Federal Employees: Trust But Verify Before You Retire
For many long-term Federal Employees, the dream of retirement becomes tangible after reaching 20 or 25 years of creditable service, usually around ages 50 or 55.
By then, you may even start counting the days until your retirement date. And hopefully, before that date comes, you’ve spoken with a federal employee retirement professional.
Know Your Retirement Date
Looking forward to retirement doesn’t have to mean you stop enjoying your work and the many friends you’ve made over the years, but it’s a great opportunity to explore interests you didn’t have time to pursue before.
Whatever your retirement dreams are, it’s important to be certain of the exact date you will qualify for the retirement benefits package you choose.
Robert’s Story
I recently read an article on FedSmith.com about a Federal Employee called “Robert.” At age 57, Robert thought his target retirement date met the criteria for regular full retirement under the Federal Employee Retirement System Minimum Retirement Age plus 30 years requirements.
His agency’s human resource department sent him a number of retirement benefit estimates reporting that Robert did indeed qualify.
Like most people, Robert assumed these were a sufficient guarantee and didn’t think twice about the criteria involved.
Double Check Your Documents
Only a few days before Robert’s scheduled retirement, he received a copy of his retirement benefits package from HR, which would be sent to OPM.
Curious, Robert reviewed the package and discovered some shocking news: he still needed six months of creditable service to qualify for regular full retirement MRA plus 30.
His first six months of federal employment were not considered creditable service, because he wasn’t paying into the Federal Employees retirement system during that time.
Robert immediately canceled his retirement. If he hadn’t, he would have irretrievably lost 25% of his federal retirement benefits.
Seek Out an Expert
Those six months of service over a 30-year period could have cost him dearly for the rest of his life, but no one ever gave him any warning of the financial penalty that would have befallen him if he had retired on his target date.
Robert’s story shows that you must hold your future under your own wing.
If you are uncertain about your retirement plans and feel unqualified to review this on your own, there are federal employee retirement professionals beyond your HR office prepared to help.
It is recommended that you have a professional review your progress and eligibility every few years to make sure you don’t experience what happened to Robert, or worse.
For over 30 years, federal employee retirement planning has been a key focus of Medallion Financial Group. We recognize that FERS retirement benefits have extra layers of complexity, such as the Thrift Savings Plan (TSP), 401K, Pension plan, FEGLI and more. It’s easy to get lost in a sea of bad advice when so few people understand the basics. We help with the basics and beyond to enable our clients to get the education and advice they need to retire with confidence.
Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.
We strive to exceed client’s expectations – because we have high expectations of ourselves.
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