Terry Gerton Talking about retirement issues, we\u2019re still hearing that the administration continues to offer the DRP program in some places. What are you seeing in retirement numbers kind of across the board these days?<\/p>\n
Tammy Flanagan Yeah, it seems like all of a sudden, just in the last week or two, we\u2019ve been getting a lot of calls from people that are retiring either September 30th, which is kind of last minute, but they\u2019re still calling for help, or the end of the year. So I agree, we\u2019re still seeing DRPs and people leaving early and people trying to make this last minute decision about what to do, sometimes with two weeks to decide.<\/p>\n
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Terry Gerton Well, you\u2019re right. September 30th is right around the corner. And it feels like last year we were talking about September 30th, it\u2019s such a big deal. As people are looking at that date, though, and it\u2019s kind of logical, the end of the fiscal year, what kinds of questions are at the top of their mind? Are they ready to make that kind of transition?<\/p>\n
Tammy Flanagan Yeah, some of them are because, as you know, some people plan for retirement throughout their career, which we should do, but there are some folks who really haven\u2019t given it much thought until they got this little golden egg in front of them saying, hey, you can retire five or seven years sooner than you had planned or that you were even eligible before and so now what do you wanna do? And it\u2019s very enticing to take that incentive to go out early, especially if you\u2019re gonna get a payment, a buyout type of payment. But are you ready? And that\u2019s not just financially, are you mentally ready for this transition, and can you afford it? Some people think they can until they realize some of the things that may not be as obvious, such as the cost of living adjustment doesn\u2019t kick in under FERS until you\u2019re 62. So if you\u2019re leaving at 50, that\u2019s 12 years before you get a pay raise. And that\u2019s a long time to wait for more money to come in.<\/p>\n
Terry Gerton Well, retiring feds are sort of a captive market. Even federal agencies, of course, are offering retirees training. What\u2019s the difference between a good retirement training preparation and a session that just sort of walks you through what your retirement benefits are?<\/p>\n
Tammy Flanagan Yeah, we\u2019ve seen it all and we\u2019ve heard it all from different agencies where we\u2019ve come in and presented training classes. And I\u2019ve found that sometimes, the easy way to do that is not always the best. You\u2019ll have folks out there who will give free training in an effort to gain clients. Perhaps I\u2019m a financial advisor and I\u2019m looking for clients, I\u2019ll just go in and give them a briefing. But yet when the questions come in about, you know, how much service credit is gonna be allowed or do I have to pay a deposit for this? You know, they\u2019re not benefits experts. So they either don\u2019t know and will say they don\u2019t know, or they\u2019ll give an answer that they think is correct and it\u2019s not accurate. So you gotta be really careful when you\u2019re attending a training class to know who it is that\u2019s presenting it, how much experience do they have? Are they benefits people? Are they financial planners? There\u2019s a big difference between the two. So, one way to test that is to ask a question that you know the answer to and see what they give you as the response. And if they don\u2019t know the answer, are they going to give you a reference as where you can find out? So, accuracy is utmost important because we don\u2019t need more rumors going around. There\u2019s enough of those amongst the employees themselves. So be sure that the training is qualified and somebody\u2019s qualified to on it.<\/p>\n
Terry Gerton Should pending retirees look for training offered by their employing agency or should they go out on their own and look for private sector training?<\/p>\n
Tammy Flanagan Well, if the agency\u2019s offering a training course, absolutely, take advantage of that, don\u2019t bypass that. You don\u2019t know how many times I\u2019ve walked into a classroom where someone will say, well, you know, I\u2019ve been here 40 years, I know all this, they told me I need to come. And at the end of the day, they\u2019ll apologize and say, oh, you told me some things I didn\u2019t know, because there\u2019s little nuances in our retirement system that that one little thing can either save you some money or avoid you from making a mistake. So I think taking advantage of agency training, usually it\u2019s vetted in some way so that you can generally be sure that someone\u2019s coming in that\u2019s gonna really provide adequate and quality training. But if you don\u2019t have that, and there\u2019s a lot of federal employees who are never afforded a formal training program, there\u2019s lot of places to go get it. Whether you\u2019re going to the agencies themselves, TSP has wonderful online learning classes. Some of them are live, some are recorded. Social Security has YouTube channels, so does OPM. So even within those agencies themselves that administer the benefits, there are places to learn, whether it\u2019s just going to the website and reading or listening to an online class. Those are wonderful opportunities. And then I also see outfits like NITP, they provide online training on a regular basis monthly by experts who have been doing this for decades. So, you know, there\u2019s places like that that you can go to that you feel confident and comfortable that the information you\u2019re getting is good, accurate, and it\u2019s going to be helpful, give you some things that you can do now to prepare for that transition.<\/p>\n
Terry Gerton Tammy Flanagan is a principal with Retire Federal. Tammy, you mentioned the nuances in the federal retirement system. Let\u2019s talk about some of those. Where do you see people either be most surprised or make the biggest mistakes by not considering those nuances?<\/p>\n
