Retirement planning can feel overwhelming, especially for federal employees navigating the unique complexities of their retirement benefits. To help make your transition smooth and confident, it’s important to pause and reflect on the key decisions ahead. Here are ten crucial questions, along with what you should consider, that every soon-to-retire federal worker should consider before submitting their retirement paperwork.
1. Have you chosen the best time of year for your retirement date?
Timing your retirement matters. Many federal employees aim to retire at the end of the year or calendar month to maximize annual leave payout and benefit coordination. Review agency calendars and consider how your retirement date affects pay, benefits, and future cost-of-living adjustments.
2. Have you requested an official retirement estimate from your HR department?
Don’t guess—get the facts. An official estimate from your HR team outlines your expected annuity, insurance coverage, and other benefits. This estimate is vital for budgeting and setting clear expectations for your post-retirement finances.
3. Have you planned for survivor benefits for your spouse or loved ones?
Your decisions matter for those you leave behind. Federal retirement plans offer survivor annuity options on your FERS or CSRS pension. Carefully weigh the costs versus benefits to ensure your spouse or dependents have the coverage they need without unnecessarily reducing your own income.
4. Are you up-to-date on your FEGLI coverage—and do you have the right amount?
More isn’t always better. Federal Employees Group Life Insurance (FEGLI) options at retirement can be complex and costly. Review your coverage needs, compare with private alternatives, and decide whether to maintain, reduce, or cancel coverage.
5. What’s your withdrawal strategy for TSP savings?
TSP withdrawals require a plan. Will you take monthly payments, ad-hoc withdrawals, roll your balance into another account, or let it keep growing? Understanding the options and potential tax implications is essential for steady cash flow and preserving principal.
6. When will you claim Social Security—and do you know your benefit amount?
Timing affects your lifetime income. Access your Social Security statement to verify your benefit and consider how claiming early, at full retirement age, or delaying impacts your monthly checks. Coordinate this with your federal pension to maximize lifetime income.
7. Have you planned for the use of sick and annual leave before retirement?
Leave balances have value. Accrued annual leave is typically paid out in a lump sum, while unused sick leave can increase your annuity calculation. Plan your final months to make the most of both.
8. Do you understand how taxes will impact your retirement income?
Tax surprises can derail your plans. Federal pensions, TSP withdrawals, and Social Security may all be taxable. Learn which benefits are taxed, how withholdings work, and whether you should seek advice to avoid unexpected liabilities.
9. Are you clear on your federal health insurance options in retirement?
Coverage can continue, but rules apply. Most federal retirees can retain their FEHB (Federal Employees Health Benefits) coverage, but they must meet specific eligibility criteria. Compare plan options for retirees and consider whether you need make any adjustments to your coverage at the next opportunity.
10. What should you know about the FERS supplement?
This benefit helps bridge the gap. If you’re retiring before age 62, you may be eligible for the FERS annuity supplement, which approximates Social Security until you reach eligibility. Understand how it’s calculated, any potential reductions (like working after retirement), and when it stops.
Preparing for federal retirement means asking the right questions and addressing each area thoroughly. By considering timing, benefits, leave, taxes, and your family’s needs, you’ll be well on your way to a smooth and confident transition into retirement life.
Do you have more questions not listed here?
Navigating the retirement process and making informed financial decisions can be challenging, but you don’t have to do it alone. 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 all things retirement. 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 exceeding 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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