Phased Retirement is Finally Here

Phased Retirement is Finally Here

By Kellie Lunney August 7, 2014

Part work, part retirement: Feds could spend more time at the beach. Or even working at the beach.

Part work, part retirement: Feds could spend more time at the beach. Or even working at the beach. Ditty_about_summer/

After more than two years in federal regulation limbo, the law allowing federal employees to partially retire while continuing to work part-time for the government is finally being implemented.

Eligible federal employees can submit their applications for phased retirement beginning Nov. 6. The Office of Personnel Management on Thursday filed the 129-page final rule on the new program for publication in the Federal Register on Friday. The so-called phased retirement provision, included in the 2012 transportation reauthorization act, allows eligible feds to work 20 hours per week, receiving half their pay as well as half their retirement annuity. Those employees who enter phased retirement must devote at least 20 percent of their work time, or about 8 hours a pay period, to mentoring other employees, ideally for those who take over for them when they fully retire. Continue reading “Phased Retirement is Finally Here”

5 Myths About Federal Retirement

One of the things I enjoy most about teaching classes and conducting webinars on the topic of pre-retirement planning is when I can bust a myth that is standing in the way of someone meeting his or her retirement goals. Sometimes these myths have been circulating so long that they’ve taken on an aura of truth. And they can stand in the way of planning for a bright and comfortable retirement.

Let’s take a look at some common federal retirement myths.

1. You need to save at least $1 million (or some other specific dollar amount) to retire comfortably.

Who says? More importantly, how do they know? Federal retirees have at least one and sometimes two sources of retirement income that will last a lifetime. In many cases, these will cover monthly living expenses not matter how much you’ve been able to save.

To figure out how much you really need in savings, start by thinking through your future living expenses. Here’s a simple worksheet from Vanguard to help you.

Next, get an accurate estimate of your Civil Service Retirement System or Federal Employees Retirement System benefit from your agency human resources office. And contact Social Security or create an online Social Security account to figure out what, if anything, you can expect to receive based on your work record — along with any spousal benefits you might be entitled to.

Your retirement savings will help pay for future unexpected expenses and to cover inflation. (Yes, you will receive cost-of-living adjustments on your federal retirement benefits, but they may not cover some expenses that tend to increase at a rate higher than inflation — think health care, for one). Some federal retirees will need their savings to provide a third source of monthly income in addition to their government retirement benefits, but the dollar amount may not be as high as you think.

2. You definitely can retire from government at age 57 if you have 30 years of service (or at 60 with 20 years of service, or at 47 with 25 years of service and an offer of early retirement).

These basic rules apply under either CSRS or FERS, but they obscure a more important question: Can you retire comfortably at any of those ages and ensure your financial future? The important thing is to figure out at what age and with how many years of service you can afford to retire.

Myths one and two are opposites of each other. The first causes people to fear they will never be able to retire, and the second rests on the false assumption that just because you’re eligible to retire, you can do so comfortably.

3. You should take your Social Security benefit as soon as you are eligible since you don’t know how long you will live.

It’s not that simple. Claiming early may be the right decision for some people, such as those with serious medical issues or a family history that suggests a shorter than average life expectancy. But with people living longer and retirement sometimes lasting decades, it’s best to make deliberate calculations and see if you can wait longer in order to collect more. By the way, this is not “gaming” the system, or taking advantage of a benefit that was created to keep people out of poverty. It’s just being smart and using all of the information you can get to put together a retirement income that will sustain you for the next 20, 30, 40 or more years.

It’s true that Social Security is an actuarial system that pays out the same amount to someone who claims their benefit at 62 or 70 as long as they die around age 81. But you might live longer than that. In addition, you could have someone else who depends on your income — or vice versa.

4. There’s a magical best date to retire for everyone.

I accept some responsibility for this myth. As many of you know, I write an annual “Best Dates to Retire” column. It identifies the dates in any given year that are generally good. But you should only pick a specific date after considering the following:

  • What are you trying to accomplish? Maximizing your lump sum annual leave payout? Coordinating your retirement with the starting date of your second career? Maximizing the anount you can save in the Thrift Savings Plan? Avoiding paying more taxes than you have to?
  • What other income will you have after your retirement and when will you begin to receive it?
  • When will your retirement benefit start? It’s the first day of the month after your date of final separation. Between your retirement date and the date your benefit kicks in, you won’t receive either your salary or your benefit check.

