Federal Employee Retiring Within 5 Years? Don't Miss These 5 Things

oh man it is crunch time if you're within five years of retirement that is really the window where you gotta dial things and of course ideally we have things dialed in or as early as we possibly can right where we kind of know what the plan's gonna be once you start getting close that's when you have to get things squared away to make sure you're going to be okay because the closer you get to retirement the last the less room you have to really make changes right because let's say let's say you start doing the plan like oh man um i really need more in my tsp well if you have only six months before you plan on retiring well how much time do you actually have to get more in there or well not much so once you start hitting these times okay five years out well there's some things you have to make sure you have done or are doing to be on track and to keep the benefits that you want into retirement there's many many things to think about today we're going to talk about some of the the top five in my opinion um that are so so crucial five years out from retirement again if you're new here my name is dallin hawes this is the haas federal advisors youtube channel and podcast welcome and all the time we talk about how you as a federal employee can retire comfortable and confident get the most out of your federal benefits so we're going to dive right in and start right here and the first thing that we're going to talk about is so crucial is being able to keep the insurance that you need into retirement because honestly if you aren't eligible to keep your health insurance when you want to retire well that's going to be tough to retire unless you are at least 65 maybe you can do medicare but even that's not ideal just having medicare as a fair employee ideally you want to be able to keep your health insurance that's one of your best benefits now if you're on tricare there's some nuances here but as a federal employee not on tricare you want to be eligible the first thing that you have to do and know about health insurance is there some eligibility requirements right first to keep your health insurance you have to retire with what they call an immediate retirement basically being eligible to get a pension right away right if that's you that's one of them next you have to be covered under your federal health insurance for five the five years before retirement that's why you have to really get serious at least five years out to make sure you're covered under fe hp and a common situation where it doesn't happen is let's say your spouse is working for a company on the private side and let's say um their health insurance is actually cheaper over there right well if you're on their plan and you do not get on your federal health insurance within the five years before retirement well either you got to work longer or you can't keep your federal health insurance into retirement and often your spouse who works for a private company won't be able to keep their health insurance either that's generally not what a private company does so you want to make sure you're covered for at least the five years before time if you want to keep your federal health insurance in retirement of course the last eligibility requirement and it's kind of built in is what on the day you retire you got to be covered you got to be covered under fehb so that is your health insurance okay and that is probably the most relevant for the most federal employees the next of course is your life insurance and life insurance eligibility rules are actually very similar to your health insurance you got to be covered for five years you got to retire with immediate retirement you got to be covered on the day you retire those are the big ones now for your dental and vision their requirements are a little laxer they're not as difficult basically you just as long as you retire with a an immediate retirement basically be eligible to get pension right away then you can keep your dental vision in retirement and actually even if you're not even covered with dental envision when you retire as long as you retire with an immediate retirement you can you can even enroll in dental envision in retirement so there's some flexibility there now the last thing i want to know when we're talking about insurance is you want to have a plan before you retire ideally at least five years out on what you're going to do with medicare now this plan can change in the future that's totally okay and it probably will because i'm sure the rules will change laws will change but you have to know at least have an idea of what it's going to cost you when medicare comes into play now medicare really only comes into play starting at 65 so if you retire before that then it's not going to come to play but you have to at least understand it at least the basics at least the basic you don't have to go in depth understand the basics of the program and what you're going to pick and then how it makes sense for you now one thing i am going to add here is that i'm going to be talking about tons of different topics today tons of them different ones and there's no way that i'm going to be able to cover each one of these for example health insurance or life insurance or medicare all these different things in depth in this episode i'm not gonna do that right but there's gonna be a link below in the description on the podcast and the youtube channel to take you to i always write an article with most pieces of content okay and in that article it goes through all these same topics we're talking about the the five things you want to talk about or think about five years out from retirement and in each one of these there's gonna be links to other articles and videos that go in depth into each and every one of these topics that i'm just gonna graze over today so if there's any of those like oh man i really do need to get a plan for medicare i really do need to get a plan for my tsp well there's going to be links in that article to go in depth of okay this is what i'm actually talking about these are the options that you have so definitely check that out if you want any more in-depth information about any one of these topics all right number two and this is a big one once you kind of figure out okay i can keep the health insurance and i can keep the insurance i need into retirement no problem awesome the next big thing is your income your income is can