Retirement options, and your nest egg

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A Reader Writes:

I would like to know my options for retirement at age 51 and 23 years service. I am under the Civil Service Retirement System.

Milt Replies:

Ordinarily, you must have at least 30 years of service and have attained age 55 to be eligible for a regular retirement under CSRS.

Following are some exceptions:

If your agency undergoes a major reorganization, a reduction in force or a transfer of function, and if a significant percentage of the agency's employees will be separated or reduced in pay, the head of your agency can ask the Office of Personnel Management to permit early optional retirement for eligible employees. By permitting early optional retirement, OPM can lessen the impact of involuntary separations and demotions.

If the head of your agency gets approval from OPM to permit early optional retirements, eligible employees will be notified of the opportunity to retire voluntarily.

Another contingency is discontinued service retirement because of an involuntary separation.

In both cases, if you have at least 25 years of service, or you are at least age 50 and have as much as 20 years of service, you will be entitled to an immediate annuity. (The annuity is reduced by 2 percent for each year you are under age 55.) At least five years of your service must be civilian service, and you must have been employed under CSRS for at least one year out of the last two years preceding retirement.

Regarding involuntary separation, the most common cause is a reduction in force. However, employees who decline reasonable offers of other positions are not eligible for discontinued service annuities.

A "reasonable offer" is defined as the offer of another position in your agency and commuting area for which you are qualified and which is no more than two grades or pay levels below your current grade or pay level. If you decline such an offer and resign, you will not qualify for discontinued service retirement.

Another frequent cause for an involuntary separation is when the location of an office or unit is moved to an area outside the commuting area of the old work site. As a general rule, if the new work site is in a different commuting area, and if you would have to change your place of residence in order to work at the new job site, then your separation for failure to relocate to the new work location would be a qualifying separation for retirement purposes.

A Reader Offers Some Advice:

After reading last week's column, I find I'm in a similar situation. However, I placed the maximum legal amount into my Thrift Savings Plan account. When I retire in January, my TSP nest egg will be sufficient to pay out from more than $125,000, thanks to the dot-com boom and today's bond market.

I receive about $1,500 per month in my account. With four months to go, that adds more than $6,000 to my retirement for the $125,000 and change.

I am a retired (20 years) Navy chief and an about-to-retire GS-11. I've paid into Social Security since 1955 and will draw the maximum next August.

The person mentioned in your column just did not watch their money, or they ignored TSP altogether. If you have a system available, put your eggs in one basket and WATCH THAT BASKET, period.

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at [email protected]


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