Each one of us wants a relaxing and comfortable retirement. It would help if you planned your secured future while you are still working. As a federal employee, your future is secured with Federal Employee Retirement System (FERS). In FERS, you are eligible to receive monthly income after you reach the age of 65 or retire. The FERS employee receives numerous benefits. Read below to find out.
Thrift Saving Plan (TSP)
It is one of the most popular federal government retirement benefits and pension plans. It grants you an opportunity to fund your retirement outside of your social security and pension. Think about the mix of plans that are most beneficial to you and stick to it. Invest as much as you can and increase your contribution over time.
Pension
The federal government retirement benefits and pension plans offer numerous perks; however, you should be aware of how much you can utilize each of them after retirement:
- Survivor Benefits- The federal retirement spouse benefitspermit a portion of your pension to your spouse after you die. You need to pay for these benefits from your pension amount. If you want to leave to your spouse 25% of your pension amount, you need to spend 5% of your pension. If you want to leave 50% of your pension amount to your spouse, you need to spend 10% of your pension amount. You can make a federal retirement spouse benefits decision at the time of your retirement.
- Insurance Premiums- The premiums are directly deducted from your pension for any federal insurance you would like to be a part of your retirements, such as FEGLI and FEHB.
- Taxes- Most of your pension is taxable. Many retirees pay about 10% to 25% between state and federal taxes.
- MRA +10 Retirement- Once you reach your minimum age of retirement (MRA), you are eligible to retire with at least ten years of creditable service. One point to remember is that before the age of 62, every year, your pension will reduce by 5%.
While planning your retirement, consider all these factors.
Social Security
You can start withdrawing your federal retirement spouse benefits as soon as you reach the age of 62. However, your benefits will reduce every month if you start withdrawing before reaching your Full Retirement Age (FRA). Depending on the year you were born, your FRA may lie between 65 to 67 years old. If you intend to enjoy your privileges until after your FRA, your perks will increase by 8% each year until you reach 70.
If you take your social security before FRA and proceed to work, your perks will decline for every dollar your earn over a specific time.
FEHB
FEHB is one of the largest employer-sponsored plans. With the rise of health care costs every year, it is one of the benefits you should opt for after you retire. To avail of FEHB, you should be
- Eligible to retire on an instant retirement.
- You are covered under FEHB for at least five years before you retire.
If you are retiring under deferred retirement, you are not eligible to extend FEHB in your retirement.
If you are retired military, a federal employee in Tricare. In that case, you may extend your FEHB to your retirement if you were covered under Tricare for a minimum of five years before civilian retirement. You must also be covered under FEHB on the day of your retirement.
FEGLI
As soon as the government hires you, you are eligible for its basic premium. It is the only coverage for which the government pays. You are required to pay only 2/3 of the premium, and the government pays the rest. It also includes optional coverage and is paid only by the employees:
- Option A- It is a flat $10,000 death benefit.
- Option B- If option A is not sufficient for you, you can opt for it.
- Option C- You can purchase insurance for your spouse or offspring.
Long-Term Care Insurance Long-Term Care Insurance covers the cost of home care, respite, assisted living facilities, and nursing home. It is advantageous when you are old and cannot take care of yourself and don’t have any family members who can care for you.
