The Fed Savvy Book


The Perfect Retirement Scenario

A generous pension, healthcare, life insurance, Thrift Savings Plan (TSP), along with many other benefits you can use towards your retirement. I am referring to the Civil Service Retirement System (CSRS) originated in 1920. The Federal Employees Retirement System (FERS) became effective in 1987, and almost all new federal civilian employees hired after 1983 are automatically covered by this new retirement system.

Beginning January 1, 1984, new employees were required to pay into Social Security and pay into the Federal Employee Retirement System (FERS), which would pay a lower pension benefit, however, FERS would be able to collect Social Security. In addition, they would get a match of up to 5% on their TSP contributions. And of course they could have healthcare and life insurance and all the other benefits of a federal career.

The point is federal employees have really good benefits while working, and if they are willing to put in the time, will have some pretty nice retirement benefits.

At present, many federal employees are feeling threatened, and for good cause, because the Congressional Budget Office is dangling a knife over their bene! ts with several proposed cuts and packages that they believe will help reduce the United States’ enormous deficit.

Are your federal benefits at risk? Are we at the point of every man for himself?

While my guess is that some of these cuts may come to fruition, and you should fight for what is rightfully yours, you still have a pretty darn good retirement package. The problem is that federal benefits are complex and federal employees often have a hard time finding the information needed for them to make informed decisions about their financial future.

Many agencies have decentralized human resources. As a result, some federal employees no longer have a personal contact they can speak to. It’s not that the information is not out there; they just don’t know where to go, and even worse, how to interpret their findings.

The other problem is that the rules are always being updated and it’s nearly impossible for the average worker to find the time to stay updated on how these changes may affect their work lives, their families, their income, retirement and quite frankly, their outlook on life.

The worst-case scenario is to take the path of least resistance and do nothing. This is typical for many of us when faced with financial decisions. The problem is by accepting the default position, especially with regard to retirement, you’ll never know if you could have achieved greater financial security.

Unlike so many other things in life, we don’t get the chance to have a “do over” of our retirement.

Fed Savvy from Carol Schmidlin will take you through the complexities of the federal retirement system so you can make informed decisions about your financial future.