Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Comparing Your Income Before and After Retirement

After you retire, you’ll find that some of your expenses — such as the cost of commuting or maintaining a professional wardrobe — will go away. But you also might find that you increase your spending in such areas as travel and health care. That’s why it’s important to compare your actual income in retirement to what you are bringing home during your working years.  

Last week, we looked at ways to ballpark your retirement income. Now let’s do a more concrete “net to net” comparison of what you can expect pre- and post-retirement.

Your gross and net income are shown on your biweekly leave and earnings statement. The net is the amount after the withholdings for such items as taxes, insurance and retirement contributions. Some withholdings, such as Thrift Savings Plan contributions, health insurance premiums and flexible spending account allotments, reduce your taxable income.

Let’s look at an example involving “Shirley”:

Gross monthly salary: $8,413.60

  • FERS retirement contributions: -$67.32
  • Medicare tax: -$115.83
  • Social Security tax: -$495.24
  • Federal Employees Health Benefits: -$265.37
  • Federal Employees Group Life Insurance (Basic): -$33.80
  • Federal Employees Group Life Insurance (Option B): -$72.93
  • Federal Employees...

Ballparking Your Retirement Benefit

Last week, I presented a series of true/false questions to ask yourself to determine if you’re  financially ready to retire. One of the questions was whether you had done a “net to net” comparison of your net monthly income while working compared to your net monthly income you will have once you are retired.

In order to do that, you need not just the information available in your paycheck about your current net income, but a reasonable estimate of what you can count on in retirement. There are several ways to get that information.

I encourage employees who are planning to retire within the next year or two to request an estimate from their human resources office. Most likely, it will be prepared using one of two software programs:

These programs are designed for use by trained retirement specialists. Those specialists typically review your service history before using the software, to provide a more accurate estimate of your Civil Service Retirement System or Federal Employees Retirement System basic benefit. Retirement specialists are often inundated with requests for estimates, along with the work of...

Are You Financially Ready to Retire? A True-False Quiz

“You can be young without money,” Tennessee Williams once said. “But you can’t be old without it.” When it comes to planning for retirement, there’s a difference between being eligible to retire and being able to afford it.

In working with federal employees, I’ve found that many think they don’t have enough money to retire, but in fact are more financially prepared than they realize. For example, I’ve met an employee with more than 40 years of federal service who is saving $24,000 year in the Thrift Savings Plan, but still is worried about becoming destitute if he retires at 62.

Others have their eye on the eligibility milestone, but might be looking for a second career when their money runs out. I’m thinking of one who is planning to retire at 58 with the minimum required service of 30 years, but is struggling to contribute 5 percent of his salary to his TSP account. On top of that, he has all of the $150,000 in his account invested in the G Fund. And did I mention he has an ex-spouse who will be receiving 50 percent of the first 20 years...

How To Make Sure You Get What You Deserve

You don’t need to become a retirement specialist to adequately prepare for your post-government years. But it is important to become familiar and confident about the retirement benefits you’re entitled to receive based on your federal career.

The best safeguard against any kind of mistake in calculating your benefits is knowledge. Here are some steps you can take to ensure you get the benefit you’ve earned:

Attend a pre-retirement or mid-career planning seminar, if available from your agency or a private vendor.

Take advantage of online training opportunities. Here are a few examples:

Get basic information about the Civil Service Retirement System, the Federal Employees Retirement System, the Federal Employees Health Benefits Program, the Federal Employees Group Life Insurance program, the Thrift Savings Plan and Social Security:

Be sure that those who may have access to benefits you’ve earned remain informed. These include:

  • Your spouse
  • Guardian of your unmarried dependent children
  • Former spouse with court-ordered benefits
  • Beneficiaries of your TSP, CSRS or FERS, and FEGLI benefits
  • Designated survivor...

Sometimes, Your Benefit Really Is Too Small

I love it when a story has a happy ending, don’t you? Some of you may remember last year I wrote about a widow named Janet who was the surviving spouse of a Civil Service Retirement System-Offset retiree. Janet suspected she was being shortchanged by a significant amount in her CSRS survivor annuity.

It all started last June when Janet wrote to me requesting help. Here is an excerpt from that email:

My husband passed away January 15, 2015. He was a CSRS Offset annuitant who retired in January 2014. My CSRS survivor annuity was supposed to be $3,649/month (55% of my husband’s unreduced monthly annuity of $6,531.72, plus 1.6% COLA for 2015). Because he was covered under the CSRS Offset retirement plan, OPM told me that my survivor annuity would be reduced by an offset of $1,107.80/month. I applied for Social Security Survivor benefits, and was awarded $396.10/month as a widow. This amount was small because I have my own Social Security benefit of $1,816.10. The widow’s benefit amount was based on my husband’s work record, which resulted in a higher Social Security...

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