Retirement planning should be thorough and not rushed. This is especially important for those who are employed by the federal government. Employees in this sector can choose from a variety of retirement options, each with its own set of rules and regulations.
Before making any decisions, it is crucial to understand all the implications of each retirement option. Employees should also have a clear idea of how much money they will need to save in order to maintain their current lifestyle after retirement.
In most cases, planning should occur at least 5 to 10 years before the desired retirement date. By doing so, you can make the most of your savings and invest in the right retirement plan.
Here is a federal retirement checklist that can help you plan your retirement:
Form SF 50
SF 50, or the Notice of Personnel Action, form is the written documentation of a personnel action that affects an employee’s federal benefits (position/pay). It is important to check this form for accuracy every year to make sure that your retirement benefits are not affected. Specifically, check boxes 30 and 31, which are the retirement plan and the service computation date (SCD).
Box 30 shows the code which the Office of Personnel Management uses to identify the retirement system to which you belong. There are four possible codes:
- CSRS — Civil Service Retirement System
- FERS — Federal Employees Retirement System
- CSRS Offset — For employees that have five years of prior civilian service under CSRS and were rehired after 1983 after more than one year of a break in service.
- FERS-FRAE — Combined plan for federal employees first hired after 1983. Social Security Benefits, Basic Benefits Plan, and Thrift Savings Plan.
Box 31 is the service computation date. This is used to determine annual leave accrual rates for federal employees. The SCD for retirement determines the years the employee needs to be employed in order to qualify for retirement. Another thing to consider when checking the SCD for retirement is to confirm your deposits. These are non-deductible deposits that come from seasonal and temporary services.
Federal Employees Health Benefits (FEHB)
If you are a federal employee or are covered by a federal employee’s health benefits, you need to make sure that your health benefits will continue after retirement. It is important to retain FEHB coverage for at least five years of federal employment before your retirement day. This will allow you to continue your healthcare coverage into retirement without any lapse in benefits. The federal government will continue to pay its share of the premium just like it was doing before you retired.
TriCare, the health insurance program for military personnel and their families, also offers health care coverage in retirement for those who finished the five-year commitment.
Federal Employees’ Group Life Insurance (FEGLI)
FEGLI is a life insurance program for federal employees and offers coverage in retirement. It provides life insurance at group rates with payroll deductions. FEGLI is one of the most important federal benefits because it gives you peace of mind knowing that your family will be taken care of financially in the event of your death. It is important for a federal government employee to properly review FEGLI program choices to make sure that you have the right amount of coverage for your needs. If you are an eligible employee, then you are automatically covered by basic insurance which covers the annual rate of pay. In addition, there are three optional coverage types that you can choose from:
- Option A: Standard $10,000 of extra coverage.
- Option B: Additional coverage that is equal to one to five times your salary of extra coverage.
- Option C: Family equals one to five times the coverage on the lives of your eligible family members.
Enroll in a Long Term Care Insurance Program
There are many cases where retirees tend to live longer and federal employees are no different. In order to make sure that you are taken care of in your retirement years, it is important to enroll in a long-term care insurance program. This type of insurance will help to cover the costs associated with long-term care, such as nursing homes or in-home care.
LTC insurance can be expensive and it should be one of your considerations when planning for retirement. It is encouraged for employees to buy LTC insurance within five to ten years of retirement. If you are a federal employee, you are eligible to fill out an application with the Federal Long Term Care Insurance Program (FLTCIP). You can submit the application anytime but the earlier you enroll, the lower your premiums will be. And just like any other type of insurance, the younger and healthier the federal employee, the greater the chance of being granted the insurance.
Consider TSP Contributions and Withdrawal Options
If you expect to have enough money to cover your expenses in retirement, you may still want to consider contributing to the TSP, or Thrift Savings Plan. The TSP is a retirement savings plan that is similar to a 401(k) plan. It allows federal employees to contribute a percentage of their salary to the TSP and the federal government will match a certain percentage of the contribution.
If you are into long-term growth, then consider investing in the three TSP funds that have the highest potential:
- The TSP C Fund, which invests in large-cap stocks.
- The TSP S Fund, which invests in small-cap stocks.
- The TSP I Fund, which invests in international stocks.
Create a Social Security Account
Gain access and view your Social Security statement any time by creating a MySocialSecurity account. Reviewing your statement will give you an idea of what to expect when you retire and how much you need to save. This also includes your Medicare earnings history and FICA taxes paid. By checking your account, you can also verify your earnings history to make sure that the Social Security Administration has accurate records.
There are different parts to Medicare and each federal employee is responsible for Part A and B.
Part A covers inpatient hospital care or hospital insurance at no cost. Even if you are planning to retire before 65 years old, you can still enroll in Part A.
Part B is medical insurance and has a monthly premium that federal employees have to pay. Do not enroll in Part B until you are ready to retire. When retiring, make sure to enroll within the eight-month period that starts the month after your federal employment ends or you will have to pay a late-enrollment penalty.
Understand Survivor Benefits
If you are married, then your spouse may be eligible for a survivor annuity. This is an important part of your federal retirement planning as it will provide your spouse with a monthly income in the event of your death. By understanding how survivor benefits work, you can make sure that your spouse is taken care of financially if something happens to you.
Surviving Annuity Options for Spouse
If you are married and you die while employed by the federal government, your spouse may be eligible for a survivor annuity. But it is important to know that you have options when it comes to survivor benefits and that you can elect how your spouse will receive the annuity.
There are three survivor annuity options for spouses:
- Option A: Full survivor annuity
- Option B: Partial survivor annuity
- Option C: No survivor annuity
If you are retiring, you will need to provide a survivor annuity to your spouse to keep FEHB coverage.
Last on our federal retirement checklist is estate planning. This includes making sure that your affairs are in order and that your loved ones know your wishes in the event of your death. A will or a trust for assets can help to make sure that your wishes are carried out and that your family is taken care of financially. Financial asset management can also serve as a form of estate planning by having an advanced directive in place to make sure that your finances are handled the way you want them to be.
With this federal retirement checklist, you should be well on your way to a comfortable and secure retirement. These are just some of the things that you need to take into consideration when planning for retirement. Remember to start early and to make sure that you have all your ducks in a row before you retire. The more prepared you are, the more likely you are to enjoy a stress-free retirement.