Check Out Three Common FERS Retirement Mistakes
Are you a federal employee thinking of planning your retirement? After retirement, the sources of income may shrink, and you may have to compromise on your dreams. But, when you are confident about your retirement planning, there is no stopping!
Employee Benefit Research Institute 2022 retirement confidence survey report states that about 33% of workers and 24% of retirees feel less confident about living a comfortable life. They cited inflation and cost of living as the primary reason for declining confidence. However, you can gain confidence when you carefully plan your retirement. So, check out the list of common mistakes and avoid them when you plan your retirement. Read on-
- Not availing of full FERS benefits
FERS pays you monthly benefits based on your year of service under FERS, your income, and the age at which you retire. If you want to receive unreduced income, understand the two eligibility scenarios. Firstly, you must reach the minimum retirement age (MRA): 55–57 yrs, you must have served 30 years of service, reach age 62 with creditable service of five years, or reach age 60 with 20 years of creditable service.
Secondly, employees are eligible for early retirement if they have reached MRA and have ten years of service. However, those who opt for early retirement will receive their essential benefit permanently reduced by 5% every year before they reach age 62. Therefore, take federal retirement consultant help before deciding your retirement age and discover how much benefit you may receive.
2. Not saving in your TSP till your retirement age
Initially, many employees contribute to TSP; however, their contribution may decrease as they approach retirement age. As you approach your retirement age, it’s time to gear up; you should try to save even more. When you reach 50 years, you become eligible to make catch-up contributions that allow you to save an additional amount in your retirement account every year.
Nobody knows how long your retired life could be, so saving more when approaching retirement is better. You can increase your contribution to at least 5% to receive the most matching dollar possible.
3. Not covering health care needs and care
Your expenses may decline once you retire; however, the health care cost may rise. Medicare eligibility age is usually 65 for Federal retirees, and if you retire at age 62, how will you bridge the gap? Retirees from FERS can cover federal employee health benefit premiums through their FERS annuity. Many federal are not aware of this and rely on out-of-the-pocket expenditure. Hence, it is important to reach out to a federal consultant as they can let you know these small tidbits. Federal government retirement benefits and pension plans can help you get the confidence to live a comfortable life after retirement. Therefore, avoid the mistakes mentioned above and plan your retirement carefully.
