Federal employees really do have one of the best retirement systems in the country, but it’s also one of the most complex and confusing! It works great when you are able to navigate all of its complexities, and that’s why we strive to keep FERS employees educated on their benefits (and updated on any news that might affect you).
So, as a federal employee, how is your retirement system different? And what decisions should you make differently, as opposed to the average American worker who is planning for retirement?
You could retire sooner. The three-tiered federal employee retirement system often allows workers like you to retire earlier than the average person. However, this superior system also comes along with added responsibility. Many FERS employees report that they have to take the initiative to keep track of their own service record, to ensure accurate benefits in exchange for time worked. It’s not a big deal, most of the time, but it does help to work closely with a financial advisor who is accustomed to the complex federal retirement system.
Typical retirement calculators can’t compute your benefits accurately. The average worker can use a retirement calculator to compute retirement income needed, pinpoint a retirement date, and determine a savings goal. It’s not so simple for federal employees, because your benefits start at different dates and can change over the course of your retirement. Therefore, it’s difficult for the average financial planner to really pinpoint your retirement needs. It takes an expert who is intimately familiar with the FERS system.
Options within the Thrift Savings Plan are unique. The TSP offers famously low expense ratios, and the opportunity to invest in certain funds that are not available elsewhere. But of course, it’s better to work with a financial planner who is familiar with the TSP, because it doesn’t work exactly like other retirement plan options.
These are just three ways that your retirement system varies from those offered to the private sector. Luckily, we specialize helping federal employees understand and navigate their retirement benefits. Give us a call, and we will be happy to answer any questions that you might have.
