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

Pay Raise Considerations

On Dec. 27, 2016, President Obama signed into law the 2017 pay increase for federal employees who are paid under the General Schedule, Foreign Service Schedule, and other pay systems for executive, legislative and judicial branch employees. You can find the new pay charts at the Office of Personnel Management’s website--if you haven’t already downloaded them.

Pay raises vary according to locality, and also raise long-term considerations about Social Security and other retirement planning issues.

For example, if you’re a General Schedule employee in the Washington, D.C. locality pay area, you received 2.88 percent more money in your paycheck for the pay period that began on Jan. 8. So a GS-9, Step 6 employee who was earning $62,338 in 2016 gets basic pay of $64,136 in 2017. That’s an increase of nearly $2,000 per year, or $166 a month before taxes. A GS-14, Step 10 employee who earned $141,555 in 2016 will get $145,629 in 2017. This is an increase of a little more than $4,000 in gross pay, or $339 per month.

As I noted in last week’s column, the maximum taxable earnings for for the...

Annual Benefit Adjustments

At the beginning of each year, certain automatic increases to federal employee and retiree benefits go into effect. Many of the increases take place under established formulas and are driven by indexes such as the rate of inflation or the increase in average wages in the United States.

Here is a recap of key increases for 2017:

The 2017 interest rate for service credit payments for civilian and military service credit deposits under the Civil Service Retirement System, Federal Employees Retirement System, refunds from the retirement fund, and voluntary contributions under CSRS is 1.875 percent (down from 2 percent in 2016).

The annual elective deferral limit for Thrift Savings Plan contributions remains unchanged at $18,000 for 2017. This applies to combined total of traditional and Roth contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay and bonus pay, but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone. In addition, the “catch-up contribution” limit — the maximum amount of contributions that can be contributed in a given year by participants age 50 and older — remains unchanged at $6,000 for...

So You Want to Retire Overseas

The inspiration for this week’s column has nothing to do with this week’s presidential inauguration. Rather, it came from a recent email from a federal employee who is married to a German citizen and plans to spend much of her time as a resident of Germany. She will join thousands of federal employees and retirees who retire outside the United States.

According to a recent Congressional Research Service report, a little less than 30,000 civilian employees live abroad. But that number doesn’t include employees of several agencies, including the State Department. It also doesn’t include the military. As of 2010, there also were almost 29,000 retirees and survivor annuitants living in foreign territories.

Here’s part of  the email from the employee who plans to retire in Germany:

I’ve been reading your posts for about 10 years now, but diligently for the past two years since planning my retirement for June 30. I have learned a lot, especially since I am married to a German citizen with a green card and a Social Security number. I will be living in Germany for at least six months and one day out of the year...

The Index: 2017 Edition

It is has been my honor and pleasure since 2006 to write this weekly column. From the beginning, I hoped that these columns would be archived so that they would form a cumulative resource to help federal employees plan for retirement at every stage of their careers.

Below is my annual index to previous columns, which I hope will serve as such a resource. I’ve updated it by adding last year’s columns and deleting some older ones that have become obsolete or irrelevant.

I hope you’ll check back from time to time and use the index when you need information to help you prepare for your retirement from federal service.


1. Retirement Processing

2. Post-Retirement and Phased Retirement

3. New Employees and Midcareer Employees

4. Best Dates to Retire

5. Deciding to Retire

6. Congressional Proposals and Action

7. Things to Do to Get Ready

8. Sick Leave/Annual Leave

9. Service Credit Issues: Civilian

10. Service Credit Issues: Military

11. Survivor Benefits

12. Law Enforcement and Special Groups

13. Eligibility and Computation of CSRS and FERS

14. Other CSRS and FERS Issues

15. CSRS vs. FERS

16. CSRS Offset

17. Disability Retirement

18. Voluntary Contributions...

Paying a Medicare Penalty

Over the years, I’ve written a number of columns about the wisdom of enrolling in “original Medicare” — Part A (hospital Insurance) and Part B (medical insurance). Most of the questions I get on this subject revolve around whether it makes sense to sign up for Part B, and how and when to do it.

Here, for example, is an email I recently received from a retiree who may learn that even after paying a late enrollment penalty, signing up for Part B can actually save her money:

I am a 67-year-old female, retired in 2009 and I have Blue Cross/Blue Shield standard FEHBP coverage. I'm healthy and I did not sign up for Medicare Part B when I turned 65 two years ago. In 2015 I had an emergency room visit and overnight hospital stay followed by two surgeries in 2016. I paid $4,000 out of pocket in 2015 and $5,000 last year. I know I would have to pay a penalty to join Medicare Part B now, but I'm wondering if I should sign up anyway?

I told her it might be worth paying for Medicare Part B even though there is a...

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