Federal Government Employee Retirement Planning
Federal Retirement Planning Made Simple
Confused about your FERS benefits, TSP options, or how your federal healthcare works in retirement? You’re not alone. Federal employees face unique retirement challenges. At SBS Retirement Consultants, we speak your language and translate those complex federal benefits into a clear path to a secure retirement. Let’s work together to make your federal service pay off for decades to come.
Navigating the Complexities of Federal Retirement
Federal employees need more than generic retirement advice. Federal retirement planning requires expertise in the specific rules, options, and strategies available to federal employees Without proper guidance, you might miss opportunities to maximize your benefits or make costly mistakes that impact your financial security.
We can help you answers questions like:
- What are my pension options under FERS or CSRS?
- How does my federal health care insurance coordinate with Medicare?
- Once I retire, what should I do with my Thrift Savings Plan (TSP)?
- Do I have options for Long-Term Care Insurance?
- How does the Social Security supplement work?
Specialized Federal Retirement Expertise in Alaska
At SBS Retirement Consultants, we understand the unique retirement landscape for federal employees in Alaska. Our specialized approach offers:
Deep Federal Benefit Knowledge
Our advisors have extensive experience with FERS, CSRS, and the specific nuances that affect federal employees in Alaska's unique environment.
Personalized Planning Process
We develop customized retirement strategies that account for your specific federal service history, benefit options, and personal financial goals.
Local Alaska Expertise
As Fairbanks-based advisors, we understand the economic and lifestyle considerations specific to retiring in Alaska as a federal employee.
Coordination of All Benefit Sources
We help you integrate your federal pension, TSP, Social Security, and personal savings into a cohesive retirement strategy.
Free Guide
FERS Retirement Roadmap:
From 5 Years Out to Day One
Planning Ahead: The Key to a Smooth Federal Retirement
Planning for retirement as a Federal Employee Retirement System (FERS) participant is ideally a thoughtful, multi-step process that unfolds over several years. Whether you’re considering an early retirement option or facing an unexpected retirement, our comprehensive guide will help you navigate this important transition.
Join other Alaska federal employees who have used this guide to gain clarity and confidence in their retirement planning.
Complete the form to download your free guide:
Understanding Your Federal Retirement Benefits
FERS & CSRS Pension Options
Your federal pension serves as the cornerstone of your retirement security, providing a lifetime of guaranteed income that few private sector employees enjoy today. Understanding the intricacies of this benefit is essential for maximizing your retirement security.
The Federal Employees Retirement System (FERS) consists of three key components: your Basic Benefit Plan (pension), Social Security, and the Thrift Savings Plan (TSP). Your FERS pension is calculated using a specific formula: 1% of your highest 3-year average salary (high-3) multiplied by your years of creditable service. If you retire at age 62 or later with at least 20 years of service, this multiplier increases to 1.1%, providing a significant boost to your lifetime benefit. For example, an employee with 30 years of service and a high-3 average of $90,000 would receive an annual pension of $27,000 (or $29,700 if retiring after age 62).
Retirement eligibility under FERS follows several paths. You can retire at your Minimum Retirement Age (MRA, between 55-57 depending on birth year) with 30 years of service, at age 60 with 20 years of service, or at age 62 with 5 years of service. Special provisions exist for law enforcement officers, firefighters, and air traffic controllers, allowing retirement at age 50 with 20 years of service in these positions. Understanding these eligibility rules is crucial for planning your retirement timeline and maximizing your benefits.
For those with service under the older Civil Service Retirement System (CSRS), different rules apply. CSRS provides a more generous pension formula but doesn’t include Social Security benefits or agency contributions to TSP. If you have “mixed” service under both systems, your retirement benefits become more complex, requiring careful analysis to optimize your benefits and understand potential impacts on Social Security due to the Windfall Elimination Provision.
At SBS Retirement Consultants, we’ll help you navigate these complex rules and options, providing clarity on:
- How your pension is calculated based on your specific service history and high-3 salary
- The financial implications of retiring at different ages and service lengths
- Special provisions that may apply to your position
- Survivor benefit options and their impact on your monthly pension
- Strategies for employees with mixed CSRS and FERS service
Thrift Savings Plan (TSP) Management
The Thrift Savings Plan represents a critical component of your federal retirement package, functioning similarly to a 401(k) but with distinct advantages, including extremely low fees and simple investment options. How you manage your TSP both before and during retirement can significantly impact your financial security.
TSP offers five core funds (G, F, C, S, and I Funds) plus Lifecycle (L) Funds that automatically adjust your investment allocation as you approach retirement. The G Fund offers a unique government securities investment not available outside of TSP, providing returns higher than money market funds with no risk of losing principal. During your working years, your agency automatically contributes 1% of your salary to TSP and matches your contributions up to 5%, providing an immediate 100% return on your invested dollars.
As retirement approaches, your TSP investment strategy typically shifts from growth to preservation and income generation. However, even in retirement, maintaining some growth-oriented investments remains important to help your savings keep pace with inflation over what could be a 20-30 year retirement period. Determining the right balance based on your risk tolerance, other income sources, and time horizon is a critical decision.
