Eight Tips for Setting Your Retirement Goals

• By Tammy Flanagan
• September 14, 2012
• comments

Do you know how much you will have to save to retire comfortably? Have you set a goal for retirement? Or are you flying by the seat of your pants?

Last week, I wrote about planning for retirement from early in your career. Here’s a comment I received from a reader about that column:

Another suggestion that I didn't think of until a couple of years ago is to assess what your retirement plans are and how much money you need to meet those goals. Otherwise, you read that you need X precent of your salary in retirement or look at numbers that don't have a lot of meaning, all of which can feel overwhelming. We were pleasantly surprised when meeting with a financial planner how much we would actually need to meet our retirement goals. We moved our Thrift Savings Plan balance to a more aggressive life-cycle fund because we won't need it for seven to 10 years after retirement.

Retirement planning can be downright scary, especially for those who are closing in on retirement eligibility. Sometimes, people are told they need $1 million or more saved to retire comfortably. I have no idea where ...

Get Started

• By Tammy Flanagan
• September 7, 2012
• comments

Until the creation of the Federal Employees Retirement System in 1984, employees who were more than a year from retirement eligibility typically didn’t give retirement planning much thought. Some of you might remember a column I wrote about my Uncle Steve and Aunt Helen, who retired from federal service in the 1970s. I once asked Steve, “What did you do to prepare for retirement?” He said, “I filled out my retirement application 30 days before I turned 55.”

Those were the days when all federal employees were covered by the single-benefit Civil Service Retirement System. The only planning required was to work for 30-plus years in federal service. Then you could earn a benefit that, in many cases, could support you for more years than you actually worked.

For today’s federal employee covered under FERS, though, retirement planning is a career-long endeavor. If FERS employees were to wait until 30 days before retirement eligibility, they might find their financial outlook to be grim.

There are three legs to the retirement stool under FERS: a basic benefit, Social Security and the Thrift Savings Plan. Figuring out how these all fit together is not a spectator sport. There is a ...

Free Estimates

• By Tammy Flanagan
• August 31, 2012
• comments

If you were to ask me what is the single most important thing you should do to ensure a smooth transition to retirement, it would be to request a retirement estimate at least a year (preferably five years) before you are eligible to retire.

The estimate is a computation of your Civil Service Retirement System or Federal Employees Retirement System benefit that is prepared by a specialist in the human resources office of your agency. Some (probably most) agencies are overwhelmed with estimate requests and actual retirements these days, so they may limit estimates to employees who are within a short window of retirement eligibility and might prepare only one or two computations per year. It is also not unusual for a request to take several weeks to be processed. Keep in mind that deaths, disability inquiries and actual retirements take precedence over your request for a retirement estimate.

In a column last year, I wrote about the information that a good retirement estimate should include. You can read that column for full information, but here are the elements:

• Summary of your federal service
• Civilian deposits
• Military deposits
• Service without credit
• Survivor benefits
• Insurance
• Sick leave
• High-three average salary
• The ...

Talking TSP

• By Tammy Flanagan
• August 24, 2012
• comments

Some of my recent columns on Thrift Savings Plan-related issues have caused readers to raise some questions and concerns. This week, I thought I’d address a few of them.

Can you please explain how TSP dividend distributions work? In my quarterly statements I don't see the distribution of dividends. My purpose for purchasing stock is to earn dividends to buy additional stock. I checked the TSP website and it says that they don't distribute our dividends to us. According to the website, the dividends we earn are not given to us, but are added to the stock price. That doesn't sound right because that means when we earn a dividend it doesn't buy us more stock. And when the stock price goes down we've lost any earned dividends without having additional stock to offset the price decrease. Is that correct?

Net earnings are reflected in the share price of the funds published by the TSP. The C, S and I Funds include the capital gain or loss (net of trading costs), plus dividends, interest on short-term investments (in the G Fund) and securities lending income. Subtract the TSP’s net expenses from that, and ...

Summertime Q&A

• By Tammy Flanagan
• August 17, 2012
• comments

When possible, I try to provide answers to questions that I find in the comments that follow my column. Well thought-out political comments and questions are appreciated. They are a gauge of how I’m doing as far as hitting issues that are relevant to the readers. So keep ’em coming. Thanks again for your loyalty and I appreciate your feedback.

Here are some recent questions readers have asked, along with my responses.

On changes to the federal retirement system in recent decades:

You didn’t go all the way back to the introduction of the Federal Employees Retirement System [in 1983], which was a major change. I consider it a wash; there are positives and negatives to FERS that I won’t go into here. But a major negative was putting federal employees under Medicare when we already can carry our Federal Employees Health Benefits Program coverage into retirement. I feel we are paying twice for medical coverage when we retire.

One of the benefits of covering federal employees under Medicare is when Medicare becomes the primary payer, the FEHBP plans save a tremendous amount of money. This generally occurs when an individual is older than 65, retired and ...