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Federal Retirement & Financial Planning Report

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Connection Made Between Education, Continued Work

A recent study says that increased educational levels help explain the trend of persons staying in the workforce longer, although noting that other more commonly cited factors play a part as well.

The report did not focus specifically on the federal government, but federal employees overall are more educated than the general workforce and increasing numbers have extended their careers in recent years beyond their retirement eligibility points.

The Center for Retirement Research, focusing on employment of men, noted that since hitting a low point in 1993, the percentage of men in the workforce at ages 60-74 has risen steadily from 33 to 44 percent. Continue ›

Premium Conversion Available for Some Retirees

Federal annuitants who are rehired by the government, unlike those who stay retired, can participate in the “premium conversion” arrangement under the Federal Employees Health Benefits program. Continue ›

Strategies to Afford Aging in Place

Your elderly parents or other aging loved ones might need substantial care, and so might you some day. Continue ›

Affordability Hampers LTC Insurance Purchases Many older persons don't insure themselves against long-term care costs simply because they can't afford the premiums, with the effect that lower-income individuals commonly get such care, if they need it, through the Medicaid program, according to a recent analysis. Continue ›
Waiting Out a FERS Annuity Penalty Certain FERS employees who want to retire on an immediate annuity are faced with the prospect of having their annuities reduced by 5 percent for every year they are under a specific age. Continue ›
Take Time for a Life Insurance Review If you still have a life insurance policy you bought more than 10 years ago, you're probably paying too much for the coverage. Continue ›
Social Security's Role in Retirement Income Declines The percentage of a couple's pre-retirement income that Social Security benefits replace has declined and will continue to decline, in part due to the way its spousal benefits operate at a time of increased participation in the workforce by women, a study has said. Continue ›
FEHB and Medicare: Who Pays First, for Whom All FEHB plans have a coordination of benefits or double coverage provision. Continue ›
The Finer Points of Powers of Attorney A power of attorney is a document where one person (the principal) names another (the agent), who can act for the principal in financial transactions. Continue ›
Getting a Social Security Benefit Estimate The formula for determining a Social Security benefit is much more complex than that for figuring a federal retirement benefit, and requires making calculations beyond the reach of the typical covered person. Continue ›
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Report: Fourteen Retirement Planning Mistakes (updated)

Subscribe to: Retirement and Financial Planning Report

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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