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Federal Retirement & Financial Planning Report

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Many Leaving, Few Entering beyond Age 50 Recent data on the federal workforce show the impact of the much-examined growth of retirement eligibility in the federal workforce, but meanwhile highlight a less-known parallel trend, the government's low rates of hiring—both from outside and from inside, of current employees changing jobs—at older ages. Continue ›
Even CSRS Employees Might Qualify for Social Security Federal employees covered by the FERS retirement system and by the CSRS Offset system pay into Social Security and for many of them, qualifying for later benefits under that system is not an issue. Continue ›
Insuring Against Bad Luck in Annuity Payout A single-life immediate annuity can deliver ample cash flow for the rest of your life. Continue ›
Retirement Risk Index Falls Only a Little Increases in housing prices and gains in stocks since the worst of the recent economic downturn have improved financial security for retirement by only a little, according to the Center for Retirement Research. Continue ›
How FEHB Carries Into Retirement Premiums are deducted from an annuity just as they are from the paychecks of active employees—only once a month rather than biweekly—and retirees also participate in the annual open seasons in which enrollees may change coverage. Continue ›
Some Target Numbers for Your Retirement Savings When you plan for retirement, some simple numbers can help you develop an investment strategy. Continue ›
TSP Examines Participant Behavior While overall participation rates in the TSP are at an all-time high among FERS employees, there are still significant differences in how much employees save according to their age and income. Continue ›
FEGLI Might Not Meet Needs in Retirement Federal employees may take their Federal Employees' Group Life Insurance (FEGLI) benefits into retirement if they've been in the program for at least five years, as most have been. Continue ›
Watch Out for Outdated Beneficiary Designations Many of your assets will pass to a named beneficiary or beneficiaries. Continue ›
Diet COLA Trend Hitting State Workers While proposals to impose reduced cost of living adjustments—or "diet COLAs"—in federal retirement have been set aside and retirees are set to receive a full adjustment in January, the same is not true of employees of many state and local governments, whose retirement systems in many other ways mirror that of the federal government. Continue ›
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Report: Fourteen Retirement Planning Mistakes (updated)

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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 (for example, you might being sucker‐punched by a little‐known rule that leaves you without health insurance). Seminars 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.

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Report: Understanding the Value of Your Benefits

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About a fourth of federal workers already are eligible to retire but are continuing to work anyway. There are a variety of reasons, including a need to rebuild finances damaged in the economic downturn and a weak job market dissuading them from following the common route of working elsewhere after retiring from the government. Within a few years, as many as 40 percent of employees will be retirement-eligible.

That has led to widespread concerns about a brain drain: a loss of expertise and continuity so important in government programs. Although they might not retire as soon as they are eligible, eventually, those employees will leave.

Many of them have been torn between staying and going. Commonly, older employees like their work, know its importance, and want to be sure it is carried on properly after they retire. They also like or need the income from working. But many would like to cut back, giving themselves more free time and lessening the everyday hassles of working full time.

However, the second issue is that the government traditionally has left only a one or the other choice: work or retire. It had no arrangement in which employees could ease into retirement by reducing their working schedules. In fact, there was a policy that actually discouraged older employees from changing to part-time work by causing a reduction in their eventual annuity. A 2009 law repealed that provision, a first step toward phased retirement.

Unlike many government personnel policies that apply to either active employees or to retirees but not to both, phased retirement is a mix of the two. Except for being able to draw a partial annuity, a phased retiree is treated like an active employee—and more specifically, as a part-time employee, although certain exceptions apply as described below.

Phased retirement has been a long time coming. Congress and OPM put real effort into deciding whether it should be available, and on what terms. Deciding whether to ask for it requires similar careful consideration (and bear in mind that granting a request is up to an agency’s discretion).

This publication is designed to illuminate the path through those issues. It includes an overview of the phased retirement policy, including eligibility rules, the special policies for calculating an annuity, and what happens during and after phased retirement. Also included is a comparison with the other career options available to someone who reaches retirement eligibility.

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