How Federal Employees Can Plan to Retire on Time

By Brett Gottlieb

Working for the federal government comes with a number of valuable benefits, and one of the most significant is the potential path to retirement after a long career of service. For many private-sector workers, the idea of retiring after 30 years on the job is difficult to achieve.

Federal employees may have access to that opportunity, but it doesn’t happen automatically. That’s where thoughtful federal employee retirement planning becomes essential. Simply reaching a certain number of years in service doesn’t guarantee you’ll be financially ready to step away from work. Without careful planning, investment strategy, and long-term financial management, retirement can still feel out of reach.

We’ve seen situations where individuals retire without a clear plan, only to find themselves returning to work sooner than expected. It’s a difficult and frustrating position to be in. With the right strategy, however, you can put yourself in a stronger position to retire when you intend to. Let’s look at a few important steps that can help keep your retirement timeline on track.

Know Your Retirement Age

One of the keys to retiring on time is maximizing your retirement benefits. When you retire and how long you have been in service will greatly affect the benefits you receive. If you retire before you have reached your minimum retirement age (MRA) or before you have completed enough service, you will not be able to maximize your benefits. The following chart shows your minimum retirement age:

To receive full benefits, you must either have 30 years of service and reach your MRA, or have 20 years of service and be age 60 or older. If you have between 10-30 years of service, you are allowed to retire at your MRA, but your benefits will be reduced by 5% a year for each year you are under age 62. For example, if you retire at age 56 with 19 years of service, your benefit will be reduced by 30% (5% for each of 6 years). However, if you work 4 more years and retire at age 60 with 23 years of service, you will receive the full benefit.

The amount of benefit you receive will affect your ability to retire successfully (i.e., having enough money to live on without going back to work). It is important to strategically balance your years of service and retirement age in order to receive a high enough benefit to support you during retirement. Sometimes simply working one or two more years can make a big difference in your benefit amount.

Keep Your High-Paying Job a Little Longer

Another factor in your benefit calculation is your salary. Under FERS, your pension benefit is calculated as:

(average of 3 highest years’ salary) X (years of service) X (pension multiplier)* = (annual pension benefit)

*The pension multiplier depends on your years of service and age at retirement, as discussed above.

If your salary significantly increases shortly before retirement, working a couple more years may be well worth it. Let’s say you plan to retire at age 60 with 30 years of service. One year prior, you go from earning $100,000 as you did for the previous 2 years to $120,000. If you retire as planned, your pension benefit will be:

$106,667 X 30 years X 1.1% = $35,200

If you decide to stay in that higher-paying job for two more years, your pension benefit will be:

$120,000 X 32 years X 1.1% = $42,240

Staying in the higher-paying job for at least three years to increase your benefit calculation can make a big difference in retirement. In our example, it is a $7,040 difference per year. Over a 20-year retirement, that comes out to $140,800.

Take Advantage of Your TSP Match

In addition to your FERS pension, as a federal employee, you have access to the Thrift Savings Plan (TSP). A TSP is not a pension “stream of income” program like FERS. Instead, it is similar to a private-sector 401(k) plan where you make regular payroll contributions and your future account value will be based upon what you put in, the employer match, and how you invest the account. It is your choice whether or not to contribute to the TSP and how much you put in it.

To build up the most funds for retirement, consider contributing up to your agency’s match. Receiving a matching contribution from the government is essentially an immediate 100% gain on your money. Your agency matches your contributions up to 5% of base pay, so you should contribute at least that much. Not maximizing your employer match is like leaving money on the table, money that can also grow for you and help fund your retirement.

Federal Employee Retirement Planning Should Focus on Helping Your TSP Grow

When it comes to federal employee retirement planning, contributing to your TSP and receiving your agency match is only part of the equation. It’s just as important to keep those funds invested thoughtfully. The choices you make with your TSP investments over a 30-year career can significantly impact the size of your retirement savings, and ultimately whether you’re able to retire on time.

Many federal employees feel more comfortable keeping their money in safer options to avoid the ups and downs of the stock market. While this approach may reduce short-term volatility, it can also limit your long-term growth potential. Without the opportunity for your savings to grow over time, you may find it more difficult to build the retirement income you’ll need.

Effective planning requires an investment strategy that reflects your age, long-term goals, and personal tolerance for risk. Because every situation is different, there’s no single investment approach that works for everyone. Working with an experienced financial professional can help you evaluate your options and create a diversified investment strategy within your TSP while also building a broader retirement plan designed to keep you on track.

At Comprehensive Advisor, we work closely with federal employees to develop customized retirement strategies that provide clarity, confidence, and long-term financial stability. Through a collaborative partnership, we help our clients navigate the complexities of today’s financial landscape and stay focused on their long-term goals.

If you don’t currently have a financial professional guiding your retirement planning, we invite you to connect with us at info@ComprehensiveAdvisor.com or call (760) 813-2125. Schedule a no-cost consultation today and take the first step toward retiring with greater confidence.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees, in business administration and economics, and is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals, and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

Our team of qualified professionals have experience in the financial service industry, and our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial strategies for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a comprehensive retirement roadmap to help ensure their assets are preserved and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. Insurance products are offered through the insurance business C.A. Financial & Insurance Services. Comprehensive Advisor, LLC is an Investment Advisory practice that offers products and services through AE Wealth Management LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by C.A. Financial & Insurance Services are not subject to investment Advisor requirements. CA Ins. Lic. #6000262. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Comprehensive Advisor, LLC is not affiliated with the U.S. government or any governmental agency. 3894875 – 4/26