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

How to Prepare for a Retirement Storm

As you probably know by now, there are some serious threats to federal retirement benefits on the table this year in Congress. GovExec reports have been keeping you well apprised of these proposals. Here’s how National Active and Retired Federal Employees Association President Richard Thissen describes the situation:

The House and Senate passed budget resolutions in March that cut billions of dollars’ worth of pay and benefits from federal employees and retirees. The House budget proposed $318 billion in “savings” by raising the cost of health insurance for all [Federal Employees Health Benefits Program] participants, eliminating federal jobs, increasing retirement contributions for current employees and, perhaps most shocking, changing the rate of return on the Thrift Savings Plan G Fund. The Senate budget, while less specific in how it would cut costs, still asks the federal community for $170 billion toward deficit reduction.

NARFE’s legislative staff will earn their keep this year fighting such proposals.

Those of you who read this column regularly know that over the past 10 years I’ve  been an eternal optimist. I’ve reminded readers time and again that few legislative proposals actually become the law of the land. While federal retirement benefits...

Don’t Mess With the G Fund

What is unique about the Thrift Savings Plan? Well, first of all, it’s a retirement savings plan specifically designed for federal employees and military service members. Another notable fact about the TSP is its very low administrative costs -- 29 cents per $1,000 invested per year. For some 401(k) plans, such costs can be as high as $24.50 for every $1,000 invested.

But more than any of these characteristics, one thing really sets the TSP apart: the G Fund, a short-term Treasury security that is exclusive to the TSP and is guaranteed by the U.S. government. Nearly 40 percent of the money invested in TSP accounts is in the G Fund--almost $200 billion.

The G Fund aims to deliver a rate of return higher than inflation while avoiding exposure to default risk and market price fluctuations. But it’s currently at risk of losing that feature. As GovExec’s Eric Katz reported in late March,  a House Budget Committee report takes issue with how the interest rate on the G Fund is calculated, arguing that “those who participate in the G Fund are rewarded with a long-term rate on what is essentially a short-term security...

9 Questions (and Answers) for Federal Couples

A few weeks ago, my colleague Bob Leins and I conducted a webinar on the topic of retirement benefit issues for federal couples -- those in which one or both of the spouses are federal employees. The presentation led to lots of audience questions. This week, I thought I’d address some of them.

How do you get proof that you have been enrolled in a family plan under the federal Employees Health Benefits program from your human resources department?

This question relates to the “five-year test” of continuous retirement coverage in order to carry FEHBP into retirement. If you were covered under your spouse’s self and family enrollment and are now covered under your own self only enrollment, your records may not show five years of continuous coverage. In these cases, either your spouse or your HR specialist can obtain your spouse’s FEHBP enrollment form from their official personnel folder and include this with your other FEHBP documentation when your retirement case is prepared for submission to the Office of Personnel Management.

If I’ve been married less than five years at retirement, does my spouse need to be vested for five years or will my vesting be...

Leaving Government Now and Taking Retirement Later

Not all federal employees retire from federal service. Some work in government for several years, but leave before they’re eligible for immediate retirement benefits. Under the Federal Employees Retirement System, those who have at least five years of creditable civilian service may be eligible for a deferred retirement at age 62 or earlier, if they have completed 10 years or more of creditable service. Only five of those years must be civilian service.

I’ve written a couple of columns in the past about deferred retirement:

I recently received the following question, which made me realize it’s probably a good time to take up the issue again:

I am a federal employee with 31 years of service in the FERS system. I have the service years required to retire but not the age. I have another seven years until I reach my minimum retirement age (MRA). I have been thinking about leaving the federal government to pursue other interests. I have read scenarios for retirement where the employee has the age but not the service years but have not found any information about acquiring the service years...

The Importance of Accurate Information

In some federal agencies, retirement counselors and specialists have very little experience these days. There’s little incentive to stay in the job of human resources specialist if there are no opportunities for advancement. Recently, I learned that one agency requires their retirement counselors to move to a different job after two or three years in the position.

Here’s why this bothers me: Would you expect your heating and air conditioning technician to move on and become a plumber after two or three years -- and then after that become an electrician? After two to three years as a retirement specialist, you’re barely ready to work without supervision.

I’ve been a retirement specialist since 1986. Every year, I build on the knowledge and experience I’ve gained in the past. This is what makes my services valuable to the employees I meet.

When I first started, I worked with a supervisor who would review my work before it was sent on to the employee or to the Office of Personnel Management to be sure that it was accurate. Employees have shown me retirement estimates that contain multiple errors. Such incorrect information can cause employees to become alarmed and...