The Retirement Advice Most Government Employees Never Hear Until They’ve Already Left

Key Takeaways

• Many government employees leave valuable benefits on the table because they didn’t understand key retirement rules until after leaving service. Planning before you retire is not optional.

• Timing decisions around annuity commencement, FEHB, and TSP withdrawals can have lasting financial effects. You need to coordinate them in advance, not after the fact.

You Don’t Automatically Get Everything You’ve Earned

Retirement from public service is often viewed as a reward for decades of work. But unlike a light switch you flip on your last day, your benefits don’t simply activate in full. You must apply for them correctly, often within strict timeframes. And if you make the wrong decisions—or none at all—you could lose access to significant value.

You might assume your annuity, health insurance, and other benefits will continue uninterrupted. But:

• You must submit a retirement application through your agency, and only then does OPM begin processing your annuity.

• FEHB continuation requires that you were enrolled for the 5 years before retirement and that you elect to continue it into retirement.

• Your TSP withdrawal strategy should be coordinated with your income needs and tax planning before you retire, not after.

Failing to understand these requirements can lead to delays, gaps in coverage, or missed opportunities.

1. Your Pension Isn’t Paid Immediately

Most government retirees expect their pension to start right after their last day of work. In reality, there’s a processing period—usually 60 to 90 days—during which OPM calculates your annuity and issues interim payments.

These interim payments typically amount to 60 to 80 percent of your expected final monthly annuity. The full amount comes only after your case is finalized. If you retire without knowing this, you may face a shortfall in income just when you need the money most.

Advance planning means:

• Keeping a cash buffer to cover 2 to 3 months of expenses

• Timing your retirement early in the month to reduce wait time

• Submitting all documentation to your agency and OPM in advance

2. FEHB Doesn’t Carry Over Automatically

The Federal Employees Health Benefits (FEHB) Program remains one of your most powerful tools in retirement—if you meet the eligibility requirements. To carry your FEHB coverage into retirement:

• You must retire on an immediate annuity

• You must have been continuously enrolled (or covered as a family member) for the 5 years immediately before your retirement

If you retire under MRA+10 without postponing the annuity, or if your FEHB enrollment lapsed for even a few months, you may lose eligibility.

Many retirees discover only after they’ve submitted their paperwork that they are not eligible to continue FEHB. That loss can cost thousands per year in out-of-pocket health expenses.

3. Delaying Your Retirement Can Increase Your Annuity

If you’re under FERS, delaying retirement can boost your monthly benefit significantly. That’s because your pension is calculated using your high-3 salary average and your years of service—and both tend to increase with time.

For example:

• Working just one more year can add another 1 to 1.1 percent to your annuity

• Delaying until age 62 with at least 20 years of service boosts your multiplier from 1 percent to 1.1 percent

Most employees know these rules only in theory. But they don’t run the numbers. That’s a missed opportunity, especially since delaying even 6 months can produce noticeable gains.

4. The Special Retirement Supplement Ends at Age 62

FERS employees who retire before age 62 may receive the Special Retirement Supplement (SRS), designed to bridge the gap until Social Security eligibility.

But there are limitations:

• SRS stops at age 62, regardless of when you start Social Security

• SRS is subject to the Social Security earnings limit, which is $23,480 in 2025. Exceeding this amount reduces your supplement

Many retirees are caught off guard when the supplement ends and haven’t planned how to replace that income. If you’re retiring before 62, you should prepare for this drop-off.

5. Divorce Can Complicate Retirement Benefits

If you divorced during your service, your retirement paperwork may still be impacted by a court order. Former spouses may be entitled to:

• A share of your annuity

• A survivor benefit election

• A portion of your TSP account

These court-ordered entitlements must be disclosed and processed through OPM and TSP. If you assume everything defaults to you because you are retiring, you may trigger legal delays or compliance issues.

You need to review your divorce decree carefully and speak with an expert before retirement, especially if you’ve remarried.

6. Medicare and FEHB Need to Be Coordinated in Advance

At age 65, you become eligible for Medicare. But if you keep FEHB in retirement, you’ll need to decide how to coordinate the two.

What many retirees don’t hear in time:

• Some FEHB plans reduce out-of-pocket costs if you enroll in Medicare Part B

• Others offer Part B premium reimbursements

• But if you delay enrolling in Part B without having other creditable coverage, you may incur lifetime late enrollment penalties

You should evaluate your FEHB plan’s coordination with Medicare before you turn 65. Waiting until your birthday month is usually too late to get the full advantage.

7. TSP Withdrawals Require a Long-Term Strategy

The Thrift Savings Plan (TSP) is your largest pool of retirement savings. But unlike your annuity or Social Security, it’s not on autopilot. You must actively choose how and when to draw from it.

If you don’t:

• You may pay more in taxes than necessary

• You could miss your required minimum distributions (RMDs) starting at age 73

• You might draw down too quickly—or too slowly—putting your financial stability at risk

A well-planned withdrawal strategy takes into account:

• Your other income sources

• Your tax bracket each year

• Whether you want to leave a legacy for heirs

Most employees never create this plan until after they retire—when mistakes are harder to fix.

8. Survivor Benefits Must Be Elected at Retirement

If you want your spouse to continue receiving part of your pension after your death, you must elect a survivor benefit at retirement. There are two key options:

• Full survivor annuity: your spouse receives 50% of your pension

• Partial survivor annuity: your spouse receives 25% of your pension

Choosing a survivor benefit reduces your monthly annuity. But failing to choose one means your spouse gets nothing—even if you die the next day.

You must:

• Submit the correct election form at retirement

• Obtain your spouse’s notarized consent if choosing less than the full benefit

Once finalized, this decision is extremely difficult to reverse. It’s crucial to get it right the first time.

9. You Can Postpone Retirement to Preserve FEHB and Get Higher Benefits

Under FERS, if you retire under MRA+10, you can postpone the start of your annuity to avoid the early retirement reduction and preserve FEHB eligibility. This only works if you defer your annuity to the month you reach full eligibility.

Why this matters:

• Retiring at 57 with 10 years of service may reduce your pension by up to 30%

• But postponing your annuity to age 62 could eliminate the penalty and retain FEHB access

This is a commonly missed strategy that gives you the flexibility to retire early but claim full benefits later.

10. Retirement Counseling is Available, But You Have to Ask

Many agencies offer retirement briefings or one-on-one counseling. But they are not automatic. You must request them—and do so well before your retirement date.

You can also:

• Use online estimators from OPM

• Order benefit statements from HR

• Consult a licensed professional for a detailed retirement analysis

The earlier you start this process, the more options you’ll have.

Lock in Your Retirement Confidence Before It’s Too Late

You’ve spent your career earning a retirement that’s structured, secure, and generous—if you know how to use it. Too many government employees wait until the final months—or worse, after they’ve already separated—to figure out what they could have done differently.

You don’t need to guess. You need a plan.

Get in touch with a licensed professional listed on this website to walk through your annuity estimates, benefit elections, and timing options. It’s not too early—but it can be too late.