Preparing For Retirement: Tips For Government Employees
It is never too early to plan for your retirement. Here are some retirement strategies that can help federal government employees prepare for their future.
Preparing for one’s retirement is a great way to ensure financial security.
Whether your retirement is near or you still have years of working as a federal government employee, it is important to plan early. You have to understand what to expect and know how you can prepare financially to have a more comfortable retirement.
Planning for federal retirement is not that different than what employees in the private sector do. But, before you start, you have to decide how much money you will need to have a comfortable life. Then start setting aside a certain amount every year to cover it. If you cannot help but spend due to unexpected situations, it may help to get loans for federal employees.
Understand Your Benefits!
Working as a federal government employee comes with many benefits. You can opt to participate in the Federal Employees Retirement System (FERS). If you do, 0.8% of your basic pay will be contributed to the plan. The government will contribute 10.7% or more.
Once you retire, you will typically receive 1% of your pay during the top three earning years of your government career multiplied by the number of years you have been in service.
If you were hired before January 1, 1984, check if the Civil Service Retirement System (CSRS) is funding your retirement. In this case, your pay will not have deductions for Social Security Taxes. So, you will not get Social Security payment when you retire.
If you were hired in 1984 or later, you are automatically added to FERS. You will get federal employee benefits, including Social Security.
The government offers many retirement benefits for federal government employees. Research and make sure you understand them.
Checking Investment Choices!
The Thrift Savings Plan (TSP) offers various investment choices, depending on risk appetites. Consider your options and start investing. You can also choose a life-cycle find, which is composed of a set of investments that change as you grow older. It is designed to help employees meet their retirement goals with minimal effort. TSP’s investment funds have low expense ratios. You can also consider investments outside of the TSP.
Getting Professional Help!
Many federal government employees do not know what to do to prepare for their retirement. You can get help from a professional. A certified financial planner and a registered investment advisor can give you advice.
Other Retirement Strategies to Try!
Here are other strategies that may help:
Consider the maximum survivorship option.
Invest in a voluntary contribution plan.
For CSRS annuitants, it is best to retire in the first three days of a month. This way, you get your first pension check at the end of the month.
Put your sick leave payout in the bank.
Set aside money every year.
While preparing for your retirement, you may face unexpected expenses. In such cases, you may get loans for government employees. There are types of loans that aim to help government workers have access to favorable loans with affordable interest rates.
