Reg Jones Expert's View

Last week I wrote about the rules governing early outs and buyouts. Now the big question is this: Can you afford to retire early? That’s a personal decision that has to be based on your financial and emotional situation. Let’s take the financial side first. Will the combination of annuity, TSP account, Social Security (if any), investments and savings be enough to let you do the things you want to do in retirement, not just now but over the next 10, 20, 30 or more years?

Now let’s consider your emotional situation. You know, it’s not enough to be happy about leaving your current job. You need to be revved up about what you are going to do next, whether that’s accepting another job, taking up or perfecting a hobby, getting involved in volunteer work, or whatever. Remember, your job provides structure to your life, and that structure will be gone when you retire. You need to figure out what will replace it.

Supposing that you have the financial and emotional security needed to retire, you need to be sure that you will have appropriate insurance coverage. In general, you may keep your Federal Employees Health Benefits (FEHB) program coverage in retirement but only if you are currently enrolled and have been enrolled for at least five years or from your earliest opportunity to enroll. OPM’s authority to grant waivers is quite limited.

If you aren’t eligible to carry your FEHB coverage into retirement, you’ll be given a 31-day extension of coverage at no cost to you. After that you can drop your coverage, covert to an individual contract or request Temporary Continuation of Coverage (TCC). The later will allow you to keep your FEHB coverage for up to 18 months. However, you’ll have to pay the full premium plus 2 percent to cover administrative costs.

The Federal Employees’ Group Life Insurance (FEGLI) program has the same five-year rule and 31-day extension of coverage as the FEHB program. However, if you are not eligible to continue your coverage in retirement, your choices are limited. You can drop the coverage or convert all or part of your insurance into a private policy at your own expense. OPM has no authority to waive the five-year requirement.

Is early retirement for you? That’s a decision you’ll have to make if the opportunity arises. If an offer comes your way, look before you leap. It may be just what the doctor ordered. Or it may not.