Login

u/Glittering_Twist_732

r/govfire r/1811 r/atc2 r/ATC
Image 1 — Follow-up: I re-ran last week's 4% vs 6% TSP numbers against 10,000 random markets (Monte Carlo simulation) instead of a flat 7%
Image 2 — Follow-up: I re-ran last week's 4% vs 6% TSP numbers against 10,000 random markets (Monte Carlo simulation) instead of a flat 7%
▲ 10 r/1811

Follow-up: I re-ran last week's 4% vs 6% TSP numbers against 10,000 random markets (Monte Carlo simulation) instead of a flat 7%

Follow-up to last week's 4% vs 6% withdrawal post.

That one assumed a flat 7% return every year for 38 years, which is how nearly every retirement projection you will ever be handed is built, including the ones people pick a date off of. A straight line is fine for comparing two options against each other. It is a bad way to find out whether either one actually holds up.

So I stress tested the same two paths. Same 1811 retiring at 50 with $720,000, same draw rates, 10,000 runs with the returns shuffled. Every run averages the same 7% with 12% volatility. The only thing that changes between them is the order of the good and bad years.

The 4% draw (first chart). The straight line says it never runs dry and ends at 88 with $2,210,522. Across 10,000 markets it ran dry in 3,129 of them, the median run ends with $1,065,870, and the bottom 10% of runs are empty by 76.

Two things worth pulling out of that. The plan that looked bulletproof fails almost a third of the time. And the median outcome is less than half of what the smooth projection promised, on an identical average return. That gap is what volatility costs you.

The 6% draw (second chart). The straight line says the account dies at 78. Across 10,000 markets, 78% of runs die at some point, and the median run is empty at 75.

So the flat projection wasn't just optimistic about whether the money lasts. It was optimistic about when it ends. Half the runs are dry before the age the smooth chart handed me as the answer.

The reason is sequence. Walk out in January 2000 and you get three down years back to back, then negative 37% in 2008 at 58, selling shares the whole way, and 2021 through 2023 raising your withdrawal because the draw is indexed to inflation. Average all 38 years and you can still land near 7% with an empty account. Walk out in March 2009 instead and the first decade compounds before anything goes wrong, so the bad years land on a balance big enough to absorb them. Same plan, same average, and nobody gets to pick which one they retire into.

Two limits. The simulation covers the TSP only, no RMDs, no taxes, no annuity or Social Security underneath, so "ran dry" means the account hit zero and not that the guy is broke. His 6(c) annuity and SS keep paying in all 10,000 runs, which is the part that makes federal early retirement a different problem from the private sector version. And randomized normal returns still aren't real markets, where crashes cluster and tails are fatter, so this is probably generous to the higher draw.

What I'd actually suggest, and the reason I bothered running this: take whatever drawdown number you're planning around and stress test it before you commit to a date. A projection that only shows you the average is showing you one outcome out of thousands, and it tends to be a flattering one. Doesn't matter what you run it in. Just don't let a straight line be the last word on a 38 year retirement.

A withdrawal rate isn't a number you solve once. It's odds you either accept or manage down as you go, and 4% here is 69/31.

If you see a hole in the method, say so. I'd rather fix it than be wrong quietly.

u/Glittering_Twist_732 — 1 day ago
▲ 0 r/ATC

Follow-up: I re-ran last week's 4% vs 6% TSP numbers against 10,000 random markets (Monte Carlo simulation) instead of a flat 7%

Follow-up to last week's 4% vs 6% withdrawal post.

That one assumed a flat 7% return every year for 38 years, which is how nearly every retirement projection you will ever be handed is built, including the ones people pick a date off of. A straight line is fine for comparing two options against each other. It is a bad way to find out whether either one actually holds up.

So I stress tested the same two paths. Same ATC retiring at 50 with $720,000, same draw rates, 10,000 runs with the returns shuffled. Every run averages the same 7% with 12% volatility. The only thing that changes between them is the order of the good and bad years.

The 4% draw (first chart). The straight line says it never runs dry and ends at 88 with $2,210,522. Across 10,000 markets it ran dry in 3,129 of them, the median run ends with $1,065,870, and the bottom 10% of runs are empty by 76.

Two things worth pulling out of that. The plan that looked bulletproof fails almost a third of the time. And the median outcome is less than half of what the smooth projection promised, on an identical average return. That gap is what volatility costs you.

The 6% draw (second chart). The straight line says the account dies at 78. Across 10,000 markets, 78% of runs die at some point, and the median run is empty at 75.

So the flat projection wasn't just optimistic about whether the money lasts. It was optimistic about when it ends. Half the runs are dry before the age the smooth chart handed me as the answer.

The reason is sequence. Walk out in January 2000 and you get three down years back to back, then negative 37% in 2008 at 58, selling shares the whole way, and 2021 through 2023 raising your withdrawal because the draw is indexed to inflation. Average all 38 years and you can still land near 7% with an empty account. Walk out in March 2009 instead and the first decade compounds before anything goes wrong, so the bad years land on a balance big enough to absorb them. Same plan, same average, and nobody gets to pick which one they retire into.

Two limits. The simulation covers the TSP only, no RMDs, no taxes, no annuity or Social Security underneath, so "ran dry" means the account hit zero and not that the guy is broke. His 6(c) annuity and SS keep paying in all 10,000 runs, which is the part that makes federal early retirement a different problem from the private sector version. And randomized normal returns still aren't real markets, where crashes cluster and tails are fatter, so this is probably generous to the higher draw.

What I'd actually suggest, and the reason I bothered running this: take whatever drawdown number you're planning around and stress test it before you commit to a date. A projection that only shows you the average is showing you one outcome out of thousands, and it tends to be a flattering one. Doesn't matter what you run it in. Just don't let a straight line be the last word on a 38 year retirement.

A withdrawal rate isn't a number you solve once. It's odds you either accept or manage down as you go, and 4% here is 69/31.

If you see a hole in the method, say so. I'd rather fix it than be wrong quietly.

u/Glittering_Twist_732 — 1 day ago
▲ 35 r/govfire

Follow-up: I re-ran last week's 4% vs 6% TSP numbers against 10,000 random markets (Monte Carlo simulation) instead of a flat 7%

Follow-up to last week's 4% vs 6% withdrawal post.

That one assumed a flat 7% return every year for 38 years, which is how nearly every retirement projection you will ever be handed is built, including the ones people pick a date off of. A straight line is fine for comparing two options against each other. It is a bad way to find out whether either one actually holds up.

So I stress tested the same two paths. Same ATC retiring at 50 with $720,000, same draw rates, 10,000 runs with the returns shuffled. Every run averages the same 7% with 12% volatility. The only thing that changes between them is the order of the good and bad years.

The 4% draw (first chart). The straight line says it never runs dry and ends at 88 with $2,210,522. Across 10,000 markets it ran dry in 3,129 of them, the median run ends with $1,065,870, and the bottom 10% of runs are empty by 76.

Two things worth pulling out of that. The plan that looked bulletproof fails almost a third of the time. And the median outcome is less than half of what the smooth projection promised, on an identical average return. That gap is what volatility costs you.

The 6% draw (second chart). The straight line says the account dies at 78. Across 10,000 markets, 78% of runs die at some point, and the median run is empty at 75.

So the flat projection wasn't just optimistic about whether the money lasts. It was optimistic about when it ends. Half the runs are dry before the age the smooth chart handed me as the answer.

The reason is sequence. Walk out in January 2000 and you get three down years back to back, then negative 37% in 2008 at 58, selling shares the whole way, and 2021 through 2023 raising your withdrawal because the draw is indexed to inflation. Average all 38 years and you can still land near 7% with an empty account. Walk out in March 2009 instead and the first decade compounds before anything goes wrong, so the bad years land on a balance big enough to absorb them. Same plan, same average, and nobody gets to pick which one they retire into.

