If you’re not fully informed about all of your options, you may make irreversible mistakes when tackling the five big decisions you have to make before you retire under FERS.
1. Deciding When To Retire
To retire with an unreduced, immediate annuity (pension) under FERS, your eligibility is based on your Minimum Retirement Age (MRA) and your years of Creditable Service. If you retire before age 62, you’re also eligible for the FERS Supplement. However, if you wait until age 62 or after with a minimum of 20 or more years of creditable service, the FERS Bonus gives you a 10% bump in your monthly pension for the rest of your life.
2. Deciding On A Thrift Savings Plan (TSP) Strategy
Before you retire, it’s important to think about what you’re going to do with the balance in your TSP. Your options include leaving your money in the TSP; a TSP rollover into a qualified IRA or 401(k); or a TSP transfer into a qualified annuity that provides guaranteed income for life.
3. Deciding To Continue FEHB In Retirement
Since the federal government continues to pay as much as 75% of your FEHB premiums after you retire, deciding to carry FEHB into retirement is a wise decision. However, you need to make sure you meet the eligibility requirements under the FEHB 5-Year Rule before submitting your retirement application. If not, once you retire, you’ll never be able to enroll.
“Then again, navigating the ins and outs can be overwhelming and you may lose out on benefits you deserve if you make a mistake.”
4. Deciding On A Survivor Benefit
Under FERS, you can elect to have your survivor receive 50% or 25% of your base annuity when you die. The reduction in your monthly pension is 10% for the 50% survivor benefit and 5% for the 25% survivor benefit. Keep in mind, you have to elect a survivor benefit for your spouse to keep FEHB coverage after you die.
5. Deciding When To File For Social Security
Under FERS, you’re eligible for Social Security in addition to your FERS annuity (pension) and TSP distributions. This gives you the flexibility to maximize your monthly payment when you delay your Social Security benefit beyond your Full Retirement Age (FRA). If you delay, your benefit is increased by 8% for each year until age 70.
Let’s be honest — your FERS retirement benefits top the list of reasons why you chose a career with Uncle Sam. Then again, navigating the ins and outs can be overwhelming and you may lose out on benefits you deserve if you make a mistake. Connect with an FRC® trained advisor who can help you make informed decisions before you retire.
