Choice for Feds: Bolt or Burrow?

Friday - 1/7/2011, 4:00am EST

The general rule of thumb is that belt-tightening is a good thing - provided it's somebody else's belt that is being tightened!

But when the new notches get up close and personal, as they are with members of the federal family, different people have different reactions. The White House ordered, congressionally approved 2-year federal pay freeze has gone into effect. And more changes are likely to come with the backing of the White House, the Democratic-controlled Senate and the Republican-controlled House.

The bipartisan Deficit Reduction Commission recommended a number of dramatic changes. Congress will look at many if not most of them. They range from non-starters such as eliminating the tax break on home mortgages to fed-family specific proposals such as:

  • Eliminating 200,000 federal jobs via attrition. Buyouts would be offered over a 2 year period and for every three vacancies only two replacements could be hired.

  • Changing the retirement computation formula for federal workers. Currently annuities are based on salary, length of service and the employee's highest 3-year average salary. The change, which has been proposed many times before, would cut lifetime benefits for future retirees by basing them on their highest 5-year average salary. The Congressional Budget Office estimated that for the average fed retiring this year it would reduce the annuity $1,484 per year.

So are the pay freeze and other possible cutbacks enough to nudge you into earlier retirement? Or, given the outside job market, does Uncle Sam still look like the safest haven around? The January 4 column outlined the situation in detail and asked feds if they are going to bolt or burrow.

Here are some comments:

  • "...In the Jan. 4 column Mike: you quote a respondent who states the following: 'I want to enjoy my retirement while I still have my health and my vigor. You can't put a price tag on being a healthy retiree and enjoying the fruits of your labor at the same time.'

    "My suggestion to this person is that he learn to enjoy his work plus his vacation time off while he still has his health and vigor, and keep the best of both worlds. Federal employees with a decade of service get very generous vacation days each year, plus sick days if we need them. Within those vacation days I have taken one daughter's family to Ireland for a week and the other daughter's family to the US Virgin Islands for a week, and still had plenty of time for extended weekends and Christmas and holidays. My college friends who are retired and in good health go on about three major vacations each year; which in my opinion is indistinguishable from my two; and since they have no major income they cannot afford to take their children and grandchildren with them. I am 67 and would not willingly swap my Government job with the US Coast Guard for retirement. It helps that I love my job and respect my boss and co-workers, and I sympathize with those who don't. Deep down I suspect that the above respondent you quoted is looking for the negatives and succeeded in finding them, and letting them turn his mind's eye to retirement.

    "I really enjoy your daily radio talk, as I struggle through but largely ignore the traffic which your respondent is bemoaning. Hopefully I can keep my attitude for another decade or until my health goes south." T.H.

  • "Deciding to hang on to your government job is not what I'm hearing... I'm hearing many from the baby-boom generation who have been eligible to retire for some time. Staying in the federal government is no longer as appealing because their pension growth is slowed significantly by the reduction to their expected High-3 average salary caused by the 'pay freeze.' They've been sitting on the fence about picking a date to retire, and now the incentive to stay has been somewhat diminished, causing some to pull the trigger on their retirement.

    "I don't think this group is too worried for themselves about the lack of available jobs after leaving federal service. They are at a stage in their lives where they are ready to settle into being 'retired.'

    "I understand President Obama's desire to show the country that the federal government is tightening its belt also. But what worries me is the number of federal employees who might exit. The very problem that OPM has been preparing for and dealing with, the so-called baby boomer 'brain drain' may very well be starting. I'm seeing it in my own office." John from Capitol Hill