Two limits. The simulation covers the TSP only, no RMDs, no taxes, no annuity or Social Security underneath, so "ran dry" means the account hit zero and not that the guy is broke. His 6(c) annuity and SS keep paying in all 10,000 runs, which is the part that makes federal early retirement a different problem from the private sector version. And randomized normal returns still aren't real markets, where crashes cluster and tails are fatter, so this is probably generous to the higher draw.

What I'd actually suggest, and the reason I bothered running this: take whatever drawdown number you're planning around and stress test it before you commit to a date. A projection that only shows you the average is showing you one outcome out of thousands, and it tends to be a flattering one. Doesn't matter what you run it in. Just don't let a straight line be the last word on a 38 year retirement.

A withdrawal rate isn't a number you solve once. It's odds you either accept or manage down as you go, and 4% here is 69/31.

If you see a hole in the method, say so. I'd rather fix it than be wrong quietly.

u/Glittering_Twist_732 — 1 day ago
▲ 11 r/1811

Uncommon Tour (work-week) Question

Quick question. How common is it for 1811s to work an uncommon tour? For example many federal firefighters have a 72 hr work week? Are most 1811 jobs a standard 40 hr work week plus OT if needed, or do some work 48, 53, 56, 60, or 72 hr workweeks?

reddit.com
u/Glittering_Twist_732 — 7 days ago
▲ 53 r/1811

A 6c retiring at 50 asked me if he could pull 6% from his TSP instead of 4%.

https://preview.redd.it/i4ycijjm4tih1.png?width=2400&format=png&auto=webp&s=368876b700f0ed023c4bb44ea06dcbd3ed1833e4

6c Retirement discussion of the week:

Ran the numbers for a guy I'll call Dave. ATC, walking out the tower at 50 with 25 years of good time under 6(c). High-3 of $155,000, about 1,040 hours of sick leave on the books, married, Virginia, taking the full survivor benefit. He's got $720,000 in the TSP.

The pension side is the same no matter what he does with the TSP: $4,592 a month from the annuity, plus a $1,425 a month supplement until it shuts off at 62, then Social Security at 62 of $2,275 a month.

The whole question was the TSP. Everybody quotes the 4% rule. Dave's argument was that the 4% rule got built for people retiring at 65 with a 30 year horizon, and he's got a pension floor underneath him that a private sector guy doesn't, so why not pull 6% and enjoy his 50s.

Honestly, fair question. So I ran it both ways, planning to 88, 7% return, 2.5% inflation, 2% COLA on the pension.

Year one At 4%: $2,400 a month out of the TSP. Total take-home $6,984 a month. At 6%: $3,600 a month out of the TSP. Total take-home $7,971 a month.

So 6% is $987 a month better right out of the gate, at exactly the age he actually wants the money. That's real and I'm not going to wave it away. Cumulatively, through age 77, the 6% path has put $447,920 more in his pocket.

Then it stops. The 6% account runs dry at 78.

Decade averages say it better than I can. Average monthly take-home:

Decade 4% 6%
50 to 59 $7,469 $8,574
60s $9,389 $10,805
70s $11,384 $11,644
80s $14,045 $6,989

The year it breaks: at 77 the 6% path is taking home $13,199 a month. At 78 it's $7,995. At 79 it's $7,408. The pension and Social Security keep right on paying (that's the good thing about a 6(c) annuity, it does not run out), but the TSP is gone and it isn't coming back.

Cumulative take-home crosses over at 84. Ride it out to 88 and the 4% path is $428,329 ahead, with $1,714,697 still sitting in the account. The 6% path ends at zero.

A few honest catches, because this is messier than "4% good, 6% bad":

  1. These are all nominal dollars. That $6,989 a month in his 80s is 2050s and 2060s money, not today's money. Cuts both ways though: the 4% path's $14,045 isn't as rich as it looks either.
  2. The 4% path pays MORE tax, not less. $661,448 vs $570,302 over the lifetime. That's what a big balance buys you: RMDs. From 73 on, Dave isn't really pulling 4% anymore, the RMD takes over and forces more out than he asked for. By 88 it's yanking $126,183 a year whether he wants it or not. If the idea of the IRS setting your withdrawal schedule bugs you, that's a legitimate mark against hoarding it.
  3. Flat 7% every single year, which is not how markets work. A rough first decade would hurt the 6% path a lot worse than the 4% one, and my model can't show that. If anything these numbers are generous to 6%.
  4. Nobody ends up broke here. Even with the TSP at zero, the pension and SS have the 6% path at $6,381 a month at 88. It's a big step down, not a catastrophe. Worth saying out loud, because the usual version of this post makes it sound like you end up eating cat food.

My read: the interesting part isn't which number is "right." It's that 6% buys you 27 good years and then hands you a cliff at 78 that you can see coming from a mile off and can't do much about once you're standing on it. If Dave genuinely values money at 52 more than money at 82, that is a defensible choice. He just ought to pick it on purpose instead of finding out at 77.

Curious how others weighed this, especially anyone who went out in their early 50s. Did you set a rate and hold it, or do you flex year to year based on what the market did? And if you see a hole in my math, call it out, I'd rather fix it than be wrong quietly.

Full worked report for each path if anyone wants to pick through the year by year:
4% path vs  6% path

reddit.com
u/Glittering_Twist_732 — 9 days ago
▲ 32 r/ATC

An ATC retiring at 50 asked me if he could pull 6% from his TSP instead of 4%.

https://preview.redd.it/1gdimzpb4tih1.png?width=2400&format=png&auto=webp&s=5768f53006a6431764df984c735b47f61df73e6d

6c Retirement discussion of the week:

Ran the numbers for a guy I'll call Dave. ATC, walking out the tower at 50 with 25 years of good time under 6(c). High-3 of $155,000, about 1,040 hours of sick leave on the books, married, Virginia, taking the full survivor benefit. He's got $720,000 in the TSP.

The pension side is the same no matter what he does with the TSP: $4,592 a month from the annuity, plus a $1,425 a month supplement until it shuts off at 62, then Social Security at 62 of $2,275 a month.

The whole question was the TSP. Everybody quotes the 4% rule. Dave's argument was that the 4% rule got built for people retiring at 65 with a 30 year horizon, and he's got a pension floor underneath him that a private sector guy doesn't, so why not pull 6% and enjoy his 50s.

Honestly, fair question. So I ran it both ways, planning to 88, 7% return, 2.5% inflation, 2% COLA on the pension.

Year one At 4%: $2,400 a month out of the TSP. Total take-home $6,984 a month. At 6%: $3,600 a month out of the TSP. Total take-home $7,971 a month.

So 6% is $987 a month better right out of the gate, at exactly the age he actually wants the money. That's real and I'm not going to wave it away. Cumulatively, through age 77, the 6% path has put $447,920 more in his pocket.

Then it stops. The 6% account runs dry at 78.

Decade averages say it better than I can. Average monthly take-home:

Decade 4% 6%
50 to 59 $7,469 $8,574
60s $9,389 $10,805
70s $11,384 $11,644
80s $14,045 $6,989

The year it breaks: at 77 the 6% path is taking home $13,199 a month. At 78 it's $7,995. At 79 it's $7,408. The pension and Social Security keep right on paying (that's the good thing about a 6(c) annuity, it does not run out), but the TSP is gone and it isn't coming back.

Cumulative take-home crosses over at 84. Ride it out to 88 and the 4% path is $428,329 ahead, with $1,714,697 still sitting in the account. The 6% path ends at zero.

