Author: June Kirby

June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert. June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits. Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE's services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.

Could Taking Early FERS Retirement Cost Benefits? – by June Kirby

Could Taking Early FERS Retirement Cost You Your SRS Benefit?

by June Kirby

fers retirement benefits
Image Credits

Although taking retirement early may sound appealing to many people, doing so could end up being detrimental to your retirement income situation – especially in terms of your FERS (Federal Employees Retirement System) Special Retirement Supplement (SRS) benefit.

The SRS was implemented in order to help in bridging the gap between the time that a FERS employee retired and the time that he or she was able to draw on Social Security income at age 62. This benefit will end when you turn age 62 and become eligible for Social Security.

The amount of the benefit is calculated based upon the age that you are when you take your retirement, as well as the number of years you have in agency service. With that in mind, taking an early retirement could essentially cost you in the dollar amount of benefit that you receive.

 

Determining the Amount of Your Monthly Special Retirement Supplement Benefit

Looking at an example, if your minimum retirement age was 57, and you retire with 30 years of federal service, your Social Security benefit may be $1,000 per month. In determining your SRS benefit, the 30 years of your federal service would be divided by 40 (the number of years in which Social Security considers to be a “full” career).

That figure, 75%, is then multiplied by the dollar amount of the age 62 Social Security benefit. This will result in the amount of your SRS benefit. In this particular case, the amount of your monthly benefit would be $750 per month.

However, if you had retired early with only 20 years of service, the calculation would come out different. For example, 20 years divided into 40 would come out to a 50% fraction. This multiplied by the $1,000 Social Security benefit at age 62 would instead leave you with $500 per month in SRS benefits – a substantial difference from the $750 you would have with 30 years of service.

In either case, your SRS benefits would end when you reached age 62 and you were eligible for Social Security retirement benefits. However, these benefits can end even sooner if you have earnings from wages or self-employment that exceed the Social Security earnings limit. So, if you do plan to have even a part-time job in retirement or to start your own new business endeavor, this is also something to be mindful of.

 

More June Kirby Articles

What Are Your TSP Options With the New Phased Retirement Program? by June Kirby

FEGLI – The Good, the Bad, and the Just Plain Ugly – by June Kirby

Survivor Options for Married Federal Spouses – By June Kirby

Determining the True Cost of Waiting to Buy Back Military Benefits – by June Kirby

 

About June Kirby

June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert.  June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits.  Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE’s services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.

Costs of Waiting to Buy Back Military Benefits – by June Kirby

Determining the True Cost of Waiting to Buy Back Military Benefits

by June Kirby

Military

If you are a federal employee who has also had military service, then a military “buy back” towards your federal retirement benefits may or may not make sense for you. In determining the benefits and the drawbacks of doing so, it is important to factor in the costs of buying back your military benefits.

The amount that you will need to pay in order to buy back your military time will depend upon several different criteria. These can include the following:

  • When your military service took place.
  • The amount that you were paid during your military service.
  • The amount of interest that accrued on that time.
  • Whether you are in the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS).

Once you have come up with the amount that you were paid for each year of your military service, you should then multiply that amount by a particular percentage. This will differ, based on the retirement system that you are in. For instance, those who are in CSRS will multiply by 7 percent, and those who are in FERS will use 3 percent as their factors.

After this figure has been determined, interest will have to be added. The rate of interest will be different each year. Here, the longer that you wait in implementing a military buy back, the more interest you will be required to pay on top of your initial percentage of base pay.

Can You Buy Back Time Without Interest?

For some individuals, there may be an option of buying back time without the need to pay interest. This can occur if your military service took place prior to the beginning of your federal career.

Here, there is an interest free grace period of two years. The grace period will typically begin on the day that you were hired under the Federal Employees Retirement System or the Civil Service Retirement System (CSRS). In this case, the interest will be accrued once per year.

