One of our readers recently emailed me to share his retirement story. Based on his personal experience, he offered some retirement planning advice for federal employees. His story is an interesting one, and I thought he provided some excellent retirement preparation suggestions so I wanted to share with all of our readers.
I started working for the government in 1980. I retired on October 2, 2014.
I could have waited and joined the herd that retired at the end of the year, but I honestly felt that would have delayed my retirement processing.
I don’t have any facts or stats to point to to back up this opinion, but it just made sense to me. Besides, retiring two months prior to the end of the year didn’t make much of a difference in terms of an annual annuity, and neither did the fact that I would have been able to add a few more days of annual leave that because of plans already made I would have had to use anyway.
But back to OPM retirement processing…
Following are the dates I received notification from OPM regarding my retirement claims process.
- 10/21/14 OPM notified of my retirement. However, they stated they didn’t have my retirement application, which is required to begin processing.
- 10/22/14 Woohoo! They received my retirement application.
- 11/3/14 OPM authorized interim pay. (Now that I’ll be collecting my full annuity, I can say that their version of interim pay was only 33.6% gross of what I was supposed to receive.)
- 11/20/14 My retirement application was assigned to an OPM retirement specialist for calculation.
- 1/28/15 I received notice that my case was finalized and that I would begin collecting my full retirement on 3/1/15.
- 2/2/15 Received my catch-up annuity payment. (This basically amounted to a 3 months of back pay less what I’d already received.)
One thing to note is that for both the interim and catch-up monies I received, OPM only deducted federal taxes. However, there was also an additional deduction taken from my catch-up annuity to cover my health benefits from October 2014 through February 2015. I should also note that I received individual bills for dental and long term care that I’ve been paying on a monthly basis since November 2014.
One thing I don’t understand is why no state taxes were ever deducted. I’m fairly certain I submitted a state tax form with my retirement application. However, now that I know my annual retirement annuity I have adjusted my federal and state tax withholdings to hopefully fully cover my tax liabilities for the entire year.
I have a few words of advice for future retirees:
When you’re about 7 years from your anticipated retirement attend your agency’s retirement informational seminar. These are usually held about twice a year. I attended one 7, 3 and 1 year before my retirement. I recommend this for two reasons. You’ll learn how your retirement annuity is computed, and for persons under FERS, how the other two important elements of retirement, namely TSP and Social Security, will play into your final retirement. Second, going to these seminars will also provide a face with a name of the person(s) who will be in a position to assist you once you decide to retire.
Next, when you are within one year of retirement, make an appointment to meet with your agenciy’s retirement specialist to make certain all of your work history is accounted for. On this point I will say I have every SF -50 I ever received since 1980. Good record keeping is paramount. But if someone doesn’t have all of theirs, your agency may have an electronic personnel file that has them. Take some time to go over every entry to make certain nothing is missing. If you agency doesn’t have an electronic personnel file, make an appointment to meet with a personnel retirement specialist to help you locate them.
If your agency has a retirement calculator, use it. If not, there are other sites you can use that will provide a rough estimation of your retirement annuity if you enter the correct data. I did both, and they were within a $200 of each other for my annual retirement annuity. Note, certain data could be changed to run different scenarios using either retirement calculator, but the bottom line is this – they’re a great place to estimate exactly what your annual retirement annuity will be. Although I didn’t use them for this purpose, retirement calculators can also help someone determine how to manage their TSP, and determine what they will be entitled to from social security.
I often wondered why anybody would leave such an important thing as retirement to chance. Even if it is far off, it still is important to be informed.