Would You Keep CSRS or Switch FERS?

This question is not tricky, but it becomes a trick question if the government commences an open season that is special to allow a person to change their retirement plan. The question that arises is if that person will pick the old program of Civil Service Retirement System (CSRS) or the new one that replaced it in the 1980s the Federal Employees Retirement System (FERS).

Majority of feds still working up to date are all under the new FERS plan, and most of the individuals under CSRS are the federal retirees.

Asking a FERS employee this question, they usually point out CSRS plan benefits. The plan offers you a considerable starting annuity, and its cost of living adjustments are indexed fully to inflation on an annual basis. CSRS retirees get a 2.8 percent COLA. FERS retirees receive a 2.0 percent under the formula referred to as diet-COLA. This is not a huge difference, but it lowers drastically over time spent in retirement.

Asking the question to a typical CSRS employee or retiree, they will highlight some FERS super benefits. For instance, Social Security covers the employees allowing them to qualify for a government match of 5 percent to their Thrift Savings Plan accounts. Majority of people under FERS take a stride in extra investment and those that do not get it only dream of it.

Employees under CSRS contribute much more than FERS workers to their retirement plan, but those under FERS will be required to pay Social Security.

Workers under FERS get contribution matches in their TSP accounts in amounts that can be quite significant. CSRS retirees do not receive contribution matches.

If you have questions regarding your own retirement plan, make sure to reach out to a trusted financial advisor.