Federal employees considering early out - buyout?

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MnD
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Federal employees considering early out - buyout?

Post by MnD » Sat Jun 17, 2017 10:49 am

I'm seriously considering it as soon as it's offered in a few months.
For many years I've had fall 2018 on my calendar for retirement when I would be first eligible for regular retirement.
But as a federal on the domestic discretionary side of things, I don't see any upside for waiting another year especially given that several earned retirement benefits are at risk. It's really just an ugly and depressing situation right now at work.

I've run a number of retirement planners and it looks like our financial standard of living would go up slightly if I bailed a year early and we are not even remotely frugal, so it would be a very comfortable standard of living.

As far as accessing our savings both at age 55 - (our ages at retirement if I take the early out)......
Can start penalty-free TSP withdrawals at age 55
Wife can do the same with her current 401-K
Wife can set up 72T plan for her traditional rollover IRA
Inherited IRA and taxable are accessible penalty free
Pension starts at early retirement and health care continues
FERS annuity supplement won't start for another year age 56 BUT the buyout is almost exactly the value of extra year of annuity supplement.
Her social security starts at age 62, same year my FERS annuity supplement ends.
My Social Security starts age 70.
Don't have and not going to do any Roth accounts or conversions.

We have no debt but I need to set up a home equity line of credit before this fall. I've heard these are harder to get after retirement.

Any show-stoppers I'm forgetting about? Anyone else running the numbers and considering pulling the plug early?

delamer
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Re: Federal employees considering early out - buyout?

Post by delamer » Sat Jun 17, 2017 11:09 am

I am retired fed, as of about 2 years ago, and very glad not to be working in the current enviroment. Did not receive a buyout and was eligible for regular retirement.

Two things for you to consider come to mind:

1. How much of your expenses (including taxes) would be covered by your pensions and Social Security? The closer you get to 100%, the more secure your retirement is. Also, this can affect the level of risk you take with your 401(k)/TSP investments.
2. How would the financial picture of the surviving spouse change when one of you dies? Hopefully, you'll have a long happy retirement together, but odds are that one of you is going to survive the other by several years. So map out scenarios where you die first, in which case your wife loses the smaller of your two SS benefits and gets a much smaller survivor benefit from your pension (than when you were living). Also, look at the reverse situation where you survive her. In that case, your pension will increase although you'll still lose the smaller SS. In either case, tax rates are higher for singles.

Good luck.

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MikeWillRetire
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Re: Federal employees considering early out - buyout?

Post by MikeWillRetire » Sat Jun 17, 2017 1:02 pm

Sounds like you have a good understanding of the federal retirement system, so I assume you are aware that your pension will not get a cost of living increase until you turn 62. If so, enjoy your early retirement.

retiredjg
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Re: Federal employees considering early out - buyout?

Post by retiredjg » Sat Jun 17, 2017 1:13 pm

I think you've given it a good look-over. I don't see any problems.

I have not heard you would not get the pension COLA until 62. I wonder if things are different during a buyout?

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dm200
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Re: Federal employees considering early out - buyout?

Post by dm200 » Sat Jun 17, 2017 1:25 pm

MnD wrote:I'm seriously considering it as soon as it's offered in a few months.
For many years I've had fall 2018 on my calendar for retirement when I would be first eligible for regular retirement.
But as a federal on the domestic discretionary side of things, I don't see any upside for waiting another year especially given that several earned retirement benefits are at risk. It's really just an ugly and depressing situation right now at work.
I've run a number of retirement planners and it looks like our financial standard of living would go up slightly if I bailed a year early and we are not even remotely frugal, so it would be a very comfortable standard of living.
As far as accessing our savings both at age 55 - (our ages at retirement if I take the early out)......
Can start penalty-free TSP withdrawals at age 55
Wife can do the same with her current 401-K
Wife can set up 72T plan for her traditional rollover IRA
Inherited IRA and taxable are accessible penalty free
Pension starts at early retirement and health care continues
FERS annuity supplement won't start for another year age 56 BUT the buyout is almost exactly the value of extra year of annuity supplement.
Her social security starts at age 62, same year my FERS annuity supplement ends.
My Social Security starts age 70.
Don't have and not going to do any Roth accounts or conversions.
We have no debt but I need to set up a home equity line of credit before this fall. I've heard these are harder to get after retirement.
Any show-stoppers I'm forgetting about? Anyone else running the numbers and considering pulling the plug early?


I see your issues and concerns!!

1. What current retirement benefits do you see "at risk" for those currently eligible for retirement now? I thought the mostly "at risk" folks would be new employees and those not retirement eligible now?

2. Stay "flexible" since you cannot predict that you will be offered a financially beneficial "early out".

3. Is she eligible, under your plan, for health benefits in retirement? There is a five year rule where both would need to be on your plan.

4. I might do calculations whether he taking SS at 62 is "optimum", especially since her life expectancy, as a female, is longer.

5. Research, both now and as age 65 approaches, on the Medicare and other options that work best for you. Consider and evaluate Medicare Advantage Plans (or the similar Medicare Cost plans). If you are in the Washington DC area, in my opinion, the Kaiser Medicare Plan is outstanding. Several friends/acquaintances have a Humana Medicare Advantage Plan and are very happy. BUT - these are not for everyone and the federal retiree benefits enter into the calculations. Depending on many factors, you may or may not want to have medicare part B.

Helo80
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Re: Federal employees considering early out - buyout?

Post by Helo80 » Sat Jun 17, 2017 1:38 pm

dm200 wrote:1. What current retirement benefits do you see "at risk" for those currently eligible for retirement now? I thought the mostly "at risk" folks would be new employees and those not retirement eligible now?



There is a lot of chatter among some federal employees on the internet about the proposed changes. They are just that, proposed. They have not been voted on or set in stone. (Like the new military blended retirement system).

Nobody knows what will be set in stone.

Note: I am a fed. I do follow money. I am a boglehead. There has been zero talk of retirement cuts in my workplace.

finite_difference
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Re: Federal employees considering early out - buyout?

Post by finite_difference » Sat Jun 17, 2017 2:04 pm

What exactly are you getting from the buy out that you wouldn't have anyway?

