By Nick Black
The question so many federal employees ask when they get serious about retirement
After spending 20, 30, or even 40 years serving the federal government, you would think preparing for retirement would be relatively straightforward. You have earned your benefits. You have contributed to the system. You have watched deductions come out of every paycheck.
So when retirement finally gets close, there is a natural expectation: “Someone should be able to tell me exactly what I need to know.”
And that is where many federal employees become frustrated. They call OPM. They search government websites. They download brochures. They attend retirement seminars. They talk to coworkers who retired a few years ago.
And yet, they still find themselves asking: “Why didn’t anyone tell me this?”
The answer isn’t necessarily that OPM doesn’t want you to know. The bigger problem is that OPM is responsible for administering your benefits, not sitting down with you and helping you build a comprehensive retirement strategy around them. And those are two very different jobs.
Your federal benefits are complicated. Your retirement decisions are even more complicated.
A federal retirement isn’t simply a matter of finding out how much your pension will be. There are decisions involving your FERS annuity, Social Security, the Thrift Savings Plan, survivor benefits, FEHB, FEGLI, taxes, Medicare, your spouse, your retirement date, and potentially your income needs for decades after you leave federal service. And many of these decisions affect one another.
For example:
- Should you retire at one age or another?
- When should you begin Social Security?
- How much should you withdraw from your TSP?
- Should you use your TSP before Social Security, or the other way around?
- What happens to your survivor benefit if you choose a different annuity option?
- How will your retirement income be taxed?
- How should you coordinate Medicare with FEHB?
- How much life insurance do you actually need after retirement?
- What happens to your federal benefits if your spouse dies first?
- How much income will you actually have available to spend after taxes?
These aren’t just questions about benefits. They’re questions about how to use your benefits together. And that distinction is incredibly important.
OPM can tell you what you have. They aren’t necessarily there to tell you what you should do with it.
Think about it this way. Your federal benefits are like pieces of a puzzle. OPM may be able to explain what an individual piece represents. But putting all of those pieces together into a retirement strategy is a different exercise.
That’s where having someone in your corner can make a tremendous difference. At FedSmart, Jesse, Steven, Steve, and myself work with federal employees to help connect the dots between the different pieces of their retirement.
Our job isn’t simply to say: “Here’s your pension.” It’s to help you ask the much more important question: “How do we turn everything you’ve accumulated during your federal career into the retirement you’ve been working toward?”
The information is out there, but knowing where to look is half the battle.
One of the most frustrating experiences for a federal employee approaching retirement is discovering just how much information exists. There are websites. There are forms. There are publications. There are calculators. There are rules. There are exceptions to the rules. And then there are exceptions to the exceptions.
The problem isn’t necessarily a lack of information. It’s knowing which information matters to you, when it matters, and how one decision affects another. A federal employee can spend hours researching retirement and still walk away with more questions than answers.
That’s not because they’re incapable of understanding retirement. It’s because federal retirement is a specialized system.
You wouldn’t expect your tax preparer to perform surgery. You wouldn’t expect your doctor to prepare your federal retirement paperwork. And you shouldn’t expect yourself to become an expert in federal retirement simply because you’re approaching retirement.
The most important question may not be “How much will I get?”
It may be: “How do I make the most of what I’ve already earned?”
That’s a very different mindset.
Your FERS pension is important. Your TSP is important. Social Security is important. Your healthcare benefits are important. But none of them exists in isolation. The goal is to coordinate them.
For example, if you have multiple sources of retirement income, the order in which you use those resources can affect your taxes, investment portfolio, Social Security strategy, and ultimately how much money you have available to spend. A decision that looks good on a benefits statement may not necessarily be the best decision when you consider the entire retirement picture.
That’s why retirement planning should begin with more than a pension estimate. It should begin with a conversation.
“I wish someone had told me this sooner.”
That’s one of the most common sentiments we hear from people as they approach retirement. Sometimes it’s about a benefit they didn’t realize they had. Sometimes it’s about a decision they didn’t understand. Sometimes it’s about taxes. Sometimes it’s about survivor benefits. And sometimes it’s simply the realization that retirement isn’t one decision. It’s hundreds of interconnected decisions that begin years before your retirement date.
The good news is that you don’t have to figure it all out alone. Jesse, Steven, Steve, and I at FedSmart are there to help federal employees understand the retirement system, identify the decisions that matter most and develop a strategy around the benefits they’ve spent their careers earning.
Because after decades of serving your country, you shouldn’t have to spend your final years of federal service wondering: “Am I missing something?”
You deserve to know what you’ve earned. You deserve to understand your options. And most importantly, you deserve to have a plan for what happens after the paycheck from Uncle Sam stops.
So, why don’t they tell us these things?
Sometimes the answer is simply that no one person is responsible for putting the entire picture together for you. That’s why having a team that specializes in federal retirement can be so valuable.
You’ve spent your career serving the government. Now it’s time to make sure you understand how to make the most of the benefits you’ve earned.
FedSmart provides educational and retirement-planning guidance to help federal employees understand their retirement options. Individual recommendations depend on each person’s circumstances.
