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

Unlocking the Secrets of FERS

As you probably know, federal employees are generally covered by one of two retirement systems: the “old” Civil Service Retirement System or the “new”  Federal Employees Retirement System. But FERS isn’t that new any more. It includes many employees who have accumulated 30 or more years of federal service. And recently it’s been updated twice: In 2013 Congress created FERS-RAE (for “revised annuity employees”) and a year later FERS-FRAE (for, get this, “further revised annuity employees”). Employees hired in the past couple of years under the two new systems contribute more than traditional FERS workers toward their basic retirement benefit. But so far, they have the same FERS benefits as other employees hired before 2013.

I rarely hear anyone say that FERS is superior to CSRS, which includes a large defined benefit.  But for some employees, FERS can provide a bigger retirement benefit than CSRS. (I can hear longtime readers of this column saying, “here she goes again.”) Sure, if given the choice, many veteran employees would choose CSRS without hesitation. But others just might find FERS is better.

Lets look at some categories of such employees:

People with less than 30 years of federal service or who ...

What Really Happens When You Change Health Plans

If you changed health plans during the 2014 open season, you might find yourself in uncharted waters this year.

I’ve been talking lately to some of my retiree friends who heard (from me) about the new Aetna Direct plan that was designed especially for retirees who have Medicare Parts A and B. They thought it seemed like a good idea to have a health plan tailor-made for their situation. So they did the unthinkable: They changed plans.

My friends, Ellie, Edie, Sharon, Wanda and Cliff (who range in age from just-turned-65 to more than 90), had been covered under the Blue Cross Blue Shield standard option for more than 30 years. So this was a big change. I don’t sell insurance, but since I was the one who introduced them to the idea of switching, I’m now the go-to person for questions about the change.

The emails, phone calls and visits started in December. Here’s a recap of how the conversion has gone so far.

Signing Up

After I told my friends about the new plan, they all were interested. “Could you help us sign up?” they asked. “Sure,” I said. “I can show you how ...

The Index: 2015 Edition

The year 2015 begins my 10th year of writing the Retirement Planning column. It’s been an honor and a pleasure to provide this weekly update to help you prepare for your retirement. My husband fully retired from federal service last month and while I’m going to continue my work for a few more years, we will be transitioning to a partial retirement lifestyle. But even though I’m not leaving, I’d like to take a little time this week to thank a few people who have helped me along the way.

First is the staff of Government Executive, who help make sure the column is concise and interesting each week. Writing this column has given me an appreciation of what it takes to get a point across through the written word.

I also need to show my appreciation for Bob Leins and all of my fellow presenters at the National Institute of Transition Planning, and Micah Shilanski at Plan Your Federal Retirement, who have helped me with their expertise on subjects ranging from financial planning to taxes. And I owe much to Mike Causey, senior correspondent at Federal News Radio, who was my inspiration and who continues ...

Beware of Scams

Many federal employees and retirees have amassed large balances in their Thrift Savings Plan accounts. That gives them some long-term retirement security, but it also exposes them to targeting by scammers who want a piece of their nest eggs.

No one wants to be misled by unscrupulous sales people. Unfortunately, it happens all too often -- sometimes even on federal property during pre-retirement seminars. The National Institute of Transition Planning, which pays me to provide unbiased information to federal employees at seminars, has been diligent about never selling anything to employees.

Beware, though of  “free” seminar presenters who ask only that they be allowed to pass out business cards or financial planning products in exchange for providing a presentation.  The North American Securities Administrators Association has issued a warning about “free meal seminars.”

“While the ads may stress that such seminars are ‘educational,’ and ‘nothing will be sold at this workshop,’ many of these seminars are intended to result in the attendees’ opening new accounts with the sponsoring firm, and ultimately, in the sales of investment products, if not at the seminar itself, then in follow-up contacts with the attendees,” the association says. “Seniors seeking educational insights and information should be ...

The TSP by the Numbers

This week, the Thrift Savings Plan held its quarterly meeting of personnel and payroll office representatives. This is when new and updated information is disseminated to agencies to share with their employees.

I thought it would be interesting to take a look at the latest numbers for the plan, as of the end of October.

The overall plan balance was $431 billion, divided as follows:

  • G Fund: 35 percent
  • C Fund: 28 percent
  • F Fund: 5 percent
  • S Fund: 10 percent
  • I Fund: 5 percent
  • L Funds: 17 percent

The average account balance for a Federal Employees Retirement System employee was $113,934 total and $5,463 for the Roth option. The average balance for a Civil Service Retirement System employee was $113,057 total and $8,947 for the Roth.

There are 4,677,445 total participants in the TSP. Some facts about them:

  • 302,000 FERS employees only receive agency contributions (equaling 1 percent of basic pay)
  • 113,000 CSRS employees contribute to the TSP (about 65 percent of the remaining CSRS employees in federal service)
  • 1,196,000 separated participants have left their money in the TSP
  • 274,000 active participants are not currently contributing, but still ...