Upon retirement, you face important decisions about your TSP. You can leave funds in the TSP to take advantage of the low fees and simplified investment options, or roll them over to an IRA for more investment choices and potentially more flexible withdrawal options. The TSP offers several withdrawal choices: monthly payments based on life expectancy or a fixed amount you choose, partial withdrawals, lump-sum withdrawals, or purchasing a life annuity. Each option has different tax implications and benefits.
At SBS Retirement Consultants, we provide comprehensive guidance on:
- Strategic allocation among TSP funds based on your risk tolerance and retirement timeline
- Evaluating the pros and cons of different withdrawal strategies
- Required Minimum Distribution planning to avoid tax penalties
- TSP rollover considerations and potential advantages/disadvantages
- Coordinating TSP withdrawals with your pension and Social Security for tax efficiency
Federal Health Benefits & Medicare Coordination
Healthcare costs represent one of the largest expenses in retirement, making your Federal Employees Health Benefits (FEHB) coverage an extremely valuable benefit. Understanding how to maintain and optimize this coverage in retirement, particularly as it relates to Medicare, can save you thousands of dollars while ensuring comprehensive protection.
To continue FEHB coverage in retirement, you must have been enrolled in the program for the five years immediately preceding retirement (or your entire federal career if less than five years). This coverage can continue for life, covering both you and your eligible family members. Unlike many private sector retiree health plans, the government continues to pay approximately 72% of the premium cost, making this an exceptionally valuable benefit worth preserving.
As you approach age 65, you’ll need to make decisions about Medicare enrollment. Most federal retirees should enroll in Medicare Part A (hospital insurance) when first eligible, as it’s premium-free for those who have paid Medicare taxes for at least 10 years. The decision about Medicare Part B (medical insurance) is more complex. While Part B requires paying a monthly premium, having both FEHB and Medicare Part B provides more comprehensive coverage with reduced out-of-pocket costs. Your FEHB plan becomes the secondary payer after Medicare, often resulting in little to no out-of-pocket costs for many medical services.
The decision to enroll in Medicare Part B depends on several factors, including your health status, which FEHB plan you have, whether you have covered family members, and your financial situation. Some FEHB plans offer incentives or reduced cost-sharing when you have Medicare Part B. Medicare Parts C (Medicare Advantage) and D (prescription drug coverage) are typically unnecessary for those with FEHB, as your federal coverage already includes comprehensive prescription benefits.
At SBS Retirement Consultants, we help you navigate these important healthcare decisions by:
- Analyzing your specific health needs and FEHB plan to determine optimal Medicare coordination
- Evaluating potential cost savings from different FEHB and Medicare combinations
- Understanding how your FEHB coverage works when traveling or living outside the U.S.
- Developing strategies to manage healthcare costs throughout retirement
- Reviewing your FEHB plan choices during Open Season to ensure you maintain the most appropriate coverage
Social Security and FERS Supplement
Social Security benefits form an integral part of the FERS retirement system, but the rules governing these benefits are particularly complex for federal employees. Understanding how to maximize this income source, along with the unique FERS Supplement benefit, can significantly enhance your retirement security.
Under FERS, you earn Social Security credits just like private sector employees. Your benefit amount is based on your highest 35 years of earnings (adjusted for inflation) and the age at which you begin collecting benefits. You can start receiving reduced benefits as early as age 62, full benefits at your Full Retirement Age (66-67 depending on birth year), or increased benefits by delaying until age 70. Each year you delay beyond your Full Retirement Age increases your benefit by approximately 8%, providing a significant incentive for postponement if your health and financial situation allow.
For FERS employees who retire before age 62, the FERS Supplement (sometimes called the Special Retirement Supplement or SRS) provides additional income until you become eligible for Social Security at age 62. This supplement approximates the Social Security benefit earned during your years of FERS-covered federal service. However, the supplement is subject to an earnings test—if you work after retirement, benefits are reduced by $1 for every $2 earned above the annual limit ($21,240 in 2023).
Federal employees with service under CSRS face additional Social Security considerations. The Windfall Elimination Provision (WEP) may reduce your Social Security benefit if you receive a pension from work not covered by Social Security (such as CSRS service). Similarly, the Government Pension Offset (GPO) can reduce or eliminate Social Security survivor benefits for those receiving a CSRS pension. Understanding these provisions is crucial for accurate retirement planning.
At SBS Retirement Consultants, we provide expert guidance on:
- Calculating your expected Social Security benefit and FERS Supplement
- Determining the optimal age to claim Social Security based on your specific situation
- Understanding how the earnings test affects your FERS Supplement
- Navigating WEP and GPO provisions for those with CSRS service
- Coordinating Social Security benefits with your other retirement income sources for maximum tax efficiency
Expert Insights on Federal Retirement Planning
Take Control of Your Federal Retirement Today
Don’t leave your federal retirement benefits to chance. With specialized guidance from SBS Retirement Consultants, you can maximize your FERS/CSRS pension, optimize your TSP, and coordinate all your benefits for a fulfilling retirement.
The first step is simple: Schedule a complimentary, no-obligation discovery meeting with our team.
