All Departure Scenarios

Step 1 — Identify the annual shortfall. "Lost Pension /yr" is your full-career pension minus the deferred annuity you'd receive if you leave early. "Lost FEHB /yr" is the employer health subsidy you would forfeit in retirement (your today's-dollar FEHB value inflated to retirement year). Together these are the two streams of federal benefit income you give up.

Step 2 — Value each stream at retirement. Both streams grow with COLA during retirement. The calculator discounts each year's payment back to the first day of retirement using your private return rate. This produces a single "required pot at retirement" — the lump sum you must have on hand on retirement day that, earning your private return and being drawn down annually, covers every year's shortfall and reaches exactly zero at your life expectancy.

Why the required pot is larger than you might expect. You might think: "I need $X total over retirement, so I just need a pot that grows to $X." That understates the problem. That logic lets the pot sit untouched and compound the entire time. In reality, you start drawing from the pot immediately at retirement — it is shrinking with withdrawals at the same time it is growing with investment returns. Because you never let it fully compound, the required starting balance is significantly larger. The "PV of Lost Benefits" column is the present value of that required pot, discounted back to your departure date.

Step 3 — Back-solve for annual savings. Given the required pot at retirement, the calculator solves for the flat annual dollar amount you must save each year from departure through retirement (invested at your private return rate) to accumulate exactly that pot. This is a level annuity: the same nominal dollar amount every year — it does not grow with your salary. Gross Premium /yr then grosses that figure up by your working-years tax rate, representing the pre-tax salary increase a private job would need to provide for you to net the required savings amount.