“What happens to the money that was deducted from my checks for the regular retirement all these years? I never receive anything regarding how much is in my retirement. When I start receiving retirement at 62 based on my High-3 and years of service, will the money ever run out? Is there a certain amount of money I put in that once that’s used up my checks stop or do I receive checks regardless of how much I paid into retirement?
The money you contributed to the retirement fund will be paid out first, after which your annuity will consist entirely of the government’s money.
Note: Because of a change in the law, for tax purposes the taxable portion of your annuity payments will be determined by actuarial tables based on the life expectancy of everyone who is your age. Before the law changed, 100 percent of the amount you contributed would have been treated as non-taxable until it ran out. After that, your annuity would have been taxable.
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Reg Jones, a charter member of the senior executive service, is the resident expert on retirement and the federal government at Federal Times. From 1979 until 1995, he served as an assistant director of the U.S. Office of Personnel Management handling recruiting and examining, white and blue collar pay, retirement, insurance and other issues. Opinions expressed are his own.