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Advice on how to prepare for life after government.
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Cliff Divers, Worker Bees and Retirees in Training

  • By Tammy Flanagan
  • March 8, 2013
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I recently received an email with this unusual question: “Should I stop/reduce contributing to my Thrift Savings Plan because I am 65?”

The emailer referred to a recent column in the Wall Street Journal by Carolyn T. Geer, entitled “How to Get to Retirement? Practice!,” noting that in it an expert had offered the opinion that contributions to 401(k) plans are the “least important” piece of the retirement puzzle for people in their 60s.

That expert, Christine Fahlund, vice president and senior financial planner at T. Rowe Price Group, describes three kinds of retirees:

  • Cliff Divers, who go cold turkey from full time employment to full-time retirement as soon as they’re eligible. These are the workers who have been planning their retirement for 35 years and are ready to enjoy their life after retirement.
  • Worker Bees, who stay in their jobs longer than most people and delay retirement. These employees typically work more 35 to 40 years and sometimes have trouble visualizing life after retirement.
  • Retirees in Training, who continue working after they are eligible to retire, but begin their retirement prior to actually retiring. In the federal sector, this type of person would be among the ...

Retirement Resources

  • By Tammy Flanagan
  • March 1, 2013
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If you are planning to retire between today and June 30 (which is one of the best dates to retire if you’re under the Federal Employees Retirement System) or July 3 (an optimum day for those under the Civil Service Retirement System), then it is time to begin to figure out the forms you need to fill out, gather and sign.

I’ve written plenty of columns in the past on how to get ready to retire. Here are some of my favorites:

Forms

The Office of Personnel Management provides a set of forms online that you’ll need to fill out. Your agency retirement specialist would love to have you turn these in at least 30 days prior to your retirement date -- or better yet, 60 to 90 days.

Here are the key forms:

The standard retirement application:

  • CSRS SF ...

What You Need to Know During a Furlough

  • By Tammy Flanagan
  • February 22, 2013
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For some (though not all) federal employees, the threat of furloughs as a result of looming budget sequestration is real, and agencies are beginning to prepare for the possibility. Here are some things you should be aware of and resources you might want to have at your disposal if the threat becomes a reality.

Retirement Credit

For purposes of retirement credit, a furlough is treated as leave without pay. The rules governing the Civil Service Retirement System and the Federal Employees Retirement System allow up to six months of leave without pay to be credited towards the eligibility for and computation of retirement benefits during any calendar year. You are not required to make a deposit (payment) to the retirement fund under such a scenario. The high-three average salary used to compute benefits will not be affected, since it is the salary rate that is in effect that is used to compute the high-three, not the pay actually received.

Leave Accrual

Here’s what the Office of Personnel Management says about leave: “The accumulation of nonpay status hours during a leave year can affect the accrual of annual leave and sick leave. For example, when a full-time employee with an ...

Give the Gift of Cash

  • By Tammy Flanagan
  • February 15, 2013
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According to Giving USA, Americans gave almost $300 billion to their favorite causes in 2011. Charitable bequests by individuals totaled more than $24 billion, which represented 8 percent of the total.

In my experience, the topic of charitable giving rarely comes up at federal retirement planning seminars. So why talk about it now? Because as federal employees have seen a shift in their retirement benefits from a single defined benefit (under the Civil Service Retirement System) to one (under the Federal Employees Retirement System) that includes a significant savings component in the form of the Thrift Savings Plan, the topic has become more timely.

Keep in mind that when CSRS or FERS retirees die, their federal retirement annuity benefits end as well, with the exception of the survivor’s annuity. There is very little cash value to a federal retirement benefit, other than the employee contributions that are generally paid to the retiree (or survivor annuitant) within a few years following the beginning of the benefit payments.

But what if your survivors are not financially dependent on you? The balance of a retiree’s TSP account might be left to loved ones who are not financially dependent (such as grown ...

A Tax To-Do List

  • By Tammy Flanagan
  • February 8, 2013
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Last week, I wrote about things new retirees need to be aware of  as they make the transition into this new phase of life. This week, I want to focus on tax issues, and for that I’ve called on my associate, Bob Leins, CPA, for help.

But before I get to some commonly asked tax questions, I wanted to address some comments from last week’s column. Several of you said you had retired on Dec. 31, 2012, or Jan. 3, 2013, and had yet to receive any retirement benefit. Keep in mind that if your retirement began in January, your first retirement check would be dated Feb. 1, and you might not receive that check until mid-February at the earliest -- and it will be an interim payment. In the meantime, you should receive your final paycheck from your agency as well as the lump sum payment for accumulated and accrued annual leave.

By the way, the Office of Personnel Management received 22,187 new retirement claims in January. The backlog of applications now stands at 36,062 pending cases. So be prepared to be in interim status for at least a few months -- maybe more.

Now for Bob ...