Part-Time Government Employment

11.7.25: Audio automatically transcribed by Sonix

11.7.25: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome back to the Federal retirement Show. I'm your host Val Majewski with American Benefits Exchange. As always, appreciate you taking the time out of your schedule to join us to view our content. It is for you, the federal employee that's looking for accurate information when it comes to your benefits and retirement situations. We have a whole library of content for you. So if you're just joining us for the first time, welcome. Uh, thank you to whoever pointed you in our direction or thank you for finding us. We've got now 153 episodes, all information geared towards federal employees trying to help you navigate your way through your career so you can retire how you want, when you want, with the lifestyle that you want. And our conversations and our content generally come from, uh, situations I encounter when talking to other, other federal employees, just like you. And that leads us to today's conversation, which is no different. We're talking about part time employment with the government. And if you're a part time employee, what does that mean? It just means you're not working a full 40 hour a week schedule. There's varying levels of part time, but if you've got part time during your career, how does that affect you when you get to retirement? And just had a recent conversation with a federal employee, and we were going through and trying to certify their employment status or their employment record for their retirement application, and you want to make sure you understand how part time employment is going to affect you down the road when it is time to retire.

Speaker1:
So again, this veteran employee as part of their retirement application, you'll get there when you get there, right? But as you're filling that out, your agency will certify your employment record. And that talks about how much years or how many years of service you have that are going to be counted towards your retirement calculation, ultimately determining what your pension is going to be. Now, if you want to know what the pension calculation looks like and how to do it, there's plenty of other episodes where we've talked about calculating your pension as a first employee, or if you happen to be CSRs, a CSRS employee. But we're talking here again about how does part time employment affect you when you get to retirement. So let's dive into today's content and learn a little bit more. So when we talk about part time employment, there's a number of things that we're going to cover today. And it said this is anything less than full time which is 40 hours a week. Okay. So when you have that part of your status or as as part of your status during any part of your career, and it could have been a temporary thing. It could have been for an extended period of time. How is that going to affect you? Now the first bullet point is time still counts.

Speaker1:
We'll talk about this in a second. We got to go over what the proration factor is. We'll talk about hi three your survivor benefits. Then we'll also discuss the Fers supplement. And all of these things are affected by your part time work. So when it says time still counts, what does that mean. The time that you spend as a part time employee still counts as full time for calculation purposes. So let's say, um, you work part time for one year and you worked 20 hour weeks, so you're at 50% time you worked, let's say. Well, let's say you worked two years part time. It's not like you just got credited one year of service because you're at 50% for a two year period. You still got two years of service time when it comes to retirement eligibility. So what I mean by time still counts. That time you spent as part time counts as full credit for retirement eligibility purposes. It's not like they're going to say, hey, you worked 20 years, but two of those were at 50%. So we're only going to credit you 19. Now that's where the next thing will come in when we talk about the proration factor. But the time still counts that you're working part time. It counts as full time for eligibility purposes, right? For what you're going to get credited when it comes to eligibility purposes. Speaking of that proration factor, now this is where they're going to do the calculation okay.

Speaker1:
To determine what the factor is. That is going to be added to the end after your pension is calculated. So here's here's how they would do this. Right. Let's say they calculate your pension as if you were full time the entire time. We'll get into high three, but high three times the factor of 1 or 1.1% times your years of service. They get your annual pension amount initial. Then they're going to look at what is this proration factor. It's the number of hours that you work total, right. So take the number of hours you work total. If it were 20 years, 30 years, what have you, the number of hours that you worked total over your career and divide that by the number of total hours that you could have worked if you were full time the entire time? Now, if you're full time the entire time, then that factor ends up being one, right? The amount of hours you work boom is the same as the maximum hours because you are full time the entire time. But if you had a portion of part time work in there, then you're not going to have the maximum hours based on your years of service. So the proration factor is hours worked divided by the total hours if you were full time the entire career. That's your proration factor. So once they calculate your pension, they're going to multiply that by the proration factor.

