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I meet federal employees on a daily basis at seminars, through email and as clients who are getting ready to retire after a long career of service. I find that many have prepared well for this next chapter in life and are looking forward to retirement. Others, however, find themselves in a situation where retirement is necessary due to an untenable work situation or changes at home that require more time with family. Many are uncertain if they have adequately prepared, and are hoping for the best even though their net retirement income will be less than what they brought home while employed.
It isn’t hard to retire from the federal government. All you have to do is fill out a three-page application. That means it can be easy to retire impulsively at a vulnerable time. But if the time isn’t right, remember that it’s very hard to undo retirement and return to federal service.
So before you make your final decision, consider some statistics—starting, for example, with these from the Social Security Administration’s Office of Retirement Policy:
- Social Security is the major source of retirement income (providing at least 50 percent of total income) for most middle class married couples and single people aged 65 or older.
- For married couples with income above $67,621 and below $108,703, 10.2 percent received more than 50 percent of their income from Social Security.
- For 60 percent of single people with income above $24,400 and below $41,151, Social Security represented 50 percent or more of income. This population is at the top income level of the middle class. The numbers are much higher for those at lower income levels.
- The never-married elderly (age 65 and older) have the highest poverty rate among all groups, followed by those who are divorced or widowed.
- As of 2014, 23.6 percent of people age 65 and older were living below the poverty line.
- The overall poverty rate is almost two-thirds higher among women than men—12 percent compared to 7 percent.
Most federal employees don’t have to worry about falling below the poverty line when they retire, or relying solely on Social Security. So what do the numbers look like for them? Consider these fiscal 2016 statistics from a recent Congressional Research Service report:
- The average civilian federal employee was 61.3 years old at retirement and had completed 25.6 years of federal service.
- The average monthly annuity payment to workers who retired under the Civil Service Retirement System was $4,755. Those who retired under the Federal Employees Retirement System received an average of $1,714.
- Employees retiring under FERS had a shorter average length of service than those under CSRS.
- From fiscal 1970 to fiscal 1985, the number of people receiving federal civil service annuities rose from fewer than 1 million to nearly 2 million, an increase of 105 percent.
- As of 2016, 55 percent of employees in the workforce who were covered by CSRS were 60 or older, and only 13 percent of FERS employees were.
- About one third of all federal employee annuitants and survivor annuitants reside in five states: California, Texas, Florida, Maryland and Virginia.
Are you worried about your retirement situation? If so, remember that the key to being financially and mentally ready all comes down to one word: preparation.