The Benefits of Working for Uncle Sam

Want to make sure retirement treats you well?  Work for Uncle Sam, and those golden years could have a little added shine. Not only are federal retirement benefits portable, but being the largest employer provides the government excellent leverage in securing benefits for its employees.  Take the example of Jane Smith, a fictional but possible example of a former federal employee. After college, Jane was hired by a large federal agency where she gained experience and insight into the workings of the federal government. After eightyears of federal service, she left the federal government with a salary of $73,000 to work for a private-sector company that offered her different opportunities for growth in her chosen field.

Portable Benefits

Despite her departure, Jane still would have earned the following portable benefits:

. Pension (FERS Basic Benefit): The Federal Employees Retirement System (FERS) provides

a basic defined benefit pension after only five years of creditable civilian service.  Eligibility for this benefit and its computation depends on the combination of years of service and age. Many federal employees retire as early as age 55 with lifetime retirement benefits. Jane’s benefit at departure: A lifetime pension of $5,600 per year or $466 per month payable at age 62 with annual cost of living adjustments.

. Retirement Savings (Thrift Savings Plan): The federal government provides an automatic 1 percent contribution to the Thrift Savings Plan (TSP)—the government’s version of a 401k plan—for all federal employees who are covered by the FERS. In addition, the government matches the first 3 percent of employee contributions dollar for dollar, and the fourth and fifth percent get a 50 percent match.  Jane’s benefit: $105,000 in retirement savings with a 10 percent payroll contribution.  If her investment grew at an average rate of 8 percent for 32 more years, that’s more than a million dollars.

. Social Security: All federal employees covered by FERS are fully covered by Social Security. Government earnings count towards a future Social Security benefit just like private-sector earnings. Jane’s benefit: Social security benefits of $200 per month payable at age 67 or a reduced amount payable at age 62.

. Long-Term Care Insurance: Long-term care insurance is fully portable. Jane’s benefit:  She brought it with her to her new employer.

Current Employee Benefits

While employed by the federal government, Jane could have taken