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

Diminishing Returns

Last week, I wrote about steps you can take to make sure the processing of your retirement benefits goes as smoothly as possible. Of course, even if you do everything the right way, sometimes you end up with an interim benefit much smaller than you expected, or with a computation of your retirement that's simply inaccurate.

Here's what one reader wrote after last week's column:

For anyone anticipating retiring, make sure you have a good financial backup. Don't retire unless you have enough money saved to carry you through six months of retirement without a retirement check. A partial source is to save up as much annual leave as possible before retiring. I recently retired and the Office of Personnel Management is paying less than 50 percent of my retirement entitlement and it appears that my final retirement determination will not be made for at least a year. Military retirements and Social Security annuities are processed much faster. To my knowledge, only civil service retirees are treated this shabbily.

As I reported in last week's column, there are several factors that can cause interim retirement checks to be less than 90 percent of the expected net amount. The following is a list, courtesy of OPM, of those things that can cause your initial retirement benefits to be as much as 50 percent lower than your expected annuity:

  • Civil Service Retirement System offsets apply and the annuitant is older than 62.
  • A court order for a divorce requires apportionment of the annuity.
  • Part-time service is involved.
  • Service has been refunded, or a deposit for service is needed.
  • Service involves the Veterans Affairs Department's part-time Direct Medical Solutions program, which includes doctors, dentists and surgeons.
  • Receipt of workers' compensation is indicated.
  • Military retired retirement pay is involved.
  • Unpaid military deposits are present and the annuitant is older than 62, or the employee was first covered by retirement deductions on or after Oct. 1, 1982.
  • Excess leave without pay (defined as more than six months) is present on the record.
  • The application includes unverified or missing service.
  • The employees has elected an insurable interest (a survivor benefit option available under both CSRS and the Federal Employees Retirement System).
  • No survivor election is made. (So remember: Don't leave this section of the retirement application blank.)
  • Interim pay does not include the FERS supplement.
  • The submission by the agency is incomplete and is missing key data needed for calculating interim payments. According to OPM, 23 percent of all claims received are missing one or more records and 11 percent are not received during the first 30 days.

Those factors cover a lot of situations, so don't be surprised if your initial benefit is smaller than you expected. But if your final benefit seems to come up short, it's worth checking to see whether the computation was accurate. Here's what another reader wrote:

After retiring on Oct. 31, 2010, my OPM annuity was finalized this month. I noticed that although my booklet, "Your Federal Retirement Benefits" listed my allowable sick leave balance in my length of service, this time was not actually computed in the annuity calculation. After contacting OPM and receiving no response, I contacted my Congressman, who got the agency to respond by saying, "OPM regrets the breakdown in its automated computational system that resulted in (inaccurate) computation." I don't think this error was limited to my case and you may wish to advise your audience to double check OPM's math.
The retirement process is still paper-based and thus subject to human error. In some cases, lack of experience comes into play, because OPM has recently hired many claims examiners to process retirement cases. My suggestion is to know what your retirement should be based on your length of service, high-three average salary, and CSRS or FERS computation. Then you can double check that against your final retirement estimate from your agency as well as the finalized retirement claim received from OPM.

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 Mondays at 10 a.m. EDT on, or on WFED AM 1500 in the Washington-metro area.


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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