you afford to retire can you afford it and to answer that question you have to of course know your pension inside and out know what you're gonna get know how it's calculated get an estimate from your agency it's okay how much is my pension going to be after taxes after survivor benefits after everything comes out that's going to come out right because often it could be a big difference between your gross pension and then what's actually left at the end of the day you have to know that again if you want to know how to calculate your pension there's a link below in the article like i said check that out next social security what's your plan on social security right that's often a big part of your retirement right and so you want to come up with a strategy before you retire on what you're going to do now that strategy can change later maybe your strategy is like hey i don't need social security right away but i'm going to delay it some but i don't know exactly how long that's fine just have a general idea of how the program works so that you're not blindsided down the road of oh man i didn't know how this works um maybe it's not maybe you don't get as much money as you thought there's lots of things to consider again if you want to think about strategies for you as a federal employee for social security how to get the most out of it there'll be a link below in that same article like i said link below check out it's on my website and there's all these links to these other pieces of information to go deeper and have every one of these topics now the last piece of income that all federer employees have now you might have other income you might have rentals you might have a military retirement you may have va disability you have other income that's awesome that's great but the core three income sources for a federal employee again is your first pension social security and your tsp your tsp is that last piece and the big questions you have to really think about is okay how much is that going to provide me in income in income right and a good way to at least estimate it at the beginning is the four percent rule right so take whatever your tsp is let's say let's keep it easy let's say you got a hundred grand a hundred thousand dollars in your tsp how much can that reasonably provide for you for the rest of your life well four percent rule says hey take a hundred grand times up by four percent well that's four thousand dollars so so again a hundred grand would provide four thousand dollars a year in retirement and that if it's the traditional tsp that's pre-tax then you have to take taxes out of that as well if you want to know again there's another a link in the art uh in the same article i was talking about on going deeper okay how much you have in your tsp how much do you think that can actually provide for you for the rest of your life and not worry about running out of money in retirement and once you kind of get all three of these decisions made on okay this is my pension right and this is my plan on social security this is my plan with my tsp and how much you can provide then from there you can actually answer the question hey can i afford to retire but of course the other side of the equation is what are your expenses going to be right and a great place to start is what are you spending now what are you spending now right and maybe a great place to start is if you ever look at your lead and earnings statement basically where it shows hey this is your gross pay this is all the things that come out of it and this is your net pay how much you get in your bank account every two weeks right a great place to start is hey what is my net pay right now what am i spending um on just my life my life right um and maybe that's a great starting point okay every two weeks i'm getting three thousand bucks net great how much is that a month how much income am i going to have in retirement net is that going to be about the same do i want to be able to have more money in retirement maybe is less fine maybe are you going to pay off your mortgage until you need less in retirement those are the sort of questions you have to dig into again at least five years out so you can say hey this is what i have to do to adjust to maybe be a little more prepared than i than i am or maybe maybe you weren't as prepared as you thought you were right so those are the things definitely think about when it comes to income and expenses now the next big thing that you have to understand and be ready for within five years of retirement is the big decisions that you make at the time you retire right and two of them you actually make on the retirement application and it's really hard to change these things later so you want to know when you're going into it what the decisions are and what makes sense for you so number one is survivor benefits survivor benefit and that is when you retire you can decide if you want to leave your spouse a piece of your pension if you were to pass away first okay there's three options three options there's full survivor benefits which basically leaves them half of your pension but it costs you 10 of your pension um while you're both alive right next option is it's the partial survivor benefit basically it costs you five percent of your pension while you're both alive but it leaves your spouse 25 and the last option is um just know you don't pay anything but they don't get anything if um if you pass away so first you gotta decide hey does my spouse need extra income if i was to pass away what income are they gonna be left with that's huge and be able to make this decision constantly now one big nuance here is if you don't let yours or don't give your spouse a survivor benefit and you pass away first they cannot stay on your federal health insurance so they better have health insurance by themselves maybe they're a federal employee and they have their own fehb great but if not then you probably are going to want at least some survivor benefit and in general the full survivor benefit is needed for a lot of people because they need income as well as the insurance so definitely think through some of these nuances of okay what are you going to be leaving for your spouse and what what are they going to be leaving you if one of you passes away first because it all comes down to just being prepared thinking through these details so you don't have to worry and stress about these details later and the second big decision that you