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

The Final Countdown: Filing the Papers

We’ve reached the time of year when many federal employees turn in their applications for an end-of-the-year retirement. One reason so many people retire at the end of the year is to get a large lump-sum payment for accumulated annual leave.

Retiring at the end of the year allows employees to stockpile a year’s worth of annual leave hours in addition to what they carried over from the previous year. Employees who retire on Dec. 31, 2017, Jan. 3, 2018, or Jan. 6, 2018, with more than 15 years of service, can accumulate 25 or 26 accruals of eight hours of annual leave (200-208 hours) in 2017 in addition to the 240 hours that they may have carried over from 2016.

If you’re among the people (and there are more than a few of them) who have saved up this much annual leave prior to retirement, you must really be looking forward to some time off. You will receive your lump-sum payment for unused leave from your agency payroll office a few pay periods following your retirement, usually within six weeks of your separation. There will be withholdings for federal, state, FICA, and Medicare taxes, as applicable...

What You Need to Know About Your Health Insurance Choices

Monday, Nov. 13 marks the beginning of the 2017 Federal Employees Health Benefits Program open season. According to a new GAO report on FEHBP, as of 2015, 85 percent of federal workers and 90 percent of retirees were enrolled in the program. FEHBP is the largest employer-sponsored health insurance program in the country, providing coverage to about 8.2 million people in 2016.

Two-thirds of those participants were enrolled in one of the two options offered as part of the Blue Cross Blue Shield Association’s nationwide fee-for-service plan.

There are, of course, many other options available to FEHBP participants. But Office of Personnel Management data indicates that between 2005 and 2015, the annual percentage of FEHBP enrollees who changed their plan enrollment by choice—rather than because of mergers or plan terminations—ranged from 5 percent to 7 percent.

Why, with so many choices, do federal employees and retirees seldom switch health plans? Part of the reason may be a lack of understanding the differences in the many plan choices.

In 1960 there were only four plan types, and OPM placed them into two categories: fee-for-service and health maintenance organization. Since then, many options have emerged within the broad...

Are You Ready to Retire? A Self-Assessment

An ever-increasing number of government employees are eligible to retire, and with Congress considering changes to federal retirement benefits, many are contemplating their next move. But even if you’re not in this group, it pays to be prepared for your long-term future.

In fact, regardless of where you are in your career, it’s in your interest to be well-informed and to develop a long-term plan for your financial future.

With that in mind, three years ago, we developed a Retirement Readiness Assessment to help federal employees determine where they stand. It contains a series of questions covering everything from Thrift Savings Plan accounts to health insurance decisions. This week, we’re re-launching the assessment.

Based on your responses to the questions, you’ll get a report on your status:  Retirement Ready, On Your Way, Beyond the Beginning, or Just Getting Started. You’ll also get a few tips on next steps in the planning process.

Are you ready? Click here to take the Retirement Readiness Assessment

Photo: Flickr user Andrew_Writer

Benefits Spared the Budget Ax

The House voted Thursday to approve the Senate’s version of the fiscal 2018 budget resolution, an action that was noteworthy because that version does not mandate reductions to federal retirement benefits.

The House’s initial version of the budget resolution had directed the Oversight and Government Reform Committee to come up with $32 billion in savings over the next 10 years. Since the panel oversees federal compensation spending, that level of reductions would likely have involved changes to retirement benefits.

The Senate, however, declined to require savings in the area of employee compensation and benefits in its resolution, and the House ultimately went along with the Senate’s approach.

This doesn’t mean that feds are out of the woods, though. Even though the budget resolution doesn’t require benefits cuts, some reductions could ultimately be included in the fiscal 2018 spending measures Congress comes up with after the current continuing resolution funding federal agencies runs out in early December.

Then there’s the issue of next year’s budget. Last week, a memo from members of the White House Domestic Policy Council surfaced that recommended a number of retirement benefits cuts be included in the Trump administration’s...

5 Things You Should Do to Prepare for Health Benefits Open Season

I can hear the groans now. It's the start of another health benefits open season. For many federal employees and retirees, this is not a cause for celebration, but a time of frustration and confusion. Open season can cause paralysis from analysis or inaction due to so many choices.

But what if I told you that you can narrow your choices and might be able to save over $1,000 next year by choosing carefully?

Choosing the best health plan is like putting together the pieces of a puzzle. You need to fit the premiums with likely out-of-pocket expenses and potential tax-saving features to come up with the complete picture of your 2018 health insurance needs. The health plan you chose 25 years ago, or even five years ago, may not be the best for next year. You owe it to yourself and your family to spend a few hours between now and mid-December to learn more about your options. After all, you most likely have more than 20 health insurance plans to choose from, up to 10 different dental supplemental plans and four vision plans. Tax-saving features include flexible spending accounts, health savings accounts and premium conversion benefits...