When you work for the Federal Government you may be eligible to receive a generous pension plan when you retire. However, that may not always be enough to allow you to live the lifestyle that you have become accustomed to so you may need to get creative and come up with some ways in which you can supplement your Federal retirement income.
This should all start while you are still working as the sooner you plan, the better. However, even if you retire and then find that you need to supplement your income, you can still do something about it, though that may require you to go back to work in some capacity.
Hopefully, along with your Federal pension plan, such as the FERS plan, you will also qualify for Social Security. If so, then that will represent a nice bit of extra money that you will be able to rely on each and every month. However, not all Federal employees will be able to qualify for both FERS and Social Security, so you should check and see if you are eligible to know for sure. Of course, if you have been getting the standard Social Security deduction taken out of you paycheck over the years, then that is usually a good indication that you will receive it when you are retired.
Another feature with your FERS pension plan that you will hopefully be taking advantage of is your Thrift Savings Plan, or TSP. Your TSP acts almost exactly like a civilian 401k and allows you to invest a certain percentage of your income in your choice of special funds that are all designed to invest in different things like bonds and stocks.
It is imperative that you take control of your TSP as you may be currently invested in a fund that is not as aggressive or conservative as you would like. There are many options available to your with your TSP so you should really look into all of them and invest according to your own personal risk tolerance.
If you do not already have a handle on your TSP, find out what is going on. This is one of the easiest ways in which you can assure you supplement your retirement income that you receive from your pension.
While there is a great deal that you can do for retirement with your Federal employer, there is a move that you can and should make independent of your employer as it will help you save even more money for retirement. A Roth IRA does allow for Federal employees to invest in almost anything they want including stocks, bonds, and mutual funds provided they are eligible.
To be eligible you have to make under a certain amount of money each year. Currently, a single person who makes under $107,000 can contribute up to $5,000 per year to a Roth IRA and $6,000 if they are over the age of 50. A married couple can contribute the same as long as they make a total combined income of under $169,000 per year.
So, while you can’t include a Roth IRA in your TSP, you can have one on your own. This is due to the fact that Roth IRAs are funded with after-tax dollars. So, you already pay the taxes on them. While this does not allow you to take a tax deduction on your contributions at year’s end, it does allow your money to grow tax free.
Once you are age 59 ½, you can take out as much or as little from your Roth IRA and whatever you take out, you do so tax-free. So, all of your contributions and anything earned on those contributions are yours to spend as you see fit.
Because you can sock away an additional $5,000 per year in a Roth IRA, it is a great way to be sure there is extra money for you to rely on and it makes the perfect supplement for your Federal retirement income.
Get a Part-Time Job
If you are already retired and find that you need more than your Federal retirement income provides, you can always consider going back to work on a part-time basis. There may be limits in how much you can work and still keep all of your benefits, so that should be the first issue you address.
Once you find out what, if any, your restrictions are, you then need to figure out a place to work. While there are many jobs that allow for seniors to re-enter the workplace, you might also want to consider using the many skills and knowledge that you gained as a Federal employee and start your own consulting business.
You can also look to the internet to help you with your part-time work quest. You can sell things online, become an affiliate marketer online, or even create your own website and try to sell your own ideas and products online.
Another way to supplement your Federal retirement income if you are already retired is with a reverse mortgage. Reverse mortgages are for seniors who have equity in their homes. Basically how it works is that you get a loan on the equity for your home and you can choose to get that in one lump sum or in monthly installment and use the money to supplement your Federal retirement income. You don’t have to pay back the loan as long as you are alive and lining in your home. Once you pass on, the sale of the home will pay off the loan amount and any excess will go to your heirs. Restrictions do apply, so you will first need to figure out if you do qualify for a reverse mortgage.
The Sooner the Better
It is better if you can plan ahead of time so you can be sure that your federal retirement income will be able to be adequately supplemented. However, even if you don’t pre-plan, you still have a couple of options available to you. Just remember, the sooner you address the issue, the better.