Retirement Requires More Than a Pension
Federal employees expect to retire much earlier than other American workers, and they say they have saved more money. But federal employees are no better at planning for retirement than other workers.
Those are conclusions drawn from retirement survey data collected over the past two years and pulled together by the nonprofit Employee Benefit Research Institute.
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Syndicate/SubscribeSome of the survey findings underscore a big difference between the federal and private sectors -- the guarantee of a pension. While federal pensions vary according to retirement system, they are adjusted for inflation each year. According to the District-based EBRI, the percentage of private-sector workers eligible to receive a defined benefit pension fell to 21 percent in 2005.
In many cases, the EBRI said, federal pensions are more generous than private-sector pensions. In addition, federal employees can take their health insurance with them into retirement, a benefit offered by only 33 percent of large private-sector companies (those with 200 or more workers) in 2005, EBRI said.
The surveys found:
· Fifty-three percent of federal employees think they will retire before age 62. That drops to 24 percent among all Americans, 50 percent of whom say they will retire at 65 or older.
· Thirty-seven percent of federal employees have saved $100,000 or more that is not earmarked for routine bills and expenses, compared with 23 percent of American workers.
· Forty-eight percent of federal employees have calculated how much money they will need in retirement, compared with 42 percent of all American workers.
The EBRI compared data from an Office of Personnel Management retirement readiness survey released this summer and a 2005 retirement confidence survey it conducted with Mathew Greenwald & Associates.
The data compared by EBRI suggest that many Americans are participating in savings plans offered in their workplaces. Nine in 10 federal employees reported that they contributed to the Thrift Savings Plan, a 401(k)-type retirement account, and eight in 10 private-sector workers offered a plan by their employer said they have made contributions.
Last year, the TSP introduced "life-cycle funds," which permit employees to diversify their retirement savings by selecting an investment mix that can be timed to when they expect to begin drawing down their savings.
In the OPM survey, 77 percent of federal employees described themselves as moderate to conservative investors. A comparable question was not asked of private-sector workers in the EBRI-sponsored survey.
The OPM survey grew out of a request by Congress, initiated by Sen. Daniel K. Akaka (D-Hawaii), for more information on retirement planning by federal employees and whether steps needed to be taken to improve "financial literacy."
The Government Accountability Office, the congressional watchdog agency, defines financial literacy as the ability to make informed judgments and manage money effectively. It includes such things as knowing the difference between checking and savings accounts and knowing how to build equity through retirement accounts and real estate.
David M. Walker, the head of the GAO, has noted in recent speeches that workers are increasingly responsible for managing their retirement savings. That means they must assess financial services and products that are sometimes complex or can put them at risk of fraud.
One More Click at Dental-Vision
The dental-vision deadline has been extended, again.
The new benefits program will accept "belated enrollments" through midnight Friday, the OPM announced Dec. 15.
OPM had planned to cut off enrollments Dec. 15.
A surge in last-minute enrollments have jammed the enrollment Web site, http:/
Robert F. Danbeck, an OPM associate director, said he did not know how many people have been turned away by benefeds.com, but said, "The volume is starting to decrease, and that means the response time will get better."
More than 500,000 people have enrolled in the program, more than twice as many as the OPM estimated would sign up.
The original deadline for dental-vision enrollment was Dec. 11. When the program's Web site bogged down, the OPM said enrollments could continue through Dec. 15. In creating the program, Congress stipulated that it begin no later than Dec. 31.
Colleen M. Kelley, president of the National Treasury Employees Union, said she had urged OPM Director Linda M. Springer to authorize a further extension because "everyone who wishes to take part should be afford the opportunity to do so."
Stephen Barr's e-mail address isbarrs@washpost.com.