Why do you need the HELOC? Just to have an open line of credit for emergencies?
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Watty
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Re: Federal employees considering early out - buyout?

Post by Watty » Sat Jun 17, 2017 2:07 pm

One thing to factor in your calculations is that if you take the buyout you could work or contract somewhere else until your planned retirement date.

I did not have a government job but I have been through a number of layoffs and the work situation has always deteriorated for the people that were left behind since the amount of work remained the same but there were fewer people to do it. You should also consider what you job will be like if other people in your group leave.

MnD wrote:It's really just an ugly and depressing situation right now at work.


If the work situation is affecting your health then that would also be a factor to consider. I retired about two years ago just before I turned 59. I had a desk job and a long commute so I sitting a lot of the time. In the first year I lost about 40 pounds because I was getting more exercise, getting enough sleep, and eating a lot better because I had the time to shop and cook better food.

I am pretty sure that retiring when I did has added years, or at least better quality years, to my life so I have no regrets about the tradeoffs.

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VictoriaF
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Re: Federal employees considering early out - buyout?

Post by VictoriaF » Sat Jun 17, 2017 2:15 pm

retiredjg wrote:I think you've given it a good look-over. I don't see any problems.

I have not heard you would not get the pension COLA until 62. I wonder if things are different during a buyout?


I took a buy-out in 2014. I was going to retire a couple months earlier but as I was preparing to talk to my management, my agency has announced an early retirement offer. And so I delayed my retirement date to the last day of the buy-out window. For me, the advantages of the buy-out were as follows:
1. $25k payment for a volunteer retirement
2. avoiding possible unpleasantness when announcing my early retirement
3. having my paperwork processed seamlessly.

I did loose 5% for every year that I was under the age of 62 on the date of retirement, and COLA until the age of 62. I was a FERS employee, for CSRS it's different.

Victoria
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MnD
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Re: Federal employees considering early out - buyout?

Post by MnD » Sat Jun 17, 2017 2:48 pm

Helo80 wrote:
dm200 wrote:1. What current retirement benefits do you see "at risk" for those currently eligible for retirement now? I thought the mostly "at risk" folks would be new employees and those not retirement eligible now?



There is a lot of chatter among some federal employees on the internet about the proposed changes. They are just that, proposed. They have not been voted on or set in stone. (Like the new military blended retirement system).

Nobody knows what will be set in stone.

Note: I am a fed. I do follow money. I am a boglehead. There has been zero talk of retirement cuts in my workplace.


It's more than just water cooler talk. It cannot be discussed in this forum but here's an article on them.
http://www.govexec.com/pay-benefits/201 ... 27/138065/
I think there is some financial risk for near-retirement employees that do not get off the rolls.
Not full-on everything proposed will happen, but some risk.
The item I see most at risk would be painful for me to lose given an original planned age 56 retirement.

retiredjg
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Re: Federal employees considering early out - buyout?

Post by retiredjg » Sat Jun 17, 2017 2:49 pm

So it appears even with the buyout, you lose the COLA on the pension till age 62. With low inflation, I guess that has not mattered much.

I guess that's what the $25k is for - to offset the losses. Knowing the govt, it probably works out about even.

Funny that you had to postpone your date in order to take the buy out. :D

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SuzyC
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Re: Federal employees considering early out - buyout?

Post by SuzyC » Sat Jun 17, 2017 2:58 pm

Sounds like you're set.

I took a buyout at 55, about a year before full eligibility for FERS retirement. One reason I did so was the possibility that the FERS supplement might suddenly disappear in a budget deal. Who knows, really. I must've run dozens of scenarios through my favorite retirement calculator before pulling the trigger. Almost four years retired now, I'm glad I took the buyout.

FWIW, I was able to get a HELOC *after* I retired when my both roof and brick mansard immediately decided that they would take early retirement together (the latter in spectacular look-out-below fashion). As it turned out, I was able to handle those replacements as well as a couple of bathroom renos out of the house maintenance fund, but it is nice to have a HELOC as a backup given the TSP's rigid withdrawal rules.

Good luck, and enjoy retirement!

Suz

MnD
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Re: Federal employees considering early out - buyout?

Post by MnD » Sat Jun 17, 2017 3:05 pm

finite_difference wrote:What exactly are you getting from the buy out that you wouldn't have anyway?

Why do you need the HELOC? Just to have an open line of credit for emergencies?


$25K gross more in the initial retirement year. That year only (prior to age 56) wouldn't have a extra annuity benefit roughly equal to that amount, so pretty handy. No immediate plans for the HELOC but our bank has no setup or annual fee and competitive rates. It was something I read about in a "do before retirement" article. We have no debt of any kind so won't go hog wild just because of the HELOC and we've had them before.

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Re: Federal employees considering early out - buyout?

Post by Barefootgirl » Sat Jun 17, 2017 3:09 pm

I think there is some financial risk for near-retirement employees that do not get off the rolls.


I realize future reforms may be different and there are no guarantees, but generally speaking, isn't there typically some kind of grandfathering for near-retirement employees?
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delamer
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Re: Federal employees considering early out - buyout?

Post by delamer » Sat Jun 17, 2017 3:20 pm

Barefootgirl wrote:
I think there is some financial risk for near-retirement employees that do not get off the rolls.


I realize future reforms may be different and there are no guarantees, but generally speaking, isn't there typically some kind of grandfathering for near-retirement employees?


Yes, in the past there has been grandfathering. But the 2018 budget proposal would reduce COLAs for future and current retirees, which is a first. So people are cautious.

MnD
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Re: Federal employees considering early out - buyout?

Post by MnD » Sat Jun 17, 2017 3:39 pm

SuzyC wrote:Sounds like you're set.

I took a buyout at 55, about a year before full eligibility for FERS retirement. One reason I did so was the possibility that the FERS supplement might suddenly disappear in a budget deal. Who knows, really. I must've run dozens of scenarios through my favorite retirement calculator before pulling the trigger. Almost four years retired now, I'm glad I took the buyout.

