There are a lot of important numbers surrounding retirement that you should be aware of. A lot of thought and planning goes into retirement as your choices will set you up for the rest of your life.
A couple of things could happen:
- You’re mentally, and maybe even financially, ready to retire, but you aren’t eligible to retire yet.
- You’re eligible to retire, however, you’re either not financially ready, or you simply want to keep working.
In either scenario, there are certain numbers you want to keep in mind.
In most eligibility scenarios, you are eligible to retire after 30 years of creditable service. With few exceptions, this is when you can receive a full pension. If you’re able/willing, waiting to hit this milestone is in your best interest.
If you don’t wait, but can make it to your Minimum Retirement Age, and you have at least 10 years of service, you have 2 options:
- Take an immediate pension with a reduction while maintaining your federal health benefits
- Postpone your pension until age 60 (with 20 or more years of service) or age 62 (with less than 20 years). If you do this, you’ll be eligible to pick up federal health benefits at the same time you pick up your pension.
You may begin withdrawing from your Thrift Savings Plan without the IRS’s 10% early withdrawal penalty if you retire or separate from federal service in the year you turn 55.
This is also the age when a CSRS employee with at least 30 years of service becomes eligible to retire.
You accrue 4 hours of sick leave each pay period. While working, your sick leave acts as short-term disability and allows you to be paid at your regular pay while out with an illness or short-term disability. This time is converted to months/days at retirement and added to your creditable service.
This is such a valuable benefit because you are rewarded at the end of your career for unused sick leave.
Every year you can save and roll over up to 240 hours of unused annual leave into the next calendar year. Once you hit your 15th year of work, you accumulate 8 hours of annual leave per pay period. At the end of your career, any unused annual leave hours will be paid out to you in a lump sum. The hours are paid out at your last pay rate, even though they may have been accrued at a much lower rate.
A bonus is if you wait to retire until the end of the year, IF there is a cost of living adjustment for current employees, you’ll receive the COLA on your unused annual leave payout.
This is the recommended percentage to save on everything you earn. 10% saved throughout your entire career will likely lead to the accumulated amount you need for retirement.
It’s also the amount that gets contributed to your TSP account, including your agency match if you contribute the maximum of 5%.
If you are retired at age 65, you will be asked to decide around electing Medicare benefits. Federal retirees are part of the only group health plan in the country that allows an opt out of Medicare.
This does require some thought, however. You do want to elect Part A, which covers room and board in the hospital, hospice, and home health care. You’ve already paid for this benefit while you were working, so it’s free.
The choice of Part B is trickier. It comes with a premium of at least $134/month, and possibly more since it’s based on your prior 2 years’ income. If you don’t make the election within your enrollment period at age 65 and later decide you want to enroll in Part B, there’s a 10% penalty for each year you’ve waited to enroll.
Make sure you keep these numbers in mind when deciding to retire. It can save you money and/or time.