Retirement & Financial Planning Report

By Rick Pendykoski, Self Directed Retirement Plans LLC

If you are close to retiring from your federal job, it’s important that you have a plan in place to ensure that you get the most from the benefits you have worked so hard for. Here are five central considerations as you get closer to taking the leap.

1. Maxing out your benefits five years before your retirement


If you are a federal employee, the five year period prior before you retire is crucial. That’s because there are certain retirement programs that require your participation for at least 5 years for you to unlock their retirement benefits.

• Retain Federal Employee Health Benefits (FEHB) health insurance coverage
If you are registered in the FEHB program, independently or through your spouse who is also a federal employee, then you must keep the FEHB coverage through at least the last five years of federal employment that ends on the day of retirement. (Even in retirement, the federal government will continue to pay its share of the FEHB premiums as it did when you were the employee.)

• Consider getting a long term care insurance policy
People are living longer but many are not financially prepared to bear the costs of advanced age such assisted living, home health care, or a stay in a nursing home on a long term basis. Therefore, it is important that you consider getting yourself covered for long term care (LTC). Buy LTC insurance when you are in your 50s or early 60s within five to 10 years of retirement. As a federal employee, you are eligible to apply for the Federal Long Term Care Insurance Program (FLTCIP).

• Contribute to Roth IRAs
Roth individual retirement accounts are set up by individuals, and not the employers. These accounts are funded with after-tax contributions, so when you withdraw money at retirement, you are not taxed and can keep more of your compounded earnings. (See also, Roth balances in the TSP)

2. Consider maximizing your TSP contributions

If you want – or are counting on – your Thrift Saving Plan (TSP) to have a sufficient amount by the time you retire, then you need to maximize your contributions. Make your regular contributions (with agency matching) and also your catch-up contributions – if you are eligible.

If you do not plan to withdraw your TSP account money immediately after retirement, then you may want to part that in the TSP stock funds to capture some long-term growth, just make sure that allocation is in line with your risk profile and that you could recover from a drop in the market.

3. Understand survivor benefits

Upon the employee or annuitant’s death, the survivor benefit elections made at retirement include:

• Insurable interest survivor annuity benefits, or

• Spousal (current and former) survivor annuity benefits

4. Survivor annuity

You may choose to give maximum, partial, or no survivor benefit to your current spouse. If the survivor annuity benefit is not the maximum, then the spouse has to provide a written consent that is notarized to claim the survivor benefits.

If you want your spouse to keep FEHB health insurance benefits if in case you die before your spouse, then you must provide a survivor annuity to your spouse.

5. Estate plan

Some of the most important parts of an estate plan are:

• Beneficiary named for all types of your accounts like TSP, life insurance policy, IRAs, bank and brokerage accounts;

• A trust, or will for assets where beneficiaries cannot be named;

• An advance power of attorney and a living will for financial asset management; and

• Setting up a trust to reduce the possibility of paying the state-imposed estate or inheritance taxes.

About the author: Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday and NuWireInvestor. If you need help and guidance with traditional or alternative investments, email him at

FERS Retirement Planning Guide 2020