FWIW, I was able to get a HELOC *after* I retired when my both roof and brick mansard immediately decided that they would take early retirement together (the latter in spectacular look-out-below fashion). As it turned out, I was able to handle those replacements as well as a couple of bathroom renos out of the house maintenance fund, but it is nice to have a HELOC as a backup given the TSP's rigid withdrawal rules.

Good luck, and enjoy retirement!

Suz


Thank you! I'm glad to hear 4 years out you have no regrets.
Your "one reason" is also my primary concern being only 1 year out from regular retirement.
You also gave a good example on why I'm interested in a HELOC.

Barefootgirl
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Re: Federal employees considering early out - buyout?

Post by Barefootgirl » Sat Jun 17, 2017 4:02 pm

But the 2018 budget proposal would reduce COLAs for future and current retirees, which is a first. So people are cautious.


Understandably. I have less control over that potential change than I do over the timing of my departure due to eligibility rules, so now I'm trying to determine if there's any talk of them changing the eligibility for retirement terms (I am 2 years away from MRA+10).

I need a back up plan if it becomes untenable. Things could become crazy, I work in a specialized group with skills that are highly coveted in the private sector, so we're only staying for the benefits. If they change substantially, time to get the word out = a *prompt* and mass exodus to the private sector, if only to work for another year or two.
"The best you can do is set up like a baseball team does against an unknown hitter. That is spread the defense and wait for the ball to come to you." - pkcrafter

delamer
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Re: Federal employees considering early out - buyout?

Post by delamer » Sat Jun 17, 2017 4:14 pm

Barefootgirl wrote:
But the 2018 budget proposal would reduce COLAs for future and current retirees, which is a first. So people are cautious.


Understandably. I have less control over that potential change than I do over the timing of my departure due to eligibility rules, so now I'm trying to determine if there's any talk of them changing the eligibility for retirement terms (I am 2 years away from MRA+10).

I need a back up plan if it becomes untenable. Things could become crazy, I work in a specialized group with skills that are highly coveted in the private sector, so we're only staying for the benefits. If they change substantially, time to get the word out = mass exodus to the private sector, if only to work for another year or two.


So you mean your entire group would likely leave if benefits were significantly downgraded? Not criticizing, just trying to understand.

One thing to keep in mind -- even if all the other benefits were to become less attractive, if you are still able to continue FEHB coverage in retirement that alone might make it worth hanging on. Obviously it depends on how eligibility for retirement changes given your personal circumstances.

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VictoriaF
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Re: Federal employees considering early out - buyout?

Post by VictoriaF » Sat Jun 17, 2017 4:35 pm

Barefootgirl wrote:
But the 2018 budget proposal would reduce COLAs for future and current retirees, which is a first. So people are cautious.


Understandably. I have less control over that potential change than I do over the timing of my departure due to eligibility rules, so now I'm trying to determine if there's any talk of them changing the eligibility for retirement terms (I am 2 years away from MRA+10).

I need a back up plan if it becomes untenable. Things could become crazy, I work in a specialized group with skills that are highly coveted in the private sector, so we're only staying for the benefits. If they change substantially, time to get the word out = a *prompt* and mass exodus to the private sector, if only to work for another year or two.


If I remember correctly, if you leave Federal employment before reaching MRA+10, you need to wait until the age of 62 before you can start getting your Federal pension and FEHB. Thus, it may be worthwhile for you to stay put or to get another Federal job until you get to MRA+10.

If you don't want to work, you can move abroad to a place with reasonably priced medical care and stay there until you reach the age of 62.

Victoria
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delamer
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Re: Federal employees considering early out - buyout?

Post by delamer » Sat Jun 17, 2017 4:47 pm

VictoriaF wrote:
Barefootgirl wrote:
But the 2018 budget proposal would reduce COLAs for future and current retirees, which is a first. So people are cautious.


Understandably. I have less control over that potential change than I do over the timing of my departure due to eligibility rules, so now I'm trying to determine if there's any talk of them changing the eligibility for retirement terms (I am 2 years away from MRA+10).

I need a back up plan if it becomes untenable. Things could become crazy, I work in a specialized group with skills that are highly coveted in the private sector, so we're only staying for the benefits. If they change substantially, time to get the word out = a *prompt* and mass exodus to the private sector, if only to work for another year or two.


If I remember correctly, if you leave Federal employment before reaching MRA+10, you need to wait until the age of 62 before you can start getting your Federal pension and FEHB. Thus, it may be worthwhile for you to stay put or to get another Federal job until you get to MRA+10.

If you don't want to work, you can move abroad to a place with reasonably priced medical care and stay there until you reach the age of 62.

Victoria


Here is the problem, quoted from an OPM booklet on deferred retirement:

"If you separated from Federal service with at least 10 years of service before reaching the Minimum Retirement Age or if you separated from Federal service with at least 5, but less than 10 years of service, and are now applying for a deferred annuity, you are not eligible to continue any health benefits, life insurance or Federal Dental and Vision coverage you had while employed."

If you have met the MRA+10 requirement you leave, then you can re-enroll in FEHB when you apply for your annuity.

All under current rules, of course.

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VictoriaF
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Re: Federal employees considering early out - buyout?

Post by VictoriaF » Sat Jun 17, 2017 4:52 pm

delamer wrote:
VictoriaF wrote:
Barefootgirl wrote:
But the 2018 budget proposal would reduce COLAs for future and current retirees, which is a first. So people are cautious.


Understandably. I have less control over that potential change than I do over the timing of my departure due to eligibility rules, so now I'm trying to determine if there's any talk of them changing the eligibility for retirement terms (I am 2 years away from MRA+10).

I need a back up plan if it becomes untenable. Things could become crazy, I work in a specialized group with skills that are highly coveted in the private sector, so we're only staying for the benefits. If they change substantially, time to get the word out = a *prompt* and mass exodus to the private sector, if only to work for another year or two.


If I remember correctly, if you leave Federal employment before reaching MRA+10, you need to wait until the age of 62 before you can start getting your Federal pension and FEHB. Thus, it may be worthwhile for you to stay put or to get another Federal job until you get to MRA+10.

