The importance of counseling in the planning process.
Pull up a chair. Can I get you a cup of coffee? If you’re married, I hope you brought your spouse along. We’re going to talk about your upcoming retirement.
Welcome to your pre-retirement counseling session!
If you are retiring in the next few months, I hope you’ve had the opportunity to get pre-retirement counseling. Unfortunately, not all federal employees receive the same level of counseling before their retirement date. Some agencies have many employees retiring and very few qualified retirement specialists.
The job of a federal retirement benefits counselor is demanding. Navigating the rules and regulations governing Civil Service Retirement System and Federal Employees Retirement System benefits requires a lot of experience. Here’s a list of agency benefits officers, who are designated to advise employees about various aspects of benefits program administration. If you’re not sure who to contact in your agency for retirement counseling, this person may be able to provide you a point of contact.
In the meantime, I’ll provide a little counsel of my own. The Office of Personnel Management’s Publication 83-11, Thinking About Retirement?, offers a very good overview of what you can do and what your agency can help you do as you prepare for your retirement. Here are some recommendations:
- Make sure you have health and life insurance in place, because both the Federal Employees Health Benefits Program and Federal Employees Group Life Insurance have five-year tests to continue coverage into retirement. For more information, see my previous column, The Five Year Test.
- Request a retirement estimate for CSRS or FERS benefits. This will allow you to begin thinking about the value of your retirement benefit to determine if it will provide enough income along with other sources, such as Social Security and the Thrift Savings Plan. For more information, see this column: Take Charge of Your Retirement.
- Update your designation of beneficiaries. There are separate beneficiary designations for CSRS or FERS, FEGLI, TSP, and unpaid compensation. See my column What Happens to Your Life Savings? I’ve also written specific columns on beneficiary designations for singles and married couples.
- Access your personal benefits statement at the Social Security Administration’s website. You can also use the Social Security estimator to create different scenarios to show the impact on your future benefit based on when you plan to stop working.
As you get close to retirement, there are a series of steps you should take. Here’s a timeline.
One year before retirement:
- Attend a final pre-retirement seminar, if available. Bring your spouse, if you are married and you are permitted to have him or her attend.
- Request an updated retirement estimate from your agency retirement benefits specialist showing the date you are planning to retire and your retirement elections for insurance, survivor benefits, taxes and (if applicable) unpaid deposits and other service credit issues.
- Make an appointment with your retirement specialist to go through a detailed summary of your federal service to be sure there are no discrepancies.
- Give serious consideration to survivor benefits. They will affect the income of you and your spouse. That’s why I called the choice about survivor benefits The Most Important Retirement Decision in a recent column.
- Get information about Thrift Savings Plan withdrawal options. Consider the tax consequences of your choices.
- Consider scheduling a session with a financial adviser. If you don’t have one, you can read my column How to Pick a Financial Adviser.
Six months before retirement:
- Clear up any outstanding debt to your agency such a travel advance or advanced leave credit.
- If you are planning to waive your retired pay from a military career, be sure to do this in writing at least 90 days, but no later than 60 days, before your retirement date.
- Consider whether phased retirement is available at your agency.
Two months before retirement:
- Set the date! Here are some great dates for 2015.
- Complete your application for retirement and submit it to your retirement specialist.
- If you’re going to begin receiving Social Security benefits, contact Social Security about three months before you want the first payment to arrive. Social Security will not process applications more than four months in advance.
- If you’re approaching age 65 or already older than 65, remember to contact Social Security to enroll in Medicare Part A and/or Part B.
- If you are under CSRS or CSRS Offset and have a voluntary contributions account, decide what you want to do with these funds. You can find more information in my column Your Own Retirement Savings Plan.
After you retire:
- Wait 30 days after your retirement date to request a withdrawal from the Thrift Savings Plan. This will allow the necessary time for your payroll office to notify the TSP that you have separated from your agency. After this time, you can choose when and how to withdraw your TSP funds.
Remember, your agency may provide some help and guidance, but it is ultimately your responsibility to make decisions that affect your retirement.
I wish all of you many things to be thankful for as you prepare to celebrate Thanksgiving!