Guiding Your FERS Retirement Journey Through the 5 Major Decisions

Approaching retirement under FERS requires making informed decisions. Here are the five key choices you’ll need to address:

1. Determining Your Retirement Age

Your retirement age and years of service significantly impact your FERS annuity. Consider retiring before age 62 to benefit from the FERS Supplement. Alternatively, delaying retirement until age 62 or later, with at least 20 years of service, can lead to a 10% increase in your monthly pension through the FERS Bonus.

2. Crafting Your Thrift Savings Plan (TSP) Strategy

Before retiring, assess your options for your TSP balance. You can choose to leave it in the TSP, roll it over into a qualified IRA or 401(k), or transfer it into a qualified annuity for lifelong income.

3. Continuing FEHB Coverage in Retirement

Maintaining FEHB coverage post-retirement is advisable, given that the federal government covers up to 75% of FEHB premiums. However, ensure you meet FEHB 5-Year Rule eligibility before submitting your retirement application to avoid permanent exclusion.

4. Selecting a Survivor Benefit

Choosing a survivor benefit—either 50% or 25% of your base annuity—affects both your pension and your spouse’s future coverage. Opting for a survivor benefit is crucial for ensuring your spouse retains FEHB coverage after your passing.

5. Timing Your Social Security Filing

You’re entitled to Social Security benefits alongside your FERS annuity and TSP distributions. Maximize your monthly payments by delaying Social Security benefits beyond your Full Retirement Age (FRA), accruing an 8% increase per year until age 70.

Navigating the complexities of FERS retirement benefits can be daunting, potentially leading to missed opportunities or errors. Seeking guidance from an FRC® trained advisor ensures you make informed decisions aligned with your retirement goals.