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Critical Retirement Decisions – Are You Prepared?

Posted By Dennis Damp On In ANNUITIES / ELIGIBILITY,BENEFITS / INSURANCE,FINANCE / TIP,LIFESTYLE / TRAVEL,RETIREMENT CONCERNS,SURVIVOR INFORMATION | Comments Disabled
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Retirement is a life changing event that requires considerable research and due diligence. The elections made are often irreversible and can compromise a retiree’s finances and the benefits carried into retirement.  I retired from federal service in 2005 and my articles focus on current events that can and often do affect those planning their retirement and annuitants alike. My column often chronicles my personal retirement experiences and hopefully sheds light on subjects of interest to all.

The target retirement date you select may at first glance seem innocuous, not capable of doing harm. Yet, it is one of the many significant decisions you must make to ensure a financially secure future.  Some simply set a date without considering the consequences of their decision.

Generally, the end of the month works best for FERS employees. Under the FERS system your retirement begins on the first day of the following month. This is also allowed for non-voluntary CSRS retirements. Federal employees under the voluntary CSRS retirement system often select one of the first three days of the month; your annuity will start on the next day. If you retire on the 3rd of the month, you will get paid through the 3rd and your annuity will start on the following day. Your first annuity check will be for a partial month, less the three days you worked. However, if you choose to leave on the 4th or later your annuity won’t start until the first of the following month. There are other factors such as furloughs or LWOP status that can impact your annuity start date. Review OPM’s Retirement Handbook [2], chapter 41 for detailed guidance on this subject.

There are many factors to consider [3] when selecting your retirement date. Mike Causey’s recent article provides an example of how working another two years — from 60 to 62 — an employee earning $80,000 per year can boost their retirement income by almost $30,000 under certain circumstances. This depends on your years of service, salary at the time of retirement, and other factors. In his article titled “Best date to retire? How about never! [4]” he asks Tammy Flanagan to address how timing your retirement can reap significant benefits for you and your loved ones. This article and Tammy’s examples are quite revealing and an essential read for anyone planning their exit. Mike and Tammy are experts in all things federal and Mike’s weekly radio show, Your Turn [5], that airs Wednesdays at 10 a.m. (EST) offers abundant and sage advice about federal employee benefits.

Tammy Flanagan also publishes a comprehensive article on the best date to retire [6] every year and she includes a detailed calendar that will help you select your target retirement date. Tammy Flanagan is a former federal employee, a federal benefits specialist, and consultant. She also offers reasonable fee-for-service [7] personal consulting for civilian federal employees and annuitants.

Another helpful and very reasonable service is offered by FederalRetirementReport.com [8]. They provide a comprehensive 27-page benefits summary to help you plan your retirement. It is prepared by retirement planning specialists and includes annuity projections, a cash-flow analysis of your net income (actual take-home pay) now vs. your net income (actual take-home pay) during your first year in retirement, a TSP option review, and a complete insurance and benefits analysis. They will help you determine what benefits to carry into retirement and their advantages.  Anyone who signs up to receive this report has the opportunity to schedule a free one-hour session with a certified financial planner.

Most federal employees have a date in mind or at least a sense of when they wish to retire. The date is significant as outlined above. However, there is so much more to retirement than meets the eye and the earlier you start investigating your options the better. Use our “Ultimate Retirement Planning Guide [9]” to take you step-buy-step through the federal employee’s retirement process. This free pdf file is yours to use and share with others in your organization. It includes links to comprehensive guidance for all aspects of your retirement planning and benefit elections.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

 

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