11 Questions to Ask Before Retirement.

If you are a Federal Government Employee getting ready to retire, ask yourself these 11 questions. And if you need help with these, contact us directly for individual assistance.

1. Do you know when you can retire without penalty?

Make sure you understand that if you retire under the MRA +10 designation, there will be a penalty. To avoid that, you need to have your MRA +30 years of service, or be 60 years old with 20 years of service, or be 62 with five years of service. Check with Swain Consulting to get more information on this important retirement prerequisite.

2. Do you have a plan to reduce debt before retirement? 

Being debt-free can improve retirement cash flow. However, in this economy, paying off debt can be tough. Some with 3.5% mortgages want to be debt-free but

Before you take a large distribution to pay off your mortgage, do some math first. 

3. Are you prepared with an emergency fund for your retirement transition?

For some new retirees, it can take up to 10 months to get their full pension check.  

You can see the wisdom of having an emergency fund during this transition, as it seems like the Office of Personnel Management (OPM) is taking longer and longer to process retirement paperwork.

4. Do you have updated beneficiary information, wills, and estate planning documents?

Here are the four beneficiary forms for the federal government:

• SF-1152. This is the unpaid compensation beneficiary form. If, God forbid, you die on the job, this stipulates who will get your last paycheck. 

• TSP-3.  This is the beneficiary form for your TSP account. 

• SF-2823 Form. This form is the beneficiary for your FEGLI life insurance. 

• SF-3102. This is a form for your survivor benefit when you retire. You won’t have filled this one out yet if you’re still working. 

  
  

5. Do you have Special Retirement Supplement eligibility?  

If you retire prior to the age of 62 on an immediate annuity, then you are eligible. Now, lots of people retire at MRA (minimum retirement age) which is somewhere between 56 and 57. You would be eligible to get that all the way up to 62. No matter when you retire, if you get that special retirement supplement, it will stop at age 62. 

6. Do you know your creditable service years? 

The important word here is creditable. This is the actual service years that you’ve actually worked. To qualify for MRA +30, you’ve got to have 30 actual years. If you’re retiring at age 60, with 20 years, then your actual service needs to be 20 years.

The difference between actual and creditable involves sick leave. Sick leave does mean that you get paid a little bit more; however, sick leave can’t cause you to be eligible for retirement. You can’t work 29 and a half years, get six months of sick leave and then suddenly have your 30 years to be eligible to retire. That’s not how it works. 

7. Have you kept track of your accrued leave time?

As far as sick leave goes, OPM has a sick leave conversion chart where you can figure out how much extra time is going to be added to your pension because of sick leave. 

8. Have you made your military service time deposit?

Do you have any military service time? If you do, do you want to buy it back? Generally, if you’ve got three or four years of military time, a lot of times it makes sense to buy it back. 

 If you’ve retired from the military and you’re receiving a pension,  a lot of times it may not make sense to buy that back. If you buy it back, you will then lose the military pension and have that time count towards your first time. 

9. How is your TSP account balance distributed between the various funds?

The TSP has recently opened up more L Funds with 5-year increments as opposed to 10 years along with the mutual fund window with many investment choices. 

It’s important to understand who you are as a person–and as an investor. How aggressive do you want to be? It’s crucial to have your TSP balance align with your “risk temperament.”

10. Do you understand how your unused annual leave is considered at separation?

Remember, unused annual leave has a cash value. They take your hourly rate at retirement and multiply it by the number of hours of unused annual leave, and you get a big fat check–hopefully. But guess what comes with that big fat check? Big fat taxes!

11. Have you been enrolled in FEHB at least five years before retirement?

One of the great benefits of being a federal retiree is that you get to take your health care into retirement with you. The government pays 72% just as when you’re working and it will continue to pay it when you retire. The issue is that you have to have been enrolled in FEHP for five years. If you’re a spouse of another federal employee, then as long as you’re on the family plan or the single plan for five years, you’re covered. If you’re military and you’ve had TRICARE, that also counts towards those five years. Every once in a while we’ll run into somebody who just recently got FEHB and now realizes he must keep working to get the five years. 

For more information on retirement, contact us at www.SwainConsultingllc.com