The article outlines the top retirement mistakes to avoid as a federal employee.
1. Failing to check personnel records before retiring from the federal government thoroughly.
Employees should also evaluate their OPF and note the following items that may affect their federal retirement eligibility and the computation of their CSRS or FERS annuities:
- The start and end dates of each service term.
- Retirement coverage – CSRS, FICA, or no coverage at all.
- Appointment type: temporary, intermittent, part-time, WAE (When Actually Employed), career, or career-conditional.
2. Failure to request estimates of outstanding deposits or re-deposits promptly.
Many employees are unaware that by depositing for military or temporary (“non-deduction”) time, they are resetting their SCD for retirement backward in time. As such, this increases their service time and the amount of their starting CSRS or FERS gross annuities. Another advantage of making a deposit is that they may be able to retire sooner than anticipated.
3. Failure to complete and, if necessary, revise beneficiary designations.
The following beneficiary forms should be filled out and updated as needed – for example, if the employee marries or divorces, etc.
- Determination of Beneficiary for Unpaid Compensation and Unused Annual Leave of a Deceased Federal Employee, Form SF 1152.
- Federal Employees Group Life Insurance Beneficiary Designation Form SF 2823
- Beneficiary Designation Form TSP 3: Thrift Savings Plan (TSP)
- Form SF 2808, Designation of Beneficiary of CSRS Contributions for CSRS and CSRS-Offset Employees, or Form SF 3102, Designation of Beneficiary of FERS Contributions for FERS Employees.
4. Failure to understand the procedures governing the continuation of federal employees’ health benefits (FEHB) after retirement.
Many federal employees are unaware of the rules for retaining their Federal Employees Health Benefits Program health insurance benefits for retirement. Employees and annuitants each pay around 25% to 28% of total FEHB premiums, with the federal government covering the remaining 72% to 75%.
5. Failure to contribute as much as possible to a Thrift Savings Plan (TSP) early in a government employee’s career.
This is especially critical for FERS employees, whose retirement income relies heavily on TSP earnings. Employees should make every effort to contribute the maximum amount allowed, and those who will be 50 or older by December 31 should make an additional maximum contribution in “catch-up” contributions each year.
6. Failing to properly plan for retirement, including income, housing, and lifestyle changes, for themselves and their family members, particularly spouses.
Retirement should be viewed as a separate “life event” with substantial implications for the retiree’s income, housing demands, and lifestyle. It could be disastrous if you do not adequately plan for these developments.
7. Failure to plan for Social Security.
Individuals as young as age 62 can apply for monthly Social Security retirement benefits. However, due to delayed retirement credits, your payout will be bigger if you wait longer to file your claim.
Social Security increases an individual’s payments by 8% for each year they delay claiming benefits.
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M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementiong a sound plan for your retirement. We are commited to helping you achieve your goals. Visit us at M. Dutton and Assoiciates.COM. Tel. 212-951-7376: email: [email protected].