If you don't want to work, you can move abroad to a place with reasonably priced medical care and stay there until you reach the age of 62.

Victoria


Here is the problem, quoted from an OPM booklet on deferred retirement:

"If you separated from Federal service with at least 10 years of service before reaching the Minimum Retirement Age or if you separated from Federal service with at least 5, but less than 10 years of service, and are now applying for a deferred annuity, you are not eligible to continue any health benefits, life insurance or Federal Dental and Vision coverage you had while employed."

If you have met the MRA+10 requirement you leave, then you can re-enroll in FEHB when you apply for your annuity.

All under current rules, of course.


I stay corrected. You can get the deferred annuity (pension) at the age of 62, but not the benefits. That makes my suggestion to stay put before reaching MRA+10 eligibility even stronger. However, waiting it out on a beach in Thailand would take longer.

Victoria
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Re: Federal employees considering early out - buyout?

Post by TimeRunner » Sat Jun 17, 2017 4:58 pm

I was going to retire April 2016, but my boss pleaded with me to stay until the end of the year, saying that buyout authority was imminent, so just hang on a bit more for the good of the Mission. Spring, Summer, and Fall of 2016 came and went seemingly very slowly. Each beautiful day was one more day that I would have spent differently. Buyout authority was not granted to my Agency, so I retired at the end of the year. Yes, I got a few more dollars for that work time, but I would have been happy to have been gone earlier.

Ironically, now my former boss is being dangled a potential buyout, agency buyout authority once again imminent but not yet granted, and so she hangs on while once again Spring slips into Summer.

Barring other fed retirement technicalities, happy times are worth more than slightly more money. :beer
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Nearing_Destination
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Re: Federal employees considering early out - buyout?

Post by Nearing_Destination » Sun Jun 18, 2017 12:21 am

One consideration:
When giving buyout authority, many agencies also WAIVE the five year rule for health insurance-- but you must be on the health insurance at the time to carry into retirement.
(Years before I retired, there was a buyout but they didn't tell me about the waiver (I had transferred back into FEHB after using spouse's better coverage and had only four of the five needed normally at the time). Alas, I didn't take the buyout since we wanted health insurance in retirement (and at the time hadn't quite done all the financial legwork to insure that we could make it))

And yes, the COLA's don't start until 62 under either regular or early out buyout retirement. See OPM - very clear on that.

{I used to joke in those days that the easiest way to reduce the workforce was to give notice that all those not retiring in say two or three years would immediately be transferred over to FERS -- all the old CSRS folks would be gone. PPS the precedent for retroactive changes is the rollout of FERS-- some of us started before FERS ever was enacted but were involuntary switched because we didn't have enough years in; made a big change in pension and future COLA's, as well.}

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Re: Federal employees considering early out - buyout?

Post by chuckb84 » Sun Jun 18, 2017 12:48 am

MnD wrote:I'm seriously considering it as soon as it's offered in a few months.
For many years I've had fall 2018 on my calendar for retirement when I would be first eligible for regular retirement.
But as a federal on the domestic discretionary side of things, I don't see any upside for waiting another year especially given that several earned retirement benefits are at risk. It's really just an ugly and depressing situation right now at work.

I've run a number of retirement planners and it looks like our financial standard of living would go up slightly if I bailed a year early and we are not even remotely frugal, so it would be a very comfortable standard of living.

As far as accessing our savings both at age 55 - (our ages at retirement if I take the early out)......
Can start penalty-free TSP withdrawals at age 55
Wife can do the same with her current 401-K
Wife can set up 72T plan for her traditional rollover IRA
Inherited IRA and taxable are accessible penalty free
Pension starts at early retirement and health care continues
FERS annuity supplement won't start for another year age 56 BUT the buyout is almost exactly the value of extra year of annuity supplement.
Her social security starts at age 62, same year my FERS annuity supplement ends.
My Social Security starts age 70.
Don't have and not going to do any Roth accounts or conversions.

We have no debt but I need to set up a home equity line of credit before this fall. I've heard these are harder to get after retirement.

Any show-stoppers I'm forgetting about? Anyone else running the numbers and considering pulling the plug early?


I was in a similar situation 2 years ago, and decided to retire at at 60.4. The FERS supplement was key in bridging us to age 62 for SS to start.

" It's really just an ugly and depressing situation right now at work." Yep. I SO hear you, and it was a big factor for me too.

Some thoughts:

1. Health care. Have you kept an FEHB policy for 5 years prior to retiring? If so, you can keep the FEHB coverage for the rest of your life and the .gov will continue to pay its share. This is an awesome benefit, so have you set this up?

2. Do you want or need FEGLI life insurance before you retire? I didn't, because I think it's overpriced, but you may feel differently.

3. EXPECT your HR and/or OPM to screw up. You need at least a 3 mont, and preferably a 6 month all-expenses cushion. You should have this anyway, but my experience with getting the FERS payments set up was not seamless. Not awful, but they did make some mistakes and there were delays.

4. Look hard at the survivor benefits on FERS and how much it costs you. After deep introspection, we declined the survivor annuity for her because my family tends to live longer than hers and a life insurance policy on me is cheaper than the 20% cut in FERS annuity.

5. Run your scenarios through i-orp. (https://www.i-orp.com/ORPparms.html). I found this one the most helpful and easiest to use of the many, many retirement calculators.

6. Congratulations! I think you are very close to your retirement goal, and getting to start at age 55 is wonderful. There is life after the .gov....

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Re: Federal employees considering early out - buyout?

Post by mrc » Sun Jun 18, 2017 5:31 am

chuckb84 wrote:4. Look hard at the survivor benefits on FERS and how much it costs you. After deep introspection, we declined the survivor annuity for her because my family tends to live longer than hers and a life insurance policy on me is cheaper than the 20% cut in FERS annuity.


Without the survivor annuity option, if you die first, surviving annuitant spouse cannot continue FEHB. That is the only reason we'll chose the minimum survivor annuity: Currently a 5% premium (reduction of monthly payment) for a 25% survivor benefit. There is also a 10% premium (reduction of monthly payment) for a 50% benefit. Never seen a 20% option.
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Re: Federal employees considering early out - buyout?

