From Day One
Set a retirement goal. This might seem a little premature at the beginning of your career, but having a long-range plan will help you figure out what you need to do now and in the future to achieve your goals. You will certainly have to make adjustments along the way, but knowing your destination will make it a lot easier to get there. In that spirit, here are three Web sites to become familiar with immediately:
- Office of Personnel Management Retirement Information and Services
- Thrift Savings Plan Retirement Calculator
- Social Security Retirement Estimator
Be aware that you have a federal retirement benefit. Besides Social Security benefits and investments in the Thrift Savings Plan, federal employees who are covered under the Federal Employees Retirement System are vested for a government retirement after completing five years of civilian federal service. Disability and death benefits are available for employees with 18 months of service. For more information about this subject, see my previous column, Eligibility: Facts and Myths (July 6, 2007).
Get acquainted with the TSP. New employees will soon be automatically enrolled in the federal government's version of a 401(k) when they are hired, but until then, it's up to you to join when you become eligible. The TSP offers a variety of investment choices. You will receive agency-matching funds on the first 5 percent of salary that you contribute biweekly. After three years of service, the automatic 1 percent agency contribution is vested and will be included in your account even if you leave federal service. The important thing is consistently saving for your retirement, regardless of where you are employed. To learn more, go to the TSP Web site.
Check with a retirement specialist at your agency regarding past federal civilian and military service. Any prior federal service could be creditable toward your retirement benefit. This might include work as a seasonal employee or Peace Corps volunteer years ago. The service already should be credited toward your annual leave service computation date, but to have it count toward retirement, you might need to stop by your agency's retirement office.
Consider the benefits you've already accumulated toward retirement from past employers. Social Security taxes paid while working in the private sector are no different from the Social Security taxes you pay as a federal employee. These benefits accumulate throughout your career, whether you spend it in government or in a mix of private sector and federal jobs. Keep in mind that it's also possible to transfer money from a past employer's 401(k) plan or roll over an Individual Retirement Account into the TSP.
Beware of the Social Security "tilt." Social Security most likely will still exist when you retire, but if you plan to rise through the ranks during your federal career and earn progressively higher salaries, you probably will not have more than 25 percent replacement of your pre-retirement income from Social Security -- and that's assuming there are no big changes to the program. Don't underestimate the need to save for your retirement.
Sick leave is short-term disability insurance. Don't abuse sick leave. You never know when you'll need it. It is not unusual for an employee to take annual leave instead of sick leave in order to preserve their sick leave for a future illness or injury. You earn three months of sick leave for every five years you work. That's 104 hours per year. After 20 years of federal service you will have earned a full year of sick leave. Keep in mind that as you approach retirement, an unforeseen illness or injury could force you into leave without pay or disability retirement unless you have a comfortable cushion of sick leave in the bank.
File your beneficiary designation forms. This applies not only to retirement benefits, but Federal Employees Group Life Insurance, TSP benefits and unpaid compensation. Be sure to update your forms throughout your career to reflect marriage, divorce, death, birth of a child or other important life events. Here is a column on this subject with links to the four forms that you will need: Who's Your Beneficiary? (May 12, 2006).
Keep a personal personnel folder. This should include copies of personnel actions, beneficiary designations, insurance enrollment and other documents that will be permanently filed in your official personnel folder. You never want to lose track of these documents. While you are a federal employee they will serve as a reference and a reminder for you to review your benefits. When you leave, they provide dates, job titles and other information you might need in future job searches. The federal government does an excellent job of maintaining these records on your behalf, but the person who cares the most about your history is you.
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.
For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Monday mornings at 10 a.m. ET on federalnewsradio.com or on WFED AM 1500 in the Washington metro area.