For federal retirees, the pressure to continue working may be reduced or at least not as strong as for those without a defined benefit plan. Image: Ground Picture/Shutterstock.com
By: FEDweek Staff
Many indicators of preparations and expectations for retirement “have changed little between 2020 and 2025, suggesting that retirement security is stuck in the doldrums,” says a report examining trends in similar annual surveys across that period.
“In 2020, large swaths of the economy were shuttered due to the COVID-19 pandemic. In the following years, the economy recovered, albeit with high inflation and uncertainties in the employment market. Yet many indicators of retirement security remain stalled,” says the study by the TransAmerica Center for Retirement Studies.
These findings stand in contrast to the retirement outlook for federal employees, who benefit from a retirement structure that much of the private sector lacks. While private sector workers often depend primarily on Social Security and whatever personal savings they can accumulate, federal employees covered under FERS, for example, receive benefits from three sources: a defined benefit annuity, Social Security, and the TSP.
And in terms of future value – your pension often is of greater consequence than your TSP balance. A pension provides a guaranteed monthly annuity for life — something increasingly rare outside of government service.
The TSP offers additional advantage. Like a 401(k), it allows employees to invest pre-tax or Roth contributions, but federal employees also receive automatic agency contributions of 1 percent of basic pay each pay period, plus matching contributions of up to 4 percent for a total agency match of up to 5 percent — a benefit many private sector workers do not receive at all.
The survey found that an overall measure of retirement confidence is virtually unchanged between 2020 and 2025: in both years 22 percent said they are very confident in their ability to have a comfortable retirement and 44 percent said they are somewhat confident, with only minor differences in the split between those who are not too confident and not at all confident. In the intervening years, the share of those very confident differed only in the narrow range of between 20 and 24 percent.
Similarly, the percentage who believe they are building or have built a large enough nest egg for retirement has ranged only between the 55 percent of 2020 and the 59 percent of 2025.
In that time, more of those still in the workforce are saving for retirement through IRAs and other investment vehicles, now 69 versus 65 percent, while slightly fewer have taken early loans or withdrawals from such savings, now 30 versus 32 percent.
The percentage who expect to work after retiring from their current job — either full-time or part-time — was the same in 2025 as in 2020 at 48 percent, with only a range of between 47 and 52 percent in between.
For federal retirees, the pressure to continue working may be reduced or at least not as strong: a FERS annuity provides a predictable monthly income regardless of market conditions, and federal retirees are usually able to retain FEHB coverage in retirement, removing one of the most significant financial concerns that drives private sector retirees back to work.
One notable difference over the years is that a growing share expect to retire at or before age 65, rising from 49 to 54 percent. However, the percentage who expect to retire at age 70 or above also increased, from 23 to 26 percent.
Federal employees may have more flexibility on this front as well: under FERS, employees may be eligible to retire as early as their Minimum Retirement Age — which ranges from 55 to 57 depending on birth year — with sufficient years of service, without waiting until the Social Security eligibility ages that largely govern private sector retirement timing.
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See also,
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