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Tammy Flanagan Yeah, there\u2019s a lot of decisions that employees have to make when they retire, and sometimes the obvious answer is not always the right one. For instance, if I\u2019m married, I have to consider survivor benefits for my spouse, and oftentimes I\u2019ll hear someone say, well, my spouse is also a federal employee, or they work in the private sector, they\u2019re going to have their own retirement, so I don\u2019t see why I need to even consider leaving them a survivor annuity. Well, you know, while there\u2019s two of you, you\u2019ve got all these sources of income between Social Security and pensions and retirement savings, but down the road, which could be decades down the road when there\u2019s one of you, can that single person survive on half of the Social Security, and without any of your retirement? And in some cases, without your health insurance, because one of the things that conveys with a survivor benefit is the ability for a non-federal spouse to maintain health insurance, or even a federal spouse who may not be eligible for their own retirement benefit. So that\u2019s a big one, I see that a lot. Other decisions have to do with life insurance. A lot of people wanna cancel their life insurance when they retire and they don\u2019t realize that some of that life insurance will convey free of charge once you\u2019re 65 or older. And a lot of our retirees are already 65 so they would have free coverage if they didn\u2019t cancel it. So there\u2019s some things you really wanna know ahead of time to avoid missing out on an opportunity or making a mistake that you\u2019re later gonna come to regret, and you can\u2019t go back and change it because some of these decisions are permanent.<\/p>\n
Terry Gerton A lot of people and a lot of our discussions focus on whether or not folks are financially ready to retire, do they have all their financial ducks in a row? But you mentioned something at the beginning of our conversation that I think is also really important and often gotten wrong, which is, are you personally and emotionally and psychologically ready to retired? How did people get to the point of really being able to answer that?<\/p>\n
Tammy Flanagan Well, I think someone who\u2019s been planning on retirement for many years, really preparing for it, has been thinking about that, has been making secret plans in their mind or with their family of, you know, here\u2019s the things we\u2019re going to do initially when I retire, here is what my retirement life is going to look like, here\u2019s what I want for that. But someone who\u2019s facing kind of a knee-jerk decision where they\u2019re just all of a presented with the opportunity to retire, and they really hadn\u2019t been giving it a lot of thought, at least not for the present moment, sometimes that can come as a mental shock when you go into retirement. First of all, you\u2019re waiting for that first check, and you have some financial concerns until everything falls into place, so that can be very stressful. And then you haven\u2019t planned on, you know, how much money do I really need? So am I mentally ready to move on to another career if need to fill in the gaps? Or, if I can\u2019t afford to retire, what was my plan? Am I just gonna sit and watch TV and clean the closets and do that? Or do I really have some things I really wanna get into and learn some new hobbies perhaps or some new trades? There\u2019s a lot of things you can do, but you gotta make an effort. There\u2019s not a supervisor now telling you here\u2019s what you need to do tomorrow. So you have to make your own plan.<\/p>\n
Terry Gerton That\u2019s right. Maybe you find out golf isn\u2019t quite as much fun as you thought it was going to be.<\/p>\n
Speaker 3 Not when you can do it seven days a week, as fun as that might sound.<\/p>\n
Terry Gerton So if someone is approaching the point where they really do need to think seriously about retirement, what information would you want them to absolutely have in hand before they make the decision to leave government service?<\/p>\n
Tammy Flanagan Yeah, how much time do you have? There\u2019s a lot of things that you want to have in place. First and foremost, make sure that you have documentation of all of your federal service so that if somebody comes back to you and says, well, you only have 19 years of service and you really have 30, can you prove that? Can you say, well here\u2019s my personnel action statement showing when I was hired, here\u2019s the one when I left, here is the one when I was rehired, keep records of your personnel. You know, you can make a copy of your electronic official personnel folder in most cases. There\u2019s some intelligence agencies, of course, where that\u2019s not necessarily possible, but you can certainly ask for specific proof that I\u2019ve done this work. You know I\u2019ve had law enforcement people who didn\u2019t get credit for being law enforcement when they move from one agency to the other. So at the last minute, they\u2019re scrambling, trying to get that proof in place so that they can actually retire under those provisions. So, be responsible for your own career. Don\u2019t expect someone else to do it for you. Chances are they will, but if there\u2019s that one important piece of information that\u2019s missing, you can be, if nothing else, stressed out until you find it, or maybe at a loss for a certain amount of service. So to me, that\u2019s one of the most important things we can do. And then review that application. You know, we now have the online retirement application. It\u2019s not as easy to review ahead of time, but those paper applications are still at opm.gov. So get your immediate retirement application, look it over, make sure you know how you\u2019re going to answer those questions because there are some decisions you have to make. So, you know, be prepared. You know, think about this, get the training that you might need, do the research ahead of time. And don\u2019t rely on something that your coworker did or that your best friend did because that may not be the right decision for you.<\/p>\n
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