Post by cleosdad » Sun Jun 18, 2017 8:31 am

mrc wrote:
chuckb84 wrote:4. Look hard at the survivor benefits on FERS and how much it costs you. After deep introspection, we declined the survivor annuity for her because my family tends to live longer than hers and a life insurance policy on me is cheaper than the 20% cut in FERS annuity.


Without the survivor annuity option, if you die first, surviving annuitant spouse cannot continue FEHB. That is the only reason we'll chose the minimum survivor annuity: Currently a 5% premium (reduction of monthly payment) for a 25% survivor benefit. There is also a 10% premium (reduction of monthly payment) for a 50% benefit. Never seen a 20% option.

When I retired with CSRS in 2005 I had $1.00 withheld from my annuity every month so wife could always use FEHB in open season if she needed. I claimed no survivor benefits.

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Re: Federal employees considering early out - buyout?

Post by Barefootgirl » Sun Jun 18, 2017 8:46 am

So you mean your entire group would likely leave if benefits were significantly downgraded? Not criticizing, just trying to understand.

One thing to keep in mind -- even if all the other benefits were to become less attractive, if you are still able to continue FEHB coverage in retirement that alone might make it worth hanging on. Obviously it depends on how eligibility for retirement changes given your personal circumstances.


I don't think I worded my prior post very clearly. I am not sure if it's yet been proposed, but my primary concern is that they change the MRA +10 option - for example, make it MRA + 15.... here I am, so close to MRA + 10 and they don't grandfather employees like me, close to reaching MRA + 10. In that case, why not bolt for better opportunities?

For example, MRA + 15 would put me close to Medicare age anyway, so why stay for FEHB? seems redundant to those of a certain age.

So my point was that if they decide to eliminate the COLA for all retirees....I can't react personally to that, only accept it, but if they change the rules for when one becomes eligible to retire? you bet I can react personally to that change.

My other point was only that there are certain career fields combined with locations/certification areas in govt that are hard to find and in high demand. They take YEARS to acquire because they are fairly specialized. Companies would prefer to higher former feds than bear the burden of sending their own employees out for the training and in many cases, it can't be replicated because experience inside the walls is not duplicated - you either have it or you don't =. $$$ in the job marketplace.

I'd guess the same would apply to certain medical professionals who work for the govt. So, I throw out the big question, the elephant in the room: *if not for the robust benefits* why stay with the government? A person would be much better served working in the private sector - when backloaded benefits are gone, frontloaded benefits are the natural answer.
"The best you can do is set up like a baseball team does against an unknown hitter. That is spread the defense and wait for the ball to come to you." - pkcrafter

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Re: Federal employees considering early out - buyout?

Post by bayview » Sun Jun 18, 2017 8:50 am

cleosdad wrote:
mrc wrote:
chuckb84 wrote:4. Look hard at the survivor benefits on FERS and how much it costs you. After deep introspection, we declined the survivor annuity for her because my family tends to live longer than hers and a life insurance policy on me is cheaper than the 20% cut in FERS annuity.


Without the survivor annuity option, if you die first, surviving annuitant spouse cannot continue FEHB. That is the only reason we'll chose the minimum survivor annuity: Currently a 5% premium (reduction of monthly payment) for a 25% survivor benefit. There is also a 10% premium (reduction of monthly payment) for a 50% benefit. Never seen a 20% option.

When I retired with CSRS in 2005 I had $1.00 withheld from my annuity every month so wife could always use FEHB in open season if she needed. I claimed no survivor benefits.

Is this one of the differences between the CSRS and FERS systems?

By the way, I was told by our HR staff, and have read elsewhere, that only the fed employee (who will be called an "annuitant" upon retirement) needs to have five years, not the fed employee AND the non-fed spouse. The OPM language is confusing, but I think it's talking about the situation when both spouses are feds.

https://www.fedsmith.com/2015/08/25/feh ... quirement/:

A few things of which you should be aware are:
...
-- The five years refers to your enrollment. Your spouse does not have to be enrolled for the five years immediately preceding your retirement in order to be covered. You can bring your spouse on your insurance at any time before retirement, or even after retirement. Do be aware that if you die after retirement but before bringing your spouse on your FEHB, your spouse will not be able to continue FEHB, even if you have elected a survivor annuity...

I wrote an article similar to this one 2 ½ years ago and, after it appeared I was contacted by many readers who had been told by their HR offices and by pre-retirement seminar providers that the five year requirement also applied to the employee’s spouse. Some other readers said that they were told that their spouse needed to be enrolled at least one day before the employee retired. Nothing could be further from the truth.

The Office of Personnel Management (OPM) clearly lists the requirements for a spouse to continue FEHB coverage after an employee’s or retiree’s death in both the FEHB Handbook and the FEHB FAQS. The requirements are as follows:

-- The spouse must be enrolled on a self and family plan as of the date of the employee/retiree’s death.
-- The spouse must be entitled to receive a survivor annuity.

That’s it. OPM lists no further requirements. As long as the two requirements above are met as of the date of the employee/retiree’s death, it does not matter whether or not the spouse was enrolled at the time of retirement or five years before.


But because I am pretty belt-and-suspenders for big stuff, I did look up the date when I added DH to my policy. He'll have his five years (needed or not) in another 10 weeks. :D
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Re: Federal employees considering early out - buyout?

Post by MnD » Sun Jun 18, 2017 9:13 am

chuckb84 wrote:1. Health care. Have you kept an FEHB policy for 5 years prior to retiring? If so, you can keep the FEHB coverage for the rest of your life and the .gov will continue to pay its share. This is an awesome benefit, so have you set this up?


I have had continuous coverage under FEHB for decades although a switch from single to family coverage occurred about 3 years ago because prior to that my wife's private sector plan was superior for herself and the kids. My personnel office has indicated in writing that the 5-year rule applies to my enrollment only and my wife did not have to be enrolled for the five years before my retirement in order to be covered going into retirement.

