Jennifer Meyer continues her Fed-Life-Cycle series, reviewing what Feds need to prepare for pre-retirement.

Jennifer Meyer, CFP

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Congratulations! At this point in your federal career, the finish line is in sight! The last five years before you plan to retire are critical to ensuring an affluent retirement. You have come this far- don’t sit back and relax just yet!

So, whether you have followed my previous articles or are just joining in now, here is a list of my recommended best practices as you count down to a successful retirement.

1. Verify your service records

Confirm your Retirement Service Comp Date and that any deposits have been completed and documented accordingly. You can do this via your agency. Make sure you have all documentation in order in case there are any issues. Most agencies will run an official retirement estimate once you are within 5 years and many will allow you to run your own via the GRB system.

2. Check your insurance

Ensure that you will have been enrolled in both the federal health insurance (FEHB) and federal life insurance (FEGLI) programs for a full 5 years to be eligible to continue these benefits in retirement. Note that this is also an important time to review your life insurance and decide what coverage you want to keep in retirement. For most employees, keeping their full amount of FEGLI life insurance will become extremely costly when retired. This is the time to evaluate the amount of coverage you want as a retiree and to consider private coverage which will likely be much less expensive than FEGLI if you are in good health.

3. Learn about your future Medicare options, NOW!

Depending on your age when you retire, you may or may not need to make important decisions regarding Medicare choices. Understanding these options well in advance will prevent costly mistakes! Don’t delay. Forewarned is forearmed.

4. Plan for survivor benefits

You have benefits available for your surviving spouse, understanding who else can receive benefits other than a spouse is equally important. Some survivor benefits come at a cost to you, some do not. Educate yourself so you have peace of mind that your intended heirs will receive what you plan for them. Also, be careful of outsiders who promote “pension maximization” strategies. This usually entails the purchase of life insurance rather than the survivor benefit on your annuity. In order for this type of strategy to truly work, you could need to spend much more for adequate life insurance than the cost of the survivor benefit.  No Short cuts!

5. Do not manage your TSP for the short term!

Just because you are getting close to retirement does not mean you should move all your money to the G fund! Your TSP is intended to last through retirement, not just through year one. To stay ahead of inflation over the years, you must manage TSP for the long term. Consider Roth conversions to give yourself a tax-free income source (note that Roth conversions should only be done with the guidance of a tax advisor and/or qualified financial advisor). Also, get familiar with the rules for getting money out of TSP once you are retired. There are many nuances for TSP that are different than the private sector. Knowledge is power!

6. Consider purchasing Long Term Care insurance.

Statistically, there is a very good chance that you will need some level of long-term care assistance in retirement. This care is generally not covered by health insurance or Medicare. Having a plan – whether or not this includes long-term care coverage is critical to your retirement years.

7. Track Expenses! Starting NOW!

I am often asked, “Jen - how much do I need to be able to retire?”

So I ask, “What does it cost to live in your world now?”

The only way to know this answer with certainty is to know what you will need on a monthly and annual basis. This does not have to be to the penny, but you want to be in the ballpark. Having several years’ worth of expenses tracked will go a long way to answering the question of how much you need. Do not forget that there are many large expenses that do not happen every year, think home and car maintenance, weddings, and big vacations. “Measure twice….Retire once!

To wrap all this up, the most important takeaway for you is that a great retirement does not just happen. You must plan and work to make it happen.  Be proactive. Learn about your benefits and how they work and fit into a plan.  And when in doubt, ask questions and ask for help.  Serving Those Who Serve offers weekly webinars for federal employees at no charge that are designed to educate you on each of your benefits and to help you make the best decisions for you and your family. You can find the lineup here.  Click the link and register now.

I wish you the very best for your retirement! You deserve it!

**Written by Jennifer Meyer, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **



Fed-Life Cycle: Pre-Retirement