5 retirement planning tips for mid-career federal employees

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Often, when I meet federal employees, I am asked, “What can I do to make sure I get the most out of my benefits?” »

Well, the answer is, “There are MANY things you can and SHOULD do at every stage of your federal career!”

I recently wrote about what’s important to feds in the preliminary steps of their careers. This article will focus on what employees should do mid-career to ensure the best results in retirement.

What is a “mid-career” federal employee?

Let’s start with a definition of earned mid-career. For the purposes of this article, mid-career is defined as between 5 and 15 years of service.

I choose 5 years not by accident, but with purpose. As soon as you reach 5 years of service, you are acquired by the pension system. This means that even if you leave the public service, (as long as you leave your pension contributions paid into the pension system!) you would be eligible to receive a pension at some point in the future, usually at age 60 or 62.

Important: If you are considering leaving the public service during these mid-career years, you need to understand the rules around maintaining eligibility and applying for a future pension – It’s not automatic!

5 action points for mid-career federal employees

Once that 5-year mark is reached, following these actions should give you the best opportunity for a terrific retirement when the time comes:

1. Deposits made?

Make sure you have made all the deposits you are eligible for.

As a general rule, former active duty service members should plan to “buy back” the time they served in the military. This will add to your service time in the calculation of your future retirement pension.

There are exceptions to this rule. For example, if someone has retired from the military and is receiving a military pension, it often doesn’t make sense to buy that time back. However, sometimes it is!

Do not wait to do this research! As a mid-career employee, there is interest accruing on the amount of what is due each year that you expect. Obviously, the longer you wait, the more interest you will have to pay. I’ve seen employees owe thousands of dollars in interest on a deposit they didn’t make early in their government careers – Don’t wait for that!

2. Understand retirement eligibility criteria.

Generally, to maximize your federal retirement benefits, it is in an employee’s best interest to work at least until the minimum retirement age (MRA). This age will be based on your year of birth and is between 55 and 57 years old. Once you have reached your MRA with at least 10 years of service, you are eligible for government retirement on what is called an “immediate annuity”.

There are different types of public service retirement, including delayed, delayed and immediate are the three most common. During these mid-career years, take the time to learn what each means and make sure you don’t miss out on valuable benefits because you haven’t understood the options. It is important to know and understand the date of calculation of your pension service.

3. Pay attention to the rising costs of your FEGLI life insurance.

During these mid-career years, the cost of your FEGLI government life insurance slowly increases, slowly enough that many employees don’t even notice it. However, now is the time to be proactive in planning your life insurance! I have seen employees save literally thousands of dollars by thoroughly reviewing their life insurance over these years.

4. Contribute to a Health Savings Account (HSA)

Effective use of a health savings account during these years can be a tax-saving machine both now and in retirement.

Consider this: your traditional TSP is a tax-saving vehicle while you work, but can be a tax generator retired machine. In contrast, the Health Savings Account is a way to save taxes both now and in retirement (withdrawals that are used for eligible medical expenses in retirement will never be taxed!) – Don’t overlook the potential this account can offer you!

5. MSYM – Make sure you MAX.

Increase your TSP contributions each year. There is no doubt that federal employees who focus on their TSP by increasing contributions and executing a good investment strategy during these years increase their ability to retire and prosper exponentially compared to those who simply hope for the best. As the annual limits increase, be sure to increase your bi-weekly contributions as well.

And, if you haven’t already, you should explore the benefits of using Roth TSP in those years. Remember that there is no income limit on Roth TSPs as there is with Roth IRAs. This is an opportunity you cannot afford to miss!

But Jen, I don’t know if I’m going to stay Fed for my entire career!

Relax, that’s perfectly fine. I refer to mid-career employees as “invested” in their government service. 5 to 15 years of your life is indeed an investment.

As a Fed in this group, you may not be sure you’ll stick around until retirement, but you now recognize that there are potential trade-offs in future benefits if you choose to leave. Our mission is to provide the information and content to help you make the best decisions for YOU!

That said, commitment to government service is the next step in a Fed’s life cycle. This usually happens when an employee decides “this is where I belong”, I will “go the distance” and retire from public service. This Committed Mid-Career Fed (CMC) will be the subject of my next article.

On a daily basis, I have the opportunity to meet many federal employees and retirees. By sharing the common themes of success that I see, I hope that every federal employee is empowered and able to get the most out of their federal benefits. Please feel free to contact me with any additional questions or comments.

Jennifer Meyer, CFP®, of Serve those who serve, is a Certified Federal Benefits Consultant (ChFEBC℠) and an Accredited Investment Trustee (AIF®). She has over 20 years of experience in the financial services industry, including many years working with federal employees.

**The information has been obtained from sources believed to be reliable, but we do not guarantee that the above information is accurate or complete. All opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary to make an investment decision and does not constitute a recommendation. Investing involves risk and you can make a profit or loss regardless of the strategy suggested. Each investor’s situation is unique and you should consider your investment objectives, risk tolerance and time horizon before making any investment or financial decisions. Before making an investment decision, please consult your financial adviser about your personal circumstances. Although we are familiar with the tax provisions of the matters presented herein, as financial advisors to RJFS, we are not qualified to provide advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **

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© 2022 Jennifer Meyer. All rights reserved. This article may not be reproduced without the express written consent of Jennifer Meyer.


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