This article seems to confirm this although I will check again with my agency prior to seperation.
https://www.fedsmith.com/2015/11/15/the ... ur-spouse/

Early out/buy out documents by OPM also indicates "pre-approved waivers" of the 5-year rule if the employee has FEHB coverage at the time the VERA was initiated but it does not appear I will need this.

https://www.opm.gov/policy-data-oversig ... authority/
Health Benefits: Employees retiring in conjunction with a VERA or Voluntary Separation Incentive Payment (VSIP) authority must have been covered under the FEHB Program (1) for the last 5 years of their Federal civilian service in order to continue such coverage in retirement, or (2) if less than 5 years, for all service since the employee was eligible for these benefits unless these requirements are waived.
OPM will grant pre-approved waivers to employees who have been:
Covered under the FEHB Program continuously since the beginning date of the agency's latest statutory VSIP authority, or OPM-approved VSIP or VERA authority; and
Retire during the statutory VSIP or OPM-approved VSIP/VERA period; and
Receive a VSIP; or
Take early optional retirement (i.e., VERA); or
Take discontinued service retirement based on an involuntary separation due to RIF, directed reassignment, reclassification to a lower grade, or abolishment of position.

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Re: Federal employees considering early out - buyout?

Post by delamer » Sun Jun 18, 2017 10:59 am

Barefootgirl wrote:
So you mean your entire group would likely leave if benefits were significantly downgraded? Not criticizing, just trying to understand.

One thing to keep in mind -- even if all the other benefits were to become less attractive, if you are still able to continue FEHB coverage in retirement that alone might make it worth hanging on. Obviously it depends on how eligibility for retirement changes given your personal circumstances.


I don't think I worded my prior post very clearly. I am not sure if it's yet been proposed, but my primary concern is that they change the MRA +10 option - for example, make it MRA + 15.... here I am, so close to MRA + 10 and they don't grandfather employees like me, close to reaching MRA + 10. In that case, why not bolt for better opportunities?

For example, MRA + 15 would put me close to Medicare age anyway, so why stay for FEHB? seems redundant to those of a certain age.

So my point was that if they decide to eliminate the COLA for all retirees....I can't react personally to that, only accept it, but if they change the rules for when one becomes eligible to retire? you bet I can react personally to that change.

My other point was only that there are certain career fields combined with locations/certification areas in govt that are hard to find and in high demand. They take YEARS to acquire because they are fairly specialized. Companies would prefer to higher former feds than bear the burden of sending their own employees out for the training and in many cases, it can't be replicated because experience inside the walls is not duplicated - you either have it or you don't =. $$$ in the job marketplace.

I'd guess the same would apply to certain medical professionals who work for the govt. So, I throw out the big question, the elephant in the room: *if not for the robust benefits* why stay with the government? A person would be much better served working in the private sector - when backloaded benefits are gone, frontloaded benefits are the natural answer.


My prior response was based on not thinking that MRA+10 was one of the benefit changes suggested in the budget proposal. So my point was that the actual proposed changes should not be enough to cause staff to leave prior to achieving MRA+10 (assumimg it is left in place) because of the high value of being able to access FEHB in pre-Medicare retirement.

I certainly understand your point that a change to MRA+10 makng it more difficult to qualify for retirement/continued FEHB would greatly reduce the government "benefits bonus." Since your salary would be higher in the private sector, then the only issue left is quality of worklife and employment stability, which are individual decisions. For me, I am not sure if I would wanted to take on a very differen work environment in my mid-50's unless it was out of necessity. But if the change would be de minimis, why not?

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Re: Federal employees considering early out - buyout?

Post by delamer » Sun Jun 18, 2017 11:10 am

bayview wrote:
cleosdad wrote:
mrc wrote:
chuckb84 wrote:4. Look hard at the survivor benefits on FERS and how much it costs you. After deep introspection, we declined the survivor annuity for her because my family tends to live longer than hers and a life insurance policy on me is cheaper than the 20% cut in FERS annuity.


Without the survivor annuity option, if you die first, surviving annuitant spouse cannot continue FEHB. That is the only reason we'll chose the minimum survivor annuity: Currently a 5% premium (reduction of monthly payment) for a 25% survivor benefit. There is also a 10% premium (reduction of monthly payment) for a 50% benefit. Never seen a 20% option.

When I retired with CSRS in 2005 I had $1.00 withheld from my annuity every month so wife could always use FEHB in open season if she needed. I claimed no survivor benefits.

Is this one of the differences between the CSRS and FERS systems?

By the way, I was told by our HR staff, and have read elsewhere, that only the fed employee (who will be called an "annuitant" upon retirement) needs to have five years, not the fed employee AND the non-fed spouse. The OPM language is confusing, but I think it's talking about the situation when both spouses are feds.

https://www.fedsmith.com/2015/08/25/feh ... quirement/:

A few things of which you should be aware are:
...
-- The five years refers to your enrollment. Your spouse does not have to be enrolled for the five years immediately preceding your retirement in order to be covered. You can bring your spouse on your insurance at any time before retirement, or even after retirement. Do be aware that if you die after retirement but before bringing your spouse on your FEHB, your spouse will not be able to continue FEHB, even if you have elected a survivor annuity...

I wrote an article similar to this one 2 ½ years ago and, after it appeared I was contacted by many readers who had been told by their HR offices and by pre-retirement seminar providers that the five year requirement also applied to the employee’s spouse. Some other readers said that they were told that their spouse needed to be enrolled at least one day before the employee retired. Nothing could be further from the truth.

The Office of Personnel Management (OPM) clearly lists the requirements for a spouse to continue FEHB coverage after an employee’s or retiree’s death in both the FEHB Handbook and the FEHB FAQS. The requirements are as follows:

-- The spouse must be enrolled on a self and family plan as of the date of the employee/retiree’s death.
-- The spouse must be entitled to receive a survivor annuity.

That’s it. OPM lists no further requirements. As long as the two requirements above are met as of the date of the employee/retiree’s death, it does not matter whether or not the spouse was enrolled at the time of retirement or five years before.


But because I am pretty belt-and-suspenders for big stuff, I did look up the date when I added DH to my policy. He'll have his five years (needed or not) in another 10 weeks. :D


Yes, under CSRS there are more options for deciding on the level of survivor's benefit than under FERS.