A few honest catches, because this is messier than "4% good, 6% bad":

  1. These are all nominal dollars. That $6,989 a month in his 80s is 2050s and 2060s money, not today's money. Cuts both ways though: the 4% path's $14,045 isn't as rich as it looks either.
  2. The 4% path pays MORE tax, not less. $661,448 vs $570,302 over the lifetime. That's what a big balance buys you: RMDs. From 73 on, Dave isn't really pulling 4% anymore, the RMD takes over and forces more out than he asked for. By 88 it's yanking $126,183 a year whether he wants it or not. If the idea of the IRS setting your withdrawal schedule bugs you, that's a legitimate mark against hoarding it.
  3. Flat 7% every single year, which is not how markets work. A rough first decade would hurt the 6% path a lot worse than the 4% one, and my model can't show that. If anything these numbers are generous to 6%.
  4. Nobody ends up broke here. Even with the TSP at zero, the pension and SS have the 6% path at $6,381 a month at 88. It's a big step down, not a catastrophe. Worth saying out loud, because the usual version of this post makes it sound like you end up eating cat food.

My read: the interesting part isn't which number is "right." It's that 6% buys you 27 good years and then hands you a cliff at 78 that you can see coming from a mile off and can't do much about once you're standing on it. If Dave genuinely values money at 52 more than money at 82, that is a defensible choice. He just ought to pick it on purpose instead of finding out at 77.

Curious how others weighed this, especially anyone who went out in their early 50s. Did you set a rate and hold it, or do you flex year to year based on what the market did? And if you see a hole in my math, call it out, I'd rather fix it than be wrong quietly.

Full worked report for each path if anyone wants to pick through the year by year:
4% path vs  6% path

reddit.com
u/Glittering_Twist_732 — 9 days ago
▲ 128 r/govfire

An ATC retiring at 50 asked me if he could pull 6% from his TSP instead of 4%.

https://preview.redd.it/0edp9wqq3tih1.png?width=2400&format=png&auto=webp&s=f105d96de2523fc20904b9d0c229f8093ca48191

6c Retirement discussion of the week:

Ran the numbers for a guy I'll call Dave. ATC, walking out the tower at 50 with 25 years of good time under 6(c). High-3 of $155,000, about 1,040 hours of sick leave on the books, married, Virginia, taking the full survivor benefit. He's got $720,000 in the TSP.

The pension side is the same no matter what he does with the TSP: $4,592 a month from the annuity, plus a $1,425 a month supplement until it shuts off at 62, then Social Security at 62 of $2,275 a month.

The whole question was the TSP. Everybody quotes the 4% rule. Dave's argument was that the 4% rule got built for people retiring at 65 with a 30 year horizon, and he's got a pension floor underneath him that a private sector guy doesn't, so why not pull 6% and enjoy his 50s.

Honestly, fair question. So I ran it both ways, planning to 88, 7% return, 2.5% inflation, 2% COLA on the pension.

Year one At 4%: $2,400 a month out of the TSP. Total take-home $6,984 a month. At 6%: $3,600 a month out of the TSP. Total take-home $7,971 a month.

So 6% is $987 a month better right out of the gate, at exactly the age he actually wants the money. That's real and I'm not going to wave it away. Cumulatively, through age 77, the 6% path has put $447,920 more in his pocket.

Then it stops. The 6% account runs dry at 78.

Decade averages say it better than I can. Average monthly take-home:

Decade 4% 6%
50 to 59 $7,469 $8,574
60s $9,389 $10,805
70s $11,384 $11,644
80s $14,045 $6,989

The year it breaks: at 77 the 6% path is taking home $13,199 a month. At 78 it's $7,995. At 79 it's $7,408. The pension and Social Security keep right on paying (that's the good thing about a 6(c) annuity, it does not run out), but the TSP is gone and it isn't coming back.

Cumulative take-home crosses over at 84. Ride it out to 88 and the 4% path is $428,329 ahead, with $1,714,697 still sitting in the account. The 6% path ends at zero.

A few honest catches, because this is messier than "4% good, 6% bad":

  1. These are all nominal dollars. That $6,989 a month in his 80s is 2050s and 2060s money, not today's money. Cuts both ways though: the 4% path's $14,045 isn't as rich as it looks either.
  2. The 4% path pays MORE tax, not less. $661,448 vs $570,302 over the lifetime. That's what a big balance buys you: RMDs. From 73 on, Dave isn't really pulling 4% anymore, the RMD takes over and forces more out than he asked for. By 88 it's yanking $126,183 a year whether he wants it or not. If the idea of the IRS setting your withdrawal schedule bugs you, that's a legitimate mark against hoarding it.
  3. Flat 7% every single year, which is not how markets work. A rough first decade would hurt the 6% path a lot worse than the 4% one, and my model can't show that. If anything these numbers are generous to 6%.
  4. Nobody ends up broke here. Even with the TSP at zero, the pension and SS have the 6% path at $6,381 a month at 88. It's a big step down, not a catastrophe. Worth saying out loud, because the usual version of this post makes it sound like you end up eating cat food.

My read: the interesting part isn't which number is "right." It's that 6% buys you 27 good years and then hands you a cliff at 78 that you can see coming from a mile off and can't do much about once you're standing on it. If Dave genuinely values money at 52 more than money at 82, that is a defensible choice. He just ought to pick it on purpose instead of finding out at 77.

Curious how others weighed this, especially anyone who went out in their early 50s. Did you set a rate and hold it, or do you flex year to year based on what the market did? And if you see a hole in my math, call it out, I'd rather fix it than be wrong quietly.

Full worked report for each path if anyone wants to pick through the year by year:
4% path vs  6% path

reddit.com
u/Glittering_Twist_732 — 9 days ago
▲ 156 r/govfire

Ran a 6(c) retirement twice and changed only the sick leave balance. Here's what 2,080 hours was actually worth.

https://preview.redd.it/myz85sel2fhh1.png?width=2400&format=png&auto=webp&s=eb593ac4aa00d39d0843c158c638d352ae1fe6c3

6(c) Retirement discussion of the week:

Every year somebody at my facility burns their sick leave down on the way out, and every year somebody else tells them they just threw away a year of service. I got tired of that argument happening without numbers, so I ran the same retirement twice and changed exactly one input: the unused sick leave balance. Zero hours in one, 2,080 in the other. Everything else identical. Same high-3, same TSP, same state, same survivor election, same everything.

The guy in the example is a 1811 I'll call Carl. Retiring at 49 on 25 years of covered service, $148,000 high-3, partial survivor election, North Carolina, planning to 87.

First thing worth knowing: 2,080 hours is not a year. The conversion is 2,087 hours, so that balance bought 0.997 of a year of credit. Close, but OPM does not round it up for you.

Second thing, and this is the one people get backwards: it did nothing for eligibility. Creditable service for eligibility stayed at 25 years in both runs. The computation service went from 25.00 to 26.00. That is the whole trick. Sick leave goes in the annuity formula and nowhere else. It cannot get you to the 20 year mark for special provisions, it cannot move your retirement date up, and it will not push back mandatory separation (57 for LEO in this case). If you are 6 months short of eligibility, a 2,000 hour balance does not fix it.

Third thing: it lands in the 1% tier, not the 1.7% tier. Carl is already past 20 years, so the extra credit is worth 1% of high-3, not the headline 6(c) rate. That is $1,475 of gross annuity, and after his partial survivor reduction it comes out to:

  • 0 hours: $54,834/yr, $4,569.50/mo
  • 2,080 hours: $56,235.28/yr, $4,686.27/mo

So $116.77 a month. Honestly, when I saw that I thought "that's it?" Two thousand hours of not calling in sick, for a hundred and change.

Then I looked at what it does over the whole retirement, and that is where it got interesting. The pension carries COLA, so the gap grows on itself every single year. Same 2% diet COLA in both runs:

  • Age 49: $54,834 vs $56,235
  • Age 70: $83,110 vs $85,234
  • Age 87: $116,374 vs $119,348

By the end the difference is $2,974 a year instead of $1,401. Average monthly take-home across the whole retirement went from $9,288.88 to $9,434.92, so $146.04 a month on average, which is more than the day one number because the gap keeps widening.

