Posted on Friday, 1st August 2014 by

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I’m sure all of you remember Aesop’s fable of the Ant and the Grasshopper.  Briefly, it’s about the ant that toiled through the summer to store food for the winter.  The grasshopper hopped about and sung to its heart’s content.  He had plenty to eat and didn’t see a need to work hard to store food.  Once the winter came, the ant had plenty of food stored but the grasshopper had nothing to eat.  The moral of the story is “Prepare today for tomorrow.”  Although you may not be in the “Spring” or “Summer” of your career, it’s never too late to continue preparing and providing for retirement. Most of us can expect to live well into our 70s and 80s so being prepared is a necessity.

Federal retirement benefits unlike many retirement benefits in the private sector are generous and allow us to prepare much like the ant for a nice retirement.

Below are 5 essential tips as you prepare for your retirement.

1) Review your Official Personnel Folder: You must review your Official Personnel Folder (OPF) to verify all of your civilian and military service.  If any of the records are missing, contact your HR office and obtain any missing records.

2) CSRS or FERS? – Understand your Retirement System:    Thereare two retirement systems in the civilian Federal Government which provide retirement, disability and survivor benefits for most civilian employees.   The simplest and oldest (since 1920) is the Civil Service Retirement System (CSRS).  It is a defined benefit retirement system with employees contributing 7 ½ to 8 %.  Employees don’t pay Social Security taxes but pay Medicare tax. The annuity can’t exceed 80% of your high-3 average salary.  The minimum retirement age (MRA) is 55 if you have at least 30 years of service.

Federal employees hired in 1984 or later are covered by the Federal Employees’ Retirement System (FERS) which replaced CSRS.  FERS is a three tiered system consisting of a smaller defined basic pension, Social Security and Thrift Savings Plan (TSP) which is similar to a 401k. Employees under FERS are covered by full Social Security Taxes.  Employees pay the pension benefit (.8% before 2013 or 3.1% starting in 2013 ) and Social Security ( 6.2%) through payroll deductions.  Under the TSP portion, the US government automatically deposits an amount of 1.0% of your pay to TSP.  The minimum retirement age is 55 if you were born before 1948, 56 if you were born between 1953 and 1964 and 57 for those born in 1970 or later.

Both FERS and CSRS allow retirement with an unreduced pension at the age of 60 for employees with 20 or more years of service and at the age of 62 for employees with at least 5 years of service.

3) Contribute to the Thrift Savings Plan: The Thrift Savings Plan (TSP) is a tax-deferred retirement savings and investment plan similar to the 401(k) plans provided by many employers in the private sector. In 2014, employees covered under either CSRS or FERS can contribute up to $17,500 to the TSP. Employees aged 50 and older can contribute an additional $5,500 to the TSP. Employees under FERS receive employer matching contributions of up to 5% of pay from their federal agency by which they are employed. (If you’re covered under FERS, you should definitely be contributing at least 5% of your salary since the government is matching it!)    Federal workers covered by CSRS also can contribute to the TSP, but receive no matching contributions.

4) Mange Your Sick and Annual Leave: Whether you are covered by CSRS or FERS, you’ll receive a lump sum payment for any unused annual leave you have to your credit when you retire. That time can’t be used to increase your length of service or calculate your high-3 salary, but comes to you in the form of a cash payment.  Many employees save their annual leave hours before retiring to get the biggest payment possible. The lump sum minus taxes normally is paid between 60 to 120 days after you retire.  You’ll need to check with your agency and not OPM, since your agency is responsible for paying the lump sum payment.

Federal employees are not compensated for their unused sick leave. But when you retire, the balance of your sick leave is converted to months and days of service and added to the length of service used to compute your retirement benefits. For employees covered by the Civil Service Retirement System (CSRS), credit toward the annuity computation will be based on the full sick leave balance at retirement. Under the Federal Employees Retirement System, only half the sick leave balance will be credited for employees who retire before Jan. 1, 2014.  100 percent is credited for employees who retire beginning January 1, 2014.

5) Have Enough Years in the Federal Employees Health Benefit Program (FEHB): One of the great benefits that Federal retirees have is the ability to continue health insurance coverage into retirement. Many private sector employers do not allow their employees to carry their health insurance into retirement.   Generally, to continue health insurance coverage, you must be covered by a FEHB insurance for five years immediately before retiring when you retire.  A few more tidbits: If you are a Federal annuitant enrolled in the FEHB Program and decide to cancel your enrollment, you can’t re-enroll and if you die, your survivors will not have FEHB.

Aesop’s fable of the Ant and the Grasshopper should be an inspiration to each of us in helping us prepare for our retirement.  It’s never too late!!  If you need help, seek it out.  Take a pre-retirement seminar to understand your retirement benefits. In addition, there is information  available online and through your HR office. Visit OPM’s site ( and ( for in-depth information on the federal retirement benefits discussed above.

My next article will provide 5 more tips regarding your benefits that are essential in preparing for retirement.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and financial information are subject to change. To ensure the accuracy of this information, contact relevant parties and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. 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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