make on the retirement application is life insurance where your federal life insurance like we talked about there's some rules on whether you can keep it or not into retirement but the next question is do you want to keep it because there's there's a number of parts there's of course basic part a part b and part c and they all work a little different in retirement and they all cost different amounts in retirement depending on which options you pick and you pick these options when you retire when you submit your application that is when you make these decisions so first how much life insurance do you need and once you know that what is the best option out of the four that you might have with the government to keep and again the federal life insurance can get quite expensive into retirement so you definitely want to think okay how much do you need and if you don't need it great you don't have to pay for it right but if you need some you want to make sure things are dialed in you're not paying more than you have to now the next big decision you make about retirement time it's not on the retirement application but it's about retirement time that you certainly want to be thinking about it is what you're going to do with your your tsp and what i'm talking about here is okay are you going to keep the money in the tsp in the thrift savings plan are you going to move it to an ira right how are you going to invest it in retirement and again these topics are huge topics that i could talk about for a long time on you know the pros and cons of tsp versus an ira or the investment strategy that you should pick for retirement these are massive topics but these are the sort of things that you've got to have in your brain so that you're not you know in shell shock right when you're tired trying to make all these decisions at once because when we get decision fatigue when we're trying to make so many decisions first either we climb up and do nothing and that's terrible right second we make bad decisions you don't want to do that you want to plan over time and over time your knowledge base and your confidence in this kind of stuff is just going to rise exponentially so that's the sort of thing you want to make these decisions over time and again if you want to know more about the pros and cons of an ira or the tsp in retirement there's a link in the in the article i said on my website check check out the the description below um or if you want to figure out hey what's the best retirement investment strategy for me again there'll be a link to an article um all about that below as well now the fourth big thing that you have to really square away within the five years before retirement is making sure that your documentation for your career is perfect you don't want any mistakes there because when it comes to of course your pension how much that's going to be and your eligibility to retire when you want and with the benefits you want like your health insurance all these things it comes down to your career and how many years of service you have and so if the documentation isn't correct right or there's mistakes on your sf50s your standard form 50s which document a lot of the changes in your career if there's mistakes typos things like that that is where big mistakes happen with opm and just with processing applications where there's delays and big issues that happen and some people just get incorrect amounts for their pension even in retirement because there's mistakes so what you want to do is you want to go and check all your standard form 50s right if you don't know where those are talk to you know talk to a co-worker it's generally in your eopf your electronic official personal folder right personal folder it's generally in there right so check that out make sure everything looks right and especially if you have weird service like part-time service intermittent service leave without pay military time anything like that that's out of the ordinary not full-time stock you want to make sure everything is well documented if you bought back military time you want to make sure your agency has all the documentation maybe make an appointment with an hr rep if that's available to you and go through your documentation make sure they have everything that they need to confirm you worked as long as you have worked that you have made all the deposits that you have made all these things are dialed in ready to go so you don't want to be surprised when you turn in your retirement application where they come back and like ah you gotta work six more months you don't want that that is no fun at all you want to make sure these are taken care of before nice and promptly before you actually try to retire all right the last thing that you need to square away before you retire five years out from a time that you really need to start thinking about is picking a specific day to retire specific a specific date whether it's okay december 12th whether it's june 21st whatever it is picking that day that first you're eligible to retire you have all the benefits that you need in retirement you have the income you're going to need in retirement pick that day pick it okay and you've worked hard you made it if you could pick a day and be confident that you're good to go in retirement congrats congrats that you have worked so hard in your career and of course being a civil servant thank you thank you for your service and putting in the time and energy and if you're watching this i know you're putting in time and energy to learning this stuff so a big kudos to you for being prepared confident and comfortable in retirement if there's any advice any tips that you got or maybe you did within five years of your time that helps you be a little more prepared or that you're doing right to be prepared for retirement please share it below share with the community and that's where we all learn and get better and approve so i hope that was helpful if you have any questions yourself there's also a link below to submit questions to my website where that's honestly where we get the topics for these these videos for this podcast to always produce the stuff that you guys are interested in and would help you guys the most so i hope that was helpful have a great rest your day i'll talk to you soon

Channel: Haws Federal Advisors

Views: 28,780

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Id: t9aKB6z-dTE

Length: 16min 59sec (1019 seconds)

Published: Thu Jan 20 2022