Lifetime net income, after tax, over 38 years: $4,347,195 vs $4,415,541. Call it $68,346 for a balance he already had sitting there.

The catches, because there are a few and they cut both ways.

Taxes eat part of it. Lifetime tax went from $503,524 to $516,785, so $13,261 of the gross gain went straight back out. The $68,346 above is already net of that, but if somebody quotes you the gross annuity difference, know that you are not keeping all of it.

The supplement does not care at all. SRS came out identical in both runs, $1,337.50 a month, $208,650 total. The supplement uses your FERS service years, and sick leave credit does not count there either. So from 49 to 62 the sick leave is doing nothing for that piece of your income.

The survivor benefit rides along. His partial election went from $14,430 to $14,798.76 a year, so $368.76 more for his spouse for life. Small, but it is real and it is permanent.

And the honest one nobody puts in a spreadsheet: he actually had to work those days. The model prices what the leave is worth. It does not price the shifts he covered sick, or the ones he should have taken off and didn't. That is a real cost and it is not in any of these numbers.

Where I landed: it is not the life changing lever people make it out to be, and it is also not nothing. A hundred and change a month at the start, $68K over a long retirement, for a balance you either keep or you don't. The mistake is thinking of it as either a free extra year of service or as use it or lose it money. It is neither. It is a permanent raise on the smaller tier of your formula, and it buys you exactly zero days of earlier eligibility.

Full worked report for both paths if you want to check my math: 0 hours and 2,080 hours.

Curious how others have weighed this, especially anyone who went out with a big balance and has an actual annuity statement to compare against. And if you see a hole in my math, call it out, I'd rather fix it than be wrong quietly. What should I run next?

reddit.com
u/Glittering_Twist_732 — 16 days ago
▲ 29 r/ATC

Ran a 6(c) retirement twice and changed only the sick leave balance. Here's what 2,080 hours was actually worth.

https://preview.redd.it/iuumnx990ehh1.png?width=2400&format=png&auto=webp&s=defbe630ed473554bae05fc5fd6b298c06783342

6(c) Retirement discussion of the week:

Every year somebody at my facility burns their sick leave down on the way out, and every year somebody else tells them they just threw away a year of service. I got tired of that argument happening without numbers, so I ran the same retirement twice and changed exactly one input: the unused sick leave balance. Zero hours in one, 2,080 in the other. Everything else identical. Same high-3, same TSP, same state, same survivor election, same everything.

The guy in the example is a 1811 I'll call Carl. Retiring at 49 on 25 years of covered service, $148,000 high-3, partial survivor election, North Carolina, planning to 87.

First thing worth knowing: 2,080 hours is not a year. The conversion is 2,087 hours, so that balance bought 0.997 of a year of credit. Close, but OPM does not round it up for you.

Second thing, and this is the one people get backwards: it did nothing for eligibility. Creditable service for eligibility stayed at 25 years in both runs. The computation service went from 25.00 to 26.00. That is the whole trick. Sick leave goes in the annuity formula and nowhere else. It cannot get you to the 20 year mark for special provisions, it cannot move your retirement date up, and it will not push back mandatory separation (57 for LEO in this case). If you are 6 months short of eligibility, a 2,000 hour balance does not fix it.

Third thing: it lands in the 1% tier, not the 1.7% tier. Carl is already past 20 years, so the extra credit is worth 1% of high-3, not the headline 6(c) rate. That is $1,475 of gross annuity, and after his partial survivor reduction it comes out to:

  • 0 hours: $54,834/yr, $4,569.50/mo
  • 2,080 hours: $56,235.28/yr, $4,686.27/mo

So $116.77 a month. Honestly, when I saw that I thought "that's it?" Two thousand hours of not calling in sick, for a hundred and change.

Then I looked at what it does over the whole retirement, and that is where it got interesting. The pension carries COLA, so the gap grows on itself every single year. Same 2% diet COLA in both runs:

  • Age 49: $54,834 vs $56,235
  • Age 70: $83,110 vs $85,234
  • Age 87: $116,374 vs $119,348

By the end the difference is $2,974 a year instead of $1,401. Average monthly take-home across the whole retirement went from $9,288.88 to $9,434.92, so $146.04 a month on average, which is more than the day one number because the gap keeps widening.

Lifetime net income, after tax, over 38 years: $4,347,195 vs $4,415,541. Call it $68,346 for a balance he already had sitting there.

The catches, because there are a few and they cut both ways.

Taxes eat part of it. Lifetime tax went from $503,524 to $516,785, so $13,261 of the gross gain went straight back out. The $68,346 above is already net of that, but if somebody quotes you the gross annuity difference, know that you are not keeping all of it.

The supplement does not care at all. SRS came out identical in both runs, $1,337.50 a month, $208,650 total. The supplement uses your FERS service years, and sick leave credit does not count there either. So from 49 to 62 the sick leave is doing nothing for that piece of your income.

The survivor benefit rides along. His partial election went from $14,430 to $14,798.76 a year, so $368.76 more for his spouse for life. Small, but it is real and it is permanent.

And the honest one nobody puts in a spreadsheet: he actually had to work those days. The model prices what the leave is worth. It does not price the shifts he covered sick, or the ones he should have taken off and didn't. That is a real cost and it is not in any of these numbers.

Where I landed: it is not the life changing lever people make it out to be, and it is also not nothing. A hundred and change a month at the start, $68K over a long retirement, for a balance you either keep or you don't. The mistake is thinking of it as either a free extra year of service or as use it or lose it money. It is neither. It is a permanent raise on the smaller tier of your formula, and it buys you exactly zero days of earlier eligibility.

Full worked report for both paths if you want to check my math: 0 hours and 2,080 hours.

Curious how others have weighed this, especially anyone who went out with a big balance and has an actual annuity statement to compare against. And if you see a hole in my math, call it out, I'd rather fix it than be wrong quietly. What should I run next?

reddit.com
u/Glittering_Twist_732 — 16 days ago
▲ 29 r/govfire+2 crossposts

Ran a 6(c) firefighter's pension out to 86 at a 2.0% vs 2.8% COLA. Same starting check, but by his 80s the paths are ~$2K/mo apart

Been going down a rabbit hole on something we almost never talk about when we plan our dates: the COLA. Everybody stresses over the high-3 and the years of service and when to grab Social Security, and then just kind of assumes the pension "keeps up with inflation" and moves on. So I ran it out to see how much that one assumption actually swings things.

Persona: a firefighter I'll call Tom. Walks out of the firehouse at 52 with 25 good years plus a couple years of other fed time and 4 years of military he bought back. High-3 of $138K, single, lives in Florida (no state tax to muddy it up). Planning horizon to 86. I held literally everything the same and changed ONE thing: the annual pension COLA. Path A gets 2.0% a year, Path B gets 2.8%. Assumed general inflation of 2.5% in both.

Both paths start at the exact same place: a $5,241/mo pension ($62,893/yr). Day one they're identical, because the COLA hasn't had a chance to do anything yet. That's the trap. For the first stretch (retirement to 59) the two paths average $7,740 vs $7,866/mo take-home. A $126/mo difference. Easy to shrug off.

Then compounding gets to work. By his 70s the average is $11,719 vs $12,959/mo. By his 80s it's $14,608 vs $16,590/mo, about $1,982/mo apart. The pension line itself: by 86 it's $123,314/yr on the 2.0% path vs $160,832/yr on the 2.8% path. Same pension, same guy, just a different COLA riding it for 34 years.

Add it all up and lifetime take-home comes to $4.52M vs $4.91M. About $393K, after taxes, purely from a 0.8-point COLA difference.

