The more you have in your TSP when you retire, the easier it will be to draw enough income from it to have the retirement you’ve always wanted. Image: Kzenon/Shutterstock.com
Have you ever asked a human resources specialist a question about federal retirement and gotten the answer “It depends”? The answer is not a cop-out.
There are many situations in which the answer does indeed depend upon your situation.
Let’s look at a common retirement-related question in which the answer depends on the employee’s situation. “Should I elect a survivor annuity for my spouse? And, if so, what size”
Here are the items on which the answer depends.
The availability of FEHB coverage for your surviving spouse.
FEHB rules provide that, in order for a survivor to keep FEHB after your death, they (or another family member) must be entitled to receive a survivor benefit. If you want your spouse to have access to FEHB coverage if you die first, you must elect at least some level of survivor benefit.
If your spouse happens to also be a federal employee/retiree and is entitled to FEHB coverage in his/her own right, this isn’t a big issue at all.
Who is likely to die first?
If the answer to this question is clear, the answer to whether to get a survivor annuity will be self-evident. If not, look at the following longevity factors.
• The age difference between you and your spouse.
• Gender differences as, on average, women live longer than men.
• The current health and individual health history of you and your spouse.
• Family health histories.
Other financial concerns, including:
• Which of you was the primary breadwinner?
• What life insurance proceeds will the survivor be entitled to?
• What other sources of retirement income (e.g., IRAs, company pension, 401(k)s, etc.) will the survivor be entitled to?
Now let’s look at a question that should never be answered with “it depends”. “How much should I contribute to the Thrift Savings Plan. That answer should always be “as much as you can.”
We know that we will receive lifetime payments from our FERS annuity and Social Security; and we know that the amount we receive from these two sources of income is likely to be less than we need to have a comfortable retirement. Both FERS and Social Security are mandatory, and their benefits are computed by a formula.
The TSP is within your control. It is voluntary (though new employees are automatically enrolled) and there is no mandatory formula to calculate what you will receive.
The more you have in your TSP when you retire, the easier it will be to draw enough income from it to have the retirement you’ve always wanted.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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See also,
Legal: How to Challenge a Federal Reduction in Force (RIF) in 2025
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Primer: Early out, buyout, reduction in force (RIF)
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