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

Weighing the Social Security Benefit Decision

The best time to start collecting your Social Security retirement benefits is when it’s best for you. There is no single age that’s optimal for everybody. There are reasons why it makes sense to start early and others why it might be a good idea to delay.

At your first eligibility age of 62 (or later if you don’t have 40 credits of coverage at 62), your benefit is permanently reduced by up to 30 percent. The reduction is based on how far you are from your full retirement age. By delaying your benefit application past your full retirement age up to age 70, there are delayed retirement credits of 8 percent per year (or a little less if you were born before 1943).

Here are five questions to ask yourself before applying for Social Security retirement:

  1. Are you still working at 62? Until you reach your full retirement age, there is a limit on how much you can earn each year before your benefit is reduced. For 2019, you can earn up to $17,640 before your benefit begins to be cut by $1 for every $2 you earn over the limit.
  2. Will your spouse or...

Annuities, Withdrawals and More

This week, we’re back with a few more questions and comments from readers, covering everything from Civil Service Retirement System and Federal Employees Retirement System coverage to TSP withdrawals.

I was CSRS back in 1977 thru 1982. I received a refund of the retirement funds. I went back into the service in 1983, did my remaining years and retired. In 2000, I returned to civil service and I am now FERS. I am paying back the five years for CSRS. How will they calculate the five years?

First of all, if you had at least five years of prior CSRS coverage (whether or not you took a refund of retirement contributions), you should have been rehired under CSRS Offset retirement coverage and given a six-month opportunity to choose FERS coverage. If this is not what happened, you should contact your human resources office to find out if you were misclassified under FERS. If so, there’s a remedy under the Federal Erroneous Retirement Coverage Corrections Act, which allows you to go back to CSRS Offset coverage instead of FERS if you choose to.

If you remain under FERS and have more than five years of coverage under CSRS, then...

Comments, Questions and Answers

It is rewarding to know that the readers of this column are genuinely looking for help in planning for retirement. Each week, I always get plenty of follow-up questions and, in many cases, thoughtful answers from other readers. Last week’s retirement quiz generated some interesting and important questions and comments that are worth exploring in a little more detail, so let’s take a look at some of them.

NEVER cancel FEHBP. If you feel you do not need it as a retiree because you have a Medicare Advantage Plan or military health care such as TRICARE for Life, then you may wish to suspend FEHBP to have a later option of reinstating it.

Agreed! According to the Office of Personnel Management, as a retiree you can suspend your Federal Employees Health Benefits Program enrollment to sign up for a Medicare Advantage plan, TRICARE, CHAMPVA, Medicaid or a similar state-sponsored program of medical assistance for the needy. Retirement and insurance form RI 79-9 is used for this purpose.

I am retired under CSRS and receive 80 percent of my high three [average salary]. I never qualified for Social Security and receive nothing from it, but my wife has a...

Federal Retirement Facts: A True-False Quiz

Regular readers of this column know that every so often, I surprise you with a pop quiz. Well, the time has come around again.

Below are several statements about federal retirement benefits, Social Security, the Thrift Savings Plan and other subjects. It’s your job to determine which are true and which are false.

  1. To be eligible to retire under the Federal Employees Retirement System or the Civil Service Retirement System, any combination of civilian federal service and active duty military service that equals five years is the minimum to be entitled to a retirement benefit.
  2. If you knew you would live to be at least 90 years old, it would be best to wait until age 70 to claim your Social Security retirement benefit.
  3. Once you reach age 65, you should cancel your Federal Employees Health Benefits Program coverage because you qualify for Medicare.
  4. After you are retired and over age 70 ½, you must withdraw your entire TSP balance.
  5. The Office of Personnel Management administers FERS, CSRS, and FEHBP, but not the TSP or Social Security benefits.
  6. If you were born before Jan. 2, 1954, you can file for Social Security retirement benefits based on your spouse’s work...

Do You Need a Financial Adviser?

After conducting a webinar recently for the National Active and Retired Federal Employees Association called “Four Simple Steps to a Smooth Retirement,” I received dozens of requests for information about working with a financial adviser. I’m not a financial adviser myself, but I think it’s important to ask yourself the following questions before deciding to engage with one.

  • Do you really need a financial adviser, or are you looking for financial education?
  • If you had more confidence in the amount of retirement income you will have, would this satisfy your need for financial help?
  • Do you have investments outside of the Thrift Savings Plan to manage?

I remember asking my late Uncle Steve whether he hired a financial adviser before he retired under the Civil Service Retirement System in 1978 after working for 30 years at Edwards Air Force Base in California. His response was, “I turned in my retirement application about 30 days before I turned 55 and I’ve been happily retired ever since.” He didn’t need to do any planning except living within his means and working a full career of federal service.

It’s not quite so easy under the Federal Employees Retirement...