Here's the honest catch, because I don't want this to read like "2.8% good, 2.0% bad." You don't PICK your COLA. It tracks CPI, and FERS uses the "diet COLA" (you get less than full CPI once inflation runs past 2-3%). So this isn't a lever you pull, it's a risk you're exposed to. And the bigger number isn't free money: the 2.8% path pays about $113K more in federal tax over the run ($736,794 vs $850,089), which is already baked into that $393K net gap. The part that actually rewired how I think about it: with inflation assumed at 2.5%, the 2.0% path is quietly LOSING ground every year, and the 2.8% path is basically just keeping pace. So the "extra" $393K is mostly the difference between holding your purchasing power and slowly bleeding it, not getting richer.

Takeaway I landed on: if you're a 6(c) type retiring at 50-52, you might be drawing this pension for 35+ years, and the COLA assumption deserves a spot right next to the high-3 in your planning. Run your worst case at a below-inflation COLA and see if the math still holds, because that's the world you don't control.

Anyway, curious how the rest of you handle the COLA question. Do you plan on full CPI, haircut it, ignore it? And if I've got a piece of this wrong, call it out, I'd genuinely rather fix my math than be confidently off.

u/Glittering_Twist_732 — 22 days ago
▲ 36 r/1811

What the FERS survivor election actually costs, in dollars: a worked example for a 6(c) retiree

https://preview.redd.it/sagfuomz6oeh1.png?width=2400&format=png&auto=webp&s=de85f2316f836d7827885dfc82e2cbd6e197a667

The survivor benefit is the one 6(c) decision people rush at the retirement counter and second-guess for years after, so I put together an example to show what it actually does in dollars. Dana here is made up, but the numbers run on current (2026) rules.

So say Dana is an ATC retiring at 52, married, high-3 around $165K, 23 years of good time. Her gross pension before the survivor election lands at about $61,762 a year, or $5,147 a month.

Here's the fork. FERS full survivor knocks 10% off her own pension for life. In her case that's $6,176 a year, so her check drops from $5,147 to $4,632 a month. Call it $515 a month, every month, for as long as she lives.

What does that $515 buy? If Dana dies first, her spouse keeps 50% of her unreduced pension for the rest of their life, with COLAs. That's $30,881 a year, about $2,573 a month, that keeps coming after she's gone. Take "no survivor" instead and the spouse gets $0 from the pension the day she dies. (And the survivor annuity is also what keeps a spouse eligible for FEHB. Drop it and they can lose the health plan too.)

Now the part that fools people. If you only look at the household's take-home while Dana is alive, "no survivor" wins every single year. Bigger check. Out to age 90 the no-survivor path averages about $683 a month more take-home and roughly $319,825 more in total. So on a spreadsheet that stops at her death, skipping survivor looks like free money.

It isn't. That $319,825 is the price of the protection, and the protection pays out after the spreadsheet ends. Every one of those bigger no-survivor checks is a bet that Dana outlives her spouse. If she goes first at, say, 72 and her spouse lives into their late 80s, that $2,573 a month (growing with COLA) is income the no-survivor path zeroed out. Fifteen-ish years of it, gone.

So it isn't "which path has the bigger number." It's "am I comfortable self-insuring my spouse's income for the rest of their life to keep an extra $515 a month now." For a household with a big TSP and a spouse who has their own pension, maybe that's fine. For a single-pension household, that's a heavy bet to make at a counter in twenty minutes.

See comprehensive reports of the full scenario broken down WITH FULL or WITHOUT the survivor benefit.

That's how the math shakes out. If you see a hole in it, call it out, I'd rather fix it than be wrong quietly. And I'm curious how others weighed this one, especially anyone who took the reduced survivor and later felt good or bad about it.

What scenario should I run next week?

reddit.com
u/Glittering_Twist_732 — 30 days ago
▲ 49 r/govfire+1 crossposts

What the FERS survivor election actually costs, in dollars: a worked example for a 6(c) retiree

The survivor benefit is the one 6(c) decision people rush at the retirement counter and second-guess for years after, so I put together an example to show what it actually does in dollars. Dana here is made up, but the numbers run on current (2026) rules.

So say Dana is an ATC retiring at 52, married, high-3 around $165K, 23 years of good time. Her gross pension before the survivor election lands at about $61,762 a year, or $5,147 a month.

Here's the fork. FERS full survivor knocks 10% off her own pension for life. In her case that's $6,176 a year, so her check drops from $5,147 to $4,632 a month. Call it $515 a month, every month, for as long as she lives.

What does that $515 buy? If Dana dies first, her spouse keeps 50% of her unreduced pension for the rest of their life, with COLAs. That's $30,881 a year, about $2,573 a month, that keeps coming after she's gone. Take "no survivor" instead and the spouse gets $0 from the pension the day she dies. (And the survivor annuity is also what keeps a spouse eligible for FEHB. Drop it and they can lose the health plan too.)

Now the part that fools people. If you only look at the household's take-home while Dana is alive, "no survivor" wins every single year. Bigger check. Out to age 90 the no-survivor path averages about $683 a month more take-home and roughly $319,825 more in total. So on a spreadsheet that stops at her death, skipping survivor looks like free money.

It isn't. That $319,825 is the price of the protection, and the protection pays out after the spreadsheet ends. Every one of those bigger no-survivor checks is a bet that Dana outlives her spouse. If she goes first at, say, 72 and her spouse lives into their late 80s, that $2,573 a month (growing with COLA) is income the no-survivor path zeroed out. Fifteen-ish years of it, gone.

So it isn't "which path has the bigger number." It's "am I comfortable self-insuring my spouse's income for the rest of their life to keep an extra $515 a month now." For a household with a big TSP and a spouse who has their own pension, maybe that's fine. For a single-pension household, that's a heavy bet to make at a counter in twenty minutes.

See comprehensive reports of the full scenario broken down WITH FULL or WITHOUT the survivor benefit.

That's how the math shakes out. If you see a hole in it, call it out, I'd rather fix it than be wrong quietly. And I'm curious how others weighed this one, especially anyone who took the reduced survivor and later felt good or bad about it.

What scenario should I run next week?

u/Glittering_Twist_732 — 30 days ago
▲ 52 r/govfire+1 crossposts

I ran the numbers on a brand new 6(c) firefighter's TSP election: 5% vs 15% is a $469,767 difference in his account by the day he retires

Discussion for the week:

We spend a lot of energy on this sub arguing about retirement dates and supplement rules (guilty). But I ran a comparison this week that convinced me the biggest-dollar decision most 6(c) folks ever make happens in their first week on the job, not their last year.

Take a brand new federal firefighter, I'll call him Marcus. Hired at 26, $68,000 salary, $22,000 already sitting in the TSP, eligible to walk out of the firehouse at 51 with 25 years of covered service (high-3 of $128,000 by then). I ran him two ways, identical in every single input except one payroll election:

  • Path A: 5% contribution ($3,400 a year to start)
  • Path B: 15% contribution ($10,200 a year to start)

Both get the exact same 5% agency match (A already captures the full match, so none of the gap below is match money). Same pension either way: $4,170 a month. Same supplement: $1,181 a month until 62. Same Social Security: $2,700 at 67. Assumptions: 7% average return, and I gave him just 1% raises a year (deliberately stingy, real raises would only widen this), 2026 tax law.

TSP balance on his last day at 51:

  • Path A: $589,170
  • Path B: $1,058,937

That's a $469,767 gap from one line on a form. The part that actually got me: he only put in about $192,054 more out of his own paychecks over those 25 years. The other $277,713 of the gap is compounding doing the work. When you start at 26, growth ends up being the senior partner, not your contributions.

What it means once he's retired, at the same 4% withdrawal rate: $1,964 a month from the TSP vs $3,530. Average take-home across all of retirement (51 to 88, net of taxes and health premiums): $10,512 a month vs $13,232. That's $2,720 more a month, every month, for life. Total retirement take-home: $4,793,664 vs $6,033,797, a difference of $1,240,133. And neither version ever runs the TSP dry; at a 4% draw both balances keep growing (by 88 it's $1,361,915 vs $2,447,819).

