Pinnacle Personnel Services LLC | Debbie Hatch
It’s been forecasted for a number of years. Is this it? Is the federal retirement tsunami upon us? Certainly, numbers have been up.
Through the first nine months of this year, the Office of Personnel Management (OPM) has received 85,308 retirement claims, almost 9,500 a month. Last year, at this same point, they had received only 66,933.
I’d like to point out a couple of numbers of note in this chart. Most federal employees under FERS retire on 31 December; most under CSRS retire between 31 December and 3 January. For that reason, we see the largest number of retirement claims arriving at OPM in January. No surprise. In February, we normally see those numbers start to decrease. Look at January/February 2017. That’s typical.
Look at January/February 2018. The numbers did not decrease as much as they normally do.
While the numbers are higher, they’re not unexpected.
According to OPM, about 14% of federal employees are currently eligible to retire. Over the next five years, that number is expected to jump to 30%. Housing and Urban Development has the highest rate of employees eligible to retire at nearly 24%. In five years, that will spike to nearly half its workforce (45%). The Environmental Protection Agency and NASA are the only other agencies with more than 20% of employees eligible to retire. By 2023, 44% of the NASA workforce will be eligible to retire with full benefits.
I think there are several other factors that have contributed to these retirement numbers though:
- The economy is good. It has had steady growth and little inflation.
- Investments are at post-recession highs and many employees have seen nice increases in their Thrift Savings Program over the last few years.
- Several agencies, such as the departments of Agriculture, Interior, Housing and Urban Development, Environmental Protection, and Treasury have all conducted substantial decreases to the size of their workforce. This will likely continue through 2019. It is important to note, though, the overall size of the federal workforce is remaining quite steady. It is merely shifting; with some agencies (Commerce, Homeland Security and Veterans Affairs among them) expected to grow in 2019.
- Federal employees are tired. They have lived through furloughs, government shut-downs, and a lot of negative press in recent times. They’ve endured hiring and pay freezes for multiple years. They’re doing more and more with less and less to the point that it’s ridiculous.
- People are nervous. For the past decade – including this year – there have been some concerning proposals in Congress, regarding federal benefits. Proposals like going to a high-5 for retirement, versus the current high-3; increasing employee retirement contributions; flat-lining returns for TSP’s G fund; taking away COLA and the FERS annuity supplement. Many have made a decision to retire before any changes might be passed.
I don’t think this is the full-blown, colossal retirement tsunami that’s been forecasted.
I know that many federal employees will be eligible to retire in the next five to ten years. There are numerous factors making retirement more attractive than it was a few years ago. I think this might be the beginning of a swell.
Thoughts? Questions? Don’t hesitate to let me know.