In this four-part series, get guidance on making the decision to leave the federal government workforce.
Feeling uncertain about your financial future as you approach retirement? Are you worried that the timing of your exit might not align with your goals?
Many people, when faced with their final working years, tend to procrastinate on planning for retirement. The mindset of “I’ll get to it later” often leads to last-minute decisions, with individuals realizing too late that they haven’t prepared properly. In today’s world, that “later” could be today, now is the time to act.
Statistics show that a large percentage of people have never done any financial planning, and even more don’t know where to begin. By understanding your financial picture—knowing your numbers, your dollars, and your next steps—you can put yourself in a position to handle the unexpected, make sound decisions, and navigate potential obstacles.
Our goal is to help you:
- Better understand your numbers
- Make informed decisions
- Avoid regrets from an impulsive move
Let’s get started on preparing for the best and worst of what lies ahead, so you can be confident in the choices you make as you move toward retirement.
Know your Time
It’s essential to have a clear vision for your retirement goals, including savings targets, investment strategies, and income sources. But that sentence right there can be overwhelming to take in. In my decade of experience teaching Federal Retirement classes and helping Feds retire in my financial planning practice I’ve learned that the saying “How do you eat an elephant? One bite at a time” is very true here. Let’s start with something simple. Pick a retirement date. It can be some arbitrary date in the future, it can be a special birthdate or another date that is meaningful for you. When picking your date keep in mind for FERS employees you are eligible for a full, unreduced pension at the following age and service combinations: MRA & 30, 60&20, age 62 and 5 years of service. So, let’s keep it simple – based on your current age and years of which of those three options do you qualify for soonest? Set that as your earliest retirement date.
Now, we can run some scenarios to tell us if we are saving enough to be on track to retire at that age. There are some tools on TSP.gov and OPM.gov that allow you to estimate growth rates and withdrawal amounts needed to support you financially. Many Fed have access to the GRB system or something similar to run their own estimates; take advantage of this! If you have never calculated your pension amount and the deductions for taxes, Survivor benefits, life insurance, and health insurance these reports can be illuminating.
These reports are powerful, as it will include your Retirement Service Computation Date (RSCD), the critical date to which your pension calculation is tied. The RSCD can be different from your Service Computation Date (SCD) for Leave based on several variables; credit for prior work, leave of absence, breaks in service. Another way to ensure all your time is accounted for is to request a Certified summary of Federal Service from your HR representative.
We’ve heard the all the stories that it can take anywhere from 6 weeks to 6 months for OPM to process your retirement application after retirement. At the time of this writing the current processing time is 62 days, and that’s only if your package is perfect when it arrives at OPM. There are things you can do now to ensure you have a clean and properly prepped retirement package.
First, ensure that all personal information provided on retirement paperwork is accurate and up to date. This includes details such as your full legal name, Social Security number, date of birth, and contact information. Any discrepancies or omissions in this information can result in delays or complications in processing your retirement application.
Second, make sure your employment history is accurately accounted for and know how to confirm that it is. Have all your SF-50’s in one place. Certify the dates match back-to-back and that there are no missing time periods. When your retirement package leaves your agency, OPM is tasked with the job to certify all your time. They do this by working through each SF-50 and making sure all the time periods match. If there is a discrepancy or a period missing, they come to you first. If you have a copy of these documents, you can reply and keep your package moving but if not, you’ll need to rely on the agency getting it back to OPM in a timely manner.
Third, check to see if you have any breaks in service and need to make a re-deposit or any military time you need to buy back. If you are eligible to purchase additional service credit, such as military service or temporary service, ensure that all necessary documentation and payment arrangements are completed accurately and in a timely manner. This will ensure that you receive proper credit for all eligible periods of service in calculating your retirement benefits.
In Summary:
- Run Retirement estimates– get familiar with the numbers and the reductions
- Confirm RSCD (Retirement Service computation date)
- Gather all documents in EOPF for your records
Deciding to leave the government can be a tough decision. If you would like help with the financial planning surrounding this choice, please contact us.
Don't want to wait for the next part of the series? Download the full white paper now.