Factors to Consider

When determining whether or not to buy back military benefits, there are several factors to consider. In addition to the amount of interest, for instance, retirement eligibility should also be factored into the equation. For example, buying back military time could result in being able to retire sooner rather than later. However, because everyone’s situation is different, it is essential to ensure that all options are well thought out prior to moving forward with any final decision.

More June Kirby Articles

What Are Your TSP Options With the New Phased Retirement Program? by June Kirby

FEGLI – The Good, the Bad, and the Just Plain Ugly – by June Kirby

Could Taking Early FERS Retirement Cost You Your SRS Benefit? by June Kirby

Survivor Options for Married Federal Spouses – By June Kirby

 

Who is June Kirby?

June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert.  June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits.  Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE’s services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.

What Are Your TSP Options With Phased Retirement? by June Kirby

new update
New Phased Retirement Program

In allowing Federal Employees Retirement System (FERS) employees to participate in the phased retirement program, there are certain requirements that must be met, as well as various options that can be chosen by the individual. It is important to have a good understanding of these guidelines, as they could have an effect on the amount that you receive, as well as whether or not moving forward will or will not even be beneficial for you and your specific situation.

What is Phased Retirement and How Does It Work?

The phased retirement program is essentially an agreement between you and your agency. When this option is elected, you will be considered as partially retired, and you will begin receiving half of your TSP annuity retirement income. At the same time, you will also be considered as employed part-time and will work at a 50% capacity and receive one-half of your pay. When you are ready to move into full retirement, you will at that time receive the remainder of your TSP retirement income.

As an example, as a FERS employee, if you had a current annual salary of $60,000 and you opted to go into the phased retirement program, you will work part-time and receive a salary of $30,000 per year.

At the same time, if your current TSP annuity would have paid you $24,000 per year at full retirement, you would instead receive $12,000 per year at 50% of that annuity. Therefore, during your phased retirement time, you would be receiving $30,000 in salary, and another $12,000 from your TSP annuity.

While working during your phased retirement, it is required that at least 20 percent of your time be spent on mentoring activities. These can include working with current employees on transferring knowledge, as well as assisting them in further developing their careers.

Taking the Next Step – How to Participate in the Program

If you opt to participate in the phased retirement program, the next step is to discuss the option with your manager. You should also obtain an estimate of your TSP annuity in order to determine the amount of your income during the time of your participation, well as the amount of your income during your full retirement once your participation in the program has ended. In addition, completion of a phased retirement election form and approval by your agency will also be required.

June Kirby Articles

FEGLI – The Good, the Bad, and the Just Plain Ugly – by June Kirby

Could Taking Early FERS Retirement Cost You Your SRS Benefit? by June Kirby

Survivor Options for Married Federal Spouses – By June Kirby

Determining the True Cost of Waiting to Buy Back Military Benefits – by June Kirby

Who Is June Kirby

June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert.  June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits.  Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE’s services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.

FEGLI – The Good, the Bad, and the Just Plain Ugly by June Kirby

FEGLI – The Good, the Bad, and the Just Plain Ugly

by June Kirby

FEGLIAs an employee of the Federal Government, it is likely that you have access to life insurance coverage through the Federal Employees‘ Group Life Insurance, or FEGLI, program. This plan, established over 60 years ago, is estimated to protect in excess of 4 million Federal employees and retirees, along with a large number of their eligible family members.

Most Federal employees are eligible for coverage through FEGLI. Through the program, the employee’s portion of the premium is deducted directly from his or her paycheck by the payroll office.

 

The Good

One of the biggest advantages to FEGLI coverage is that you have several options in determining how much coverage you can obtain. First, there is the option to just receive “Basic” insurance that is equal to your salary, rounded up to the next even thousand, plus another $2,000.

On top of that, however, there are three additional options where an employee can add more coverage to the Basic amount. These options include a flat additional $10,000, or different multiples based on either salary amount or family members (i.e., spouse and children).

