On Tuesday, I spent all day at a retirement planning seminar with more than 100 other federal government workers. Talking to a few of my colleagues around my same age (63), I jokingly referred to it as an AARP event.
The instructor was Janet Fox, someone who has obviously presented a lot of these. She walks the participants through the pretty complicated federal retirement system and also gives thoughts about what levels of Medicare coverage to get, whether to keep one’s Federal Employee Health Benefit Plan past age 65, etc. The good news for me is that my retirement income when I retire (I’m not planning to soon) will be slightly higher than I thought because of a factor I had failed to take account of. The bad news for taxpayers is that my retirement income will be fairly high and inflation-adjusted for inflation rates under 2% and inflation-adjusted minus one percentage point for inflation rates over 3%.
Ms. Fox has a great delivery style and, in discussing whether you should wait until 66 or later to take your Social Security or start as early as age 62, she had a great line:
They’re [the federal government is] hoping you’re gonna wait. And they’re hoping you’re gonna die.
There was one other interesting moment. To get the humor, you have to remember that literally (yes, I’m using that word correctly) everyone in the room except Janet was a government worker.
Ms. Fox had just laid out the fact that when you think you’re going to retire, you should contact the Office of Personnel Management 120 days in advance. Even then, she said, they are slow and backed up and your first few monthly retirement checks are likely to be for the less than the full amount you have calculated. Then they make it up later, with zero interest, of course, with subsequent checks.
One professor whom I recognized asked the obvious logical question: “If they’re a few months late in getting you your full amount, how about the idea of contacting them 6 months in advance to give them time?”
Janet grinned and I knew what was coming: “You could do that but what will happen is that your application will sit around for a few months with no one acting on it.”
A huge percent of the audience, including me, laughed. We all understood government. Indeed, although I can’t find it quickly, I think I made the point in The Joy of Freedom: An Economist’s Odyssey that some of the strongest critics of government are government workers because they know from the inside and from daily experience just how badly government works.
READER COMMENTS
Maniel
May 8 2014 at 6:22pm
Just curious. Are you under CSRS or FERS?
David R. Henderson
May 8 2014 at 7:04pm
@Maniel,
FERS.
Maniel
May 8 2014 at 7:13pm
@David,
Under FERS, your plan to work as long as possible makes sense. I was fortunate to retire under CSRS. That allowed me to reverse the arrow – the fund pays me rather than I pay the fund – and then find a private-sector job to qualify for Social Security. Little wonder that CSRS was terminated. In my case, her retirement class was very useful.
Joel Aaron Freeman
May 8 2014 at 8:48pm
I like Janet.
Bill D
May 8 2014 at 9:09pm
Processed in a cave, literally.
http://www.washingtonpost.com/sf/national/2014/03/22/sinkhole-of-bureaucracy/
jamesoswald
May 9 2014 at 4:33pm
At PBGC, we always pay interest on late payments. It’s not particularly good interest,but not paying interest at all when you’re at fault in the late payment is tantamount to theft.
While the late retirement factors might not be actuarially fair, if you are in good health (read: You expect to live longer than the average person), it’s worthwhile to wait. The government does not weight factors to individual mortality risks, so smokers and the obese should retire early, ceteris paribus.
Floccina
May 22 2014 at 4:47pm
When I was in college I worked for the state one summer. It was incredible how inefficient the department that I worked for was. That started me in the path to libertarianism.
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