Retirement Costs

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FERS Sick Leave Conversion

The National Defense Authorization Act (HR 2647) was signed by the President that now allows FERS employees similar sickleave benefits as CSRS employees. However, the credit is phased in with a 50 percent credit for those who retire now and full conversion after January 1, 2014. Go to our Sickleave section for complete details and a conversion calculator. More to come.

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Retirement Costs Menu

• Introduction (Retirement Costs Continued)
  • Retirement Cost Analysis Spreadsheet
    • Chart details
• Return to Financial Planning Home Page
• Go to Probate Avoidance
• Go to Estate Planning
• Insurance, Retirement and Financial Planning Questions - Talk with a retirement specialist

Introduction (Continued)

Now is the time to pull together all of your receipts, pay statements, loans and bank account information. There are many things to consider for both CSRS and FERS federal employees and the sample spreadsheet included on this page will help you see the value of completing this form. A copy of the Microsoft Excel Retirement Cost analysis spreadsheet is available on this site. You can save the spreadsheet to your local computer hard drive and work on it off line. This spreadsheet shows approximately what you will have left over after you pay all of your bills before and after you retire. The last column represents what your survivor will have remaining from their reduced annuity after you die. This exercise provides an opportunity for you to review and make changes to increase you retirement income.

Gather Up the following Documents in preparation for completing this spreadsheet:

• Pay Stubs
• Insurance Policies
  • Life
  • Auto
  • Home
  • Umbrella
  • Long Term Care
• Loans
• Utility costs
• Other expense items
• Last years taxes

Table R1, listed below, is not all inclusive and you can add or remove expenses as you see fit on the downloaded version. The sample here is for a federal employee who will soon retire at age 55. He is a CSRS employee and worked 35 years for Uncle Sam. His top grade was a GS-11, step 6.

All expenses are listed on the chart for pre retirement per year and month and again for post retirement per year and month. The last column is for calculating what your spouse will have to live on with current expenses after you pass on. This is a very revealing analysis. Note that in retirement this person will be living on an annuity of approximately $36,985. His total expenses after retirement are $33,835 leaving him with a buffer of just over $3,000 for emergencies. If there are unanticipated expenses or increased costs this person will need to be able to tap other retirement savings such as savings bonds, his Thrift Savings plan, or other investment income. The other option, if you don't have much in your other savings plans, is to continue to work at least part time some where.

After completing this chart you may determine that it is not feasible for you to retire if you were depending 100% on annuity income. Most in the federal sector have the Thrift savings plan which can substantially augment your retirement income. Others purchased savings bonds through payroll deduction and you and your spouse may be eligible for social security when you reach age 62 or older if you worked over 40 quarters, 10 years, in the private sector. If you are in the FERS system and retire at or after your eligibility date social security offset will help you make ends meet.

The last column is significant to the surviving spouse. In this example, the surviving spouse's annuity reduces to 55 percent of the retiree's annuity, or $20,341. The survivor has expenses totaling $19,680, way to close for comfort. Ideally, insurance would add a blanket of security for the survivor along with social security, Thrift Savings and other investment income. The survivor may have to change their lifestyle considerably to live comfortably in retirement.
The above discussion should get you thinking about where you need to go from here. You can cut unnecessary expenses, possibly move to a less expensive home, sell the second car. There are lots of options. Also, in the survivor's case, there are a number of cost cutting things they can do immediately such as change their health insurance from a family plan to self only. This one action alone can save thousands each year. After reviewing the following chart go the the detailed chart analysis discussion.

Sample Retirement Cost Analysis Spreadsheet
(Table R-1)

Go to Chart Analysis Discussion
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