As federal employees move closer to the end of their working years, they often find themselves at a crossroads: Should they retire now or wait? The current landscape of government employment is undergoing some changes, with administrative shifts, and emerging policies influencing retirement options and decisions. For those contemplating this significant life transition, it’s essential to consider various factors that could impact financial security and personal happiness in retirement.
Understanding the Current Environment
Recent developments in the new administration have led to potential changes and opportunities affecting federal employment and retirement benefits. With discussions around RIFs, deferred retirements, and Voluntary Early Retirement Authority (VERA), many employees are weighing the pros and cons of different retirement timeframes. Here are some critical aspects to consider while making your decision:
1. Job Security and Stability
In an era marked by shifts in government operations, many employees are concerned about job security. If you feel that government restructuring may impact your position, it may be wise to evaluate your options sooner rather than later. The potential for changes in job responsibilities could impact your work satisfaction and financial stability.
2. Retirement Benefits Under Review
Understanding how an early retirement offer could impact your FERS pension payment is crucial. Ensure you understand how administrative changes may impact your FERS pension, particularly regarding retirement eligibility and potential COLA adjustments.
3. Deferred Resignation and VERA Considerations
Deferred resignation options and VERA could provide federal employees with the opportunity to retire early. It’s crucial to weigh the early retirement benefits, relative to the reduction in income or benefits that may occur if you choose these pathways.
- Deferred Resignation: Evaluate how this may affect your retirement income. While it allows you to speed up your official retirement, it may delay access to certain benefits.
- VERA: If offered, VERA can be beneficial, allowing you to retire early with a pension. Be mindful of how this might affect future benefits and consider discussing it with a financial advisor.
4. The Potential to Retire with Higher Income
Despite current uncertainties, many federal employees may find they can retire with equal or higher income than actively working. With careful planning, you can harness your retirement benefits, including your pension, FERS Supplement/Social Security, and TSP, to develop a comprehensive income strategy.
- TSP Investments: The Thrift Savings Plan allows you to control your investments. With the right strategy, your savings can grow to support your retirement lifestyle.
- Keeping Expenses in Check: Understand that some employment-related deductions may cease upon retirement, which could improve your net retirement income.
5. Developing a Strategic Retirement Plan
Before making a final decision, develop a comprehensive retirement plan that encompasses all elements of your financial picture:
- Consult Financial Experts: Partnering with a financial advisor specializing in federal retirement can clarify benefits and help maximize income streams.
- Create a Spending Plan: Project your expenses versus your projected income. Understanding your financial needs will help you make a more informed decision.
- Consider Timing: Consider market conditions and remember that financial markets fluctuate. Timing your retirement can meaningfully impact your savings and income strategy.
Taking the Next Step
Deciding whether to stay in the workforce or transition to retirement is personal and should be informed by many factors in today’s unfolding landscape. While the current changes in government administration present challenges, they also open doors for careful planning and strategic retirement decisions.
Whether you’re ready to retire or still have reservations, take the time to assess your options thoroughly. Engaging with professionals who can provide personalized guidance tailored to federal employees will empower you to embrace your future confidently.
If you’re at the crossroads of retirement and need assistance navigating your options, consider contacting a financial planner or a retirement advisor specializing in federal benefits. Benchmark Financial Group specializes in helping federal employees turn uncertainty into confidence. Through personalized strategies, educational tools, and one-on-one consultations, we empower you to navigate these changes and thrive because of them. It all starts with gathering your information, discussing your goals, and preparing a plan so that we may help you maximize your income in retirement. With the right strategy, you may get your income equal to or exceed your pre-retirement net income. 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 will help you navigate your options and determine the best path 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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