My last post about feeling “trapped” by federal benefits seemed to strike a nerve with my readers. (All 5 of you. Thank you, I mean it.) I was really shocked by how many comments I got on the blog and on Twitter by people who could relate to my ennui. The truth of the matter is that unlike the private sector, federal employees have a large financial incentive to reach MRA. Today’s post will describe a federal employee off ramp (or ramps) for those who want to leave federal service.
Note: I still haven’t written a post fully describing what’s at stake if you leave before MRA. Joe at Retire By 40 left a thoughtful comment that made me realize I haven’t fully communicated the full cost of early retirement for feds. While I still haven’t written a computer program to calculate the total benefits, I’d estimate that making it to MRA would be worth at least $1,000,000 in retirement savings for FERS employees. (I promise to write that post soon and link back to this post).
I tried to envision different “early retirement” scenarios that make sense given the benefits of reaching MRA. Since many of theme aren’t “early retirement” in the true sense of the word, I thought maybe I’d describe them as a “federal employee off ramp”. In this post, I tried to envision six different possible off ramps for my federal employment and rated them in terms of desirability and likelihood.
Federal employee off ramp 1: Staying in my current job until MRA
- Likelihood: 5/10
- Desirability: 5/10
The easiest option is obviously to not do anything. I make a good salary and enjoy a lot about my job. Additionally, I love my coworkers and feel very supported in my job. On the surface, there’s no reason to leave.
On the other hand, there are things about my job that are burning me out. I have to travel too much (1-2 times per month). Work travel is super stressful on my young family. It’s up to my wife to single-handedly get everyone where they need to go in the mornings, afternoons, and evenings. It’s too much. I’ve also learned that I really don’t enjoy supervising people. (Does anyone enjoy being a manager?).
When work is going well, I feel like I have the best job in the world. On the other hand, there are days I wake up and couldn’t imagine doing this for another 20 years, 4 months, and 10 days. Especially because we’ll be financially independent in 10 years or less.
Federal employee off ramp 2: Congress guts federal retirement benefits
- Likelihood: 3/10
- Desirability: 1/10
Federal employees have a large incentive to stick around until their MRA. I have previously written about what happens to your pension if you leave early, but the pension is one of several benefits that kick in at MRA. You also get to keep your health insurance for the remainder of your life. Furthermore, if you have an MRA+30 retirement, you get a FERS supplement from the time you retire until you turn 62 at which point you can begin drawing Social Security.
Over my 18 years of federal service, Congress has often debated changes to the FERS retirement system. Currently, there is a proposal to change how the FERS annuity is calculated. Another proposal would increase employee contributions to the pension. (Note that this wouldn’t change benefits, so is essentially just a pay cut). While neither of these proposals benefit federal workers, they also don’t change the early retirement math by that much. (That is, the benefits for sticking around until MRA are still massive).
The biggest reason to stay in a federal job after obtaining FI is the lifetime health insurance (FEHB). If a future Congress decides to get rid of the FEHB retirement benefits, then there is little incentive to stay past FI.
While changes to the FEHB haven’t been proposed, if they were enacted, it would be bittersweet. On one hand, it’d be good motivation to leave the federal government. One the other hand, I’d be losing a valuable benefit of employment.
In other words, if the FEHB or FERS supplement were eliminated, early retirement for federal employees would look almost identical to that for private sector employees.
Federal employee off ramp 3: Congress passes a single-payer health care system
- Likelihood: 1/10
- Desirability: 5/10
As stated in federal employee off ramp #2, the promise of lifetime health benefits are one of the biggest incentives to stay in the federal service. Even with the Affordable Care Act, finding health insurance outside of employment can be difficult and expensive. Therefore, a dramatic change, like “Medicare for all” could change the early retirement calculus for federal employees.
If the US went to a single payer health care system, the incentives for reaching MRA drop dramatically. While this does not seem likely today, it may happen in the future.
Federal employee off ramp 4: I become wealthy enough where it doesn’t matter
- Likelihood: 3/10
- Desirability: 10/10
Okay- let’s face it. Maybe I’ll get rich. Something could happen:
- I’ll perform the Heimlich maneuver on a billionaire and he’ll reward me with a spare million.
- Perhaps I’ll have a unknown rich uncle pass away.
- Maybe this blog will become a respected resource for federal employees and I’ll get a six-figure advance to write a book on the topic.
