The new year has arrived, and with it comes a raise in pay for many federal employees. The calculation of these pay increases is a complicated subject, far beyond the scope of this blog, but you will be notified of any raise by your employer anyway. Beyond that, you might be wondering when your pay raise will take effect, and what you should do with the increased cash flow.
When will you receive your raise? If you are subject to an increase in compensation, the exact arrival of a higher paycheck will depend upon your employee classification. For GS employees, the time table is simple; your raise will take effect during the first pay period after the new year.
For FWS employees, raises will not take effect until after the FY 2018 pay limitation is released. When you do receive your raise, paychecks will be adjusted to retroactively reflect your new pay grade. If you’re an FWS employee, you will receive more information from your employer.
What should you do with that extra money? And now we arrive at the main topic of this blog. While it can be tempting to utilize a pay increase to cover a new purchase, consider your retirement savings. If you aren’t maxing out contributions to your Thrift Savings Plan (TSP), diverting the extra cash to that retirement fund will benefit you more in the long run. You’ll not only be stashing extra money for the future; that money can also earn interest over time.
Paying down debts is another excellent idea. Work with a debt counselor to make a plan to get out of debt, stick to a regular payment schedule, and avoid taking on any new debts if possible. Entering retirement free of high credit card and other payments is one of the better ways to establish a stable lifestyle on a fixed income.
Of course, you can always give us a call if you’re trying to decide what to do with extra money in your budget. We can review your financial plans with you, and help you identify ways to put that money to its most beneficial use.