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1. Letting chance chart your course by not taking advantage of a pre-‐retirement seminar. When you are thinking about retiring, planning might not be everything, but it’s head and shoulders above whatever’s in second place. This is a mistake too many federal employees make: going it on their own. Or relying on water cooler conversations or other conventional wisdom. Even on the odd chance that what you’d hear there is actually correct, the lunchroom lawyer doesn’t know everything you need to understand. You need authoritative help because federal retirement is more complicated than it looks. So get with it. A pre-‐retirement counseling seminar, in person or online, is the best way to go. Most agencies, if they don’t offer them to their retirement-‐eligible employees already, are willing to pay the enrollment fee for ones offered by private companies – and often let employees have time off to do it. Even if your agency doesn’t provide or pay for pre-‐ retirement counseling seminars, it’s worth it to pay out of your own pocket. They are that important. Be prepared with questions – and be ready to be surprised by all the questions and answers that had never occurred to you, as you’ll see below.
2. Being sucker-‐punched by a little-‐known rule that leaves you without health insurance. Can you imagine a future without health benefits coverage at a time when the cost of health care is increasing far beyond the cost-‐of-‐living and wages? Well, count your lucky stars. Why? Because the government covers 100 percent of its retirees who meet a simple eligibility requirement, whereas only a small minority of companies in the private sector extend such coverage to their retirees. As a rule, you must have been enrolled in the Federal Employees Health Benefits (FEHB) program for the five years immediately preceding your retirement (or have been covered by a spouse’s FEHB policy). If not, you won’t be allowed to carry your coverage into retirement. (There are some exceptions. For example, if you enrolled in the FEHB at your first opportunity and retired in less than five years, you’d still be covered in retirement. The same holds true if you accept an opportunity to retire early but before you’ve been covered for a full five years. Exceptions also can be made for certain other reasons, but these are rare.)
3. Failing to consider the effect of withdrawing your retirement contributions at separation before reaching retirement eligibility. Many federal employees have left government employment and taken a refund of their retirement contributions not thinking they’d ever return, only to rejoin Uncle Sam’s workforce later. So, what would happen to that period of refunded service if you did this? If you are a FERS employee, you would have to make a redeposit with interest in order for that time to count in determining your eligibility to retire or in calculating your annuity. If you are a CSRS employee, you would have a choice if that refund were for a period of service that ended before March 1, 1991: you could either repay the refund (plus interest) or not pay it. If you didn’t, when you retire, your annuity would be reduced based on the amount you owe and your age. On the other hand, if the refund were for a period of service on or after March 1, 1991, and you didn’t make a redeposit, you’d get credit for the time in determining your eligibility to retire but the time wouldn’t be used in the computation of your annuity. (Incidentally, similar rules apply to getting credit for time for which no retirement deductions were taken in the first place. That practice is rare these days but years ago it was not uncommon, especially in jobs where employees were low-‐paid and/or were not expected to stay in the position long, such as summer jobs.)
4. Not getting credit for military service. You served your country and now that you’re on the civilian side of government, you’d like to get credit for your military service when you retire. In general, you can. But how you do that depends on the retirement system you’re in. If you are a FERS employee, you must make a deposit with interest in order to get credit for that time. If you are a CSRS employee, policies differ. If you were hired before October 1, 1982, you don’t have to make a deposit unless you’d otherwise be hit by the so-‐called “Catch-‐62” penalty (see below). However, if you are a CSRS employee hired after that date, you’ll only get credit for that time if you make a deposit with interest.