As you near the finish line, the federal retirement questions start to pile up.
How much should I have in my TSP?
Can I keep my health insurance?
When will my pension actually start?
Ask three recently retired coworkers, and you’ll probably get three different answers.
The problem is that most retirement advice wasn’t written for someone with a FERS pension. Federal retirement follows its own rules, which is why many of the same federal retirement questions come up in almost every benefits review we conduct.
Here are five of the most common.
“How much do I actually need in my TSP?”
This may be the question we hear more than any other, and the answer frustrates people because there isn’t a magic number.
Federal employees retire differently than most Americans. Before you ever touch your TSP, you may already have income coming from your FERS pension and, eventually, Social Security.
Instead of asking, “How much should I have?” a better question is: How much income will I actually need my TSP to provide?
For one retiree, that could be $1,000 a month. For another, it could be $4,000. Your savings goal depends less on a national headline and more on your own retirement budget.
“Can I really keep my FEHB after I retire?”
In most cases, yes.
If you’ve been continuously enrolled in FEHB for the five years immediately before retirement (or since your first opportunity to enroll), you can generally continue your coverage into retirement while the government continues paying its share of the premium.
This is one of the biggest advantages federal employees have over many private-sector workers, but it’s also one of the easiest benefits to misunderstand. Missing the eligibility requirements can have lasting consequences, which is why it’s worth confirming your situation before choosing a retirement date.
“When will I start receiving my full pension?”
Not immediately.
Once you separate from federal service, your agency sends your retirement package to OPM for processing. While your claim is being finalized, most retirees receive interim payments that are less than their final annuity.
After OPM completes its review, you’ll begin receiving your full monthly benefit, along with any back pay you’re owed.
The important thing to remember is that a smaller first payment usually isn’t a mistake. It’s simply part of the normal processing timeline.
“Do I have to claim Social Security as soon as I retire?”
No.
One of the biggest misconceptions is that retirement and Social Security have to begin at the same time.
Many federal employees retire years before claiming Social Security. During that gap, income may come from a combination of a FERS pension, TSP withdrawals, the FERS Special Retirement Supplement (for those who qualify), or other savings.
The best claiming strategy depends on your overall retirement income plan, not simply your retirement date.
“What’s the biggest mistake people make before retiring?”
Making assumptions.
Federal retirement is filled with deadlines, eligibility rules, survivor elections, insurance requirements, and tax considerations that aren’t always intuitive.
We’ve seen employees assume they could keep FEHB when they couldn’t, roll TSP money into an IRA without realizing they were giving up certain withdrawal flexibility, or retire believing they’d immediately receive a full pension check.
Most of those mistakes are avoidable with a little planning.
The Bottom Line
The best retirement decisions usually aren’t the result of finding one perfect strategy. They’re the result of understanding how all the pieces fit together.
Your FERS pension, TSP, Social Security, FEHB, and retirement timeline all influence one another. Looking at each benefit in isolation can lead to costly assumptions.
Getting answers to your federal retirement questions before you submit your retirement paperwork can help you avoid surprises and make the transition into retirement much smoother. Reach out to a Federal Retirement Consultant (FRC®) who can walk you through the process.
Frequently Asked Questions
How much should I have in my TSP before retiring?
There isn’t a universal target. Your pension, Social Security, spending needs, and retirement goals all influence how much you’ll need.
Can I keep FEHB when I retire?
Generally yes, provided you meet the five-year enrollment requirement before retirement.
How long does OPM take to process retirement?
Processing times vary, but many retirees receive interim payments before OPM finalizes their claim and begins full annuity payments.
Do I have to start Social Security when I retire?
No. Many federal employees delay Social Security while relying on other retirement income sources.
Should I meet with someone before retiring?
Reviewing your benefits before selecting a retirement date can help you avoid misunderstandings about pensions, FEHB, TSP withdrawals, survivor elections, and other retirement decisions
