Tips to Get the Most Out of Your Retirement Benefits Sponsored By:Aaron Steele

As a federal employee planning to transition from work life to retirement, it’s essential to be prepared in every way. Here are the various federal retirement benefits you could get and how to maximize them.


Retirement Systems

As you probably already know, the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS) are quite similar. But both systems have their own unique features.


One of the CSRS’s unique features is the voluntary contributions program, which allows employees to save after-tax dollars (up to 10% of their lifetime salary) and earn tax-deferred interest during their federal service employment. You can transfer the interest accrued to a TSP account and the already-taxed principal to an IRA at retirement.


On the other hand, the FERS has Minimum Retirement Age+10 provisions that provide employees with immediate (reduced) or delayed retirement options. This is beneficial for employees who want to leave the workforce earlier or those who came in late in their lives and want to postpone retirement by a few more years to meet the service-year requirements. The MRA+10 requires that an employee be between  55 and 57 years old (depending on the year of birth) and have a minimum of ten years of service.  


Note: check with your benefits officer to find out if they arrange pre-retirement counseling. Pre-retirement counseling provides insight on:

The estimate of your FERS and CSRS retirement benefits

The opportunity to sign up for pre-retirement seminars

Answers to any questions you may have regarding retirement eligibility, service credit, benefit computation, choosing a retirement date, electing survivors, lump-sum payment for unused annual leaves, and other retirement issues


Social Security

There have been talks about the state of the Social Security program. The Agencies commission Andrew Saul said most changes, like closing their offices and working virtually, might remain permanent. He further explained that the agency plans to digitize communication with beneficiaries to make it quicker and more efficient.


If you have Social Security coverage via FERS, think of it as just a piece of your retirement puzzle. The other pieces are your TSP account, investments, and other income sources you’ll get in retirement. When you put together the different pieces, you’ll have a complete retirement plan. You still have to figure out ways to deal with expenses that will strain your retirement income, like taxes, long-term care, financial assistance to family members, and other unforeseen expenses.


Thrift Savings Plan

TSP participants are no longer allowed to make catch-up contributions since the beginning of 2021. If you are age 50 or older and your contributions exceed the annual limit, the excess will automatically count towards the IRS catch-up limit. Just include any contribution towards your catch-up limit as part of your normal TSP contributions.

If you are eligible for matching contributions, the excess contributions you make for the catch-up limit will qualify for a match on up to 5% of your salary. You can stop, start, or change your contributions anytime you want. You can also decide not to contribute towards the catch-up limit. Just adjust your TSP contributions accordingly.


Life Insurance

The Federal Employees Group Life Insurance (FEGLI) program is a group term insurance. The program doesn’t build up cash value. There are two types of FEGLI life insurance. There’s the basic plan, which pays out the annual rate of basic pay upon death.

It offers three options, including a $10,000 payout, one to five multiples of your annual rate of basic pay, and multiples payable to the insured person upon the death of the spouse or an eligible child.


What makes FEGLI unique is that employees are automatically enrolled in the basic plan regardless of their health. If you qualify to carry FEGLI into retirement, you can keep the basic FEGLI and Option A without paying any additional premiums once you reach age 65. If you want to continue Options B and C past age 65, you’ll have to pay the full premium based on your age.


Long-term Care Insurance

The Federal Long-Term Care Insurance Program (FLTCIP) 3.0 has a premium stabilization feature designed to reduce the rate of premium increases. With the feature, a specific amount is calculated as your premium based on the FLTCIP 3.0 group policy. In some instances, the PSF amount is used to offset your future premium or provide a refund of the premium death benefit.


Note: the best time to buy life insurance is when you are younger, as you are more insurable at a lower price.

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