it reads like they are trying to structure it like corporate severance pay, the people who take this will generally be on admin leave according to the FAQ and not expected to work for 8 months with the exception of small turnover type actions.
That seems to be the current statement, for whatever that's worth.
There will be an avalanche of additional information in the next week and litigation past 30 Sept, but I would be wary of this unless someone is eligible for early or voluntary retirement and planning to go before 30 Sept or planning to resign anyways.
Avalanche to be sure, but the big question is the reliability of the sources.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by RJC »

I don't think the plan is legal:

Much about the plan remained unclear, including whether the administration can legally offer such a sweeping buyout package without budget authorization from Congress. On the Senate floor Tuesday night, Senator Tim Kaine, Democrat of Virginia, urged federal workers not to resign, and warned that the administration was not legally bound to pay them after they stopped working.

“The president has no authority to make that offer. There’s no budget line item to pay people who are not showing up for work,” Mr. Kaine said. “If you accept that offer and resign, he’ll stiff you.”
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Pops1860 »

This thread has been moved to the "Personal Investments" forum. Moderator Pops1860
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by BrooklynInvest »

OP,
I'm sorry for the stress this fiasco is causing.

I would urge you to do nothing yet. The legality of all of this is certainly a question, as is the budgeting. I can foresee a scenario where people are resigning in good faith, the legality is questioned for years and they're stuck in limbo. After getting similar emails, Twitter employees had to sue to get their agreed-to packages.

Good luck OP. The one good thing about these publicity stunts is that interest tends to pass quickly when the next opportunity to grab a few headlines comes along.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by THY4373 »

FWIW the OPM guidance is out for the Deferred Resignation offer and it does clarify the expectation (though not requirement) is the employee will be placed on administrative leave. Still it all seems very questionable. Note the site is getting hammered so the memo may take a while to load.

https://www.chcoc.gov/content/guidance- ... on-program
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ZMonet
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by ZMonet »

BrooklynInvest wrote: Wed Jan 29, 2025 10:13 am OP,
I'm sorry for the stress this fiasco is causing.

I would urge you to do nothing yet. The legality of all of this is certainly a question, as is the budgeting. I can foresee a scenario where people are resigning in good faith, the legality is questioned for years and they're stuck in limbo. After getting similar emails, Twitter employees had to sue to get their agreed-to packages.

Good luck OP. The one good thing about these publicity stunts is that interest tends to pass quickly when the next opportunity to grab a few headlines comes along.
Thank you. I hope people get that this isn't about telework or "lazy civil servants." I won't go into detail because I don't want to violate forum rules, but I appreciate the kindness that you and others have shown.

As for the 8-month "buyout," it seems like the only thing you would be guaranteed is that you don't have to come into the office. I hope even the least legally minded wouldn't accept FAQs as the basis for their not continuing to need to work. Anyone I know in government would not be able to hand off their duties very quickly, especially with a hiring freeze, if their agency will even allow a handoff before September. I think the only people who would even consider taking it are: (1) Those just starting (probationary and therefore subject to being let go); (2) those about to retire in the next year (so would have left anyway); or (3) those that have had enough, know that the abuse will continue, and aren't thinking of the financial ramifications.

Actionable advice: Anyone looking to visit DC should avoid driving in the DC metro area during the week. You will certainly be in gridlock traffic.
makeitcount
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by makeitcount »

I am a fellow Fed with about 20 years under my belt.
I am not making any changes to my AA based on the current foolishness, though it is lower in stocks than yours (65/35).
Hang in there.
"Yeah, well, you know, that's just like, uh, your opinion, man." - J. Lebowski
danhas26
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by danhas26 »

duplicate
Last edited by danhas26 on Wed Jan 29, 2025 7:51 pm, edited 1 time in total.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by danhas26 »

DCChak wrote: Tue Jan 28, 2025 7:42 pm
delamer wrote: Mon Jan 27, 2025 12:39 pm

Given your concerns, I’d put a couple years of expenses in your after-tax account. You could either reduce your G Fund allocation to keep bonds/cash at 20% or allow the bonds/cash allocation to drift up.

