Is it time to go?

Anonymously contributed:

It appears that for some current LLNL and LANL employees the elimination of merit salary increases for the next two years has altered the financial calculus, hastening the optimum time of retirement. This observation may apply to TCP1 folks who have been in the system for a long time, probably over 25 years.

As an TCP-1 employee approaches 60, the year- to-year pension benefit increases by the change in HAPC * change in age factor * change in YOS. After age 60, the change in age factor is zero, so only the change in YOS and change in HAPC apply.

Prior to 60, the change in age factor is 0.14% per year, which works out to a 6.6% in lifetime pension benefits in the year from age 59 to age 60.
At age 60, each year of service adds 2.5%. It does not increase after age 60.
Generally a 2% salary increase every year boost the HAPC by 2% each year.
So up to age 60, a TCP-1 beneficiary should see the monthly pension benefit increase by about 9% plus the % value of his/her average merit wage increase.
Under a wage freeze the HAPC still rises a little as it approaches the frozen wage, (it will be assumed to be zero)

After 60, the only increases that apply for delaying retirement are a YOS increase which will be 2.5% plus the average wage increase (which under a salary freeze is zero). Notice if the average merit increase is frozen at zero, the increase in pension benefit barely exceeds that which will be given by a yearly TCP-1 COLA for a retiree, which will average 1-2%, (though it is probably lower this year as inflation is very low).

Note importantly, that each month that a person delays retirement beyond age 60, results in one less lifetime monthly pension payment, which could be $5 -$10k per month. Though I haven’t done a general net present value calculation for the two alternatives, it is unlikely that a retiree can recover the lost income of a few months delay with an effective 0.5-1.0% increase in the subsequent pension payments over his remaining life.

So who might this general analysis apply to? It is a limited subset of the current TCP-1 population. Some financial advisors recommend that a retiree have 70% of past income that grows with COLA to provide a satisfactory retirement. If this is so, an TCP-1 retiree will need to have about 80% of HAPC, because there is about a 3% reduction between HAPC and current wages and an additional 5-8% hidden reduction to select the now mandatory 50% spousal continuance. 80% /2.5% per year = 32 years. If a person is part of social security, and at age 62 this provides 15% of former income, the breakeven drops to 26 years of service.

It may be worthwhile to examine your specific information to see what is the difference in pension for retirement ages, 58 though 62.