Many people doubt their decisions, especially when they hear some myths and misconceptions about what they are planning to do. Just like all the other things in life, there are some urban legends about federal retirement benefits, too. These myths can affect people’s decisions, which is why it is important to spread the truth about them.
In this article, you will learn about common myths and the truth behind them.
Myth #1: The Last Day of the Leave Year Would Be the Best Day to Retire
One thing to consider before you retire is your actual retirement date. Try asking several financial experts, and each one will likely tell you something different.
Some people recommend retiring at the end of the year, so you can make use of your remaining PTO balance, especially if you haven’t used up the average balance of 240 hours worth of leave. More than that, if you’ve even earned a full 440 hours of annual leave, you can save a full year of leave accruals, so you can design a buyout for your last year!
However, this would work only if you have stocked up on leaves. If you haven’t saved enough, you can consider other factors for your retirement date. For example, you can think about the weather, tax planning, moving into your retirement home, and your eligibility for retirement benefits.
Myth #2: CSRS Are Better than FERS
Is it true that the Civil Service Retirement System (CSRS) is better than the Federal Employee Retirement System (FERS)? They both offer their own perks.
First, CSRS can stand alone even without Social Security and personal savings. When you retire with a CSRS plan, you will receive the full cost of living adjustments (COLA) throughout your life after you retire. That’s a plus because with FERS retirement, you still have to wait until you turn 62.
On the other hand, the best part of FERS is the flexibility it comes with. With FERS, you get to enjoy lifetime insurance even with as little as 10 years worth of service at the minimum retirement age. Plus, FERS workers that also have Social Security can also enjoy the Social Security retirement benefits.
Myth #3: Social Security Will Disappear in the Future
Social Security is something that a majority of Americans have. After all, it is usually a part of payroll tax contributions to receive benefits when retirement comes. However, there is a growing doubt that Social Security will even still be around when the time comes that they have to retire in 30 or 40 years.
In the 2020 Social Security Trustees report, the organization looked into reducing the possibility of a financial shortfall in the long run. Lawmakers are looking into policy options that will keep Social Secuirty healthy in preparation for the generations to come. Of course, it’s always a challenge, but the fact that they’re working on it right now means the future is bright for the current workforce!
No matter the type of retirement plan you prefer, you must begin your retirement education as early as possible. Early preparation will lead you towards making the right choices and avoid costly mistakes that might harm you in the long run.
If you need extra guidance, you can work with retirement planning services like My Federal Plan. We offer free consulting and retirement benefits planning for all US federal employees. Schedule your free consultation session today!