While none of those are likely to happen, they’d change the calculus on early retirement. Like I said earlier, I estimate that there’s an additional $500k-$1M benefit to sticking around until your MRA. But if you already have enough money, there’s no reason to stick around.
One of my favorite concepts in Your Money Or Your Life is the concept of “enough“. We’re always taught that more money is better. Instead, we should seek to be content with enough. This whole exercise on early retirement for federal employees is about balancing having enough money to get you through retirement. That being said, finding the right amount of enough can be tough when faced with a potential windfall at MRA.
Federal employee off ramp 5: I take a different job (i.e. TSA-FIRE)
- Likelihood: 5/10
- Desirability: 6/10
FIRE isn’t just FIRE any more. There’s “Barista FIRE” and “Coast FIRE” and “fat FIRE” and “lean FIRE“. I want to stake my ground and lay trademark to “TSA-FIRE”. TSA-FIRE™ is where you take a part time job in the federal government after you achieve financial independence to run down the clock until you reach your MRA.
I’m calling it TSA-FIRE™ because that’s the job I’ve spent the most time thinking about. While I’m sure that job isn’t nearly as pleasant as I’m dreaming it is, in my daydreams it has a lot of advantages over my job:
- The TSA is an hourly job. When you clock out you’re done.
- Email: I can’t imagine the TSA agents have extensive correspondence. I get between 50 and 100 emails per day. Even when I’m on vacation or TDY. Most of them need to be answered. That’s ridiculous. If you go on vacation for a week that’s about 500 emails to wade through when you return.
- Travel: I currently have to travel 1-2 times a month. I imagine that the TSA agents have little if any TDY assignments.
Actually, I’m not sure that I want to become a TSA agent when I TSA-FIRE™. I just thought that TSA-FIRE™ would be a catchy phrase. It might be a crummy job dealing with cranky passengers all day. But I think the idea has some merits. Once I reach FI I could look for a federal job that
- Is part time.
- Does not require travel.
- Has low responsibility.
Would I be a GS-5 phone receptionist for 20 hours a week? You betcha. My first federal job was in the wage grade system as a general laborer. I could easily see mowing lawns and shoveling snow again in a few years if I could find a part time position.
Federal employee off ramp 6: I try to negotiate my current position into something I love
- Likelihood: 3/10
- Desirability: 10/10
Ok- so I spent all of that time describing TSA-FIRE. And maybe that’s a good daydream for now. But the reality is that I am a highly skilled employee of the federal government. I’m well liked by my organization and I know that my position would be extremely hard to fill given my level of specialization. I probably have more leverage than I’m giving myself credit for.
Given the type of work we do, and my particular situation, I think it is possible that I could negotiate dropping to part time in my current position. Furthermore, it might be possible to negotiate a reassignment of some of my duties to other employees. However, knowing that you have leverage and using leverage are two different things.
At this point (~50% of the way to FIRE), I’m not ready to do anything too dramatic. But in many ways, this off ramp has the greatest appeal for me. I’m still using my PhD. I’m still in the FERS system. Another concept I love from Your Money or Your Life is thinking about work as nothing more than a place we trade our time for money. Wouldn’t it be nice if our jobs were dimmer switches instead of on-off switches. I think I could easily do the core part of my job until I was in my 70s if I were able to spend more time doing things I loved outside of work. I also like Ernie Zelinski‘s philosophy of not working in any month that doesn’t contain the letter “r” (affiliate link).
Basically, once I achieve FI, I might as well ask to see if I can get out of doing the parts of my job I hate doing. Because if I don’t ask, I’m sure it’ll never happen. I’m not sure exactly what I *do want* yet but it would involve having about 1 month off per year and dropping to part time. At that point, the worst they could do is fire me, which is very doubtful. (And ironically would result in me achieving FIRE).
Why wait for FI?
As part of this growth process I’ve been going through thinking about my job the past few months, I realized that I don’t need to wait until I achieve FI to let my supervisors know that I’m unhappy. I recently had a talk with my supervisor about stepping back from my managerial duties. He was very receptive of the suggestion and we’re working out details of what that might entail.
I also started saying “no” to every time I got asked to travel. Well not exactly “no” but trying to come up with an alternative solution to travel. I was able to go 3 months without traveling, which was extremely refreshing.
So while I haven’t jumped with both feet into reshaping my career into something that is work optional, I have started to take tangible steps in that direction.
In the end, perhaps this option, which is more HOT (Happy, Opportunity Rich, Time Rich) than FIRE really suits me best. And I really would be happy in my job… if it didn’t take up so much of my life.