According to the Social Security Administration, one in four people turning age 65 today will live to 90. Ask yourself this: will you have enough money to live comfortably if your retirement runs 10 years longer than you planned? Working for Uncle Sam a few years beyond your MRA can generate a bigger annuity, a higher Social Security check, and a larger TSP nest egg for your retirement.
FERS Annuity (Pension): 10% Bonus For Working Longer
To calculate the amount of your FERS annuity, the formula for regular employees is your high-3 salary multiplied by 1%, then multiplied by your number of years of creditable service. When a FERS participant waits to retire until at least age 62 with at least 20 years of service, their high-3 is multiplied by 1.1%. The bump may not seem that big until you do the math. In fact, it can work out to as much as a 10% raise in your monthly annuity for the rest of your life.
“Since you’re likely earning the most at the end of your federal career, working additional years can potentially boost the amount of your Social Security benefit.”
TSP: Super Catch-Up Contribution If You’re Age 60-63
One of the most significant changes under the SECURE Act 2.0 is good news for working feds who turn age 60, 61, 62 or 63 in 2025. Nicknamed TSP Super Catch-Ups, eligible TSP participants can make a catch-up contribution of up to $10,000 or up to 150% of the regular Catch-Up contribution for those 50 and older — whichever is greater. Of course, if you decide to work a few years longer, you’ll continue to get your 5% agency match on your TSP contributions. This means more free money for working a few extra years.
Social Security: Highest 35 Years
Your Social Security benefit is calculated based on the highest 35 years of lifetime earnings. Since you’re likely earning the most at the end of your federal career, working additional years can potentially boost the amount of your Social Security benefit. Add to this, when you delay filing for benefits beyond your Normal Retirement Age (NRA), you earn credits that continue to increase your benefit by 8% each year up until age 70.
Bottom Line: Working Longer Mitigates The Risk Of Outliving Your Money
Financial analysts agree that the top risk to retirement is longevity. Since 1970, the average life span has been gradually increasing. If it increases just three years by 2050, it’s estimated that the cost of aging will increase by 50%.
To learn more, connect with an FRC® trained advisor who fully understands your federal benefits. Together, you can run the numbers to discover how you can protect your retirement by working a few years longer.
Source: https://longevity.stanford.edu/underestimating-years-in-retirement/
