FEDweek

In It for the Long Haul

“We shall never be younger,” Shakespeare wrote in The Taming of the Shrew, and that seems to be true of the federal workforce, too.

Unless you’re in one of the few occupations that have mandatory retirement, you can continue working as long as you’re able and capable. That’s just what increasing numbers of federal employees have in mind.

That runs counter to the common view that federal employees retire as soon they are eligible. Some of them do, but far fewer than you would expect from the cafeteria chatter. Fifteen percent of federal employees are retirement-eligible but are still working.

Latest data from OPM reduce it to numbers. The average federal retirement age, as of last year, was 61.7. That’s up from 59.5 over the last 10 years, and in that time the number has increased every year. (Over that time, incidentally, there has been an increase in the share of all retirements coming from occupations that require earlier retirement; otherwise the increase in the average age would have been even more.) That in turn pulled the average of the workforce as a whole up from 40.0 to 47.7.

More than 28 percent of the federal workforce is over age 55; only 17 percent of it is under 35; those over 60 outnumber those under 30 by more than two to one.

A lot of what has been expected of federal retirement has not happened. For example, there has been a general expectation of a “retirement wave” for many years, but the data over the last 10 years show—apart from a spike related to early out offers from the Postal Service when its finances were especially poor—that retirements have been averaging just above 60,000 a year, with fiscal 2017 being no exception at around 63,000. The retirement wave hasn’t happened.

There was an expectation of a surge of retirements in 2014, when full crediting of unused sick leave toward a FERS retirement calculation began, versus only half-crediting the prior five years and no crediting before that. Didn’t happen.

There was an expectation of a surge of retirements in 2016, three years after the end of a three-year freeze on federal salary rates—in other words, after “high-3” salary used in the computation been recovered. Didn’t happen.

There was an expectation of a surge of retirements due to the availability, starting in 2015, of phased retirement—half-time work while drawing a half annuity. As of several months ago, fewer than 300 federal employees/retirees were in that status and only about 100 had completed such periods. While it’s largely the fault of agencies rather than employees, phased retirement isn’t happening.

What is happening is that many federal employees simply need to continue working for the income, with the added benefit of building their later retirement benefit—by 1 percent of high-3 salary under FERS, 2 percent under CSRS, in addition to the impact of salary increases on their high-3.

Others simply like their work and/or value what they do too highly to be comfortable in passing it off to someone who doesn’t know it as well.

Some, for personal reasons, financial reasons or both, say they’ll never retire; you’ll hear that in the cafeteria too. However, studies consistently show that such expectations are unrealistic.

Commonly a health issue arises—personally, or involving someone you would need to support—or you will just reach the point where you’ve had enough of working and you want to get on to that list of things you’ve planned for retirement. Or the difference between your salary and the annuity benefit you have built up will narrow to the point that it’s just not worth it to you to continue working.

What’s it all mean? If you’re not yet eligible for retirement, recognize that you don’t have to go out as soon as you reach that point, and in fact the odds say you won’t want to. You need to stay current in your field and engaged at your workplace so someone else doesn’t make the decision for you.

If you are eligible and are still working, recognize that it can’t go on forever. Have your finances and your personal plans in a state of readiness for retirement at any time, because at some point even a long haul toward retirement reaches its destination.