Making informed decisions is key as you approach retirement under FERS. Here are the five major decisions you’ll need to tackle:
1. When to Retire
Your retirement age and years of service play a crucial role in determining your FERS annuity. Retiring before age 62 offers the added benefit of the FERS Supplement. However, delaying until age 62 or later with 20 or more years of service can result in a 10% boost to your monthly pension through the FERS Bonus.
2. Thrift Savings Plan (TSP) Strategy
Before retiring, consider what to do with your TSP balance. Options include leaving it in the TSP, rolling it over into a qualified IRA or 401(k), or transferring it into a qualified annuity for lifelong income.
3. Continuing FEHB in Retirement
With the federal government covering up to 75% of FEHB premiums post-retirement, maintaining FEHB coverage is advisable. However, ensure you meet FEHB 5-Year Rule eligibility before retirement application submission to avoid permanent exclusion.
4. Survivor Benefit Decision
Choosing a survivor benefit—either 50% or 25% of your base annuity—impacts your pension and spouse’s future coverage. Remember, electing a survivor benefit is crucial for your spouse to retain FEHB coverage after your passing.
5. Social Security Filing Timing
You’re entitled to Social Security alongside your FERS annuity and TSP distributions. Optimal monthly payments can be achieved by delaying Social Security benefits beyond your Full Retirement Age (FRA), accruing an 8% increase per year until age 70.
Navigating FERS retirement benefits can feel overwhelming, risking potential missed benefits with errors. Seeking guidance from an FRC® trained advisor ensures informed decisions aligning with your retirement aspirations.
