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

Great Expectations

More than 100,000 employees each year retire from civilian federal careers that have lasted from as little as five years to more than 40. As usual, the end of the leave year -- Dec. 31 -- will be a popular date for many of this year's new group of retirees. If you're one of them, what should you expect?

First of all, expect to wait. Be prepared to be in an "interim" retired status for up to a year. For some lucky folks, the wait will be only a few months, but for others it will drag on. There are a variety of reasons for this, but mainly it is due to a massive backlog of retirements at the Office of Personnel Management that is getting worse by the month. Your agency can't submit your retirement application to OPM until you actually leave. The final agency processing should be complete within a few weeks of your departure. You'll know when your agency has completed its work, because you'll receive your payment for unused annual leave in a lump sum. You also should receive a notice of separation to let you know when your retirement record was submitted to OPM.

You should get your lump-sum check within six weeks of retiring. The deductions will include taxes, but not retirement contributions, insurance or Thrift Savings Plan contributions.

You might need your lump-sum check to pay your bills for the first few months of retirement since your interim checks will not be the full amount of your annuity. They should be close to 90 percent of your agency's estimate of your retirement benefit, but that isn't always the case either. If you are entitled to a Federal Employees Retirement System supplement, that is not included. If you are covered under Civil Service Retirement System-Offset and are older than 62, OPM must work with Social Security to find out the amount of your offset, so again, you should expect your interim checks to be less than 90 percent of your full benefit.

Expect that your health and life insurance coverage will continue automatically. OPM will deduct the premiums from your full annuity when it is finalized. As long as you are eligible for these benefits, they will be transferred to OPM by your agency for you.

Dental and vision benefits are handled differently. You will receive a letter letting you know that premiums will be deducted for dental and vision when your retirement is finalized. While you are receiving interim benefits, you will be billed. Here's more information.

For long-term care insurance, you should contact Long-Term Care Partners to let them know you are retiring if you pay by payroll deduction. You cannot have deductions from your annuity until your annuity is finalized, so it might be easier to do a direct deposit from a bank account if you don't want to write a check. More information is available here.

Expect to pay your state income tax on a quarterly basis until you can arrange for state tax withholding from your retirement benefit once it is finalized. OPM does not withhold state income taxes from your interim retirement checks. You will have federal taxes withheld as you indicated on your retirement application. Remember that not all states will tax your federal retirement benefit. More information about state policies is available here and here.

Expect to wait at least 30 days after you retire to make a withdrawal from your TSP account. You can choose a one-time partial withdrawal or a full withdrawal -- or you can postpone your decision until later. If you opt for the full withdrawal, you'll have a variety of options: a second partial withdrawal, a series of monthly payments in a specific dollar amount, or an amount computed based on your life expectancy. You also can choose to purchase of a life annuity. You can devote portions of your balance to each of the withdrawal options as long as the total covers 100 percent of your balance.

If you are older than 70 ½ when you retire, then you must take your first withdrawal by April 1st of the year following your retirement. The TSP will inform you of this as long as it has your current address. Don't forget to update your address with the TSP if you move after you retire.

Expect that OPM won't be able to find you if you are going to be out of town or at a different phone number or address in the initial months following your retirement. Be sure to include this information on your retirement application. OPM may need to reach you while your claim is being processed. During your initial transition to retirement, you will be able to contact OPM by phone or in writing once you have received your civil service annuitant number. The same applies to the TSP.

Expect to have four of your beneficiary forms follow you into retirement:

Expect that you will have to contact the Social Security Administration if you are eligible for Social Security retirement or Medicare benefits. Social Security has automated the application process, so you can apply online, or over the phone at 800-772-1213.

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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