Posted on Friday, 31st December 2010 by

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Tighten Up …….

I can vividly recall dancing to this song by Archie Bell and the Drells in the late sixties with my wife of 41 years now. I’m sort of stuck in the 60s these days with XM Channel 6 and this song brought back many memories, good ones I might add that are in conflict with what is going on today. I can hear the guitar riffs and lyrics as I write this.

Do the tighten up

Just do it

Come on and tighten up…

We all have to tighten up in so many ways today with no cost of living adjustments for social security and annuity payments, and now an across the board federal two year pay freeze.  Add to the mix inflation that government hides by fudging the Consumer Price Index (CPI). Did you know that food and fuel are excluded from the CPI calculations? I go to market with my wife and everything costs $3 and up, butter has increased over 100% in the past year, meat costs are through the roof, a small roast costs $12 or more today and only a half of that 2 years ago. We all get the point especially when you shop too, and by the way make that necessary stop at the gas station where gas now costs $3 a gallon in WINTER, projected to be $5 a gallon this summer. Yes, we all have to tighten up because of government’s out-of-control spending.  Check out the suggestions in my previous article on ways to cope with rising prices.

Most of us understand that annuitants and actively working employees from all sectors must share the burden. Do we like it – hell no! However, this sacrifice has to spread across the board to the state and local municipalities as well. A 2007 study estimated the unfunded liabilities of state and local employee pension systems (including teachers) to be as large as $1.4 trillion according to a University of Missouri–Columbia study.

Local and State government worker’s benefits are more generous than the federal sector in many cases. I requested copies of the Robinson Township, PA,  municipal worker’s and Montour school teacher’s contracts under the Freedom of Information act. They charged me – a local resident – $100 for copies and wouldn’t provide electronic versions. I was shocked at how generous their benefits are compared to the federal and private sectors.

Teachers work 190 days, 7.5 hours per day or 1425 hours per year. The highest salary for the current school year is $99,665 which is reached after 17 years, one step for each year of service.  This doesn’t include additional pay received for working summer programs, curriculum writing, detention, relinquishment of planning period, homebound instruction, and any site assignment beyond their 7 ½ hour normal school day. When you divide $99,665 by 1425 hours worked teachers with 17 years of service earn $70 an hour and unlike federal workers, many in the private sector, and all on Social Security their pay raises are fixed under a 6 year contract through 2013 at what I calculate to be approximately 2.5 to 3% per year. It isn’t only retirement, teachers also receive 10 days of paid sick leave plus 3 personal days, up to 7 days bereavement leave, and time off with pay for jury duty, certain athletic events and union association business activities each year plus up to a one year sabbatical leave with half pay after just 10 years on the job.

Pennsylvania teacher retirement benefits are based on the following formula for what they designate their Class TD benefit:

2.50 %

X Final Average Salary

X Credited School Service

Yearly Benefit Payment


2.00 %

X Final Average Salary

X Credited Non-School Service

Yearly Benefit Payment

Teachers with 35 years of service (at any age) and an average high three salary of $97,265 would retire under their traditional “defined benefit” (DB) pension system with a pension of .025 x 35 x $97,265 = $85,106 plus social security if eligible. Combined retirement earnings can be more than what they made while working and this calculation doesn’t include creditable non-school service for the second part of the equation or any additional pay received for time worked beyond their normal 71/2 hour day! A FERS federal retiree with the same high three average salary receives 1% times years of service times average salary for $34,042 per year!

It’s not just teacher contracts, municipal worker too receive generous benefits including 18 paid sick days, paid time off for 9 holidays, their birthday, plus 2 personal days per year, excellent pay, and attractive retirement packages. States and Municipalities across the country are on the verge of bankruptcy and residents face huge tax increases to pay for the large unfunded retirement liabilities and all too generous pay and benefits packages. It’s time for teachers, state and municipal workers, union leadership, and municipal managers and school boards to take Archie Bell and the Drells’ “Tighten Up” routine to heart and join in the shared sacrifice.

Request copies of your township’s teacher and municipal worker’s contracts, insist they fully disclose unfunded liabilities, salary and benefits, and hold your elected representatives accountable. You too will be surprised at what you and your neighbors are funding.

Retirement Cost Analysis Update

Matthew, a site visitor sent a message asking for clarification of the Retirement Cost Analysis Spreadsheet example that I have online. He noticed that the total take home pay of the retiree in the example was less than the employee’s total expenses pre-retirement. The example leaves out the spouses income so the retiree will know what their total expenses will be based on the annuitants income only. A spouse could be laid off or stop working for other reasons. I neglected to mention that in the example and updated it to reflect this. It also leaves out Social Security income. I retired under the CSRS system however I did add a Social Security entry line on the form. You would be surprised to find out how many retirees find their income in retirement insufficient and below their total expenses if not immediately several years after they leave due to inflation and other factors. There are many reasons for this including couples marrying later in life and federal workers in their late 50s and early 60s have college age children and major expenses. That is just one reason why I highly recommend feds pay off their mortgage before they retire. My October 2010 article available at discusses the process I used to pay off my mortgage before I retired.

For a comprehensive cost verses expense analysis I suggest using the Retirement Planning & Expense Analyzer that you can download online at that was developed by John Talbot, a federal retiree. You can download a free trial version of their CSRS and FERS Benefits Calculator and Retirement Planner software program. This software has been used by tens of thousands of federal employees, since 1999, to thoroughly investigate the affordability of federal retirement. It is compatible with all 32 bit windows software from Windows 95 to Windows 7.

For a professional review of your personal situation you can submit an Assistance Request online at  A Benefits Specialist will use the professional version of this software to prepare a free analysis of your entire situation with trend lines that reveal you and your spouse’s expenses verses total retirement income from all sources.  We posted a sample analysis online for you to review. Notice the trend lines on the report, they are very revealing.


  • Beginning this month 10,000 baby boomers a day are turning 65. This trend is projected to continue for 19 years, I turn 65 in 3 years. Can’t believe just how fast the time is flying by.
  • Nancy Holston, our travel editor, talks about the ins and outs of Travel Insurance in her recent article that you will find helpful when planning your 2011 trips. She touches on the many issues that must be considered including extended coverage, medical treatment while away from home and much more.
  • FEDWEEK offers a free report titled The 14 Worst Retirement Planning Mistakes a Federal Employee Can Make. It talks about not leaving retirement to chance by not attending a retirement seminar to the effect of WEP and GPO that you will find helpful. Fedweek publishes a number of helpful booklets on retirement subjects.
  • A two year federal pay freeze was passed during the Lame Duck session and affects most federal pay scales and there will be no COLA increase in 2011 for annuitants.
  • The 2% Payroll Tax Decrease in 2011 – FERS employees will notice a 2% pay increase this year due to the temporary 2% reduction in the Social Security Tax rate. CSRS employees do not pay Social Security taxes and will not see an increase in take home pay.

Learn more about your benefits, employment, and financial planning issues on our site and visit our Blog frequently at to read all forum articles.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

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