The honest catch, because nothing is free: Path B costs him about $6,800 a year of spendable pay to start (growing with his raises), on a $68,000 salary. That's a real sacrifice in your 20s and 30s, and no spreadsheet gets to tell you it's easy. Also, this run is all traditional TSP, so the bigger balance comes with a bigger tax bill on the way out: $513,051 in total retirement taxes vs $343,942. That extra $169,109 to the IRS is already subtracted from every take-home number above, but you should know it's in there.

The takeaway I keep coming back to: we obsess over the retirement-date math, and it matters, but the box a 26 year old checks on a TSP form moved this guy's whole retirement by $2,720 a month. If you've got a new hire in your station or your facility (or your house), maybe show them this.

These are estimates under current law and one set of assumptions, not gospel. If you see a hole in my math, call it out, I'd rather fix it than be wrong quietly. And what should I run next Tuesday?

u/Glittering_Twist_732 — 1 month ago
▲ 3 r/ATC

Did the math on how the SRS earnings test hits a $60K second career for a 6(c) retiree at 49. It surprised me twice. Sanity-check my numbers?

https://preview.redd.it/mreeg800zxbh1.png?width=2400&format=png&auto=webp&s=c085bb450a394ad1d593192e56cd7b40f564674a

Scenario discussion for the week:
Made-up scenario, real math. I wanted to see how the SRS earnings test actually treats a second career, so I built a realistic 1811 (also Special Provisions like ATC), call him Carl: retiring this year at 49 with 25 years of covered service, high-3 of $148K, $520K in traditional TSP, married, partial survivor election, retiring in North Carolina. Pension nets out to about $4,610 a month, plus the Special Retirement Supplement at $1,337.50 a month until 62.

Now hand him a $60K a year consulting offer, and the warning we've all heard kicks in: the earnings test will eat your supplement. The formula backs the fear up. The test withholds $1 for every $2 you earn over the exempt amount ($24,480 in 2026). On $60K of wages that's a $17,760 annual reduction, which is more than his entire $16,050 supplement. So on paper the gig kills the SRS dead from day one, right?

Wrong, and this is the part almost nobody knows: special provision retirees (LEO, firefighter, ATC) are exempt from the SRS earnings test until they reach their MRA. It's in 5 U.S.C. 8421a(c). Carl was born in 1977, so his MRA is 57. I ran his numbers year by year:

  • Ages 49 through 56 (8 years): supplement untouched. $16,050 a year, every year, identical to the path where he never works a day. The $60K gig costs him exactly nothing here.
  • Age 57 (his MRA): the test switches on. The $17,760 reduction is bigger than the supplement, so it doesn't shrink it, it erases it. SRS goes to $0 for ages 57 through 61.
  • Age 62: moot. The supplement ends for everyone at 62 anyway and Social Security picks up.

Totals: skip the gig and he collects $208,650 in supplement by 62. Take the gig and he collects $128,400. The second career costs him $80,250 of SRS, all of it packed into the last 5 years. At 57 his federal benefit checks run about $6,228 a month against $7,348 a month if he'd stayed fully retired. (Both of those are his benefit checks only. The consulting paycheck rides on top, minus its own taxes, and giving up $16,050 a year to bring in $60,000 a year still wins by a mile. The point isn't "don't work." The point is the timing.)

Caveats that matter: only wages and self-employment earnings count toward the test. Pension, TSP withdrawals, rental and investment income never touch it. The supplement itself doesn't get COLAs, which is why it's flat $16,050 the whole way. And if Carl kept the gig past 62 and claimed Social Security at 62 like the scenario assumes, SS has its own separate earnings test until FRA, which is a whole different post.

If you're 6(c) and pricing out a second career, run this year by year, because the shape of it (free years up front, a cliff right at MRA) changes how you'd negotiate hours or when you'd wind the job down. Curious how others here handled the MRA cliff. Did you throttle back at 57, eat the clawback, or restructure the work? And if you see a hole in my math, call it out. I'd rather fix it than be wrong quietly.

reddit.com
u/Glittering_Twist_732 — 1 month ago
▲ 9 r/1811

Did the math on how the SRS earnings test hits a $60K second career for a 6(c) retiree at 49. It surprised me twice. Sanity-check my numbers?

https://preview.redd.it/3kpz65oj2tbh1.png?width=2400&format=png&auto=webp&s=742be51f98dc2c71839d1418cc74e1fdea4f5cc5

Scenario discussion for the week:
Made-up scenario, real math. I wanted to see how the SRS earnings test actually treats a second career, so I built a realistic 1811, call him Carl: retiring this year at 49 with 25 years of covered service, high-3 of $148K, $520K in traditional TSP, married, partial survivor election, retiring in North Carolina. Pension nets out to about $4,610 a month, plus the Special Retirement Supplement at $1,337.50 a month until 62.

Now hand him a $60K a year consulting offer, and the warning we've all heard kicks in: the earnings test will eat your supplement. The formula backs the fear up. The test withholds $1 for every $2 you earn over the exempt amount ($24,480 in 2026). On $60K of wages that's a $17,760 annual reduction, which is more than his entire $16,050 supplement. So on paper the gig kills the SRS dead from day one, right?

Wrong, and this is the part almost nobody knows: special provision retirees (LEO, firefighter, ATC) are exempt from the SRS earnings test until they reach their MRA. It's in 5 U.S.C. 8421a(c). Carl was born in 1977, so his MRA is 57. I ran his numbers year by year:

  • Ages 49 through 56 (8 years): supplement untouched. $16,050 a year, every year, identical to the path where he never works a day. The $60K gig costs him exactly nothing here.
  • Age 57 (his MRA): the test switches on. The $17,760 reduction is bigger than the supplement, so it doesn't shrink it, it erases it. SRS goes to $0 for ages 57 through 61.
  • Age 62: moot. The supplement ends for everyone at 62 anyway and Social Security picks up.

Totals: skip the gig and he collects $208,650 in supplement by 62. Take the gig and he collects $128,400. The second career costs him $80,250 of SRS, all of it packed into the last 5 years. At 57 his federal benefit checks run about $6,228 a month against $7,348 a month if he'd stayed fully retired. (Both of those are his benefit checks only. The consulting paycheck rides on top, minus its own taxes, and giving up $16,050 a year to bring in $60,000 a year still wins by a mile. The point isn't "don't work." The point is the timing.)

Caveats that matter: only wages and self-employment earnings count toward the test. Pension, TSP withdrawals, rental and investment income never touch it. The supplement itself doesn't get COLAs, which is why it's flat $16,050 the whole way. And if Carl kept the gig past 62 and claimed Social Security at 62 like the scenario assumes, SS has its own separate earnings test until FRA, which is a whole different post.

If you're 6(c) and pricing out a second career, run this year by year, because the shape of it (free years up front, a cliff right at MRA) changes how you'd negotiate hours or when you'd wind the job down. Curious how others here handled the MRA cliff. Did you throttle back at 57, eat the clawback, or restructure the work? And if you see a hole in my math, call it out. I'd rather fix it than be wrong quietly.

reddit.com
u/Glittering_Twist_732 — 1 month ago
▲ 4 r/govfire

Did the math on how the SRS earnings test hits a $60K second career for a 6(c) retiree at 49. It surprised me twice. Sanity-check my numbers?

https://preview.redd.it/j48qnr311tbh1.png?width=2400&format=png&auto=webp&s=2fa64127833acff57c20295a5dfdd7aecab927ea

Scenario discussion for the week:
Made-up scenario, real math. I wanted to see how the SRS earnings test actually treats a second career, so I built a realistic 1811, call him Carl: retiring this year at 49 with 25 years of covered service, high-3 of $148K, $520K in traditional TSP, married, partial survivor election, retiring in North Carolina. Pension nets out to about $4,610 a month, plus the Special Retirement Supplement at $1,337.50 a month until 62.

