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HomeMoneyRetirement Tips for Federal Employees: 5 Important Considerations

Retirement Tips for Federal Employees: 5 Important Considerations

Five Things Federal Employees Should Know for Retirement

As a financial planner who specializes in federal employee benefits, I have seen many federal employees prepare for retirement. It can be complex and confusing, especially when navigating federal benefits. Retirement is something that federal employees have worked hard to achieve for 30 or 40 years, so it’s important to ensure that they have the right financial planner to help them. In this article, I’ll outline five things that federal employees should know about retirement.

TSP (Thrift Savings Plan) Rollover

The TSP is a great investment, but it has some limitations that may not make it the best investment for retirement. One limitation is that the TSP has only five investment options, which may not be enough for some federal employees. Another limitation is that you cannot do in-plan Roth conversions with TSP. If you have a large amount of tax-deferred investments, then you may be setting yourself up for trouble with the potential of increased tax rates and large amounts you will be required to take out due to required minimum distributions (RMDs). Roth conversions are a strategy that you could do to turn a forever-taxed investment into a never-again-taxed investment, which could potentially save you money on your hard-earned dollars in retirement. You would need to move your TSP to an IRA in order to take action with this strategy. Be careful when you do this, as there are many things to be aware of. Make sure you seek help from a CPA and a financial planner who specializes in tax planning.

FEGLI (Federal Employees’ Group Life Insurance): Option B Gets Expensive!

If you have Option B heading into retirement and plan to keep it, then you want to do your due diligence to see what other options you have. Option B gets more expensive the older you get. If you are eligible and can qualify for private life insurance, then you may be able to find better options with better features/benefits. It could also decrease your cost from what you are paying with FEGLI!

FEGLI: 75% Reduction

If you have had Basic FEGLI coverage in place for at least five years before you retire, then you are eligible for what is called a “75% reduction” when you retire. This means you can keep 25% of your Basic life benefit for no cost for the rest of your life. It’s an excellent benefit, but it’s important to understand the catch – the value of the policy reduces by 2% each month until it reaches 25% of the original amount. After that point, the coverage freezes, and it will remain at the 25% level until your death.

CSRS Offset

CSRS Offset is a retirement system that combines elements of both CSRS and FERS. If you have worked for the federal government for a long time and then transitioned to a job in which you paid into Social Security, then you are likely to be in this system. CSRS Offset can be confusing, and it’s important to get help from a financial planner who specializes in it to navigate it correctly.

Social Security Offset

If you retire with a federal pension, you may be subject to a reduction in your Social Security benefits through the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). It’s important to understand how these provisions work, as they can significantly reduce your Social Security benefits. Make sure you speak to a financial planner who specializes in this area to help you plan for this.

Related Facts

  • The TSP is the most widely used retirement savings plan for federal employees with more than 5 million participants.
  • FEGLI is a group term life insurance program for Federal employees that has been available since the 1950s.
  • CSRS Offset employees receive both a CSRS annuity and a Social Security benefit.

Key Takeaway

Retirement planning is complex and confusing for everyone, but it can be even more challenging for federal employees. Federal benefits can be complex and full of red tape to navigate. Therefore, it’s important to work with a financial planner who specializes in federal benefits planning to ensure that you get the retirement you deserve.


As a financial planner who specializes in federal employee benefits, I have seen many federal employees prepare for retirement. It’s important to understand that retirement planning is not a one-size-fits-all approach, and it can be very different for federal employees. It’s important to seek help from a financial planner who specializes in federal benefits planning to ensure that you make the most of what you are entitled to. With the right planning and guidance, federal employees can enjoy a comfortable and financially secure retirement.

Denk Liu
Denk Liuhttps://www.johmm.com
Denk Liu is an honest person who always tells it like it is. He's also very objective, seeing the situation for what it is and not getting wrapped up in emotion. He's a regular guy - witty and smart but not pretentious. He loves playing video games and watching action movies in his free time.


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