The Things You Don’t Know Are What Can Wreck Your Retirement

The things we don’t know are what can often hurt us when it comes to retirement planning. These are some common ones for federal employees to be aware of.

Too often, hard-working, conscientious federal employees fall prey to simply not knowing what they don’t know when it comes to preparing for retirement. 

Matters such as Social Security, the TSP, Federal Pension (annuities), Supplemental Retirement, IRAs, Roth IRAs, Life Insurance, Long-Term Care, retirement expenses, life events, and inflation, the latter of which is perhaps the most overlooked, are just a few things that can overwhelm federal employees.

Not knowing what to do and then taking ill-advised actions can muck things up like a peanut butter and jelly sandwich in a VCR. (An unanticipated consequence of having two toddlers and an infant all at the same time). 

What you may not know about retirement

It’s often what we don’t know that hurts us.

Below are a few critical points to consider and understand when planning for a successful retirement.

Social Security

Social Security retirement income benefits are expected to stop paying benefits in “full” by the year 2034. We’ve been hearing this for years, but how many feds that qualify for Social Security retirement income benefits consider how they would overcome a reduction or loss of this income source?

Federal employees (especially FERS employees) may one day be forced to accept an uncomfortable reduction in retirement income, or perhaps they can discover a path today to prepare to replace it before it’s too late.

Also, consider that Social Security retirement income benefits are less than impressive. Even if Social Security is somehow able to continue to pay in full, that number is only about $16,000 per year on average.

Potential steps to thwart possible Social Security income reduction

  1. Determine at what age you plan to start receiving Social Security income benefits.
  2. Look at your annual Social Security statement to determine what your monthly income will be at the age you intend to start taking SS income. 
  3. Multiply that number by 12 to find your annual SS income. 
  4. Finally, divide that annual number by 4% to learn how much extra retirement savings it would take to equal your SS income benefit…just in case.

Example: Rule of 1000

To withdraw $1,000 per month from retirement savings, you would need $300,000 (assuming a 4% annual withdrawal rate) socked away:

$1,000 (monthly) x 12 months = $12,000 per year. $12,000 ÷ 4% = $300,000

Note: 4% is an industry standard used to hopefully allow the savings to last throughout retirement without depleting the principal.

Longer life expectancy

Although this is (depending on the quality of life) heartening news for Americans’ health, it’s not so encouraging wealth wise. A longer life does necessitate more money to make it to the end.

Statistics tell us that 18% of couples that are 65 years old will have one partner live to 95 years old**. For feds that fall into that 18%, I wonder how many will have made plans to attempt to ensure they haven’t outlived their retirement savings?

The amount saved specifically for retirement by many baby boomers is frighteningly low. 1 out of 3 boomers has less than $25,000 in retirement savings. It is doubtful that many reading this piece will fall into that category, but it does show just how unprepared (and potentially unaware) many Americans are about the steps needed to prepare for their retirement success. 


Inflation may be the most overlooked assailant to federal retirement. According to, the average annual inflation rate in the US from 1914 to 2020 is 3.25%. 

Inflation is defined as the rate at which prices rise and purchasing power falls. It is why something that cost $1 in 1980 cost $3.13 in 2020. (According to CPI inflation calculator)

Example of how inflation can overwhelm a federal retiree

Mike (not his real name) is 62 years old, has over 30 years under his belt as a federal employee, a FERS pension and over $600,000 in his TSP.

During his Federal Retirement Readiness Review (FRRR), Mike learned that he would need $6,000 per month to maintain his lifestyle at the start of his retirement. He also discovered his fixed income (from all sources) would be roughly $7,000 per month. Mike was thrilled to understand that he would have approximately $1,000 per month cushion ($7,000 – $6,000 = $1,000) when he retired.

Mike saw this cushion as a means to allowing him to utilize his TSP assets to fund some major life-long “fantasy” purchases. It was woefully obvious he was unfamiliar with how harmful even a moderate inflation rate can be to an otherwise strong looking retirement plan.

Mike needed to understand how using his TSP early in retirement could be a disastrous decision. Mike was encouraged to estimate how much he would need to maintain his future lifestyle if inflation only averaged 3% per year in his first six years of retirement. Mike responded, “Maybe $6,200 or $6,300 per month.” (his answer was based on the $6,000 per month he discovered during his FRRR.) However, the real answer was nearly $7,000 per month…his entire monthly income at retirement. 

He found it surprising that in as little as just 6 years his monthly cushion could be eroded. 

Now think about his potential situation 20 or 25 years down the road; if he had spent his TSP early, where would he be able to go to add needed income later in life? 

Note: For this column, the tax nightmare of removing large amounts from a retirement account early in retirement was not addressed. Rest assured, that subject was carefully broached and well-examined with Mike. 

Mike is like most feds nearing or even already in retirement; intelligent, but largely unfamiliar with the intricacies involved in deliberating, planning and preparing for or financially surviving federal retirement.

The prudent options appear clear – lots and lots of study and research into ALL things retirement related for a fed or finding a dependable retirement professional (focused on federal retirement) to work with. Neither may be as palatable as you would like, but both are preferable to entering or rolling through retirement not knowing what you don’t know. 

** Vanguard, society of actuaries retirement participant 2000 table, “Plan for long Retirement, 2019

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About the Author

Randy Silvey is the published author of You FIRST, Federal Employees Retirement Guide, one of the bestselling books of its kind on Amazon and Kindle. For over 18 years, he’s been educating and guiding Feds in pursuing wealthier retirement lifestyles. Randy can be reached at 816-524-1515 or visit his website at Securities offered through Infinity Financial Services. Member FINRA/SIPC.