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

The TSP Quiz

Even the most experienced investors in the federal government’s retirement savings program, the Thrift Savings Plan, may find some things about it surprising. With that in mind, I decided to present a short quiz this week on TSP facts and statistics.

When you’ve completed the quiz, click here for the answers.

1. When should you make your request to withdraw funds from the TSP?

a. When you are 70 ½ years old, whether you are still working or are separated from federal service

b. No later than the end of February of the year after your separation from federal service if you are over age 70 ½

c. April 1 of the year after you are separated if you are already over 70 ½

d. The TSP does not require that you withdraw funds from your account until you want to

2. The TSP will declare your account to be abandoned when:

a. There is no activity in your account, such as interfund transfers, monthly withdrawals or contributions

b. You don’t respond to the TSP’s notice that you must make a withdrawal request by the required minimum distribution deadline

c. You are on active-duty military service

d. You neglect...

How Your Retirement Nest Egg Adds Up

I like to think of the Thrift Savings Plan as the icing on the cake of the Federal Employees Retirement System. For many federal retirees, the TSP will play the starring role in a financially comfortable retirement.

Since 1987, federal employees have been able to use the TSP to save a portion of their salaries for their future retirement on a tax-deferred basis. (And since 2012, they can invest after-tax dollars that grow tax-free in the Roth TSP). For those under FERS, the TSP includes agency automatic and matching contributions that provide a total of 5 percent of an employee’s basic pay in additional savings as long as the employee contributes 5 percent of his or her salary. The TSP was designed as one of three parts of the FERS retirement plan, along with Social Security and the basic FERS retirement benefit.

All federal employees who are serving under permanent appointments have coverage under FERS or the Civil Service Retirement System and can contribute to the TSP. More than 88 percent of FERS employees participate in the TSP, and more than 60 percent of CSRS employees do. (But they don’t receive agency matching contributions.) The TSP also is...

10 Things You Need To Do Before Leaving Government

This week, I had the opportunity to attend the annual Women In Federal Law Enforcement conference. It included sessions devoted to “You and Your Federal Career.” The range of knowledge about retirement from the women in attendance--who ranged from relatively new employees to those retiring within the next five years--was very interesting.

A few attendees let me know that they were in fear of retirement, which is mandatory at age 57 for federal law enforcement officers. Some admitted they had waited too long to really understand the basics of retirement planning and were worried about their future.

With that in mind, this week I thought I’d present a list of 10 things you need to do to be prepared for before leaving your federal career behind.

1. Figure out when you’re eligible to retire. There are specific age and service requirements for federal retirement -- and there are additional provisions for those considering early or deferred retirement under special provisions such as law enforcement retirement and disability.

2. Determine if all of your federal service is creditable for retirement. In order to be credited towards your length of service for retirement eligibility and computation of your federal retirement benefit...

What You Need to Know About Taxes

If you are planning to retire in the near future, there may be things that you don’t know you don’t know. You know?

One of those things may be tax planning. Over the years, I’ve learned a lot about taxes from friends and associates like Micah Shilanski and Bob Leins. I’ve also been fortunate to learn from many financial and tax experts who have a comprehensive understanding of federal retirement.

Let’s review some of the basics regarding the taxes you pay now compared to what you’ll pay after you retire.

Most federal retirees pay taxes on their retirement benefits. Some retirees aren’t required to pay income taxes -- or pay very low taxes -- but only if they have very low income or live off of investments that produce tax-free income.

Here are a few things you should know about how taxes are different when you’re working and when you’re a federal retiree.

Social Security and Medicare

While employed, most workers pay Social Security taxes (known as FICA taxes). As of 2015, FICA taxes are 6.2 percent on wages up to $118,500. Federal employees covered under the Civil Service Retirement System...

A Retirement Readiness Checklist

Last week’s column ended with a question: When is the best time to retire?

In my seminars I describe it this way: It’s when you are financially and mentally ready for this change in your life -- with a little magic thrown in for good measure. The magic is when you wake up one morning with the realization that you’re ready, and the time has come.

Before you get there, you’ll need to ask yourself a series of questions. If you’re married, are you ready to be with your spouse 24/7? Are your children awaiting your retirement so you’ll  be available to help with child care? Do you need to retire to be a full-time caregiver for someone? Have you discussed what retirement will be like with those who are closest to you?

Here’s a common-sense checklist of things to consider while you’re waiting for that epiphany to come and let you know it’s time to go:

Figure out how much money you’ll need, and how much you’ll have. Will your spending patterns be different than they are now? It is important to calculate your income from all retirement...