Speaker1:
And that's going to get your actual amount of what you're going to get paid. Hi three. So if you work part time in this whole thing we mentioned hi three is part of that retirement calculation. Hi three is still going to count. So we had this come up where let's say you make 100,000 okay. We talk about that two year period right there where you work part time. So you made your 100,000 was your annual pay because you only worked part time though you only made 50,000 for that year. So your annual salary is 100. That was assuming full pay right. Full time pay. But let's say you only worked 50% of the time, so you only actually earned 50,000 or 50% of that because you worked at 50% capacity 20 hours a week. Your high three is still going to count at that 100,000 level, or 100,000 is still going to count towards your high three. So all of this levels out in the end when they add that proration factor. But time, as I mentioned earlier, still counts for eligibility and the high three based on the annual salary will still count totally towards your high three calculation. Now, because your final annual salary gets affected by the proration factor, then your survivor benefits will also get affected by it. So your survivor will still your surviving spouse if you choose to elect.

Speaker1:
Let's say your fur is either the 50% or the 25% option. Your surviving spouse will get 50% or 25% of the final amount after the proration factor. Okay, so they're not going to get 50% of the full amount. They it's got to be after the proration factor is applied, they'll get 50 or 25% of that. And the first supplement, if you go back and view our content on the first supplement, you can see the first supplement is based on two things your age 62 Social Security benefit, and the number of years you work in the Fers service. So when they add that proration factor at the end, I said all of your years count towards full time credit when it comes to eligibility for retirement. But when the first supplement comes in, they're going to use that proration factor for your years to determine what your final amount is going to be for the first supplement, so you don't get full credit for the first supplement, it's going to still be affected by the proration factor, which will lower your first supplement amount. So pretty, pretty awesome stuff here. When it comes to, uh, part time work and part time employment, how it affects your retirement. So that's that was a question we got to ask. Again. It was a federal employee that was trying to certify their, uh, work record, their service record with their agency so they can file it in for their retirement application.

Speaker1:
Good news is, like I said, all that time counts. The high three still calculated the highest amount. It's not lowered for the proration factor. Uh, the high three still still counts. But that proration factor, as I mentioned earlier, will affect the final when it comes to the pension calculation. The survivor benefits and the Fers supplement. So hopefully you found this information helpful. If you've had some part time work during your career and you haven't been full time 100% of the time, this is how this is going to affect you. If you have further questions, please reach out to us. You can go to our website, Federal Retirement Show.com. Fill out the form. One of our experts across the country. If it's not me personally, we'll be reaching out to you to discuss your benefits. Answer your question. We can produce some reports for you to let you know exactly where you stand and how you're trending as you get closer and closer to retirement. Again, I hope you found today's content helpful. If you have suggestions on future episodes, go to that website again Federal retirement Show.com. Fill out the form. Let us know what it is we can talk about in the future. What will be helpful for you and the people that you work with? Again, my name is Val Majewski with American Benefits Exchange. You've been watching the federal retirement show and I look forward to seeing you on a future episode.

Speaker2:
Everyone pictures retirement a little bit differently. For some, it's peaceful mornings and coffee at sunrise. For others, it's finally exploring what comes next. But no matter the vision, the time to start planning for retirement is now. I'm Jim Terrebonne here for the Retirement Radio Network powered by Amara Life. Retirement doesn't just happen. It's built one small step at a time. The first big hurdle saving the right amount of money. Nbc senior business correspondent Christine Romans.

Speaker3:
Time is your superpower. The longer you are saving for retirement, the better.

Speaker2:
Christine and financial experts alike all say there are a few key steps that can make all the difference. First, start saving now.

Speaker3:
Let me give you an example. You put $10,000 into a retirement account over 30 years with compound interest of 5%. That becomes $40,000. Imagine doing that every single year, over all of your earning years. That's how you really use time to your benefit.

Speaker2:
Second, take advantage of your employer's retirement plan. If your company offers a 401 K with matching contributions, sign up and contribute enough to get the full match. It's one of the easiest ways to build your nest egg. Third, balance your investments. A healthy mix of riskier investments like stocks or mutual funds, coupled with safer options like bonds or annuities can help. Whether the market's uncertainty, especially as you get closer to retirement. Fourth, know what you'll need the US Department of Labor suggests planning for 70 to 90% of your current income to maintain your lifestyle. Social security helps, but it likely won't cover it all. And finally, seek professional guidance. A qualified financial advisor can help tailor a strategy to meet all of your goals so your savings last as long as you do. Remember, retirement isn't just a finish line, it's a new chapter, one that finally feels a lot better when you've planned for it for the Retirement Radio network powered by Amara Life. I'm Jim.

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