6 Retirement Questions Government Empoyees Should Ask
Retirement planning is one of those areas that looks simple on paper but feels complex in real life. For government employees, the path often includes a pension, Social Security, as well as a 457 or TSP account. Yet the same questions still come up: When can I retire? How much income will I need? What happens to my healthcare?
Whether you’re covered by FERS, CSRS, another public retirement plan, or a contractor, these questions apply to anyone preparing to transition out of government service. Having worked with dozens of federal employees through this transition, I’ve seen how much peace of mind comes from clarity and preparation.
The goal of this article is to help you think through the most important questions before you make the leap. A successful retirement is not only about financial readiness but also about purpose, structure, and lifestyle.
Key take aways
- Retirement is a transition, not a finish line. The financial and personal adjustments often take time.
- A strong plan focuses on three things: preparation, protection, and persistence.
- Your pension is only part of the picture. Integrating other savings vehicles gives you more flexibility and control.
- Healthcare costs deserve real attention. A couple may spend close to $300,000 in retirement on medical expenses.
- Having a vision matters. Knowing how you want to spend your time helps shape how you should plan your money.
1. Do I Want to Retire?
Retirement looks different for everyone. Some people count down the days, while others find purpose and energy in continuing to work. The key is to separate whether you can retire from whether you want to retire.
Start by asking yourself what you value most about your work. Is it structure, purpose, social connection, or income? Those answers will guide how you approach the next phase of life.
Once you know your “why,” you can focus on the “how.” Build a plan that covers your income sources, potential expenses, and the kind of lifestyle you want to maintain. If you plan early, you can decide whether retirement means leaving work entirely or simply shifting to something different.
For federal employees, this decision also depends on your eligibility under FERS or CSRS and whether you’ve reached your Minimum Retirement Age (MRA). Understanding those rules helps you see if you can retire now or whether another year or two of service could strengthen your benefits.
Building a Financial Roadmap
The best place to start is by outlining your income streams. Include your pension, Social Security, investment accounts, and any other assets that can generate income. Compare those to your projected expenses, factoring in healthcare, travel, taxes, and the cost of maintaining your lifestyle.
Working with a financial professional can help you stress test your plan and make sure your money supports your goals, not the other way around.
2. Can I Afford to Retire?
A simple way to estimate your retirement income needs is to assume you will spend about 75 to 85 percent of what you spend today. From there, you can calculate how much income your pension, Social Security, and savings will provide. For FERS employees, your income typically comes from three key sources: your basic pension, Social Security, and your Thrift Savings Plan (TSP). If you’re under the older CSRS system, your pension may represent a larger share of your income, but Social Security will play a smaller role.
Longevity risk is real. Many retirees will live 20 to 30 years after leaving the workforce, so your plan should account for growth and inflation. The traditional “4 percent rule” may not be as reliable today given market volatility, so it is worth reviewing your withdrawal strategy every few years.
Here are four ways to strengthen your readiness:
Max out contributions to your retirement accounts while you can, including catch-up contributions if you are over 50.
Delay Social Security if possible, since each year you wait increases your monthly benefit.
Right-size your lifestyle by reducing large expenses or downsizing housing if it improves flexibility.
Redefine retirement as a new chapter. Many government employees choose part-time or consulting work that keeps them active and provides extra income.
3. What Will My Retirement Look Like?
Numbers alone will not create a fulfilling retirement. The happiest retirees are intentional about how they spend their time. Remember, your money should serve your life, not the other way around.
Ask yourself a few questions:
What do you want your days to look like?
How will you stay engaged mentally and socially?
What activities or goals excite you?
I personally plan on pursuing a PhD in retirement. I love learning and I think that will be a great way to have a semblance of structure while taking a deep dive into a topic I truly enjoy.
It is a good practice to write out a vision of your retirement, then align your financial plan around it. A clear picture of what you want your life to look like helps prevent drift and keeps your planning meaningful. Once you’ve clarified your goals, use your pension estimate and projected TSP withdrawals to see how your financial reality supports your lifestyle vision.
4. How Will I Pay for Healthcare?
Healthcare is often the largest expense in retirement and one of the easiest to overlook. A couple retiring today may need roughly $295,000 to cover medical costs over their lifetime, not including long-term care.
If you retire before 65, check whether your employer offers retiree coverage to bridge the gap until Medicare. Once eligible, explore whether a Medigap or Medicare Advantage plan fits your needs. If you have access to a Health Savings Account, continue funding it since withdrawals for medical expenses are tax-free.
If you’re covered under the Federal Employees Health Benefits (FEHB) program, find out whether you can continue your coverage in retirement. Most federal retirees who meet the eligibility requirements can carry FEHB into retirement, which can help bridge the gap until Medicare begins at 65.
Planning early for healthcare costs gives you more control and helps protect the rest of your retirement income.
5. What Are My Plan Options?
Government employees often have multiple plan types that fall under one of two primary systems: the Federal Employees Retirement System (FERS) or the older Civil Service Retirement System (CSRS).
Defined Benefit Plans: Traditional pensions such as FERS or CSRS that provide a guaranteed monthly income based on years of service and salary.
Defined Contribution Plans: Savings plans like a TSP, 403(b), 457, or 401(k), where you decide how much to contribute and how to invest.
Hybrid Plans: A blend of the two, offering some guaranteed income and an investment component that you manage.
Each plan comes with unique distribution rules and potential tax implications. Understanding how they interact with Social Security is key to maximizing your income.
6. What Should I Do Next?
If you are within five years of retirement, it is time to put everything on paper. Review your expected income, healthcare coverage, estate documents, and any outstanding debts. Clarify your goals for the next phase of life.
A well-designed retirement plan brings peace of mind. It allows you to make decisions confidently and enjoy the rewards of the years you have invested in public service.
Bethesda Wealth Planning Group works with government employees to help them coordinate pensions, Social Security, investments, and tax strategies into one cohesive retirement plan.
If you are preparing for retirement or want to know where you stand, contact us to start the conversation.
This material was prepared using publicly available information believed to be reliable but is not guaranteed as to accuracy or completeness. The data and opinions referenced are for informational purposes only and are not intended as investment, tax, or legal advice. Past performance is no guarantee of future results. Please consult your financial professional before making any investment decision.Securities and advisory services offered through LPL Financial, a Registered Investment Adviser, Member FINRA/SIPC.
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9.Medicare.gov, June 15, 2020
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12.TaxPolicyCenter.com, May 28, 2020
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14.NASRA.gov, June 15, 2020
