Custer's last stand and your retirement

Thursday - 1/19/2012, 2:00am EST

If he could have twittered headquarters from the battle of the Little Big Horn, Gen. Custer probably would have settled on something like: "OMG SEND MORE PEEPS ASAP...NOT LOL"

In our automated, computerized, digital world there are times when people, as in human beings, are still necessary. NASA can send people to, around and back from the Moon before it can process an astronaut's retirement papers.

The federal retirement process is one of the last bastions of paperwork, forms and important accompanying memos that must be compiled, sorted, eye-balled and approve by a living, breathing, sneezing human being.

Even the computer weirdo wizards on TV's "Criminal Minds" and "CSI" — who can find any person, solve any problem in a matter of minutes — couldn't process your retirement paper trail if they had a week.

The retirement backlog (the time it takes to get retirees off of partial payments and on to full annuity payments) is said to average four months. But that's average, as in normal. If you have a long career, worked at different agencies or have a break in service (remember those kids you had and raised) it can be months — in some cases a year or more — before you get your first full retirement check. And it could get temporarily worse before it gets better, because ...

Thousands of federal workers got — and many took — buyout offers last year. Many more are expected to get the chance to take regular or early retirement this year along with a $25,000 (before deductions) one-time payment.

Buyouts allow agencies to save money in the long run without resorting to furloughs or, worse yet, layoffs. RIFs hit younger workers, new hires and nonveterans first. Buyouts can cut into the institutional memory of an office or agency, but they also open up the promotion pipeline for new and mid-career workers. During periods of a pay freeze (like now), that's one of the few ways people can get a raise.

But the surge in retirements — thanks in part to buyouts, especially in the U.S. Postal Service — has produced a partial logjam in processing retirement claims. The Office of Personnel Management has hired more people and says it will make faster service a top priority.

OPM has hired more people and director John Berry has promised Congress the process will be sped up. But if you are contemplating retirement, regular, early or because of a buyout, here's a tip. Bring money. Lots of money.

Depending on which financial guru you worship, estimates are you will need the equivalent of anywhere from 70 percent to 100 percent of your current income even after you retire. Your dry-cleaning bills may go down, and your commuting costs won't be as much. But you will still probably continue eating, taking vacations and children and grandchildren, who were once happy with a doll or a toy car as a gift, have since moved into the laptop iPhone world.

Once you retire, and until your papers are processed and approved, you will be put on interim payments that could be anywhere from 40 percent to 80 percent of what your estimated annuity should be, according the NARFE.

Paid mortgages are often replaced by heavier taxes and regular maintenance bills that eat up the money you thought you would save after 20 or 30 years of making payments.

Feds with long careers under the CSRS retirement system are in the best shape. Their benefits are tied to their highest three-year average salary and they get regular cost of living adjustments (when inflation is up). This month, after twp flat-line years, they got a 3.6 percent cost of living adjustment. FERS retirees must make do with a smaller civil service annuity and diet-COLAs which don't start until age 62. But they can offset that with their Social Security and by tapping into their TSP accounts. FERS investors qualified for a 5 percent government match to their accounts which they don't have to touch until they turn 70 and a half.

But for the first few months after retirement, hope for the best but prepare for the worst. Have as much as possible saved up so you can pay bills and necessities despite a much reduced annuity benefit. Things are bound to get better, but the improvements won't happen and the backlog won't disappear overnight.

Are you motivated?