If you work for Uncle Sam, you don’t need financial guru Suze Orman to tell you there are lots of reasons you need a hefty stash of cash — in the bank or under your mattress — before you retire and your income (but not your bills) drops dramatically.
The most immediate reason is that you are facing the possibility of a 20 percent pay cut thanks to the threat of sequestration-driven furloughs. The one-day-per-week-without-pay exercise will likely begin in March unless Congress and the White House — who created the problem and set the deadlines — fix it. President Obama suggested Tuesday that they delay the start date of sequestration, as they have before.
The other reasons you need extra money to live on after retirement is the fact that record numbers of federal workers are retiring and adding to the backlog in processing retirement claims. The Office of Personnel Management said 22,000-plus feds put in their retirement papers in January, about 1,000 more than OPM anticipated. At the same time the agency processed a near record 12,527 retirement applications. Only when all the paperwork is processed and approved can retirees be authorized to start getting their full and final annuity payments.
Experts have been predicting a tidal wave of retirements since the late 1990s. It appears they are finally correct. The tsunami seems to have been triggered by an aging federal workforce and buyout-induced retirements at a number of federal agencies. The rapidly deflating U.S. Postal Service has led the buyout derby although it is paying buyouts that are less generous than the $25,000 offered in past by the IRS, Agriculture, Defense and other agencies. The USPS is also spreading its reduced buyout payments over two years in some cases.
Depending on the length and the complexity of the retirees’ paperwork trail, it can take anywhere from a couple of months to, in extreme cases, more than a year before workers get their first full annuity payment. Many start out with 80 percent of their estimated final annuity, but we’ve heard from some who say they got as little as 40 percent of what they anticipated before their sometimes very complex claims were processed and approved. Breaks in service, time out (for military service or to have children), or movement from one agency to another make applications harder to process, adding to the delay.
It may be a little late to start saving for a sequestration-triggered furlough, but there is still time for most to set aside tide-me-over funds before they retire.
March on Washington
The Federal Managers Association will have its 75th annual national convention here in D.C. March 4-6. The sessions will be at the Mayflower Hotel, just down the street from the White House. Delegates will also go to Capitol Hill to see their senators and representatives.
The National Active and Retired Federal Employees legislative conference will be held in Arlington, right across the river from D.C., March 9-12. It expects 300 to attend.
Outdoor retail exec picked for Interior President Barack Obama on Wednesday will nominate business executive Sally Jewell to lead the Interior Department, an administration official said. Jewell is the president and chief executive officer at the outdoors company Recreational Equipment, Inc., known as REI, which sells clothing and gear for outdoor adventures with more than 100 stores across the country.
Postal Service to cut Saturday mail to trim costs The financially strapped Postal Service plans to cut Saturday mail starting Aug. 1 and keep 6-day-a-week package delivery. Patrick Donahoe, postmaster general and CEO, said the change would mean a combination of employee reassignment and attrition and is expected to achieve cost savings of approximately $2 billion annually when fully implemented.
Civilian agencies set to release sequestration details to employees Civilian federal agencies are expected to begin telling employees how automatic budget cuts set to go into effect in March will impact them, according to federal employee unions who were briefed by Obama administration officials. The Office of Management and Budget gave agency heads the go-ahead to begin communicating to their employees as early as Tuesday about the possible effects of sequestration, including employee furloughs.