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Thinking About Getting Out of Government? Here’s What You Need to Know

Lately, it seems like I’ve been conducting seminars for as many mid-career employees as for those nearing retirement. It’s great to see younger workers planning for the future.

One difference with midcareer employees is that many of them aren’t planning to complete their careers as federal employees. I always try to point out the value of working long enough to retire and be eligible for lifetime health benefits and the other advantages enjoyed by federal retirees. Still, some employees are going to leave government service before they are eligible for immediate retirement.

If you’re in this group, there are some things you should know before you leave.

Deferred Benefits

Under the Federal Employees Retirement System, even if you leave early, you may be entitled to a deferred retirement benefit. To qualify, you must meet the following requirements:

  • Have at least five years of civilian federal service before you resign.
  • Do not elect to receive a refund of your FERS retirement contributions.
  • File for your future retirement benefit as early as your minimum retirement age (55-57, depending on your year of birth) if you had at least 10 years of prior service. The benefit will be reduced...

4 Things You Need to Know About Retirement Rules

On many occasions, someone tells me that they’re worried that there is something about their retirement that they may not realize that they don’t know. Often, this is why they attend a retirement seminar or end up hiring a professional to provide advice.

There are good reasons for federal employees to be concerned about gaps in knowledge about their retirement benefits. Let’s look at a few.

The rules have changed many times over the years.

Civilian employees have had retirement benefits for almost 100 years. In that time, the rules that apply to it have been overhauled and amended many times. Here’s just one example: differences between the newer Federal Employees Retirement System and the old Civil Service Retirement System. Under FERS, civilian service that was not covered by retirement deductions is not creditable towards eligibility or computation of the basic retirement benefit if it was performed after 1988. This includes most temporary service, such as seasonal work for the National Park Service. However, if such service was performed before 1989, it can become creditable by making a contribution to FERS (with interest) prior to retirement.

Under CSRS, this type of service counts towards eligibility and...

Weighing Your Life Insurance Options

In last week’s column, we took a look at the Federal Employees Group Life Insurance program. FEGLI is a form of group term life insurance. It has no cash value, and once you’re insured, you can choose to keep it throughout your life. For most of people, term life insurance is the best way to cover their insurance needs.

Permanent or whole life insurance is different. It generally has a fixed premium, it maintains its value throughout your life and there is a cash value component you can access. In a Kiplinger’s article about how to determine your life insurance needs, Kimberly Lankford writes that the best reason to consider whole life insurance is if you’ll need coverage beyond 20 or 30 years -- or after age 65, when term insurance gets expensive. You might want permanent insurance, for example, if you need to protect kids with special needs who will always rely on you (or your estate) for support.

There are also enrollment issues to consider when weighing your insurance options. FEGLI rarely holds open enrollment periods, when you can increase your coverage without medical underwriting. (There was one last year.) You can sign up when...

Your Money and Your Life Insurance

As federal employees plan for retirement, it’s important that they reevaluate their insurance needs. This includes health, long-term care, and life insurance. The unexpected need for expensive medical care, personal care due to a physical or mental impairment or an untimely death can throw a monkey wrench into the best-laid retirement plans.

In recent columns, we’ve looked at the cost of prescription drugs and assessing whether you need Medicare if you have federal health benefits coverage. In this week’s column and next week’s we’ll zero in on evaluating the Federal Employee’s Group Life Insurance program to determine if it is the best option for your life insurance needs. FEGLI may be the best choice for you, or you might find a better fit if you shop around. Just to be clear, I don’t sell life insurance products. I’m just here to help guide you through your options.

This week, we’ll look at FEGLI, and next week we’ll cover some of the other options.  

When it comes to life insurance, FEGLI is an easy option for federal employees. It’s offered by the federal government,  and the premium is deducted automatically...

Two Medicare Questions You Need to Think About

Whether you are turning 65, getting ready to retire, or just gathering information to become better informed, you may need some guidance when it comes to Medicare enrollment and benefits. There are two important questions for federal employees and retirees to consider about Medicare:

  • How does adding Medicare help provide more complete health coverage?
  • How do you avoid paying a penalty for late enrollment in Medicare Part B?

Federal Medicare beneficiaries are in a unique and sometimes confusing situation when it comes to Medicare enrollment because Federal Employees Health Benefit Program plans continue to cover employees as well as eligible retirees before and after they qualify for Medicare coverage. (A postal reform bill currently under debate in Congress would change this flexibility for postal retirees.) In addition, many federal employees and retirees qualify for coverage through the military’s TRICARE system or via the Veterans Affairs Department.

Because of this complexity, one of the most frequent questions I get at my pre-retirement seminars is, “What do I do about Medicare enrollment when I turn 65?”

According to the Office of Personnel Management, the percentage of federal employees working past age 65 is increasing. In September 2016 there were nearly 80...