ven if we’re over the hill, we’ll never be under it (financially, that is). Image: nexus 7/Shutterstock.com
By: John GrobeYou’re over the hill! What hill, and when exactly did I go over it?
We tend to view life differently as we age. I remember the first “over-the-hill” party I went to was a surprise 30th birthday party for (of all people) me. Imagine thinking that life was taking a downward turn at the tender age of 30! My next OTH party was disguised as a “Hat in the Ring” party when I turned 35 and was eligible to serve as President of the United States. By the way, three US Presidents have been born in the same year as me: Clinton, G. W. Bush, and Trump – and all of them are at least a few months older than me.
Later celebrations of my going further over the hill occurred when I turned 40, and then again, 50. Then they stopped. Am I no further over the hill at 78 than I was at 50? Probably not, but both myself and other people are more accepting of this fact. Though I’ve been over several hills in my life, I’m still in a place where all my financial needs are taken care of. Why am I so lucky? Here’s why:
· Both my wife (not over as many hills as I am) and I are retired federal employees. We have inflation adjusted annuities that we receive monthly from OPM. Mine is CSRS and hers is FERS.
· We are both entitled to Social Security. She gets hers from a private sector career, as well as being covered under FERS. I get mine from work both before and after my federal career.
· We both set money aside in defined benefit plans. Initially we both used the TSP, but then, when I took early retirement, I set up a defined contribution plan for my business and rolled my TSP into it.
When all of these actions are considered together, we have built a source of retirement income that will keep us going over all the hills that we face from here on out. Even if we’re over the hill, we’ll never be under it (financially, that is).
If you are a career federal employee, you’ll probably be as lucky as I am. We don’t even need to worry about cashing out our pension prematurely – we can’t! Federal retirement is designed in such a way that we cannot cash out our FERS annuity. We will receive payments from our FERS annuity for as long as we live because, unlike many private sector pensions, FERS has no lump-sum distribution option. Personally, I think that’s a good thing.
We’re also lucky to be covered by a defined benefit pension like FERS. Most private sector retirees are not entitled to a pension from their employer at all. According to the Bureau of Labor Statistics, 15% of private sector workers have access to a defined benefit pension like FERS.
Most, if not all, federal employees and retirees are members of the middle class or higher. That’s another good thing. Last year, in a poll conducted by the Washington Post, a majority of the respondents identified the following traits as defining the middle class.
• Owning a home;
• Having a secure job;
• Being able to save money;
• Having the time and money to take vacations;
• Having health insurance;
• Being able to afford a $1,000 emergency;
• Being able to pay bills on time;
• Having a job that offers paid sick leave; and
• Being able to retire in comfort.
I would say our federal employment checks all of the boxes for middle class. Are we lucky, or what?
John Grobe is a retired federal employee and retired retirement educator with over 30 years of experience in helping federal employees understand their retirement.
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