Occam's Razor

I am in retirement class this week. No, at age 49 (effective tomorrow) I am not quite ready for retirement. However, I am ready to start actively planning for successful retirement. Thus far my strategy has been to throw as much money into my 401-K as I can afford. I need to do better for myself, so I am in two days of learning the ins and outs of federal retirement. It is quite a revelation to me.

I am a federal employee with nearly 24 years of federal employment. I understood when I joined the government in 1981 that the retirement benefits in the government were good, but today they are excellent. My retirement benefits are excellent not because they have improved over the years. They seem better today because many companies have reduced or outright eliminated their retirement benefits. Pensions seem to be going the way of the dinosaur. Even IBM is going to require new hires to consider a 401-K their retirement system. United Airline employees are fighting to retain their pension plans, but it is unclear whether in the airline will even still be in business in a couple years. You can bet Southwest Airlines does not have no stinking pension plans beyond a 401-K. Similarly, GM and Ford are groaning under the weight of their own pension plans and would get rid of them if the UAW would let them.

When I joined the government at age 24, reaching retirement was as otherworldly to me as my setting foot on Mars. I started my career with the Defense Mapping Agency (now the National Geospatial-Intelligence Agency). After some months doing boring clerk typist duties I found a job as a production controller. It involved monitoring the production of the agency’s many maps through its printing plant. I was a young buck in an office chock full of Korean War veterans. The veterans in the plant had one big career goal: retirement. There was a ten-year calendar in one of the offices I frequented. Each employee had marked on the calendar his or her name and the month in the year when he was eligible for retirement. I remember looking at it and not being able to grasp even the notion of holding on to the same job for ten years.

Now, turning age 49, those grizzled Korean War veterans from the early 1980s are looking very wise. Yes Virginia, there is more to life than working 9-5 for the rest of your life. Having some time in life to enjoy financial security without the press of work is indeed a noble goal for a human being. We are truly privileged to live in an age where this is now possible for many of us. Rather than the end of something, retirement is looking more and more to me like the beginning of something that quite wonderful.

Staring in 1987 new federal employees had to enroll in a newer and less generous retirement system called FERS, the Federal Employees Retirement System. While most of the retirement benefit depend on building wealth in a 401-K like system called the Thrift Savings Plan, there is still a true pension component to FERS. A federal employee wise enough to save systematically can enjoy quite a comfortable retirement. He also will enjoy partially indexed cost of living raises in his pension and social security benefits. In 2006, this is a good deal.

Because I started federal employment in 1981, I belong to the original Civil Service Retirement System. This system is even more generous than FERS, with fully indexed cost of living raises on its pension. Both plans allow you to maintain your membership in the Federal Employees Health Benefits Plan (FEHBP) in retirement, providing you retire having been insured for a number of years by one of its plans. Even in retirement, the government will keep paying about three quarters of your health insurance costs. As a retiree, you are still free to switch between one of the many myriad health plans during the annual Open Season.

These are just the highlights of a suite of benefits and services that federal employees take for granted, but should not. Frankly, the benefits are so superior to what you can get in private industry these days that you would be a fool not to consider government employment as a career. Certainly as I can attest, being a government employee has its downsides. However, unemployment is usually not one of them. Moreover, the plethora of real and meaningful benefits, many of which continue until the day you die, now seem almost surreal.

Today I find myself grateful that I am a federal employee. At the time, it did not seem like a great career choice but I stumbled on something truly wonderful. Now I feel protected from many of the sad but harsh realities of modern living. I can understand why many in the private sector would feel resentful. However, I wonder if their anger is misplaced. Maybe instead of feeling resentment they should be ask why they are permitting so many of the benefits we used to take for granted to slip away. Maybe they should be demanding that their leaders invest as much energy in the health and welfare of the people as they do catering to the needs of business. It sure seems to me that business has an increasingly unenlightened attitude toward is employees.

I take health insurance for granted. I pay an excellent rate because my employer values me enough to pay most of these costs. The government also buys health insurance for millions of employees at a time, likely garnering significant discounts. The FEHBP is a model for how a health plan should work for all Americans. I do not understand why we cannot open it to all Americans. I think Americans would embrace it, even if they had to pay the full price of the premiums. I also think employers, sick of double-digit health insurance price increases every year, would welcome the relief.

When it comes to my retirement, I can retire on a full pension when I have thirty years of service, which should be in 2012. I am not sure I will actually retire then, since I will be only 55. Yet it is nice to know that I have that option. I have many options. I can buy term life insurance and long-term care insurance. If I want, I can set aside money into dependent care and health care savings accounts and have this money subtracted from my taxable income. Of course, there are survivor benefits should I die, become disabled, or get injured on the job.

It may be that the federal government is the last place where a worker can get a square deal in this country. Perhaps you deserve better too. If you are a private sector employee who feels like you are getting the shaft from your employer, perhaps you should consider Uncle Sam, or your state and local governments as an employer of first resort.

You can view and apply for thousands of federal jobs at the Office of Personnel Management’s USA Jobs web site.