When comes to retiring under FERS, it is often described as a 3-legged stool. There is a fourth leg, however- The Strategic Leg® – Financial Planning and Investment Advisory Services from Serving Those Who Serve.
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Compared to other retirement systems offered to workers in both private and public sectors, federal benefits are often referred to as ‘the gold standard’ of retirement plans. And while there is certainly a lot of truth to this sentiment, it also comes with a catch. When the switch was made from the old Civil Service Retirement System (CSRS) to the newer Federal Employee Retirement System (FERS), a lot of choice and responsibility was left on the individual federal worker to construct their own retirement. While CSRS made things relatively easy by not including social security and the TSP as part of the retirement system, when these two components come into play for a CSRS retiree, like with the social security offset, it can quickly become overwhelmingly complicated.
For FERS retirees, their retirement system has been presented as a 3-legged stool:
With the FERS pension providing less retirement income than CSRS, FERS retirees are expected to make up this shortfall by contributing to the thrift savings plan (TSP) and social security. Choosing how much to contribute to a TSP account, and what funds to invest in, is a crucial part of building a stable retirement from federal civilian service under FERS.
With financial planning and investment advisory services provided by Serving Those Who Serve advisors, feds can get a “leg” up by adding a fourth pillar to this model of FERS: the strategic leg:
While FERS might be ‘the gold standard’ of retirement plans these days, this is only the case with a thorough strategy. Many FEDS believe having a pension in place and contributing enough to get their 5% TSP match will be sufficient to live comfortably after leaving service. However, neglecting to review the choices and consequences that are entailed with a FERS retirement can have a detrimental impact.
For social security, knowing when to withdraw can vary drastically depending on one’s financial situation. For FERS as well, claiming retirement benefits at the minimum retirement age or at age 62 can similarly impact your pension amount. And with TSP, strategy is needed to determine a fed’s investment allocation, which includes how much risk they’re willing to take, and also how to time withdrawals so the money isn’t drained too hastily. The new mutual fund window is also opening up this summer, and will offer thousands of new investment choices in the TSP. More choice is not a bad thing, but it will leave more room for error, and therefore there will be an even greater need to develop a sturdy financial plan. For planning your federal retirement, strategy is everything.
Learn about adding The Strategic Leg to your Federal Retirement plan today! – Meet with a Serving Those Who Serve advisor today to talk about your financial plan and our investment advisory services. CLICK HERE TO SCHEDULE
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Until Next Time,
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
The FedLife Podcast is your in-depth, biweekly deep dive into the world of federal benefits and retirement planning. Hosted by federal benefits expert Ed Zurndorfer and Dan Sipe of Serving Those Who Serve, each 30-minute episode unpacks the complexities of FERS and CSRS retirement, FEHB and Medicare, survivor benefits, tax planning, and more. Designed for federal employees and retirees who want more than just the basics, FedLife goes beyond the headlines to explore the rules, nuances, and strategies that can make a meaningful difference in your retirement. Remember: it’s your Fed life, make it a great one.
The Fed15 Podcast is your weekly 15(ish)-minute briefing on federal benefits and financial planning, built specifically for federal employees and retirees. Hosted by Dan Sipe and Katelyn Murray of Serving Those Who Serve, each episode delivers clear, actionable guidance on topics like FERS and CSRS retirement, TSP strategies, FEHB, survivor benefits, tax planning, and more! Whether you’re five years from retirement or already there, The Fed15 helps you cut through the noise, avoid costly mistakes, and make confident decisions about your federal benefits.
