Considering Retirement: Should you stay or should you go?

Jun 6, 2022 | Federal Employee Articles, Newsletter Articles

As you approach retirement, you are faced with many choices in planning for your future outside of the workforce and making decisions to meet your financial goals. But how do you know if it is the right time to retire? Today’s economic circumstances and world events may have you hitting the pause button on your plans. If you are having trouble deciding whether you should stay or go, we’ll walk you through some considerations to help you make your decision.

SHOULD YOU STAY?

Inflation and market concerns may have you rethinking your retirement date. Costs have skyrocketed including home prices, health care, even groceries, etc. In order to create an income strategy in retirement, you should know how all the different income streams work when inflation is a concern. As a federal employee, you have at least three sources of retirement income—your FERS pension, Social Security, and your TSP.

With your FERS pension, if you are at least age 62 you will receive a cost of living adjustment every year (COLA). If you are younger than 62, you will have to wait to receive any COLA. This could negatively affect your buying power if inflation continues to remain high. If inflation rises above your cost-of-living increases, your FERS pension will start to lag behind. However, this is only one piece of the pie. 

With Social Security, the COLA is there so your purchasing power can keep up with increases in the Consumer Price Index.  However, with the cost of health care expenses continually rising, your Medicare part B premiums could go up as well. Higher premiums, which are taken directly out of your Social Security benefits, will lower your net income from Social Security. 

The other piece of the pie is TSP. TSP is great because you control how you use and invest it. With the right investment strategy, it has the potential to grow at a pace that keeps up with inflation, or even faster than inflation, which will help maintain your standard of living.

The fact of the matter is that there will always be times of difficulty and challenging market conditions, but there is also opportunity. It all starts with a solid strategy and a well-thought-out plan. You’ve been working towards this your entire career. If the state of the economy has you nervous, it may be time to start working with an advisor that can help you navigate and identify the opportunities and challenges you are facing. A market downturn can be scary, but it’s important to remember the historical nature of the market. The S&P 500 index has appreciated at least +10% (total return) in 19 of the last 30 years (source: BTN Research). Avoiding rash decisions and staying calm is always the best plan of action.

SHOULD YOU GO?

You might be surprised to hear that there is no magic number you need to have in your accounts to green-light retirement. Many individuals don’t realize that some expenses and deductions taken from their paychecks stop once they enter retirement. Depending on what benefits you turn on, you have the potential to make the same amount, if not more, in retirement than you did when you were in the workforce. Federal workers have some of the best benefits, and Benchmark Financial has seen firsthand many individuals who ended up making more in retirement than when they were employed.

If you are looking for clarity and are ready to confidently head into retirement, now is the time to get a plan in place. Whether you need to figure out how to plan for your pension, Social Security, TSP, and a plan that incorporates your spouse, Benchmark Financial Group can help.

READY FOR THE NEXT STEP?

If you have any questions regarding your federal retirement, Benchmark Financial Group is here to help. We will take a closer look at your financial situation because retirement may be closer than you think! 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 Client One Securities, LLC  Member FINRA/SIPC and an Investment Advisor.  Benchmark Financial Group, LLC and Client One Securities, LLC are not affiliated.

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Overland Park, KS 66210

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