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5 Retirement Questions Only You Can Answer

There are some relatively simple things that everyone should know about their basic benefits under either the Federal Employees Retirement System or Civil Service Retirement System. This week, I want to present five straightforward questions covering the key items that allow you to transition from employee to annuitant. The answer to these questions vary according to work experience and other factors, so only you can answer them.

How old you must be and how much service you will need in order to be eligible for an immediate, voluntary CSRS or FERS retirement benefit?

Here’s some basic information to guide you:

If you’ve worked other than a full-time work schedule, it is important to factor in the impact of intermittent or when-actually-employed time, part-time work, and leave without pay periods during your federal career. (Bonus question: Can you explain the difference between an immediate and a deferred retirement?)

Remember, the age at which you are eligible to retire is not necessarily the age at which you can afford to retire. It’s just the date on which you will be able...

The Saving of the Green

When my husband and I lived in Northern Virginia, he always wanted to to see green grass by March 17. That might be because our last name is Flanagan, or just that he takes great pride in maintaining our yard — probably a little of both. (It’s a good thing we’ve moved to Florida, where things are green year-round, because right now Northern Virginia’s grass is snow-covered.)

Green isn’t just the color of a lush lawn or St. Patrick’s Day attire. It’s also a popular color when thinking about your retirement needs. After all, it’s the color of money.

In the movie Wall Street, Carl Fox (played by Martin Sheen) says, “Money’s only something you need in case you don’t die tomorrow.” That’s retirement planning in a nutshell: You’ll need a lot more to finance a retirement that is going to last 30 or 40 years than you would if you were only going to be retired for five to 10 years.

In fiscal 2014, the average age of a new federal retiree was 61.4. According to data compiled by the Social Security Administration:

  • A man reaching 65 today...

Should You Use Your Retirement Savings to Buy a House?

Last week we talked about ways to assess whether or not to leave your money in your Thrift Savings Plan account in retirement.

One specific question along these lines that comes up often at retirement seminars is “Does it make sense to withdraw a large lump sum from my TSP account after retirement to buy a house or pay off my existing mortgage and limit my tax liability?”

To answer to this question, I turned to Mark Keen, a certified financial planner at the firm Keen and Pocock in northern Virginia. Mark writes a monthly column called “Managing Money” for the National Active and Retired Employees Association’s magazine.

Here’s what he had to say:

The problem with taking large lump-sum distributions from tax-deferred retirement plans, such as the money in the traditional TSP balance, is the withdrawal is taxable income, and depending on the size of the withdrawal, it may be taxed at least one higher bracket than it would if the money were distributed over a series of payments.

For example, let's assume a couple has taxable income of $50,000 and decides to withdraw $200,000 from their TSP. The first $25,900 will be...

TSP Withdrawal Tips

Did you know that almost as many people transfer their money out of the Thrift Savings Plan when they leave federal service as leave it in?

The Federal Retirement Thrift Investment Board has reported that in 2016, close to $2.5 billion was taken out of the TSP in the form of cash payouts, and $5 billion left the plan as single payments that were transferred to individual retirement accounts or other retirement arrangements. Every month the TSP sends out about 178,000 ongoing monthly payments and more than 150,000 post-separation withdrawals and transfers of single cash payments. Even though many retirees opt to get monthly payments from their TSP funds after they leave, more than 30,000 partial withdrawal lump-sum payments also were processed last year.

In 2016, the TSP started a campaign called “Stay,” directed at getting federal employees to think through all the options before deciding to move their funds out of the TSP upon leaving government. The campaign included two short YouTube videos: “Don’t Move” and “Once You’re Gone, You’re Gone.” It also featured a scorecard to help TSP participants through the process of deciding what to do with their funds.

Reasons...

Delayed Retirement: Benefits and TSP Considerations

In last week’s column, we began to explore some of the issues to consider for employees who continue to work past age 65 and delay their retirement. A recent MetLife Mature Market Institute research study, Engaging the 21st Century Multigenerational Workforce, reported that older workers are more likely to have higher levels of engagement with their work than younger employees. This could explain why some of people continue to work even if they have a generous retirement benefit and might be eligible and able to retire.

Last week, we looked at the considerations and options for such employees regarding Social Security and Medicare. This week, we’ll explore some of the issues surrounding basic government pension benefits and the Thrift Savings Plan.

Civil Service Retirement System

The basic annuity of any employee covered by CSRS may not exceed 80 percent of the employee's high-three average salary (not including credit for unused sick leave, which can cause the benefit to exceed 80 percent). Ordinarily, total service of 41 years 11 months results in the maximum annuity.

The 7 percent CSRS retirement deductions (some CSRS employees pay a little more and CSRS Offset employees have this deduction reduced by the...

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