What do you want out of retirement? Throughout the busyness and demands of work and family life, it can be difficult to stop and reflect on what federal retirement will look like. Often the hours of preparation that include signing of forms and crunching the numbers can be so overwhelming, that it seems like all you can do is just get to retirement. Once retirement is reached and you walk out the door on that last day, what are you walking toward? What will you do in retirement? Prior to retirement you have the chance to plot a course for your next phase of life that is both meaningful and fulfilling. Many of the choices you make when you leave federal service cannot be changed. Now is the time to understand the options available.
1. Setting the Course
To plan your dream retirement, you must first know what you want out of retirement. When Larry Bird was on the basketball court, no one needed to tell him what the goal of the game was; he understood how to put the ball in the hoop. Discerning the goal of your retirement can be a trickier task. Unlike Larry Bird and the game of basketball, there’s not usually thousands of people cheering you on and your own personal coach helping you along the way. We recommend speaking with your spouse or significant other about your goals for life after federal employment. There are many worthwhile goals: investing time in children and grandchildren, engaging in a new passion, or perhaps entering a new career in the private sector.
Whatever your goal may be, it’s important to know what it is before you retire. Once the course is set, the next step is to pull out the map and plot your route.
2. Plotting the Path
How do you get from where you are now to where you would like to be? First, you need to take stock of your financial situation and retirement preparedness. If you are unfamiliar with when you are eligible to retire under FERS, what your annuity will be, or when you can access the Thrift Savings Plan (TSP) without penalty, you are probably not quite ready. The many details of the FERS system can seem overwhelming but there are resources available to help. Retirement Benefits Institute has a wealth of information available. Whether it’s FERS or CSRS rules, FEHB, TSP, or any other aspect of federal retirement, we encourage you to search our website and YouTube channel for help.
One very important part of preparing for retirement is obtaining an accurate estimate of your retirement income. Getting a ballpark figure of your annuity as well as potential future costs can help you begin to answer the question, “Am I financially ready to retire?” One easy way to determine this is to try and live on your retirement budget now. If your retirement budget doesn’t work today then income or spending habits will have to change.
3. Landing the Plane
The last few months before retirement can either be a time to look back on a fruitful career with confidence in the future or a chaotic and worry-filled dash to the finish. Typically, you should allot 60-90 days for your retirement application to be processed. This procedure may take longer depending on OPM’s workload.
It’s important to remember that the retirement process takes a while and final adjudication may take longer than you anticipate. Before final adjudication the monthly check you receive will not be your full pension amount. Are you prepared to live for several months on less than your total pension? It may be wise to have a plan in place in case you go several months before receiving your correct pension.
The ins and outs of your retirement system and making sure to maximize your benefits are important, but don’t forget step one. The financial aspect of retirement should be an avenue to achieve your larger retirement goals, not the objective itself. With that in mind, we hope you will take a few moments today to sit down and plan your dream retirement.