Now hand him a $60K a year consulting offer, and the warning we've all heard kicks in: the earnings test will eat your supplement. The formula backs the fear up. The test withholds $1 for every $2 you earn over the exempt amount ($24,480 in 2026). On $60K of wages that's a $17,760 annual reduction, which is more than his entire $16,050 supplement. So on paper the gig kills the SRS dead from day one, right?

Wrong, and this is the part almost nobody knows: special provision retirees (LEO, firefighter, ATC) are exempt from the SRS earnings test until they reach their MRA. It's in 5 U.S.C. 8421a(c). Carl was born in 1977, so his MRA is 57. I ran his numbers year by year:

  • Ages 49 through 56 (8 years): supplement untouched. $16,050 a year, every year, identical to the path where he never works a day. The $60K gig costs him exactly nothing here.
  • Age 57 (his MRA): the test switches on. The $17,760 reduction is bigger than the supplement, so it doesn't shrink it, it erases it. SRS goes to $0 for ages 57 through 61.
  • Age 62: moot. The supplement ends for everyone at 62 anyway and Social Security picks up.

Totals: skip the gig and he collects $208,650 in supplement by 62. Take the gig and he collects $128,400. The second career costs him $80,250 of SRS, all of it packed into the last 5 years. At 57 his federal benefit checks run about $6,228 a month against $7,348 a month if he'd stayed fully retired. (Both of those are his benefit checks only. The consulting paycheck rides on top, minus its own taxes, and giving up $16,050 a year to bring in $60,000 a year still wins by a mile. The point isn't "don't work." The point is the timing.)

Caveats that matter: only wages and self-employment earnings count toward the test. Pension, TSP withdrawals, rental and investment income never touch it. The supplement itself doesn't get COLAs, which is why it's flat $16,050 the whole way. And if Carl kept the gig past 62 and claimed Social Security at 62 like the scenario assumes, SS has its own separate earnings test until FRA, which is a whole different post.

If you're 6(c) and pricing out a second career, run this year by year, because the shape of it (free years up front, a cliff right at MRA) changes how you'd negotiate hours or when you'd wind the job down. Curious how others here handled the MRA cliff. Did you throttle back at 57, eat the clawback, or restructure the work? And if you see a hole in my math, call it out. I'd rather fix it than be wrong quietly.

reddit.com
u/Glittering_Twist_732 — 1 month ago
▲ 49 r/atc2+1 crossposts

ATC, 50 years old, eligible today. The full math on "two more years"

https://preview.redd.it/3yf5mcunygah1.png?width=2160&format=png&auto=webp&s=4a49ce30b25ce825bc0df12ea65eb934342291ef

Here's my discussion scenario for the week. I'll call him Dave. ATC, 50 years old, 25 years of 6(c) service, married, Virginia. He can retire today. He keeps asking himself: is two more years worth it?

So I ran it. Both paths, same starting point. The only thing that changes: does he walk out at 50 or 52?

A few things move when retirement age shifts, and they're all linked to the same decision (not separate choices):

  • Two more years of pension service: goes from 25 to 27 years under the 6(c) formula
  • Two more years of SRS credit: same service-year count drives the supplement
  • Two more years of TSP contributions at his current rate ($8,100/year) plus the agency match
  • Two more years of growth on the existing $720,000 balance

Here's what that package adds up to:

Pension:

  • Retire at 50: $4,592/month (net, after survivor benefit)
  • Retire at 52: $4,824/month

That's $232/month more, for life. From 2 more years of service.

TSP at retirement:

  • Retire at 50: $720,000
  • Retire at 52: $857,862

The extra $137,000 comes from two years of 7% growth on $720K plus two years of contributions and match.

SRS (the supplement that bridges to Social Security):

  • Retire at 50: $1,425/month for 12 years (to age 62)
  • Retire at 52: $1,539/month for 10 years (to age 62)

This one's a tradeoff inside the SRS: higher monthly rate from more service years, but two fewer years to collect it. Net: Dave gets $20,520 less total SRS by waiting. Worth noting.

Average monthly take-home in retirement:

  • Path A (retire at 50): $10,727/month
  • Path B (retire at 52): $11,836/month

That's $1,109/month more for the rest of his life.

Total lifetime income to age 88:

  • Path A: $5,020,015
  • Path B: $5,255,078

Waiting adds $235,000 in total income across his retirement.

Now the honest catch.

Dave doesn't break even in cumulative income until age 75. He gives up two full years of retirement at 50 and 51 -- that's income he'll never get back. On a raw dollars-collected basis, he's behind until 75, then ahead for every year after.

So the real question isn't "does B win?" -- it does, if he reaches 75. The question is how he values 50 and 51 specifically. Being 50 and out of the tower isn't the same as being 52 and out of the tower. No calculation touches that.

One thing the break-even doesn't capture: Dave in path B isn't sitting idle at 50 and 51 -- he's still working, still earning his $162K salary. After federal and Virginia taxes, that's about $136K/year in take-home. Path A over the same two years is collecting about $84K/year in net retirement income. Count working income on both sides and path B is already ahead at the start of retirement -- the break-even at 75 is a retirement-income-only number, and a conservative one.

If Dave is healthy and reasonably expects to reach his mid-70s or beyond, the math makes a pretty clear case. An extra $232/month pension, a bigger TSP, and $235,000 more over a lifetime is hard to walk away from. But if there's a reason to go now, the numbers don't favor him until 75, and two retirement years at 50 have real value that doesn't show up in any spreadsheet.

Did others in 6(c) positions run this same calculation? Did the math change your decision, or did something else win? And if I've got a flaw in the setup, call it out. What should I run next Tuesday?

reddit.com
u/Ace-hole007 — 2 months ago
▲ 58 r/ATC

ATC, 50 years old, eligible today. The full math on "two more years"

https://preview.redd.it/hylmx45fygah1.png?width=2160&format=png&auto=webp&s=d3d5378b51b514292343b9bb3cdc1714c957d692

Here's my discussion scenario for the week. I'll call him Dave. ATC, 50 years old, 25 years of 6(c) service, married, Virginia. He can retire today. He keeps asking himself: is two more years worth it?

So I ran it. Both paths, same starting point. The only thing that changes: does he walk out at 50 or 52?

A few things move when retirement age shifts, and they're all linked to the same decision (not separate choices):

  • Two more years of pension service: goes from 25 to 27 years under the 6(c) formula
  • Two more years of SRS credit: same service-year count drives the supplement
  • Two more years of TSP contributions at his current rate ($8,100/year) plus the agency match
  • Two more years of growth on the existing $720,000 balance

Here's what that package adds up to:

Pension:

  • Retire at 50: $4,592/month (net, after survivor benefit)
  • Retire at 52: $4,824/month

That's $232/month more, for life. From 2 more years of service.

TSP at retirement:

  • Retire at 50: $720,000
  • Retire at 52: $857,862

The extra $137,000 comes from two years of 7% growth on $720K plus two years of contributions and match.

SRS (the supplement that bridges to Social Security):

  • Retire at 50: $1,425/month for 12 years (to age 62)
  • Retire at 52: $1,539/month for 10 years (to age 62)

This one's a tradeoff inside the SRS: higher monthly rate from more service years, but two fewer years to collect it. Net: Dave gets $20,520 less total SRS by waiting. Worth noting.

Average monthly take-home in retirement:

  • Path A (retire at 50): $10,727/month
  • Path B (retire at 52): $11,836/month

That's $1,109/month more for the rest of his life.

