With Cuts on the Table, Is It Time to Go?
It’s a good idea to have your ducks in row in case you decide to move up your retirement date.
I’ve received a lot of emails lately about the proposed changes to federal retirement benefits included in President Trump’s budget submission to Congress. Employees are asking if they should move up their retirement date to August or September so they can leave before the new fiscal year begins on Oct. 1.
Here’s my first response: Remember that nothing has changed yet. Any act of Congress causing a substantial negative change in benefits is going to face a lot of opposition from groups who lobby on behalf of federal employees and retirees. Already, members of Congress who represent significant numbers of federal workers have stated their opposition to the changes.
Also, remember that that these ideas have been proposed many times in the past and so far have not been enacted. It is unlikely that all of the proposals affecting retirement will be approved this year. It’s possible that none of them will.
However, many people, including yours truly, are a little more concerned this year than in past years. That’s because Republicans are more likely to enact measures to trim federal benefits, and they now control the White House and both houses of Congress.
When President Reagan was in office, there were many changes to laws affecting federal employee benefits, including:
- The creation of the Federal Employees Retirement System, for employees hired after 1983.
- Major reforms to Social Security programs, including implementation of the windfall elimination provision.
- New federal employees began paying the FICA tax to help fund Social Security and Medicare benefits.
Subsequent changes and events also have had an impact on retirement planning for federal employees, including a three-year pay freeze (2011-2013). Employees hired in 2013 and later have been making higher employee contributions to FERS. Between 1988 and 2005, the Base Realignment and Closure process shuttered 350 military installations, which caused many federal employees to consider early retirement or relocation.
Every Social Security benefits statement includes the following language: “Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time.”
So, operating under an abundance of caution, it’s probably a good idea to have your ducks in a row just in case you decide to move up your retirement date. Here are some things to do to be ready.
Estimate your future retirement income:
- Request an estimate of your Civil Service Retirement System or FERS benefit from your agency’s retirement specialist. You can also estimate this yourself by manually applying the benefit formula under CSRS or FERS.
- Project your Thrift Savings Plan income using the TSP’s retirement income calculator.
- Request a personal benefits statement from Social Security.
Gather forms and publications:
- Application for retirement: SF 2801 (CSRS), SF 3107 (FERS).
- Application to make a service credit payment (if you owe a deposit): SF 2803 (CSRS) SF 3108 (FERS).
- Application to continue Federal Employees Group Life Insurance: SF 2818.
- Beneficiary designations for FERS or CSRS, TSP and FEGLI
- Make a copy your electronic official personnel folder for your own record-keeping. You won’t have easy access to these important records after your separation from federal service.
- Documents you may need to locate that you’ll need for your retirement application, such as marriage certificate, notarized consent of your current spouse if you’re choosing less than the maximum spousal survivor benefit, records of military service, and proof of five years of Federal Employees Health Benefits Program and FEGLI coverage.
- Information on continuation of other benefits into retirement, such as Federal Employees Dental and Vision Supplement Insurance and Federal Long Term Care Insurance.
- Tax planning documents, including IRS form W-4P, IRS Publication 721 and state tax information.
Photo: Flickr user DocChewbacca