Being able to cover your expenses for awhile with no tax consequences is a good position to be in. And if you are unemployed for a significant amount of time, you can tap the G Fund and pay little in taxes.

Good luck; between the job uncertainty and (for many) the loss of work-from-home opportunities, feds are not in a good place now. I’m expecting to get word that a lot of my former colleagues are retiring ASAP.
8 months salary (through 9/30) for the current buyout appears to be multiples higher than prior iterations. https://www.opm.gov/fork
That's not a buy out, they are saying they can keep working (even from home) till then but then must retire. It's not a buy out but a threat/bribe to stay. UnionS are advising to not accept the offer as nothing has been negotiated or approved.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by Stang70 »

tigermilk wrote: Tue Jan 28, 2025 7:53 am I sleep well at night knowing I am fully covered for the bridge years in a very stable position (G fund).
I like the idea of using G fund for the bridge years. If the proposed G fund interest rate decrease is enacted, would that influence your plan.....or would you proceed as planned, perhaps substituting/supplementing with F fund?
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by delamer »

Stang70 wrote: Thu Jan 30, 2025 8:31 am
tigermilk wrote: Tue Jan 28, 2025 7:53 am I sleep well at night knowing I am fully covered for the bridge years in a very stable position (G fund).
I like the idea of using G fund for the bridge years. If the proposed G fund interest rate decrease is enacted, would that influence your plan.....or would you proceed as planned, perhaps substituting/supplementing with F fund?
There is a proposed G fund interest rate decrease?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by chinchin »

The same song and dance happened 8 years ago too and nothing happened.
not financial advice
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by chinchin »

delete
Last edited by chinchin on Thu Jan 30, 2025 10:01 am, edited 1 time in total.
not financial advice
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by retiredjg »

Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?
I think you should adjust your AA based on nearness to retirement, not job uncertainty.

The last few years of employment are never guaranteed anyway. And they are the most likely time for you to become retired by surprise due to disability, illness, need to quit to take care of family, death, etc.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by HMSVictory »

I am in a similar position and my AA is 95/5.

I am not at risk for a layoff or early retirement but I am about 5 years out from full retirement.

I will be eligible for partial retirement in a few months and plan to slowly dial my AA back to 90/10 and then 80/20 over the next 10 years (as my wife nears retirement).

So to directly answer your question - I would change nothing. If you could retire today then you are fine. Stay the course.
Stay the course!
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by WeakOldGuy »

rkhusky wrote: Mon Jan 27, 2025 12:18 pm An important factor is your portfolio size as a function of annual expenses needed to be covered by the portfolio. If you are at 25X or less, I would be more conservative. If you are already at 40X or higher, your stock/bond ratio doesn’t matter much.
I think this is the best way to look at it. Regardless of the reasons for your increased employment insecurity, it would be wise to compare your future projected expenses against your current portfolio. That will allow you to determine your risk tolerance. Loss of employment is always one of the risks to consider, as it sudden health changes, personal disasters, or significant market downturns.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by rkhusky »

I try to imagine what I would do and how I would feel if the market crashed 50% today - if the answer is a shrug or “buying opportunity”, then stay with your current allocation.

If the answer is “oh no, I can’t retire on schedule” or “oh no, I have to drastically cut back on spending,” or “oh no, I am getting out of stocks before I lose more,” then dial back on stocks.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by MnD »

ZMonet wrote: Wed Jan 29, 2025 12:33 pm As for the 8-month "buyout," it seems like the only thing you would be guaranteed is that you don't have to come into the office. I hope even the least legally minded wouldn't accept FAQs as the basis for their not continuing to need to work. Anyone I know in government would not be able to hand off their duties very quickly, especially with a hiring freeze, if their agency will even allow a handoff before September. I think the only people who would even consider taking it are: (1) Those just starting (probationary and therefore subject to being let go); (2) those about to retire in the next year (so would have left anyway); or (3) those that have had enough, know that the abuse will continue, and aren't thinking of the financial ramifications.
That's a great perspective. FERS is a relatively complex retirement system with tons of moving parts that requires a lot of careful thought, analysis and appropriate actions to completely optimize for a given retiree. Some overnight "act now!" gimmick on highly questionable legal grounds with no funding or statutory authority is something to run away screaming from. I could even list a number of specific risks and unintended consequences for the three examples you gave.

