Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Should I Stay or Should I Go?

Every week, I talk to people at my seminars who are focused on retirement. Some are there because they're anxious to leave government soon.

But others aren't. In 2001, the Government Accountability Office reported (GAO-01-509) that federal employees have become less likely -- by roughly 50 percent -- to retire within their first year of eligibility. And data from the Bureau of Labor Statistics show that private sector workers are also remaining in the workforce longer. The percentage of private sector workers still working at age 65 or older increased from 10.8 percent in 1985 to 12.8 percent in 2000.

Let's look at some of the factors that go into the decision about whether to retire as soon as you can, or stick around for a while.

Let's Go!

Some employees are strongly inclined to leave government service as soon as they're eligible, for various reasons:

  • Many who were hired into federal service directly after high school or college graduation, have a lifelong retirement goal that they will reach on their 55th birthday (or, for those in the Federal Employees Retirement System, at the minimum retirement age, which is between 55 and 57). For these people, persistence and patience has paid off.
  • Some employees retire as soon as they can to join a spouse who already is retired and waiting for some company at the beach house in North Carolina or at the early-bird special at the Silver Diner. For some of these folks, it's more about the health insurance than the money. In many cases, these employees do not have a full career of federal service and may work until age 60, when the requirement for receiving retirement benefits is only 20 years of service.
  • Other people have a second career waiting for them. For these motivated souls, retirement starts with living off the new paycheck and putting the retirement income in the bank or other investment. This group includes early retirees who took buyouts and also those covered under special provisions of federal retirement law, such as law enforcement officers and firefighters. Many of these employees will leave at too young of an age to have complete access to their retirement savings without a tax penalty. For them, postponing official retirement often makes sense, so some will transfer their Thrift Savings Plan investments to their new employer's 401(k) plan, where they will be available when the second career is over and the fun of retirement leisure can begin.
  • For employees at many agencies, the temptation of early retirement with a buyout is often available, but sometimes with short notice for planning. This can be a tricky decision to make. Employees in this situation must give careful thought to the question of what exactly they will do after retirement. Here's the key question: Will your early retirement benefit be enough to cover your expenses in the event a second career becomes an elusive goal? Before grabbing a buyout, it's worth estimating what your benefit would have been if you had stayed until you were eligible for regular retirement.
  • Finally, there are those that are feeling obsolete. They tell me that they're not comfortable with the changes taking place around them. This can be a sad realization, but it's also an indication that there are other more enjoyable, interesting and productive activities waiting for them in the next phase of their lives.
Staying Put

I also have the pleasure of meeting employees who have no burning desire to retire. Why?

  • Some simply find fulfillment and satisfaction in their federal careers and are reluctant to give them up. For them, working is fun.
  • Some fear retirement. That might be because they think they won't have enough income, or because they fear declining health or the loss of the social circle of co-workers who have become close friends. Some even think that continuing to work is easier than retiring since retiring seems to take too much planning!
  • There are those who want to be absolutely sure that they will enter retirement financially secure. They are maxing out their TSP accounts, paying off all debt and extending their service to the point of being able to replace their full salary.
  • Some folks didn't give much thought to retirement planning in their younger working years. Around mid-career, they realized that retirement was going to require a considerable amount of replacement income in the form of savings, a pension benefit and Social Security -- or some combination of the three. Sometimes unfortunate circumstances caused the loss of pension benefits or retirement savings, so a longer career is necessary to make up for lost time and money.
  • Finally, some look at it this way: "The kids are still home, we just got a big new mortgage and the credit card is maxed out. Retirement? Are you kidding?"
What To Do

So what should you do? First of all, you should figure out what kind of effect staying in your job will have on your retirement. Let's look at a couple of examples.

Suppose Jules is covered by the Civil Service Retirement System and can retire on his 55th birthday on June 19, 2007. If he retires at the end of June, he will have 33 years and nine months of service. His high-three average salary will be computed from June 30, 2004, to June 30, 2007 (because we're assuming he was a GS 12-10 for that entire period), and will total $82,751. So his retirement benefit will be computed as:

.6375 x $82,751 = $52,753/year or $4,396/month
If Jules stays six months longer, his retirement will be computed on a high three of $84,381 and he will have about 34 years and three months of service. So his CSRS annuity will be:
.6475 x $84,381 = $54,636/year or $4,553/month
That's $157 per month more for staying an extra six months.

Here's another example. Suppose Judy is under FERS and can retire when she is 55 and 10 months on June 19, 2007. If she retires on June 30, she will have 33 years and nine months of service (and let's assume that includes 23 years and nine months of civilian service and 10 years of active duty in the military). Her high-three average salary will be will be $82,751, and her retirement benefit will be computed as follows:

.3375 x $82,751 = $27,928/year or $2,327/month
+ FERS Supplement based on her civilian FERS service = about 24/40 of her Social Security entitlement
+ Her TSP investment that can be withdrawn if necessary
If she stays six months longer, her retirement will be computed on a high three of $84,381 and she will have about 34 years and three months of service. Her FERS annuity will be computed as:
.3425 x $84,381 = $28,900/year or $2,408/month
+ FERS Supplement based on her civilian FERS service = about 24/40 of her Social Security entitlement
+ Her TSP investment that can be withdrawn if necessary
Let's also assume Judy will contribute an additional $8,000 to her TSP account between July and December (and receive automatic and matching contributions). That adds up to $81 per month more in basic benefits, plus additional wages towards future Social Security benefits and additional TSP investments, all for staying an extra 6 months. Between the $2,408 FERS benefit and the supplement, Judy will need income from her TSP account to make up the needed cash flow unless she plans to continue working to supplement her retirement.

Are You Ready?

Are you ready to retire from the federal government? To help figure that out, think about the following questions:

  • Do you plan to start a second career? You can receive your federal retirement and work at the same time. If you can find a job that pays what you're earning now, you can invest your retirement income so that it is available to you when you fully retire later.
  • Do you need more monthly income to cover your retirement expenses?
  • Will six months of additional retirement income provide you the opportunity to jump-start your retirement plans?
  • The amount of your retirement income will increase every day that you continue working. What is "enough" varies from each individual. Have you done the financial planning necessary to decide?
  • Can you afford to retire without going back to work? Would these extra years of retirement be important to you?
  • Do you enjoy your job?
  • Most importantly, how clearly have you visualized your "life after retirement?"
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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