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

Tricks and Treats in Retirement

Halloween is right around the corner, so this week I’m focusing on tricks and treats in the retirement process. In this context, “trick” means sham, snow job, run around or double-cross.  “Treat” indicates a pleasant surprise or satisfactory result. Read the stories below, and see if you can predict which will turn out to be tricks and which will be treats.

Judy’s husband passed away on Aug. 10 and the Office of Personnel Management was notified within two weeks of his death. Her husband was receiving a reduced Civil Service Retirement System benefit so Judy could get survivor’s annuity benefits and continuation of health benefits if she outlived him. Did she get them?

Trick: Judy said she had notified OPM personally, but the agency treated the notification as though it had come from someone else. So OPM assumed she had already died, and asked her heirs for a copy of her death certificate, too. A phone call to OPM straightened out the confusion and Judy will soon be receiving the survivor’s annuity that her late husband had provided for her along with continuation of his health insurance.

Delores is a recent widow who is planning her...

8 Myths About Federal Retirement

Sometimes it seems like I’ve made a career out of debunking urban legends about federal retirement benefits. Anyone who has worked in a federal personnel office has heard many claims that just simply aren’t true, no matter how many people have passed the information around. Here are some of the common myths I’ve encountered recently.

Civil Service Retirement System

Myth: Members of Congress want to move the remaining employees covered under CSRS out of the system.

Truth: They don’t have to. CSRS employees currently make up only 4 percent of the federal workforce. More than 70 percent of all new retirement claims are from people under the Federal Employees Retirement System.

Myth: CSRS retirees are not entitled to Social Security retirement benefits.

Truth: Anyone who earns 40 credits of coverage under Social Security is eligible for a Social Security retirement benefit at age 62 or later. Individuals who receive a pension from work not covered by Social Security (such as CSRS) may be affected by the Windfall Elimination Provision, which will cause the benefit to be computed under a modified (read: lower) benefit formula. In addition, if you are eligible for spousal or widow’s benefits...

As Costs Go Up, Benefits Don’t Keep Pace

You probably are already aware by now that health care premiums are rising next year, while pay increases and cost of living adjustments for 2017 are nothing to get excited about.

Retirees will know for sure after Oct. 18 how much COLAs for Civil Service Retirement System, Federal Employees Retirement System, military retirement and Social Security benefits will go up in January. That’s when the Bureau of Labor Statistics will release the Consumer Price Index for the month of September. According to a formula set in federal law, September is the final month needed to determine the retiree COLA. It is likely to be small, based on monthly price increases so far in 2016. According to the American Institute for Economic Research, the benefits will most likely rise between 0.2 percent and 0.5 percent in 2017.

Civilian federal employees should know by Nov. 30 how much their salaries will increase for 2017. That’s President Obama’s deadline for deciding on a locality pay plan that likely will include a 1 percent pay increase and a 0.6 percent locality adjustment.

Health care costs are increasing more rapidly than that. The Office of Personnel Management recently announced...

What Is the FERS Supplement Worth?

One of the unique features of the Federal Employees Retirement System is the supplement it offers to younger retirees. About 40 percent of FERS retirees receive the supplement in addition to the FERS basic retirement benefit and income from the Thrift Savings Plan. It is designed to provide additional income to bridge the gap from the time they retire until they’re old enough to qualify for Social Security.

The supplement is a temporary payment. It doesn’t receive cost of living adjustments and is not paid after age 62. The supplement is treated as taxable income in the same manner as the FERS basic benefit and will be included on IRS form 1099-R along with other taxable FERS retirement income. The supplement is calculated by the Office of Personnel Management, rather than the Social Security Administration.

The FERS supplement does not directly affect your Social Security retirement benefit. But if you’re receiving the supplement, it means that you retired earlier than age 62 and are no longer working and earning a substantial salary, so indirectly, your lifetime history of Social Security covered earnings will be smaller than reported on your Social Security estimate.

Employees are eligible for the...

Best Dates to Retire: Taking Your Leave

Last week, I presented my annual calendar showing the best dates to retire in 2017. I noted that there are a lot of different factors to consider in settling on a date, and the best days aren’t necessarily the same for all employees.

One of the most significant considerations is how much annual leave you have accrued and what you can be paid for it. Let’s look at a couple of examples.

Stockpiling Leave

Dan plans to retire on Dec. 31, 2017. He will carry over 240 hours of annual leave on Jan. 8, 2017 (the maximum he is allowed to keep in his account at the beginning of the leave year).

Throughout his final year of employment, Dan plans to save the annual leave that he earns each pay period. If he retires on Dec. 31, 2017, he will accrue 25 leave accruals. He earns 8 hours per leave period, so that will be an additional 200 hours of leave plus the 240 hours that he had at the beginning of the year.

If Dan doesn’t use any annual leave during 2017, he will be paid for 440 hours of unused annual leave. If his annual...

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