If you’re 10 years into your federal service job, you’re probably going to skip this article and read something more interesting like how pornography can affect your security clearance. But skipping this one could prove to be a serious error in judgment. Believe it or not, having 10 years of service is a great time to start planning your retirement. In fact, having six months of service is a great time to start planning your retirement. So before you get sidetracked by another article, take a few minutes to read the seven retirement tips below.
1. Make a Plan
One of the most common mistakes people make when it comes to retirement is failing to put together a plan while there’s still time to implement it. A study done by the Employee Benefit Research Institute revealed that 48 percent of workers haven’t calculated how much they need to save in order to live a comfortable lifestyle once they retire. Don’t go into your golden years wondering if you’ve got enough money to survive. Instead, work with your agency, an accountant or even a retirement calculator to figure out how much you need to save. And when you’re about five to seven years out from retirement, start attending your agency’s retirement seminars. You’ll learn how your retirement annuity will be computed as well as any new developments that may affect your plan.
2. Contribute to the Thrift Savings Plan
According to the National Active and Retired Federal Employees Association, the contributions Federal Employees Retirement System employees make to the TSP are intended to make up 1/3 of their retirement income. In other words, it’s not an amount you should shrug off. The earlier you can contribute – like when you’re hired – the better, but it’s never too late to put money toward the TSP. Civil Service Retirement System and FERS employees can make tax-deferred contributions up to $16,500 per year and employees over age 50 may make an additional $5,500 per year in catch-up contributions. Also, FERS employees have the benefit of government contributions. Check to see how much the agency is willing to match and if at all possible, max out your contributions. Don’t turn away free money.
3. Decide on Health Benefits
If you want to continue using the Federal Employees Health Benefits Program once you retire, you need to make sure you’re enrolled with the program at least five years prior to retirement. The options for enrollment span from being the primary user with a self-care or family plan all the way to being enrolled under someone else’s plan as a family member. The catch is that you must be enrolled for at least five years before the date your annuity starts or for the full period of service since your first opportunity to enroll (possibly less than five years).
4. Decide Where to Live
As a federal employee, you’ve had the option to work all over the world. And it’s possible that as you close in on retirement, you’re not actually living in the city or state you’d like to retire in. To help ease the retirement transition, start looking for jobs in your desired location at least five years out. You’ll need time to go through the application process, get hired, move and then dedicate a few years to your new agency before you retire. Note: If you’ve worked abroad, you may be eligible for a more generous computation of your retirement benefits so check with your agency.
5. Pay Your Military Service Deposits
If you previously served in the military, it’s possible your military time will count toward your civil service retirement. Meet with your human resources representative and see if “buying back” your military time would be beneficial toward your retirement. Each case is different so it’s imperative you speak with an expert. If you do owe military service deposits, make a plan to get them paid off. These credits can affect your retirement eligibility and the computation of your annuity so it’s essential you have them paid well before you retire.
6. Decide if You’ll Work
Not every person who retires will stay that way. If you think you’ll need to work for financial – or sanity – reasons, start putting together your resume about a year out from retirement. You’ll need time to tweak your resume for certain jobs and the application process can be long. It’s worth noting that federal service retirees can go back to work in the private sector without any impact to their benefits. However, federal service retirees who go back to work for the federal government will likely have their new salary reduced based on the amount of their annuity.
7. Plan Your Ceremony
If you want to have a retirement ceremony, make sure you give yourself enough time to plan it. Family members may want to fly in for the big day, guest speakers may have full schedules and the agency probably needs time to put a gift together. Plan it early so you can have a stress-free event that you actually enjoy.
Overall, planning for retirement from federal service can be a lengthy process. But if you start early, you’ll have more money in the bank and less stress as you become a retiree. These tips are a great start, but there’s always more you can do. Contact your local human resources expert for help and don’t forget the resources offered online by the Office of Personnel Management.