Another nice feature about the FEGLI insurance coverage is the fact that once you are eligible for this program, there is no medical examination required in order to be accepted for the life insurance policy. Therefore, if you (or your eligible family members) have an adverse medical condition, you will still be able to obtain the life insurance policy. This can be a great way for someone who is not able to qualify for individual life insurance coverage to obtain the life insurance protection that they need.

 

The Bad….and the Ugly

Although there are many advantages to participating in the FEGLI program, there are also a few factors to be mindful of as well. First, there are two primary types of life insurance that are offered in the market place – term and permanent. Term life provides only death benefit protection, whereas permanent offers both a death benefit, as well as a cash value component. The insurance that is offered through FEGLI is term. Therefore, the only benefit here is death benefit coverage, with no cash value or savings plan combined with in.

Also, even though term life insurance is oftentimes more affordable in the early years, these policies will  become much more costly as an insured increases in age. This is usually the case with FEGLI participants. Here, the price increases can be quite high for those who are in their 50s and 60s – so it is important to be aware that you may see your premium double, or even triple, as time goes on.

 

More June Kirby Articles

What Are Your TSP Options With the New Phased Retirement Program? by June Kirby

Could Taking Early FERS Retirement Cost You Your SRS Benefit? by June Kirby

Survivor Options for Married Federal Spouses – By June Kirby

Determining the True Cost of Waiting to Buy Back Military Benefits – by June Kirby

About June Kirby

June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert.  June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits.  Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE’s services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.

Survivor Options for Married Federal Spouses – By June Kirby

Thrift Savings Plan (TSP) Newly Married Couple ca. 2003

When thinking about Federal Employees‘ Retirement System survivor’s benefits (SSB), many people will oftentimes refer to the survivor annuity. However, the truth is that there are really a number of possible survivor benefits that you can choose from within the FERS system.

In fact, there are a variety of options that may be opted, depending on your specific situation. These may include the following:

  • Federal Employees’ Retirement System Survivor Annuity or Pension
  • Federal Employees’ Health Insurance
  • FEGLI Life Insurance
  • Thrift Savings Plan (TSP)
  • Social Security income

In many instances, the FERS Survivor Annuity or Pension is chosen. With this option, when the Federal employee passes away, his or her survivor will continue receiving a portion of that person’s pension each month.

Within this particular plan, there are several different choices that you can make for your survivor. These include:

  • A full Federal Employees’ Retirement System Survivor Annuity
  • A reduced Federal Employees’ Retirement System Survivor Annuity
  • No Survivor Annuity

With the full FERS Survivor Annuity option, your survivor will receive 50 percent of your pension amount. If, however, you opt for the reduced FERS Survivor Annuity option, your survivor will receive 25 percent of your pension amount. (It is important to note that if you are married and you choose an option other than the full survivor annuity, you will need to obtain your spouse’s written permission).

Depending on which of the options that you choose, there can also be a cost. For example, by choosing to have your survivor receive 50 percent of your pension after you pass away, it will “cost” 10 percent of your monthly pension. In other words, 10 percent of your monthly pension will be deducted from your pension each month until the time that you pass away. Likewise, should you choose your survivor to receive the lesser amount of your pension as their survivor benefit, it will cost 5 percent of your pension amount.

Other Survivor Alternatives

In lieu of having your survivor receive a portion of your retirement pension, there are other potential options. For example, if you feel that your survivor will not need the money, you could alternatively purchase a permanent life insurance policy and name your survivor as the beneficiary.

In doing so, the proceeds from the policy will go income tax free to the named beneficiary of your choosing. In most cases, these funds will also typically bypass the potentially costly and time consuming process of probate.

More June Kirby Articles

What Are Your TSP Options With the New Phased Retirement Program? by June Kirby

FEGLI – The Good, the Bad, and the Just Plain Ugly – by June Kirby

Could Taking Early FERS Retirement Cost You Your SRS Benefit? by June Kirby

Determining the True Cost of Waiting to Buy Back Military Benefits – by June Kirby

About June Kirby

June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert.  June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits.  Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE’s services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.