Retirement 101 for Federal Workers MyFEDBenefits Style

Are you ready for retirement?

That’s a question many of us think we know the answer to.

But what we think we know doesn’t always align with reality — attaining the style of retirement you desire.

Surely that isn’t pinching pennies and having to be worried about how much you spent on a cup of coffee at the diner this morning.

Unfortunately, knowing how much you can expect to earn from your federal benefits is no easy task.

The payout of your annuity (pension) is governed by a complex equation. Your Thrift Savings Plan investment is subject to a myriad of arcane withdrawal rules and restrictions.

Fortunately, your Social Security payout is relatively easy to figure out thanks to the Social Security Administration. However, you can’t be sure what your Social Security cost-of-living adjustment will be: In 2010 and 2011, retirees got zero percent.

Also, you’ll have to figure out how much in taxes you’ll be paying in retirement. Yes, it’s true: forking over cash to Uncle Sam never ends. You will more than likely have to pay taxes from the earnings you receive from your annuity. Even your hard-earned pension payout is subject to federal and state tax laws.

And you will have to pay taxes on the money you withdraw from your Thrift Savings Plan investments. That tax-differed status doesn’t last forever.

There are so many tax rules governing your retirement benefits that the IRS put together a 32-page document that explains the tax liabilities you may be subject to.

No doubt, it easily can become disheartening when you think start thinking about answering the question we posed at the beginning of this blog post, “are you ready for retirement?”

You might be, but we urge you to think deeply before you take that leap. You have to be mindful of all these rules and several others that we didn’t mention here because it will affect your anticipated retirement earnings. You don’t want to be blindsided.

But we can help you square the circle — help you solve the seemingly impossible question of retirement and enable you to answer it with confidence.

Our federal benefits experts will examine your financial situation and your benefits to see where you stand today and how well that will carryover into retirement. We’ll help you answer many of the serious questions and concerns that will surely arise when you begin thinking about that magic question.

Contact us anytime for a no-cost consultation.

In addition, Government Executive put together a comprehensive retirement primer that reiterates some of the retirement issues we discussed here and other issues that will come up as you explore this incredibly important decision.