Total lifetime income to age 88:

  • Path A: $5,020,015
  • Path B: $5,255,078

Waiting adds $235,000 in total income across his retirement.

Now the honest catch.

Dave doesn't break even in cumulative income until age 75. He gives up two full years of retirement at 50 and 51 -- that's income he'll never get back. On a raw dollars-collected basis, he's behind until 75, then ahead for every year after.

So the real question isn't "does B win?" -- it does, if he reaches 75. The question is how he values 50 and 51 specifically. Being 50 and out of the tower isn't the same as being 52 and out of the tower. No calculation touches that.

One thing the break-even doesn't capture: Dave in path B isn't sitting idle at 50 and 51 -- he's still working, still earning his $162K salary. After federal and Virginia taxes, that's about $136K/year in take-home. Path A over the same two years is collecting about $84K/year in net retirement income. Count working income on both sides and path B is already ahead at the start of retirement -- the break-even at 75 is a retirement-income-only number, and a conservative one.

If Dave is healthy and reasonably expects to reach his mid-70s or beyond, the math makes a pretty clear case. An extra $232/month pension, a bigger TSP, and $235,000 more over a lifetime is hard to walk away from. But if there's a reason to go now, the numbers don't favor him until 75, and two retirement years at 50 have real value that doesn't show up in any spreadsheet.

Did others in 6(c) positions run this same calculation? Did the math change your decision, or did something else win? And if I've got a flaw in the setup, call it out. What should I run next Tuesday?

reddit.com
u/Glittering_Twist_732 — 2 months ago
▲ 1 r/1811

I ran Roth vs traditional TSP for a 34-year-old ATC. The all-traditional path looks better, until you get to the tax bill

https://preview.redd.it/ja8lxytuu09h1.png?width=2400&format=png&auto=webp&s=ecd353093326de02b857b319b66ccec427bef1b7

Every Tuesday I take a realistic 6(c) (LEO/ATC/Fed Firefighter) FERS case and change exactly one variable, then run the real numbers to see what that single change does. This week's lever: traditional vs Roth TSP, for someone with a long runway ahead.

The setup: an ATC I'll call Priya. Age 34, married, planning to walk out the tower at 53 under 6(c). About $190K in the TSP today, putting in $6,750 a year. Nineteen years of runway. Same person, same contributions, same 7% return assumption. The only thing I changed: 100% traditional versus splitting it 50/50 traditional and Roth. The question I wanted to answer is the one a lot of mid-career feds wrestle with: is it even worth bothering with Roth this far in, or did you miss the boat?

Here's the first thing that got me. Both paths land at the exact same TSP balance at retirement: $1,191,756. Going Roth doesn't shrink your pile. The difference is what KIND of money it is. The all-traditional path has $0 sitting in Roth. The 50/50 path retires with $469,724 of that pot in Roth, completely tax-free to pull, plus $722,032 on the traditional side.

Second thing: going Roth did NOT cut her early retirement paycheck. The first stretch (53 to 59) both paths net the same $8,894 a month. You draw the traditional side first, so the Roth just sits there compounding.

Now the catch, and this is the part that's easy to get wrong. If you only look at average monthly take-home across the whole retirement, the all-traditional path actually looks BETTER: $14,163 a month versus $13,302 for the Roth split. So traditional wins, right?

No. That gap is RMDs. At 73 the all-traditional saver gets force-fed required minimum distributions that balloon into six figures a year, all taxable, all counted as "income" whether she needs it or not. The Roth saver's traditional balance is smaller, so her RMDs are smaller, and her Roth keeps growing untouched (no RMDs on Roth TSP). That "extra" monthly income for the traditional saver is really just the IRS prying money out of the shelter and taxing it on the way out.

Two numbers make it concrete. Lifetime federal tax: the all-traditional path pays $777,936. The 50/50 path pays $434,475. That's $343,461 less in tax over the run. And at age 90, the Roth split still has $3,658,893 left in the TSP versus $2,517,872 for all-traditional. That's $1,141,021 more left over, a big chunk of it tax-free.

So the honest takeaway: at 34, going half-Roth isn't a free lunch and it won't pad your early checks. What it buys you is a smaller lifetime tax bill, over a million more left at the end, and the freedom to pull tax-free money on YOUR schedule instead of the RMD table's. "Too late to bother" is the opposite of true.

Curious how others weighed this, especially anyone who went all-Roth early or split it. Did the RMD math factor into your call, or did you just go by your current bracket? And if there's a FERS decision you'd like me to run next Tuesday (retire age, SS claim age, survivor election, high-tax vs no-tax state, whatever), drop it in the comments and I'll add it to the list.

reddit.com
u/Glittering_Twist_732 — 2 months ago
▲ 52 r/govfire

I ran Roth vs traditional TSP for a 34-year-old ATC. The all-traditional path looks better, until you get to the tax bill

EDIT (corrected math): A sharp commenter caught two real mistakes in my original numbers, and they were right on both. First, I wasn't accounting for the income tax you pay up front on Roth contributions (Roth is after-tax, so a dollar going in costs more than a dollar of traditional). Second, my model was quietly relabeling part of her existing balance as Roth when I flipped the split, a second change I never meant to make. I fixed both and re-ran. The corrected writeup is below.

Important: the image on this post is from the original version and the numbers on the card are WRONG. Please ignore the figures on the image. I can't swap an image without deleting the whole post, and I'd rather leave this up with the correction out in the open than scrub it and pretend it didn't happen. The right numbers are all in the text below (bolded). Short version: Roth still comes out ahead, but by a lot less than the card claims ($87,800 less lifetime tax and about $652,926 more left at 90, not the six-figure-pot blowout on the card), and it's a genuine tradeoff, not a slam dunk.

---

Every Tuesday I take a realistic FERS case and change exactly one variable, then run the numbers. This week: traditional vs Roth TSP for someone with a long runway.

The setup: an ATC I'll call Priya. Age 34, married, retiring at 53 under 6(c). $190K in the TSP today, putting in $6,750 a year, 19 years to go. Same person, same return, same everything. The only change: 100% traditional versus a 50/50 traditional/Roth split. To keep it fair I held her take-home cost equal, because Roth is after-tax, so the 50/50 version actually puts a bit less into the account: $1,158,452 at retirement versus $1,191,756 all-traditional.

Here's what the split buys her. By retirement she has $92,849 sitting in Roth, tax-free to pull and exempt from RMDs (the all-traditional version has $0 in Roth). Over the full retirement, the 50/50 path pays $87,800 less in lifetime income tax (federal and state combined). And at 90 she still has $3,170,799 in the TSP versus $2,517,872 all-traditional, about $652,926 more, a good chunk of it tax-free.

Now the honest catch, and it's a real one. If you look at monthly take-home, the all-traditional path is actually HIGHER, by about $982 a month on average across retirement. Why? RMDs. Starting at 73, the all-traditional saver gets force-fed required withdrawals that climb into the six figures, all taxable, needed or not. That pumps up her "income" line, but it's really the IRS prying money out of the account and taxing it on the way out. The Roth saver pulls less, keeps more sheltered, and hands less to the IRS.

So this isn't a slam dunk for Roth. It's a tradeoff. Roth here means a smaller lifetime tax bill, more money left at the end, and freedom from RMDs on that chunk, in exchange for a slightly smaller monthly check. If your goal is max monthly spending, all-traditional edges it. If it's paying less tax and keeping more, with more control over when you pull it, Roth wins.

One caveat worth stating: this assumes her tax rates and today's RMD rules hold. Change those and the math shifts.

Curious how others think about this one, especially the RMD angle. Did dodging the RMD tax bomb factor into your Roth/traditional call, or did you just go by your current bracket? And if there's a FERS decision you want me to run next Tuesday (retire age, SS claim age, survivor election, high-tax vs no-tax state), drop it below.

reddit.com
u/Glittering_Twist_732 — 2 months ago