A two-year pay freeze, threats of a freeze extension and proposals that cut federal employees’ benefits might have some feds thinking about retirement.
But, warns retirement expert David Snell, “Before they make a plunge like retirement, they should really do some careful thinking.”
Snell, a former OPM official and now director of retirement services for the National Active and Retired Federal Employees, said people need to anticipate how much they need in retirement. He said they should expect to spend 70 to 100 percent of their pre-retirement income to maintain their lifestyle.
Feds also need to estimate how long they will be in retirement.
“More and more, people are living longer. So I think people that have reached age 65 today…the reports are they’re going to live another 20 years, and that’s a long time to live in retirement,” Snell said in an interview with Your Turn with Mike Causey.
Some people see a “gross figure” but do not plan for various reductions in their annuity, such as if you are retiring earlier than age 55 in the Civil Service Retirement System or if you are providing survivor benefits, Snell said.
“All of those things come into play,” he said.
Also, the cost of health benefits and life insurance will now be deducted every month from the annuity.
Another consideration: The rising cost of living.
“Things keep adding up, and computers and that sort of thing are almost a necessity in modern life. In addition to the … inflation that is constantly loosening the price for everything, you have other add-ons that are coming in,” he said.
Your family is another factor to consider before retirement. “Whatever affects their annuity affects the family’s annuity,” Snell said.
In the second half of the show, Mike talked with Stephen Losey and Sean Reilly from the Federal Times about what didn’t happen to feds last year, and why and whether the outlook for 2012 if grim, bright or more of the same.