Are You Retirement Ready?
With President Trump’s proposal to eliminate 107,000 federal positions in non-defense agencies starting in 2026, federal workers may face job insecurity, potentially leading to earlier-than-planned retirements. Here are essential steps to evaluate your financial readiness for retirement.
Verify Retirement Eligibility
Determine your eligibility under the Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS). For FERS, retirement is possible at your Minimum Retirement Age (MRA, typically 55-57) with 30 years of service, at age 60 with 20 years, or at age 62 with 5 years. An MRA with 10 years of service allows retirement but with a reduced annuity. Check if your agency offers Voluntary Early Retirement Authority (VERA). Confirm service credits through HR or the Office of Personnel Management (OPM) website.
Calculate Your Pension
Estimate your FERS annuity (1% of your high-3 salary multiplied by years of service, or 1.1% if retiring at 62 with 20+ years). Note that the Retiree Annuity Supplement may be discontinued for 2028 retirees. Use OPM’s retirement calculator to forecast your pension income.
Assess Your Thrift Savings Plan (TSP)
Review your TSP balance and ensure you’re taking full advantage of the 5% agency match. If retirement is near, consider shifting to low-risk funds like the G Fund to minimize market risks. Use TSP calculators to plan withdrawals, such as following the 4% rule.
Estimate Social Security Benefits
Use ssa.gov to project your Social Security benefits, which increase if delayed until age 70. If facing potential job cuts, evaluate whether to claim benefits at 62 or use other income sources temporarily.
Understand Continuing Benefits
To maintain Federal Employees Health Benefits (FEHB), you need five years of enrollment before retiring. Compare Federal Employees’ Group Life Insurance (FEGLI) costs with private alternatives, as FEGLI premiums increase in retirement.
Evaluate Income and Expenses
Create a retirement budget, accounting for healthcare and discretionary costs. Sum up income from your annuity, TSP, Social Security, and other sources, then identify any shortfalls. A lump-sum payment for unused annual leave can provide a financial boost. Build an emergency fund covering 6-12 months to protect retirement savings.
Obtain a Comprehensive Benefits Analysis
A free Comprehensive Benefits Analysis can clarify the cost of your federal benefits in retirement. Partner with a vetted Federal Retirement Consultant (FRC®) to analyze gaps and develop a tailored retirement strategy.
