If you are someone who will lose their health benefits, you may want to postpone your departure until you can carry that coverage into retirement. Image: hxdbzxy/Shutterstock.com
With few exceptions, you can carry one of the government’s most valuable benefits, Federal Employees Health Benefits (FEHB) or Postal Service Health Benefits (PSHB) program coverage, into retirement only if you have been enrolled for the 5 consecutive years before you retire or from your first opportunity to enroll.
Double-check your eligibility to keep coverage and then triple-check it. Then give it a little time and check it again. If you retire without that eligibility, you’ll get a temporary extension with no government share toward premiums and then, as I said last week, you’re on your own.
If you are someone who will lose their health benefits, you may want to postpone your departure until you can carry that coverage into retirement.
Once you’re sure you’ll have the health insurance protection you’ll need, be sure your retirement income will provide the financial protection you’ll need. Two of the most common mistakes I see involve overestimating how many years of service will be included in your annuity calculation, especially for:
• Refunded service—If you ever left government, took a refund of your retirement contributions, and returned to government service, that refund could have a significant impact on both your eligibility to retire and in your annuity computation. Since the rules differ for CSRS and FERS on whether you either need to or can redeposit the money to get credit for that time, you’ll need to meet with one of your agency’s retirement counselors to determine which rules apply. Only then can you decide which option is best for you.
• Military service—If you are a CSRS employee who served in the armed forces before October 1, 1982, you won’t have to make a deposit to get credit for your active-duty service to have it used in the computation of your annuity. If you served after that date, you will. If you don’t make that deposit, are retired, and eligible for a Social Security benefit at age 62, your annuity will be recomputed downward by 2 percent for every year (5/12th of 1 percent per month) that is covered by that period of service. The rules are different for FERS employees. If you are one of them, you only have one option. Make the deposit and get credit for that time or not make the deposit and get no credit for that time.
Also, ask yourself this: Will your final annuity and the nest egg in your Thrift Savings Plan account be sufficient to let you to live the life you want to live in the future? That TSP account may be a nice number but how will it translate into income, and for how long? There are calculator functions at www.tsp.gov to help that analysis; you may be surprised at what you find.
Be sure you have an accurate picture of your annuity, taking those possible reductions into account. Also be sure to know how electing a survivor benefit will reduce your benefits and remember that if you are covered by FERS, with rare exception you won’t receive a cost-of-living adjustment (COLA) on your annuity until you reach age 62.
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See also,
Legal: How to Challenge a Federal Reduction in Force (RIF) in 2025
The Best Ages for Federal Employees to Retire
Alternative Federal Retirement Options; With Chart
Primer: Early out, buyout, reduction in force (RIF)
Retention Standing, ‘Bump and Retreat’ and More: Report Outlines RIF Process