What New Federal Retirees Should Know

by | Jan 24, 2018

Last Updated June 17, 2024


Entering retirement can be full of unknowns; how much is your monthly annuity? Are taxes withheld? Will insurance continue? This post looks to answer some of the questions that are common for federal retirees, and more.

First Payments For Retirees

OPM begins to provide interim payments as soon as they receive all your retirement records. Those payments represent a portion of your final benefit.


Only federal income tax is withheld from interim payments. Those federal income taxes withheld from your first interim payment will be higher than subsequent payments or your regular annuity. OPM makes necessary changes regarding tax withholding when your application is finished processing.

Health and life insurance continue while receiving interim pay. OPM begins withholding health and life insurance premiums retroactive to the commencing date of your annuity when your application is finished processing.

When OPM finished processing your application, they will send you a personalized booklet titles “Your Federal Retirement Benefits”. It details how much your monthly payments will be, confirms health and life insurance coverage, and provides the information you need to prepare your tax return.

Credit for Civilian Service

If you don’t make retirement contributions:

  • Under FERS, you’ll be given an opportunity to pay for temporary service prior to January 1, 1989.
  • Under CSRS, if no contributions were made for service on/after October 1, 1982, OPM will give you an opportunity to pay the contributions and let you know any difference it makes to your monthly benefit.

Changing Health Insurance Coverage After Retirement

After you retire, you still can change your enrollment from one plan to another during an annual Open Season. You may not change to another plan simply because you retired. That does not suffice for a life event.

If you are receiving an annuity and enrolled in the FEHB program and decide to cancel your FEHB enrollment, the following consequences may apply:

  • You cannot re-enroll in FEHBP
  • You and your enrolled family members will not be eligible to enroll in temporary continuation of coverage or convert to a non-group contract, plus the 31-day extension of coverage doesn’t apply to canceled enrollments
  • If you die, you won’t have an FEHB Self and Family enrollment for your survivors to continue, even if they are eligible for a survivor annuity.

Life Insurance Coverage For Retirees After Retirement

You may cancel or decrease coverage at any time. However, you cannot increase coverage. Once you cancel your life insurance coverage, it can NEVER be reinstated.

Cost of Living Adjustments

Your first COLA will be prorates based on how long you were retired before it is given. FERS COLA’s aren’t provided until age 62, except for disability or survivor benefits.

FERS disability retirees get the adjustment except when they are receiving a disability annuity based on 60% of Hig-3 salary, in other words, the first year on disability retirement. Also, if you have a CSRS component under FERS, the component is subject to CSRS COLA calculations.

To receive the full COLA, a retiree or survivor annuity must have begun no later than 12/31/2016. If not, the increase is prorated under both retirement systems. Prorated accounts receive 1/12 of the increase for each month they received benefits.

A benefit will not be increased if it would cause the annuitant to receive payments more than any cap amount specified by law.

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