January’s book of the month, Navigating the Federal Employees Retirement System, gives a helpful overview of FERS retirement. The book provides an outline of the key areas of the retirement system every FERS employee should be aware of and delivers helpful tips for retirement planning. Below is a section from the book on the importance of using all aspects of FERS retirement in conjunction with one another.
FERS employees construct a retirement income from their annuity, Social Security, and their personal savings (which includes the TSP). Financial professionals often refer to this triumvirate as the “three-legged stool.”
All three legs are important to maximizing your retirement income, but they will not necessarily bear the same weight in your planning, nor do they have to. That is the beauty of having multiple income streams—one leg can compensate for the others. For example, if you haven’t put enough away in savings, you can continue working longer to beef up your pension and delay drawing Social Security in order to increase your benefit.
There are various strategies you can employ when planning for retirement, but you must understand your entire financial situation and your options. You also need to develop a firm understanding of what the tax implications of your FERS annuity and other income will be, and how the different components of your retirement will work together. The three legs of the stool can and do affect one another. Plan so that these legs work with rather than against one another.
Making the Right Retirement Decisions
FERS employees enjoy a number of retirement benefits and have the advantage of a wide array of options. However, the multitude of possibilities also means numerous choices have to be made. Making the wrong decision or not understanding the consequences of a retirement election can affect you for the rest of your life! Navigating the Federal Employees Retirement System is meant to come alongside and help you wade through the murky waters of retirement. Helping you solve service history puzzles, calculate your annuity, and learn about the Special Retirement Supplement are just a few of the benefits of this book.
Preparing for Retirement
If you’re preparing for retirement, we encourage you to dig into the details of your retirement system. The years of hard work and sacrifice put into a federal career should pay off once you leave federal service. Consider attending a retirement training if your agency offers one. Our website has a wide selection of resources covering FERS, Social Security, and TSP, as well as many topics in between. If you’re ready to plan for retirement and gain the clarity you need, consider starting with Navigating the Federal Employees Retirement System.