Traditionally ranging from six to eight percent of the entire United States workforce, federal employees serve as the backbone to our country. From small, medium, and large independent agencies to cabinet level positions, federal employees – just like yourself – are much needed and certainly appreciated. As a strong symbol of this appreciation and gratitude for your service, you may have access to the Federal Employees Retirement System (FERS) – upon retirement. Whether you are already retired and trying to understand how the system works, or you are still in the workforce and want to prepare for the future, it’s crucial that you understand how FERS works and what benefits you will have.
Strength in Numbers: United States Federal Employees
According to the most recent data from the United States Office of Personnel Management, the total federal workforce consisted of just over 4.31 million in 2012. Of those 4.31 million, 2.7 million were executive branch civilians, 1.55 million were uniformed military personnel, and 64,000 were legislative and judicial branch personnel.
With so many United States federal employees working in all 50 states, in both small and large agencies, it’s important to understand the power each individual employee has to build a solid and secure financial future through FERS. This guide will help you better understand some of the benefits offered to you and will provide some information that is otherwise difficult and challenging to find.
Understanding Retirement as a Federal Employee
Whether you just retired or are planning on doing so in the near future, you need to understand FERS – inside and out. Overlooking details can cause you to miss out on some of the great benefits afforded to you.
First off, you need to understand when you can retire. To qualify for retirement under FERS, you must meet three eligibility requirements:
- In most cases, you will not be eligible for retirement benefits until you reach your “MRA,” or Minimum Retirement Age. Your MRA depends on what year you were born in and typically falls somewhere between 55 and 57. More information can be found by visiting Plan-Your-Federal-Retirment.com
- Years in service. Another factor that often works in conjunction with your age is how many years of service you have. For example, if you want to take immediate voluntary FERS retirement, you must be at your MRA with 30 years of experience, or age 60 with 20 years of service, or age 62 with 5 years of service. These are, however, just minimums.
- Type of retirement. The third determining factor is which type of retirement you choose. This is the most complicated factor and will take some research and planning on your part. Some examples of FERS retirement include Immediate Voluntary, Immediate Voluntary with 10% Bonus, FERS MRA+10 Retirement, Postponed and Deferred FERS Retirement, Involuntary/Discontinued Service Retirement, and more.
After understanding when you can retire, you should thoroughly research the three main components of your FERS retirement. These components are the Basic FERS Pension, Social Security, and Thrift Savings Plan.
- Basic FERS Pension. Also frequently referred to as your FERS annuity, your FERS pension is one of the major benefits of your retirement plan. This pension fund comes from the small portion of pay the government takes from your paycheck each month – but isn’t necessarily based on the amount you put in. It can be estimated by taking your High-3 salary, multiplied by years of creditable service, multiplied by the pension multiplier.
- Social Security. The second major component is Social Security. Under the FERS, employees are typically able to receive benefits as soon as they retire. Your payments will depend on how much money you’ve received over the years and how long you’ve contributed to Social Security. One of the major benefits you may receive as a federal employee is the Specialty Annuity Program, which bridges the money gap for those who retire prior to turning 62 (minimum age for Social Security benefits).
- Thrift Savings Plan (TSP). The TSP is a special account which allows federal employees to save pre-tax dollars or invest them without tax consequences. After retirement, you may receive a fixed amount that directly correlates to how much money you put in and how well you managed those funds.
Other FERS Benefits and Deals
While these are the three major, government programs for federal employees, there are plenty of other smaller benefits offered by various companies and organizations. As seen in this article, “There are literally hundreds of opportunities to save on special and everyday purchases that companies are willing to offer you as a ‘thank you’ because of your service to our country.”
While that’s great news, the problem is that many retirees don’t know these opportunities exist. This is primarily because many discounts are not publicly advertised or touted. However, that doesn’t mean they don’t exist. It just means you have to ask. As somebody probably once told you, “It can’t hurt to ask!” Whenever you are doing business with a new organization, company, or store, ask if they have special discounts for federal retirees.
One way to learn about deals and opportunities for savings – as well as to increase your chances of receiving discount benefits – is to join an association for retired government employees. Depending on where you live or what level of government you worked for, you may be eligible to join FedSave, the National Active and Retired Federal Employee Association, or the Government Employee Marketplace. Here is a brief look at some examples of where retired and current government employees can save:
- If you’re looking to move, downsize, or get rid of items you don’t need, many storage companies offer discounted moving trucks and temporary storage units.
- Restaurants like IHOP and Applebee’s offer daily discounts on breakfast, lunch, and dinner specials.
- Did you know that Apple actually has its own government employee store? Well, they do, and you can receive discounts on all the latest tech gadgets – including iPhones, iPads, and more.
- When it comes to caring for yourself and your belongings, you can save, as well. GEICO offers savings on car insurance plans, while many doctors offer discounted care programs for patients.
- Dell frequently offer deals for federal government employees and retirees (as much as 30 percent off computer purchases and 5 percent cash back).
- Carbonite computer backup service offers a 10% discount on all 1, 2 and 3 year subscriptions.
While these companies and hundreds more offer great deals, it’s the travel industry that takes the lead.
The Best Travel Benefits for Federal Employees
As a current or retired federal employee, you have the opportunity to secure large discounts on cruises, airfare, accommodations, and vacation packages each time you travel. You just have to know where and when to look for these incredible deals.
- Have you looked at airfare lately? According to an Associated Press analysis this August, the average round-trip ticket in the United States was more than $500 in the first half of 2014. In fact, average domestic airfare has increased 10.7 percent over the past five years. Multiply that $500 by a family of three, four, or five and your trip budget is already gone before you land.
That’s where federal employee airline discounts help out. Depending on where you’re going and who you fly with, you may be able to save a considerable amount of money. Most notably, JetBlue, Southwest, and American Airlines offer great discounts.
- As a federal employee, the savings often extend to hotel or lodging accommodations. Dozens of hotel chains offer discounts for government employees, including Marriott, La Quinta, Gaylord Palms Resort in Orlando, and Hyatt. For information about available discounts and how to save the most, FedRooms.com is a great source.
- Car rentals. Looking for a way to get between the airport and your hotel, without breaking the bank? Many of the top rental companies offer discounts for government employees. These include Enterprise, Alamo, Avis, Hertz, Dollar, and more. Deals include discounted rates, free upgrades, and reduced membership fees.
- Package deals. If you are one of those people who enjoy purchasing package deals, there are savings options for you, as well. One of the best can be found through the Government Employee Travel Opportunities (GETO) program. As their website touts, government employees and retirees can enjoy vacations for just $369 per unit, per week. Other amazing travel opportunities can be found through GovArm.
Making the Most Out of Your Benefits
Whether you are a current or retired federal employee, it’s important that you make the most out of the benefits offered to you. Whether it’s the official benefits like FERS pension, Social Security, and the Thrift Savings Plan, or smaller discounts on everyday expenses and travel, every dollar matters. The more you research, the more informed you will become.
For even more information on federal retirement, check out this article on the ten things you probably don’t know about retirement. It offers information that only experts in the field know and are willing to share.
You’ve worked hard over your career, and you deserve to enjoy a happy, peaceful, secure retirement. Don’t let your finances take control of your life. Instead, take control of them by maximizing the benefits and opportunities available to you.