Although there are many reasons people launch a career with the federal government, near the top of the list is your retirement benefits. On one hand, your retirement benefits are arguably the best in the nation. On the other hand, things can get complicated when planning your retirement because some decisions can potentially impact the rest of your life.
Deciding On A Retirement Age
Unlike the private sector, there is no one-size-fits-all retirement for federal workers. Under FERS, in order to retire with an immediate annuity (pension) you must reach your Minimum Retirement Age (MRA), based on the year you were born, and meet the requirement for years of creditable service. Calculating your creditable service isn’t easy. You can’t assume that your creditable service starts with your Service Computation Date (SCD). Your SCD is only used for calculating leave. If you make a calculation error when retiring, it can lower the amount of your monthly pension.
“Since Uncle Sam continues to pay up to 75% of your premiums for the rest of your life, continuing FEHB into retirement is a valuable benefit.”
Making Sure You Satisfy The FEHB 5-Year Rule
Most full-time federal workers will not have a problem satisfying the 5-Year Rule. However, some married feds covered under a spouse’s private-sector employer plan may find themselves unable to meet this requirement. If this describes your situation and you’re close to retiring, you need to make sure you don’t lose FEHB coverage forever. Since Uncle Sam continues to pay up to 75% of your premiums for the rest of your life, continuing FEHB into retirement is a valuable benefit.
Deciding On A Survivor Benefit
Under FERS, you can elect to have your survivor receive 50% of your base annuity when you pass away (a full annuity), or 25% of your base annuity (a partial annuity). The reduction of your base annuity is 10% for the 50% survivor benefit and 5% for the 25% survivor benefit. If you choose a partial annuity or no annuity at all, your spouse must give their written consent. Keep in mind, in order for your spouse to keep their FEHB coverage after you die, you have to elect either a full or partial survivor benefit.
Other Retirement Decisions Exclusive To Feds
Your federal retirement requires making other highly complicated decisions that can impact your financial security in the future:
- Deciding between the FERS Supplement or the FERS 10% Bonus.
- Develop a Thrift Savings Plan (TSP) withdrawal strategy.
- Decisions about FEHB insurance, long-term care insurance, and more.
Since the OPM is prohibited from giving you retirement-planning advice, you may want to consider working with a professional FRC® certified advisor who specializes in federal benefits.
