Publisher's Perspective

The turn of the year always brings retirement to the forefront of considerations for federal employees.

Many of those who are eligible to retire do so at the turn of the year for various financial reasons, including maximizing the value of lump-sum payments for unused annual leave on separation. Many of those who aren’t eligible to retire see the exodus and start seriously considering when they will be able to, or want to, join the crowd.

And just as predictably, there are criticisms from outsiders, many of them motivated by envy, about what a sweet deal federal retirees get.

Some data from OPM put things in a better perspective.

First of all, there’s a myth that federal employees retire earlier than the rest of the population; to hear some tell it, retirement while still in your 40s is not uncommon. That may be true of military personnel–who can get retirement benefits at 20 years of service, typically having started in their late teens or early twenties–but not of federal workers. The average retirement age last year was 62 for those under FERS and 60 for those under FERS, just about exactly the national average.

Another myth is that federal employees don’t have to work particularly long but get generous benefits. As for the first half of that argument, the average years of service at retirement for those retiring last year was 34.6 years under CSRS and 20.4 years under FERS. The average monthly annuities were $4,261 and $1,493, respectively.

But the median annuity—the point where half are above and half are below—was lower in both cases–$3,601 and $1,120, respectively. That means the average figure is misleading, because it is skewed upward by a minority who receive especially large benefits due to their elevated high-3 salary levels.

Another interesting trend is that the number of FERS employees who are retiring now outstrips the number of new CSRS retirees—57 percent of the 138,000 2013 retirees went out under the FERS system. That’s yet another telling indicator of how FERS has supplanted CSRS as the main federal retirement system

However, 74 percent of those on the retirement rolls retired under CSRS.

A couple other figures of note:

While 74 percent of retirees have FEHB in retirement and 80 percent have FEGLI, only 52 percent have provided for a survivor annuity. In many cases, that’s simply because the retiree is single, but in other cases it’s likely because they decided against providing for that benefit, with the consent of a spouse. That’s a way to avoid the reduction for providing a survivor benefit, but should be handled with care. A survivor benefit provides a steady lifetime stream of income to a surviving spouse that is largely funded by the government, and it also conveys continued eligibility for FEHB.

In 2013, only nine new retirees elected the “alternative form of annuity” better known as the lump-sum option. That’s a once-common alternative that now is available only to those who retire with life-threatening conditions.

While federal employees are concentrated in the District of Columbia and its immediate suburbs—about 15 percent of all feds work in that general area—the state with the most federal retirees, more than 215,000, is California, followed by Texas and Florida, each with about 171,000. Maryland and Virginia stand at about 160,000 and 143,000, respectively, while Pennsylvania is the only other state with more than 100,000, at 110,000.