5. Because the G Fund is safe, it’s your best bet for TSP investments.

The G Fund, which invests in government securities, has a reputation for rock-solid security. As a result, many federal employees invest 100 percent of their TSP in the G Fund. They’re afraid of the risk of stocks and bonds because they don’t know when to invest and when to pull back.

A better approach is to diversify between the C, F, G, S, and I funds no matter what is happening in the market. Rebalance your savings from time to time to take advantage of growth, and shelter some of your investments from too much risk — especially as you get closer to retirement. (Or let the lifecycle funds do this for you.)

Shortly after the TSP started in 1987, the stock market took off like a rocket. As it grew, many federal employees moved all of their G Fund money to the C Fund. Then the market “corrected.” Many feds lurched back to the safety of the G Fund. That’s like going to Las Vegas and constantly putting your money in slot machines after you’ve seen them light up for a payout.

Just because the G Fund, which invests in government securities, will never have a negative return does not necessarily mean it’s your best option. If you need to understand more about investing, there are lots of opportunities to learn. You can start with information from the Thrift Savings Plan itself.

If you need additional help, you can attend a pre-retirement or midcareer planning seminar at your agency. I’ve been conducting such seminars since 1988 and the most common comment that I see on evaluations is “wish I would have attended sooner,” followed by “this training should be mandatory.”

(Image via Jerry Sliwowski/

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

For more retirement planning help, tune in to “For Your Benefit,” presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

Poll: Half the Federal Workforce Says They Might Leave Government

Poll: Half the Federal Workforce Says They Might Leave Government


Fifty percent of federal employees are mulling a career switch, according to a small, online poll released Thursday. The reasons, not surprisingly, include frustration over the three-year pay freeze, political attacks on the government workforce and an expectation of higher salaries in the private sector.

The PulsePoll survey of 370 civilian and defense agency employees by Market Connections Inc. and FierceGovernmentIt also documented concern about a “brain drain” of experienced employees that could crimp effective pursuit of agency missions. Continue reading “Poll: Half the Federal Workforce Says They Might Leave Government”

Congress Extends Sequester to Pay for Veterans Benefits

Congress Extends Sequester to Pay for Veterans Benefits

Sen. Carl Levin, D-Mich., said Democrats would rather have passed legislation to reverse the cuts without a payfor.
Sen. Carl Levin, D-Mich., said Democrats would rather have passed legislation to reverse the cuts without a payfor. J. Scott Applewhite/AP file photo

The Senate overwhelmingly approved a House-passed bill 95 to 3 Wednesday that would unwind $6 billion in cuts to veterans benefits from last year’s budget deal that proved to be a political fiasco for all involved.

The conclusion of the battle to unwind the cuts in Congress culminates several days of flip-flops from Democrats and Republicans. Lawmakers ultimately concluded it was shrewder to put to rest a rising political vulnerability with veterans than continue petty-looking squabbles over offsets that are lost on the public at large.

The takeaway message from the massive backlash over a relatively small-dollar provision included in last year’s budget agreement engineered by Wisconsin Republican Rep. Paul Ryan is don’t mess with vets, especially in an election year. Continue reading “Congress Extends Sequester to Pay for Veterans Benefits”

Don’t Go, Please Stay

Don’t Go, Please Stay

  • By Tammy FlanaganFebruary 6, 2014

Last week’s column, To Stay or Not to Stay in Government, which featured my advice to a federal manager considering a jump to the private sector, hit a nerve with many readers. The benefits of a full career of federal employment and service came through loud and clear in the comments from readers of the column. In addition to the benefits that I pointed out, readers came up with additional reasons to look before you leap away from a career in federal service. There is something to be said about hearing these words of wisdom from those who have been there and are reaping the rewards of a federal career. Here’s a summary of what they had to say.

Advantages of Government

Reasons commenters listed for sticking it out in federal service included: Continue reading “Don’t Go, Please Stay”