For those who have been working with the government for many years, you’re probably tired of this headline because the retirement tidal wave is something that has been promised for nearly two decades. With the catastrophic government shutdown at the beginning of this year, will this be a catalyst for such an event?
If you’re considering retiring, you need to be aware of certain qualifications. For example, the FERS system requires either;
– 62 years of age OR 5 years of experience
– 60 years of age OR 20 years of experience
– If one has 30 years of experience, this retirement age may reduce to between 55 and 57 years (depending on birth year).
What about the Civil Service Retirement System? Well, there’s one difference: retirement age is reduced to 55 after 30 years of service regardless of birth year.
If you have five years of creditable service but you don’t yet qualify for retirement benefits, you will be eligible for a deferred pension. These days, most CSRS employees are eligible for retirement but deferred retirement will be available at 62 years (regardless of service time). For deferred retirees, they will not be entitled to FEHB coverage during retirement.
Should You Retire?
This is the all-important question, and your answer depends on timing and money. Firstly, what will you do with all your available time now? Secondly, do you have the funds in place to support your current lifestyle?
With time, for example, many retirees struggle to find satisfaction in life now they no longer work. If you genuinely despise your job, this is slightly different because you probably feel as though you have less to lose. However, we advise you to consider life expectancy and make plans for retirement. Although it can be upsetting to deal with shutdowns and a new generation of politicians, you also need to consider yourself and your loved ones.
When it comes to money, according to financial advisers, a pre-retirement standard of living can be maintained by retiring on 80% of income. If you were to combine Social Security, TSP withdrawals, and your CSRS/FERS pensions, would this add up to 80% of your current income?
Generally speaking, around 60% will be provided by Social Security and a pension (for someone with 30 years of experience). From here, the rest will need to come from other investments and the TSP. Often, the pension isn’t strong enough and people are forced into part-time work. If this happens, you’ll need to pass the Social Security earnings test if you’re under FRA (full retirement age). FRA is normally either 66 or 67 years.
Consider Your Situation Carefully
According to the Federal Career Experts’ president, John Grobe, it’s best to consider how much money you bring home right now and compare this with the money that would enter the home after retirement. While some reading this guide will have these two numbers close together, others will have a large gap. If the latter, this suggests financial problems if you were to retire right now.
Before a knee-jerk reaction to the country’s current affairs, we recommend thinking about both your retirement activities and income. If there’s a gap but you’ve fallen out of love with your job, speak with a finance professional and assess whether there’s another option!