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Advice on how to prepare for life after government.
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When Life-Changing Events Happen

The annual insurance open season ended more than two months ago. So what do you do if you need to make a change in your insurance benefits? Did you know that there are some insurance changes that can—and should—be made outside of open season?

This is true for the Federal Employees Health Benefits Program, Federal Employees Group Life Insurance and the Federal Employees Dental and Vision Insurance Programs. When it comes to the five years leading up to your retirement date, the rules regarding changes can be especially important for FEHBP and FEGLI because of the “five-year test” that must be met in order to maintain these valuable benefits during retirement.

I wrote about the five-year test for FEHBP in a previous column. Last July, I received the following anguished email from an employee who was planning to retire in August 2017:

I have been a federal employee for 34 years and I am retiring under CSRS on 31 August 2017. I have had federal health insurance since day one of my career. I was covered by my retired husband’s FEHB self and family plan until the end of 2016. Because all our children are now over...

Retiring Sooner Than You Expected

Last week, I got a little ribbing for writing about divorce so close to Valentine’s Day. So this week, I decided to write about a topic that some of you may love: retiring a little sooner than expected. I’m going to tell you about a recent retiree and a soon-to-retire employee who were able to get sweetheart deals that allowed them to retire a bit earlier than initially planned.

Before I share these two examples, I need to explain a few retirement rules. For most federal employees, unused sick leave will add a little more money to your retirement benefit by providing additional time towards the computation of your retirement benefit. But it generally won’t help you be eligible to retire any sooner.

For example, if you’re planning to retire at age 55 under the Civil Service Retirement System, you will be required to have 30 years of creditable service to be eligible for retirement before your sick leave can be credited in the computation of your retirement benefit. The same goes for the Federal Employees Retirement System if you want to retire at your minimum retirement age (55-57, depending on your year of birth). You...

Divorce and Your Benefits

If you have gone through a divorce, are going through one, or may go through one in the future, you should be aware of the potential impact on your federal benefits. In many cases, employees are not sure exactly how much their former spouse is entitled to receive from their Civil Service Retirement System or Federal Employees Retirement System benefit. Some people are not aware of the difference between retirement benefits, the FERS annuity supplement and survivor benefits, and the meaning of such terms as “marital share” and “court order acceptable for processing.”

Let’s look at three of the most important concepts.

Court Order Acceptable for Processing

To understand why this phrase is so misunderstood, consider the definition of a COAP found in the Handbook for Attorneys on Court Ordered Retirement and Insurance Benefits: “a court order as defined in this section that meets the requirements of subpart C of this part to affect an employee annuity, subpart E of this part to affect a refund of employee contributions, or subpart H of this part to award a former spouse survivor annuity.”

This means that the court order must be written in specific language that is understood by the...

Preparing to Live a Long, Healthy Life

On Jan. 24, the Senate Special Committee on Aging held a hearing titled Turning 65: Navigating Critical Decisions to Age Well, which highlighted strategies to empower members of the baby boom generation as they move into older adulthood. The committee’s chair, Sen. Susan Collins, R-Maine, opened the hearing with a sobering report on our aging society. She noted:

  • About 49 million Americans are already 65 or older.
  • This number is estimated to grow to 98 million by 2060.
  • Over the next twelve years, 10,000 Americans will turn 65 each day.
  • More than one out of four Americans who live to age 65 can expect to live into their 90s.
  • Americans age 85 and older are the fastest-growing segment of our population.
  • The second-fastest growing age group is 100 and older.
  • Genetics determines 20 percent of longevity; lifestyle and environment dictate the other 80 percent.

As Collins highlighted in her remarks at the hearing, to maximize health and well-being it’s important to stay physically active, eat well, converse with friends, read engaging books, do something meaningful every day, and take proactive steps to improve wellness. She noted that in her home state, many people are isolated in rural...

Tax Assessments

Last week, we started looking at tax implications in the retirement planning process, which are complicated this year by recent changes in tax law. This week, let’s continue exploring tax issues, with some specific considerations for federal employees—and a few tips.

First, on withholding. When a federal employee files a retirement application under the Civil Service Retirement System or Federal Employees Retirement System, they can give the Office of Personnel Management a Form W-4P, indicating whether or not to have tax withheld. The amount of withholding depends on your marital status, the number of withholding allowances, and any additional amount you designate to be withheld. If you don't make any of these choices, OPM will withhold as if you were married with three withholding allowances.

OPM also will accept the W-4 that is already on file with your employing agency if you attach a copy with your retirement application. OPM will withhold federal income tax from your interim retirement payments while your retirement application is being processed—and you might receive several interim checks during the processing of your retirement. If you choose not to have tax withheld, then you can make estimated tax payments directly to...