1. Plan For High Inflation
One retirement-planning rule-of-thumb is to factor in a 2.5% inflation rate when calculating the income you’ll need once you’re no longer working. However, thanks to COVID-19 disrupting the international supply chain, the rate of inflation spiked to as high as 9.1% in June of 2022. And it may not come down any time soon.
2. Build A Rainy Day Fund For Emergencies
Far too many federal retirees haven’t put enough aside for emergencies. In fact, many use their Thrift Savings Plan (TSP) as their rainy day fund when unexpected emergencies arise. This impacts your TSP growth and costs you in income taxes. If you have to work longer to put more money away for emergencies, it’s worth it.
3. Communicate With Your Spouse Or Significant Other
Discuss the big picture of your retirement together to make sure you’re on the same page about spending, travel, etc. Put your heads together and have these talks long before you retire. Otherwise it may lead to conflicts later.
4. Make Sure You Can Carry FEHB Into Retirement
Make sure you understand the rules for carrying FEHB into retirement. You need to be enrolled in FEHB for the five consecutive years before you retire, or for the entire time for which you were eligible to be enrolled, plus retire on an immediate annuity to be eligible to continue coverage into retirement.
“If you develop a budget and test-drive it before you retire, it can be a big wake-up call.”
5. Create A Budget & Test-Drive It Before You Retire
The importance of having a budget when you retire can’t be overstated. In fact, studies show new retirees tend to overspend in their first few years of retirement. If you develop a budget and test-drive it before you retire, it can be a big wake-up call.
6. Pay Off Or Pay Down Your Mortgage
Paying off or paying down your mortgage can eliminate, or significantly reduce, one of your biggest expenses in retirement: housing. It also helps increase your home equity which can work to your advantage, later.
7. Consider Working Longer
As a FERS participant, you can count on three streams of income: your FERS annuity, Social Security plus the Thrift Savings Plan (TSP). Working longer can potentially result in the growth of all three of these benefits.
8. Work With An FRC® Trained Advisor
Mainstream retirement consultants often don’t understand your federal benefits. An FRC® Trained Advisor can provide you with complimentary reports, personalized with your information, including: the Federal Retirement Analysis, Social Security Analysis, FEGLI Analysis and Thrift Savings Plan Overview.
