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Achieving retirement readiness is about both financial and mental preparation. It’s important to make sure you have both of these areas covered before you make the big move. Here are some tips and resources to help you prepare.
Do your due diligence on financial professionals. In addition to Security and Exchange Commission resources, the Commodity Futures Trading Commission provides an interactive website, SmartCheck.gov, where you can check the background of financial advisers and become a more informed investor.
Don’t forget to factor in taxes. Refer to IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits, to help with completing your federal return and to learn about computing the tax-free portion of your benefit. The Office of Personnel Management withholds federal tax from retirement payments, and you can use OPM Retirement Services Online to set up state tax withholding from your Federal Employees Retirement System benefit. You can also choose to pay estimated federal and state taxes. This IRS Withholding Calculator will help.
Also see important tax information from the Thrift Savings Plan, especially page 8, which covers mandatory withholdings and options to change withholdings. The TSP provides tax information about withdrawals and required minimum distributions and specific information for participants receiving installment payments. The TSP does not withhold state or local income tax. However, they report all TSP distributions to your state of residence. The TSP does withhold federal income tax, but beware of mandatory amounts of withholding as well as potential tax penalties.
Wrap your mind around retirement. Readiness is about more than just having the money to live comfortably. It’s about adjusting to a whole new stage of life. Here are some resources to help you through that process:
- Transitions: Making Sense of Life’s Changes, by William Bridges.This book, originally published 40 years ago, has been updated, but still provides a simple, clear roadmap to navigating life’s changes.
- Retire Smart, Retire Happy: Finding Your True Path in Life, by Nancy K. Schlossberg. A guide to making the psychological and emotional adjustments needed to make sure you enjoy your retirement years.
- Next Avenue, an online publication affiliated with the Public Broadcasting System, provides news and information for America’s older population.
- Growing Bolder specializes in “sharing the inspirational stories of ordinary people living extraordinary lives; men and women who are smashing stereotypes and proving that when it comes to living big, bold lives, it’s not about age, it’s about attitude.”
- The National Active and Retired Federal Employees Association not only advocates for federal employees and retirees in the halls of Congress, but provides online webinars, a monthly print magazine and other resources.
Whether retirement is right around the corner for you or off in the distance, it pays to think about the monetary and emotional adjustments you’ll have to make. That way, when the day comes, you can relax and enjoy what could be the most rewarding stage of your life.