As a federal employee under the FERS system, you are undoubtedly familiar with the three main components of your retirement plan: Your annuity, Thrift Savings Plan investments, and Social Security. However, you might be locked into one way of thinking about your benefits and overlook financial strategies that are available to you.
For example, did you know that you can collect Social Security before you retire? It’s possible, if you reach full retirement age and you’re still working, to go ahead and claim your Social Security benefits. You will continue to earn your regular salary and contribute to your Thrift Savings Plan, while also enjoying the income boost of monthly Social Security benefits.
For some workers, it makes more sense to suspend those payments until age 70 ½, at which point your benefits checks will have grown larger. But you can also reap valuable benefits from going ahead and claiming your checks. For example, the income boost in your last years of employment can help you to pay down debts so that you enter retirement on more sound financial footing. Or, perhaps the extra income allows you to invest more in your Thrift Savings Plan.
You might also choose to set aside some cash in an emergency fund, so that you have a significant financial cushion in retirement. Other people choose to invest in a life insurance policy, or hedge against future risk by selecting a long-term nursing care insurance plan.
In other words, claiming your Social Security benefits while you continue to work can give you the funds to make additional retirement planning decisions. There is no single path that works just right for everyone, but having more options is always a great thing!
The timing of your Social Security claim is one of the most important retirement decisions you will make. If you’re still working when you reach full retirement age, you face an important decision: Allow your Social Security benefits additional time to grow, or go ahead and claim them right away. Call us to schedule an appointment before you reach full retirement age, and we can help you weigh your options.
