As a government employee, there are several ways to manage retirement for stable financial security well into your golden years. Aside from Social Security benefits and 401(k) plans, it’s essential to understand the federal retirement benefits made available to you, specifically as an employee of the federal government. Depending on your hiring date, you may receive coverage through a different retirement system than your peers. So let’s delve deeper to see what applies to you and how it will benefit your retirement.
Hired in 1984 and Beyond
Civilian service employees hired in 1984 or later receive coverage from the Federal Employees Retirement System (FERS). This program provides government employees with Social Security benefits, a Thrift Savings Plan (TSP), and a basic pension plan. The TSP comprises government contributions, matching, and voluntary employee contributions. These retirement benefits are structured as an annuity, depending on years of service, plan contributions, and the participant’s age.
Hiring Date Prior to 01/01/1984
Those who began working before January 1st, 1984, might have access to the Civil Service Retirement System (CSRS). This distinction provides older civilian service employees with disability, survivor benefits, and retirement. Unfortunately, you will be ineligible to receive Social Security benefits because your employer did not deduct Social Security taxes from your paycheck. However, you may qualify for some Social Security benefits if another employer employed you to earn them or qualified through a current or former spouse.
Contributing to a Thrift Savings Plan (TSP)
The TSP is a defined contribution plan that allows federal employees to determine the amount of money and the method they’d like to invest. Ultimately, the amount available upon retirement is up to you, utterly dependent on your financial determinations according to your plan. Additionally, a TSP is not available to FERS employees alone. A CSRS employee may also make contributions to a TSP. The most significant difference here is employer contribution eligibility, with FERS receiving another 1% of their salary toward contributions made by their employer.
Furthermore, those covered by FERS can also receive matching employer contributions by increasing employee contributions accordingly. Calculating your maximum contribution amount according to the available employer match will reap big rewards. This strategy will enable you to accrue the necessary years of service to receive the automatic 1% match. If you had a retirement account through a previous employer, you could also roll these funds into your TSP.
Investment Options
Depending on your risk appetite, TSPs provide several investment choices, including low-risk funds (U.S. Treasury investments), higher-risk funds (international stock investments), and beyond. A life-cycle fund is another investment composition that changes as you age. In doing so, this design meets retirement goals with minimal effort overall. Low expense ratios are just one of the many reasons to utilize a TSP. In 2021, for example, TSP participants paid around $0.42 per $1,000 in net administrative expenses depending on the fund.
Contact Information:
Email: [email protected]
Phone: 8007794183
Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”
Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.
A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.
Disclosure:
Not affiliated with the U.S. Federal Government or any government Agency. Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured.
