It is essential for a federal worker planning to retire to work out the details of the expected net income and expenses after retirement. Doing this will help determine if it is time to retire or not. Here are some helpful points
Ensure That Your Net Income After Retirement Will be Similar to Your Previous Net Income
As stated earlier, when you think about money and benefits, think in terms of net payments, not gross payments. After comparing the money you receive before retirement to what you expect to receive after retirement, the result should be close enough to keep you comfortable after you stop working and receiving paychecks.
Federal workers under the CSRS and FERS plans can go to the scheme's HR departments to work out the details of all deductions they are to expect. Factors including a survivor benefit scheme may cause more deductions in a worker's net income after retirement.
Suppose you choose to speak with a specialist at the FERS or CSRS, as the case may be. In that case, you should ask questions about how much you can expect after retirement, applicable deductions, best retirement age, and an exact amount you are eligible to receive under the CSRS Offset and the FERS supplement plans for workers who are qualified for these plans.
After you get a figure from the HR departments, you must also consider other deductions, such as tax retention and payments to former partners. If all these deductions seem confusing, you can use any of the IRS tax retention calculators to arrive at a specific figure.
Retire at the Best Age
Using any of the available Social Security Administration guides, you can decide the best time to retire. This should be an age where you will have the least deductions and most payments. The "Retirement Benefits Estimator" is one such guide.
Factor in TSP Withdrawals
Another influencing factor concerning post-retirement finances is the funds you will receive from your Thrift Savings Plan. The withdrawals from a TSP will also include some tax retention that you must also examine in your calculations. You can use the TSP calculators to arrive at a specific figure.
Consider Other Businesses and Investments
For federal workers who have other sources of income, retirement finances do not end with annuities. If you fall under this category, you must also consider the resources from that side job, investment, and other sources.
Don't Forget Expenses That Will Stop
After retirement, it is normal that many expenses end. The money you spend on special clothes for work, transportation expenses, and much other spending will stop. You could have also finally paid off your mortgage or seen your youngest child through college. The money that you would have used for these activities can now go towards seeing you settled for retirement.
Remember Other Fresh Expenses That Will Rise
The flip side to the point above is that, as many expenses are dying off, others will sprout up in their place. With the extra cash, you might decide to go on a vacation or take up a new hobby. It would be best if you considered these things in your calculations.
After considering these essential tips, if you feel you are ready to stop working, great. If you think otherwise, it is not too late. You can begin to make better financial decisions that will help set you up after retirement.