I was subject to an actual legally authorized RIF (with early out and buyout) which was well communicated and employees were given ample time to decide. My best friend ended up taking the early out which was a godsend to her because she wanted to retire but didn't have enough years for the healthcare and it fixed all that. In my case I did nothing as I wanted to work three more years and fortunately I wasn't separated due to enough people taking the buyout/early outs and my seniority and performance. But get this - as part of the RIF we all had to update our job descriptions and have them evaluated and rescored by HR. I did a good job on mine and my supervisor approved it. Then HR scored it one grade higher than my current grade and the scoring wasn't even close. They asked my supervisor what he wanted to do and he said let it stand so I got a full grade increase out of the blue which was huge for upping the high-3 of last three years of work for pension calculations.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by tigermilk »

Stang70 wrote: Thu Jan 30, 2025 8:31 am
tigermilk wrote: Tue Jan 28, 2025 7:53 am I sleep well at night knowing I am fully covered for the bridge years in a very stable position (G fund).
I like the idea of using G fund for the bridge years. If the proposed G fund interest rate decrease is enacted, would that influence your plan.....or would you proceed as planned, perhaps substituting/supplementing with F fund?
Nope. F fund has more volatility. With my bridge allocation fixed in G, I will let the rest ride in C/S/I.
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by tj »

chinchin wrote: Thu Jan 30, 2025 9:47 am The same song and dance happened 8 years ago too and nothing happened.
No...it didn't. There was no mass deferred resignation solicitation 8 years ago. This is unprecedented. Literally, nobody understands what is going on. If you ask management, they will tell you they are finding out when you do. It doesn't sound like you are a federal employee?
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by chinchin »

tj wrote: Sun Feb 02, 2025 7:05 pm
chinchin wrote: Thu Jan 30, 2025 9:47 am The same song and dance happened 8 years ago too and nothing happened.
No...it didn't. There was no mass deferred resignation solicitation 8 years ago. This is unprecedented. Literally, nobody understands what is going on. If you ask management, they will tell you they are finding out when you do. It doesn't sound like you are a federal employee?
I don't know what qualifies as "mass," but in my agency, there were rumors of buyouts and early outs coming last time Trump was president (never happened). This time around, we haven't got any "deferred resignation solicitation."

Mass RIFs are not unprecedented. Literally happened under Clinton.

If "nobody understands what is going on," how can you manage your assets based on that? You can't. So my point stands.
not financial advice
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Re: Federal Employees Nearing Retirement (5-8 years): Should We Adjust Our 80/20 Asset Allocation Amid Job Uncertainty?

Post by tj »

chinchin wrote: Sun Feb 02, 2025 9:21 pm
tj wrote: Sun Feb 02, 2025 7:05 pm

No...it didn't. There was no mass deferred resignation solicitation 8 years ago. This is unprecedented. Literally, nobody understands what is going on. If you ask management, they will tell you they are finding out when you do. It doesn't sound like you are a federal employee?
I don't know what qualifies as "mass," but in my agency, there were rumors of buyouts and early outs coming last time Trump was president (never happened). This time around, we haven't got any "deferred resignation solicitation."

Mass RIFs are not unprecedented. Literally happened under Clinton.

If "nobody understands what is going on," how can you manage your assets based on that? You can't. So my point stands.
Non-career staff at OPM have sent mass emails to every civilian in the US government circumventing communications through chain of command. That did not happen under Clinton, Trump or anybody else.
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