Preparing for federal retirement can seem like an impossibility when factoring in the vast array of plans to consider, paperwork to complete, and decisions to make. Those with careers in public service may be worried about the financial aspects of retirement. Some feel hesitant about leaving a job they love and losing the camaraderie of their co-workers. Others may wonder about what comes next. These feelings are a normal part of the retirement process but shouldn’t be used as an excuse to put off developing strategies for the future. The decisions one makes—or doesn’t—directly impacts the future. Doing nothing and “kicking the can down the road” rarely eliminates a problem but rather gives the issue time to multiply. In light of this warning, here is one more retirement question to contemplate. (See the first two questions here.)
What do I need to do before retiring?
For over a decade, the team at Retirement Benefits Institute has helped federal employees prepare for and reach retirement. During this time, we’ve assembled some recommendations to facilitate a smooth transition into this next phase of life. While the list below may seem overwhelming at first glance, completing these tasks can go a long way to bringing clarity out of confusion and peace to a troubled mind.
FERS retirement checklist:
- Sit down with a spouse or loved one(s) to think about the future. What does a successful retirement really look like? It’s impossible to hit a target that doesn’t exist, so don’t forget to be sure of the target.
- Estimate expenses in retirement using the Retirement Budget Calculator.
- Review income sources, including guaranteed benefits and Social Security. Evaluate retirement savings and determine whether additional savings are necessary.
- Review healthcare coverage options and note important Medicare and insurance deadlines.
- Review legal documents like wills, trusts, medical directives, beneficiaries, and powers of attorney.
- Review the distribution options allowed by the Thrift Savings Plan (TSP) and other retirement accounts.
- Assemble a retirement team. This may simply consist of the government-provided HR individuals available and/or a spouse; however, it can be useful to bring others into this discussion as well. Weigh the added cost and possible value gained through seeking the counsel of a financial professional or retirement specialist to review the details or help construct a retirement plan.
The list above is a great start but is far from comprehensive. One blog post cannot solve every conundrum facing federal retirees, yet hopefully the above list will provide a helpful framework to build around. Below are a few more areas to consider.
Retiring with debt?
If you have a significant amount of mortgage, student loan, or credit card debt, your retirement expenses may not decrease considerably. Balancing debt reduction and lifestyle choices can be a slippery slope, but it’s a slope that must not be ignored.
What About the TSP?
Step 6 in the checklist above may not do justice to the importance of the TSP. Federal retirees have several choices to make regarding the TSP. Evaluating which decisions make the most sense in a given instance involves understanding individual income needs and tax implications. For more information on one of the TSP retirement options, read Should I convert TSP to a Life Annuity?