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

Smooth Sailing

Are you one of the thousands of federal employees who will be retiring during the next year? If you're lucky, your transition will go something like my aunt's and uncle's, who left government in the late 1970s under the Civil Service Retirement System. They filled out their applications about 30 days prior to their departure, and have been happily retired ever since. They've stayed on the same health plan (though I've discussed open season with them), so they have never even needed to contact the Office of Personnel Management. Yet, their monthly checks come on time and their retirement benefits have increased three times due to cost-of-living adjustments to keep pace with inflation.

Unfortunately, not everyone's retirement will start so seamlessly. Some hang-ups are outside your control, but the good news is there are a few proactive steps you can take to make the process smoother. Here are some things you can do and some issues to consider:

1. Obtain an annuity estimate. Ask your human resource specialist for an annuity estimate at least one year before your planned retirement. Besides providing information about your anticipated monthly CSRS or Federal Employees Retirement System benefits, most estimates also include a summary of your federal service, showing the agencies where you worked, the dates and your retirement coverage. You also will find out the effect of intermittent appointments, part-time service, leave without pay and "when actually employed" appointments (intermittent service without a prearranged regularly scheduled tour of duty).

It is important to be sure that all your creditable federal service has been included in the computation of your retirement, keeping in mind there are some types of service that will require a deposit or payment to receive credit. By requesting an annuity estimate, you will learn of any service credit issues.

2. Complete your retirement application. Do this four to six months ahead of time and turn it in 60 to 90 days early. If your agency offers a retirement counseling session, take advantage of this service to discuss your choices regarding life insurance, survivor annuity elections and any other outstanding issues with your application. The CSRS Application for Immediate Retirement can be found here, and the FERS Application for Immediate Retirement, here.

3. Contact the Social Security Administration. If you are eligible for benefits, SSA can tell you more about what will happen if you take them immediately, as well as the potential increase in your payments if you postpone your application. You can contact SSA at 800-772-1213, or

4. Think about your Thrift Savings Plan balance. Will you need to withdraw money to supplement your other retirement income and benefits? Will you keep your investments in the TSP, or move some or all of the balance to an individual retirement account? Remember that you cannot submit a TSP withdrawal application until your payroll office has notified the retirement plan of your separation. It is suggested that you wait at least 30 days after your departure to make a withdrawal election from the TSP. If you are retiring before you reach age 70 ½, then you don't have to make any election unless you want access to your savings. If you are older than 70 ½, then you will be required to make a withdrawal choice by April 1 of the year following your retirement. TSP offers a monthly payment calculator to help you decide whether you will need to make withdrawals, and a pamphlet with more information on taking money out of your account. Click here to request a full withdrawal, and here for a partial withdrawal.

5. Save your annual leave. The reason so many people choose to retire at the end of the leave year is so they can accrue an entire year's time off. Your payroll office will compensate you in a lump sum for the annual leave still on the books on your date of separation.

You might wonder why it's important to have a big lump-sum payment for annual leave when you separate. Maybe you'll want the money for a nice retirement cruise in the Caribbean, or to remodel that kitchen that you will now have more time to enjoy. But there's another important reason you should have extra money on hand: you could experience a delay of anywhere from three months to one year or more before you begin receiving your full retirement income. Due partly to hurdles in developing an automated benefits processing system at OPM and staffing issues, the average retirement claim takes five to eight months to finalize. While you are waiting, you will be placed on interim retired status and you will begin receiving partial annuity payments. As long as your agency gets your claim to OPM promptly and there is no question about your retirement eligibility, the interim checks should start arriving within four to six weeks of your separation. They are generally paid at about 90 percent of your net annuity amount, but unfortunately, there are some things -- such as part-time service or military retired pay -- that can cause this payment to be as low as 50 percent of your net annuity. Your health and life insurance coverage will continue while you are receiving interim pay. When OPM finishes processing your application, it will begin withholding premiums for these programs retroactive to the start date of your annuity. 6. Familiarize yourself with tax withholding policies. OPM will withhold only federal income tax from your interim retirement payments. You might find that the federal income taxes withheld from your first interim payment will be higher than those from subsequent interim payments and your regular annuity. OPM will make any necessary tax withholding adjustment when it finishes processing your application.

If you want to have state income tax withheld from your retirement payments, this arrangement can be made once you are placed in full retirement status. Here is some additional information about tax withholding from your CSRS or FERS retirement benefit.

7. Consider your survivor elections carefully. It is best to think hard about your survivor benefit elections when you are completing your retirement application, since you will have limited options for making changes after you leave government and you could be penalized for any alterations. For instance, you might want to change your election if you had picked a partial survivor benefit for your spouse, but were diagnosed with a serious illness shortly after retirement. You could move your spouse to a full survivor annuity if you do so within 18 months of your retirement, but you would incur a penalty. The CSRS and FERS Handbook Chapter 52 provides more details on survivor elections that can be made at retirement, along with changes that are permissible after you separate.

8. Read up on health insurance and long-term care. You will be able to change your health insurance options during the annual open season much as you did while you were employed. The only difference is that now you will contact OPM and not your agency to make that change. You can elect long-term care insurance and dental and vision coverage after retirement. But if your parents, in-laws, or children would like to enroll in the federal long-term care insurance program, they must do so while you are still a federal employee. If you have a flexible spending account, be aware that you will not be able to continue this account after you are retired. OPM offers more information on insurance after retirement. 9. Understand your options for voluntary contribution elections. If you are retiring under CSRS or CSRS Offset and want to make a voluntary contribution election at retirement, you might find the CSRS and FERS Handbook Chapter 31 helpful. The National Institute of Transition Planning Inc., where I work, also offers resources, particularly on converting a Voluntary Contributions Account to a Roth IRA.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Mondays at 10 a.m. EDT on, or on WFED AM 1500 in the Washington-metro area.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement and the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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