When it comes to warnings, timing is everything. One second before stubbing your toe on an unseen object, hearing the words, “Watch out,” are helpful, welcome, and save considerable pain. The same warning shouted a second too late is entirely unhelpful, unwelcome, and only adds insult to injury. Verbalizing certain sayings can indicate that things are not going as well as they could have. “Oops” and “my mistake” are two of the most common of these expressions, but there are many more. For the federal employee, there are three expressions that you don’t want to find yourself saying. Let’s look at what these are, why they are bad, and how to avoid them.
“I’ll get to that tomorrow.”
This sentence is certainly not unique to federal employees but rather is a universal favorite of busy individuals. When facing a heap of urgent tasks, the easiest action is to do whatever is most pressing and push everything else to tomorrow. All too often the urgent chores take mental energy away from areas that need some serious thought and long-term planning. The obvious challenge for federal employees is retirement planning. Just as making the proper decisions today can help maximize your pension, Social Security, and Thrift Savings Plan (TSP), choosing the wrong course of action or procrastinating today can forfeit significant benefits in the future.
“I could already be retired?”
For employees who are counting down the days to retirement, have everything lined up, and are prepared to walk out the door, it may be hard to imagine that anyone could ask this question. However, it’s one we hear with surprising frequency. In the midst of a demanding work life, many federal employees simply don’t set aside the time to look at their specific situations and determine when they can reasonably retire. Some individuals are worried about whether or not they will have enough money to live in retirement. So, they continue to work due to a fear of the future.
If you’re concerned about whether you have enough income in place to retire, it may be helpful to speak with a financial professional. After analyzing your specific case, you may find that you’re perfectly positioned to transition out of your federal career. Even if the news isn’t what you wanted to hear, being informed is better than reverting back to the first pitfall we discussed; “I’ll get to that tomorrow.”
“Oh Yeah, Taxes”
Do you have a plan in place to mitigate taxes? If you have not spent any time in looking at your funds from a tax perspective, now is the time. Some individuals assume that taxes just won’t be an issue in retirement, but all too often this attitude is merely ignoring a looming obstacle. When you’re considering taxes in retirement, it can be helpful to analyze income by asking one simple question, “Will this income be taxed?” Remember that the three primary sources of income for a FERS retiree are a FERS pension, Social Security, and the TSP; so, the answer to that one simple question is slightly different for all three.
It’s beyond the scope of this blog to fully expound the tax status of each of these three areas, but please explore RBI’s website and YouTube channel for more on these topics.
So, how do you avoid saying these costly expressions? Though there are many answers to that question, we have three ways that are simple and can pay off significantly down the road.
- Set planning time aside. Whether this needs to be some extended time off or just intentional use of lunch breaks or other free time, the key is to plan for retirement.
- Educate yourself. Speak with a member of your HR department and perhaps attend a retirement seminar. See our registration page for upcoming retirement trainings that are offered at no cost.
- Ask for help. Whether it’s someone from your HR department, a financial professional, or an analyst at Retirement Benefits Institute, speaking with those familiar with the “dos and don’ts” of federal retirement is a wise course of action.