Welles: Your retirement ballpark

The Office of Personnel Management has a new online tool to help you get in the batting lineup for retirement. The interactive Federal Ballpark Estimate was developed by the Employee Benefit Research Institute and its American Savings Education Council program.The Federal Ballpark Estimate calculates your projected federal annuity based on your current salary. The estimate also includes any Thrift Savings Plan benefits to quickly identify how much you will have in retirement income. It calculates benefits based on whether you are in the Civil Service Retirement System, CSRS Offset or the Federal Employees Retirement System.  I took the Federal Ballpark Estimate for a test drive by using my salary and TSP savings when I retired from the government five years ago. It took only a few minutes to answer questions about my salary, my service computation date — the date I started my first federal job — and any projected salary from part-time work. If you were considering full-time work in retirement, you could estimate that salary. In an instant the words appeared, “Congratulations! Based on your input, you have saved enough to replace 97.3 percent of your final wages.” I felt relieved.  But I wondered what would happen if I were not continuing to work. I redid the worksheet and left that field blank.  This time the calculator told me I had enough to replace 76.25 percent of my final wages. Should I worry? The ballpark estimate gave me an informative explanation.“Many experts agree that a replacement rate of 75 percent to 85 percent will provide adequate retirement income.  When determining your goal, you need to think about the type of lifestyle you would like in retirement. Do you want the cruise-of-the-month retirement, or are you planning to spend your time in the garden?” Depending on which you choose, you might need enough money to cover a higher percentage of your current gross income. Calculating replacement income requires a different computation in which you list all expenses and tally those against your projected income to see if you can still pay your bills and live the lifestyle you would like.  For those who have worked in government and in the private sector or plan to do so, Social Security is another factor to consider for future retirement income.  This is not part of the Federal Ballpark Estimate.  The provision called the Government Pension Offset (GPO) can adversely affect planned Social Security for those in CSRS, especially for those counting on spousal benefits.   A widow who receives a federal pension wrote, “Although I had heard of the GPO, I didn’t fully understand how it would affect me. Well, it did. Your spouse’s or widow’s or widower’s benefits may be reduced by two-thirds of your government pension.  Because my annuity falls within these parameters, I will not receive my spouse’s Social Security.”  The National Active and Retired Federal Employees association has been working for several years to change the law that creates that circumstance. But for now, if you want to hit retirement out of the park, consider using the Federal Ballpark Estimate.