Reg Jones Expert's View

Reg Jones

From time to time, events cause a spike in anxiety among federal employees and retirees. We are currently in such a time.

For retirees, the concern is about preserving benefits already being received. For active employees, it is about whether benefits they have been expecting will be taken away by the time they retire—and whether they should speed up their retirement, just in case.

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The last such spike occurred as the Trump administration prepared to, and then did, take office. The White House quickly generated a number of proposals that would have reduced employee and retiree benefits.

Those included familiar proposals such as changing the benefit calculations of future retirees to a high-5 salary base rather than the current high-3 and eliminating for them a FERS retirement supplement paid before Social Security eligibility begins; reducing the value of COLAs for both current and future retirees; and more.

Fortunately for employees and retirees, they didn’t get very far. Then the mid-term elections of 2018, when Democrats captured the House, virtually guaranteed that they wouldn’t be further considered in Congress until after this year’s elections.

The possibility of these proposals being revived after the upcoming election would again produce anxiety just by itself. However, the anxiety level has been heightened by COVID-19 and its effect on voters. Now there’s not only the emotional effect of being grounded and out of control but also how (or even whether) they will vote on election day.

For many employees, the question is whether to stay on the job and see what happens on election day or leave now. Leaving comes in four forms: immediate retirement, postponed retirement, deferred retirement or resignation. I’ll deal with the last one first.

You always are free to resign. If you do, you can take a refund of your retirement contributions. If you decide to come back to work for the government at some later date, you can either redeposit those funds, plus interest, and get credit for your prior service time or decide not to and get no credit for the time. The choice is yours.

Note: There’s a special consideration if you have at least five years of service but are not currently eligible to retire, which I’ll examine later in this series.

Next week I’ll go over the rules governing eligibility for immediate retirement and what you need to think about before making that decision.

Federal Retirements Trending Older, Few Early-Outs

Thinking of Returning to the Government as a Retiree?

OPF: Tweak Your Personnel Folder for Maximum Benefits

FERS Retirement Guide 2020