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Could You Survive on Interim Retirement Check Payments?

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We continue to receive horror stories from retirees waiting up to a year or more for OPM to process their retirement paperwork. It is a real problem even for those who thought they prepared knowing that delays were inevitable. David wrote us in early November stating that he retired September 30, 2010 and as of November 2, 2011 he was still receiving partial interim payments. The only paperwork that he received came on October 31, 2011. One of the documents was FEGLI life insurance form 2819 which stated that his FEGLI insurance was terminated from the date of his retirement; an election he did not make.

David expected delays and thought he had prepared financially. He put away sufficient funds to cover six months expenses to give OPM the time he thought they needed to process his paperwork. This is causing a considerable hardship for his entire family and he needed guidance on how to proceed. Retirement processing delays and errors could get much worse as agencies offer Voluntary Early Retirement Authority (VERA) [2] incentives across the country.

Many Departments still don’t have a budget and there are rumors of cuts in many agencies, some estimate cuts of between 15-27 percent coming this year or next. Typically agencies plan for a 5 percent attrition rate not counting those who accept a VERA. VERAs could be as high as 10% or more of total staffing for some agencies especially if Voluntary Separation Incentive Payments (VSIPs) [3] are offered. Agencies are calling these actions “Reduction in Force (RIF) abatement measures.”  RIFs are historically difficult to manage and agencies avoid them if at all possible.

If a VERA with VSIP incentive is offered, agency retirement counselors and OPM will be swamped with applications; delays are inevitable. For example, an agency that typically processes 2000 retirements a year now has to process 4000 retirements in a 2-4 week VSIP period; it would be chaotic for the retirement counselors to say the least. Each retirement counselor suddenly has 150-200 retirement actions to process in two pay periods. Can you imagine one person counseling and reviewing retirement options for 200 people in a month, the potential processing delays, and the errors that will result from this mad rush?

What Can Be Done?

This delay is unacceptable by any measure. OPM has acknowledged processing delay problems in a memo [4] they posted online.  This document doesn’t provide immediate relief, it simply explains the many reasons for delays without providing any contact information for extreme cases.  I wrote an article titled Interim Retirement Check Issues [5] last April that you may find helpful.  Here are a few things to consider when you are planning to retire:

In extreme cases, where you can’t get satisfaction through OPM or your benefits office, call or write your Congressman [11] or Senator [12] for assistance.  Their staff can assist you with problems like this and they can expedite a resolution.  If you can’t get a timely resolution call them for assistance.

Learn more about your benefits [13]employment [14], travel [15], and financial planning issues [16] on our site and visit our Blog frequently at https://fedretire.net [17] to read all forum articles.

Request a Retirement Benefits Summary Analysis [18] from a local adviser. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections. A sample analysis [19] is available for your review. This service is not affiliated with www.federalretirement.net

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

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