Are you a federal employee on the brink of retirement? Filled with a mix of excitement and uncertainty? As you prepare to embark on this new chapter, it’s crucial to be well-informed about your options and decisions that lie ahead. You will have many decisions that you will need to make that may have an impact on your financial health in retirement. We’ve highlighted a few below, but know that you are never alone in this process. Benchmark Financial Group is here to help you make informed choices that align with your financial goals and aspirations.
Pension: A Pillar of Your Retirement
Your FERS/CSRS pension is a cornerstone of your retirement plan. It offers you a consistent stream of income, reflecting your years of dedicated service. With your pension, you will have a few Surviving Spouse Benefit (SSB) options to choose from. You can opt for either a 25% or 50% SSB, which determines the percentage of your pension your surviving spouse would receive. Keep in mind that your choice of SSB may have implications for your Federal Employee Health Benefits for your spouse. Depending on your SSB election, your spouse might retain access to these benefits after your passing. It’s vital to understand these connections when making your decision.
FEGLI: Evaluating Your Life Insurance Options
The Federal Employees’ Group Life Insurance (FEGLI) program offers life insurance coverage for federal employees and retirees. As you prepare to retire, assess your FEGLI coverage and determine if it meets your current needs. Consider whether maintaining coverage post-retirement aligns with your overall financial strategy. FEGLI, like all group insurance plans, gets more and more expensive the older you get.
Retirement opens the door to several critical decisions that can shape your financial landscape. Some of these choices include opting for a reduction of your FEGI coverage, which can influence your income levels in retirement. Carefully evaluate the impact of each choice on your financial stability and longevity.
TSP: Crafting Your TSP Income Strategy
Your Thrift Savings Plan (TSP) is a powerful tool that complements your pension and Social Security benefits. It’s essential to determine if you should tap into your TSP funds to get your monthly income to an amount you’re comfortable with or rely solely on your pension and FERS Supplement or Social Security. An income strategy using TSP funds can provide flexibility and help you maintain a net monthly income you’re comfortable living on.
Creating a TSP income strategy requires careful consideration. Decide whether you’re comfortable managing your investments as a “do-it-yourselfer” or if you prefer seeking professional advice to tailor your strategy to your unique circumstances. Remember, the cheapest option isn’t always the best—prioritize a strategy that aligns with your financial objectives over the long haul of retirement.
FERS Supplement and Social Security
Understanding when to start receiving your FERS Supplement or Social Security benefits is crucial. You can choose to begin benefits at age 62 or wait until your Full Retirement Age (FRA). One of the main disadvantages of waiting to turn on Social Security benefits is the potential opportunity cost of delaying access to income. While waiting to claim benefits can result in larger monthly payments when you do start receiving them, the decision to delay means you’re forgoing immediate financial support that could be used for current expenses, investments, or other financial goals.
If you do decide to turn on your Social Security benefits before your FRA, you can still work so long as you don’t exceed the income threshold limit. Each year, the Social Security Administration establishes threshold amounts that determine how much you can earn from work without affecting your Social Security benefits. In 2023, that limit was $21,240 annually or $1,770 per month.
Making the Right Choices for Your Retirement
As you embark on this exciting journey, make your choices wisely. Though the number of decisions may seem overwhelming, the goal is to create a well-rounded income plan that supports your desired lifestyle. Seek advice from financial professionals who specialize in federal employee retirement to ensure you’re on the right track. By understanding your options and making informed decisions, you can confidently transition into a fulfilling and financially secure retirement.
Looking for assistance in navigating the retirement experience? We can help!
If you are looking for a guide through the retirement process and to put together a complete financial plan, Benchmark Financial Group can help. It all starts with gathering your information, discussing your goals, and preparing a strategy so that we can help you maximize your income in retirement. With the right strategy, you may be able to get your income equal to or exceed your pre-retirement net income. Remember, the choices on what to do for each piece of the Federal Employee benefits system are unique to everyone’s individual situation. To get started, schedule an appointment today with Benchmark Financial Group by filling out the form online or calling David Raetz at 913-534-8256 to discuss your financial needs. Benchmark Financial Group is happy to help you navigate your options and determine the best path to move toward your financial goals.
*Securities and Advisory Services Offered Through CreativeOne Securities, LLC Member FINRA/SIPC and an Investment Advisor. Benchmark Financial Group, LLC and CreativeOne Securities, LLC are not affiliated.
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