Your husband did not need to be added to your FEHB to maintain his eligibility once you retired. (The only issue would be if you had died and he wasn't already covered.) My husband/kids were not on my policy in the 1st year of my 5 years under FEHB before retirement, but they are covered in my retirement.

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Re: Federal employees considering early out - buyout?

Post by delamer » Sun Jun 18, 2017 11:19 am

chuckb84 wrote:
MnD wrote:I'm seriously considering it as soon as it's offered in a few months.
For many years I've had fall 2018 on my calendar for retirement when I would be first eligible for regular retirement.
But as a federal on the domestic discretionary side of things, I don't see any upside for waiting another year especially given that several earned retirement benefits are at risk. It's really just an ugly and depressing situation right now at work.

I've run a number of retirement planners and it looks like our financial standard of living would go up slightly if I bailed a year early and we are not even remotely frugal, so it would be a very comfortable standard of living.

As far as accessing our savings both at age 55 - (our ages at retirement if I take the early out)......
Can start penalty-free TSP withdrawals at age 55
Wife can do the same with her current 401-K
Wife can set up 72T plan for her traditional rollover IRA
Inherited IRA and taxable are accessible penalty free
Pension starts at early retirement and health care continues
FERS annuity supplement won't start for another year age 56 BUT the buyout is almost exactly the value of extra year of annuity supplement.
Her social security starts at age 62, same year my FERS annuity supplement ends.
My Social Security starts age 70.
Don't have and not going to do any Roth accounts or conversions.

We have no debt but I need to set up a home equity line of credit before this fall. I've heard these are harder to get after retirement.

Any show-stoppers I'm forgetting about? Anyone else running the numbers and considering pulling the plug early?


I was in a similar situation 2 years ago, and decided to retire at at 60.4. The FERS supplement was key in bridging us to age 62 for SS to start.

" It's really just an ugly and depressing situation right now at work." Yep. I SO hear you, and it was a big factor for me too.

Some thoughts:

1. Health care. Have you kept an FEHB policy for 5 years prior to retiring? If so, you can keep the FEHB coverage for the rest of your life and the .gov will continue to pay its share. This is an awesome benefit, so have you set this up?

2. Do you want or need FEGLI life insurance before you retire? I didn't, because I think it's overpriced, but you may feel differently.

3. EXPECT your HR and/or OPM to screw up. You need at least a 3 mont, and preferably a 6 month all-expenses cushion. You should have this anyway, but my experience with getting the FERS payments set up was not seamless. Not awful, but they did make some mistakes and there were delays.

4. Look hard at the survivor benefits on FERS and how much it costs you. After deep introspection, we declined the survivor annuity for her because my family tends to live longer than hers and a life insurance policy on me is cheaper than the 20% cut in FERS annuity.

5. Run your scenarios through i-orp. (https://www.i-orp.com/ORPparms.html). I found this one the most helpful and easiest to use of the many, many retirement calculators.

6. Congratulations! I think you are very close to your retirement goal, and getting to start at age 55 is wonderful. There is life after the .gov....


As mrc said above, your wife will not be able to continue FEHB coverage if you predecease her, since you did not elect a survivor annuity.

Also, the reduction in the FERS annuity is 10% with a 50% survivor annuity and 5% with a 25% survivor annuity.

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Re: Federal employees considering early out - buyout?

Post by Barefootgirl » Sun Jun 18, 2017 11:22 am

then the only issue left is quality of worklife and employment stability,


I've only been in one agency, one career category for my entire federal career. I hear about this thing called quality of worklife, but so far, it remains elusive lol. I find the pressures in this position to be no less than my career was in the private sector.

Federal employees, in many cases, appear to pay an opportunity cost for stability. It's definitely a YMMV thing -


and yes, I have yet to see a proposal to revise retirement eligibity rules, but it seems to me, in the current environment, *nothing* is off the table.
"The best you can do is set up like a baseball team does against an unknown hitter. That is spread the defense and wait for the ball to come to you." - pkcrafter

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Re: Federal employees considering early out - buyout?

Post by delamer » Sun Jun 18, 2017 11:41 am

Barefootgirl wrote:
then the only issue left is quality of worklife and employment stability,


I've only been in one agency, one career category for my entire federal career. I hear about this thing called quality of worklife, but so far, it remains elusive lol. I find the pressures in this position to be no less than my career was in the private sector.

Federal employees, in many cases, appear to pay an opportunity cost for stability. It's definitely a YMMV thing -


and yes, I have yet to see a proposal to revise retirement eligibity rules, but it seems to me, in the current environment, *nothing* is off the table.


With such a big federal workforce and such a huge variety of positions, all advice has to be in the context of YMMV. I am sure that I paid an opportunity cost, but the stability was not just job security but the ability to llimit my work schedule.

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Re: Federal employees considering early out - buyout?

Post by MichDad » Mon Jun 19, 2017 9:43 am

A $25,000 buy-out is the equivalent of eight weeks' gross salary (four bi-weekly pay periods) of a highly-paid federal employee.

$161,900/52 = $3113.46

$25,000/$3113.46 = 8.03 weeks

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Re: Federal employees considering early out - buyout?

Post by MnD » Mon Jun 19, 2017 6:31 pm

Its just mental accounting but I look at a potential buy-out offer like an extra year of the FERS annuity supplement.
Looking at going out a year earlier than scheduled and a year before annuity supplement starts.
Buy-out fills that in quite nicely.

It's not big bucks but 8 weeks of buyout and (in my case) 8 weeks of annual leave payout is a nice walk-away deposit.
Higher-compensated feds may also not be subject to social security tax on either payment if they have capped out by the pay period when they leave.

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Re: Federal employees considering early out - buyout?

Post by retiredjg » Mon Jun 19, 2017 8:09 pm

MnD wrote:Its just mental accounting but I look at a potential buy-out offer like an extra year of the FERS annuity supplement.
Looking at going out a year earlier than scheduled and a year before annuity supplement starts.
Buy-out fills that in quite nicely.

It's not big bucks but 8 weeks of buyout and (in my case) 8 weeks of annual leave payout is a nice walk-away deposit.
Higher-compensated feds may also not be subject to social security tax on either payment if they have capped out by the pay period when they leave.

I don't think it is mental accounting. If the govt needs to unload some older folks and replace them with cheaper younger folks, they have to make getting out at least comparable to staying awhile. I think there is a reason it all fills in quite nicely.

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Re: Federal employees considering early out - buyout?

Post by MichDad » Tue Jun 20, 2017 7:57 am

Assuming no portion of the $25,000 buy-out payment is subject to Social Security taxes, the recipient will save an additional $1,550.

$25,000 * 6.2% = $1,550

Assuming a highly paid federal employee works 251 days in a year (365 - 104 weekend days - 10 holidays), he or she can earn about $645 per day ($161,900/251 = $645.02). So, this savings of Social Security taxes amounts to less than twenty hours of work.

MichDad

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Re: Federal employees considering early out - buyout?

Post by SeeMoe » Thu Jun 22, 2017 4:21 pm

Watty wrote:One thing to factor in your calculations is that if you take the buyout you could work or contract somewhere else until your planned retirement date.

I did not have a government job but I have been through a number of layoffs and the work situation has always deteriorated for the people that were left behind since the amount of work remained the same but there were fewer people to do it. You should also consider what you job will be like if other people in your group leave.

MnD wrote:It's really just an ugly and depressing situation right now at work.


If the work situation is affecting your health then that would also be a factor to consider. I retired about two years ago just before I turned 59. I had a desk job and a long commute so I sitting a lot of the time. In the first year I lost about 40 pounds because I was getting more exercise, getting enough sleep, and eating a lot better because I had the time to shop and cook better food.

I am pretty sure that retiring when I did has added years, or at least better quality years, to my life so I have no regrets about the tradeoffs.


Well said. I retired in my early 50's and believe it helped me age better with quality food eaten when I feel hungry. Plus the lack of stress and anxiety working with humans that I would never associate with in private life....Etc.

SeeMoe.. :!:
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Re: Federal employees considering early out - buyout?

Post by MnD » Sun Jul 23, 2017 2:02 pm

SeeMoe wrote:
I retired in my early 50's and believe it helped me age better with quality food eaten when I feel hungry. Plus the lack of stress and anxiety working with humans that I would never associate with in private life....Etc.

SeeMoe.. :!:


It hasn't been offered yet (early out or buyout) at my agency, but the approval to do so is still progressing forward through the system. Before this possibility I hadn't given leaving a year early any thought at all but now it's like an obsession or more specifically a major case of Baader-Meinhof phenomenon. :shock:

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Re: Federal employees considering early out - buyout?

Post by Swansea » Sun Jul 23, 2017 2:13 pm

I was offered a buy out in 2003, but was not ready to go. Left in 2005. The terms in 2003 prohibited return as an independent contractor, and that was another reason I declined to accept it. However, those who took the buyout could return to work for a contract firm.

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Re: Federal employees considering early out - buyout?

Post by Dottie57 » Sun Jul 23, 2017 2:13 pm

You have no idea how jealous I am. My megacorp will never do any kind of buyout although it is increasingly obvious they want younger IT people.

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Re: Federal employees considering early out - buyout?

Post by VictoriaF » Sun Jul 23, 2017 2:23 pm

MnD wrote:
SeeMoe wrote:
I retired in my early 50's and believe it helped me age better with quality food eaten when I feel hungry. Plus the lack of stress and anxiety working with humans that I would never associate with in private life....Etc.

SeeMoe.. :!:


It hasn't been offered yet (early out or buyout) at my agency, but the approval to do so is still progressing forward through the system. Before this possibility I hadn't given leaving a year early any thought at all but now it's like an obsession or more specifically a major case of Baader-Meinhof phenomenon. :shock:



The Baader-Meinhof bias is an understatement of your case. I diagnose your situation as the Prospect Theory's loss aversion. Your Reference Point has jumped: Before the rumors, it was "employment;" now it is "retirement." In your current state, If you were not offered a retirement package it would feel like a great loss.

Good luck!
Victoria
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Re: Federal employees considering early out - buyout?

Post by MnD » Sun Jul 23, 2017 5:34 pm

Huge reference point shift!
Prior to the possibility of early-out buyout I had a plan and a date and the positives and negatives of the next 14 months of employment were acceptable and tolerable. Now with the reasonable possibility of an offer to exit in say 2-month time frame - the value of the positives of another 12 months of employment on top of that have just flat-out evaporated while the "perceived" negatives of this employment have magnified dramatically. A few new factual negatives to staying around have actually cropped up, but nothing like the impact of the reference point shift on perception. Very interesting!

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Re: Federal employees considering early out - buyout?

Post by SeeMoe » Mon Jul 24, 2017 4:15 pm

VictoriaF wrote:
MnD wrote:
SeeMoe wrote:
I retired in my early 50's and believe it helped me age better with quality food eaten when I feel hungry. Plus the lack of stress and anxiety working with humans that I would never associate with in private life....Etc.

SeeMoe.. :!:


It hasn't been offered yet (early out or buyout) at my agency, but the approval to do so is still progressing forward through the system. Before this possibility I hadn't given leaving a year early any thought at all but now it's like an obsession or more specifically a major case of Baader-Meinhof phenomenon. :shock:



The Baader-Meinhof bias is an understatement of your case. I diagnose your situation as the Prospect Theory's loss aversion. Your Reference Point has jumped: Before the rumors, it was "employment;" now it is "retirement." In your current state, If you were not offered a retirement package it would feel like a great loss.

I feel for you....6 weeks ago we deposited $3k on a 2018 AMG GLE43C4 Mercedes Benz coupe with all of the options, colors and stuff that we want. Now we have to wait 2 months for the delivery and every day just drags by now...Despite driving around in a 2017 GLS450w4 that is a peach to drive, but we are so careful with it per trade-in value keeping it garaged mostly.

SeeMoe.. :shock:
Good luck!
Victoria
"By gnawing through a dike, even a Rat can destroy a nation ." {Edmund Burke}

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