40 minutes to a richer retirement
Wednesday - 5/27/2015, 2:30am ET
Timing isn't necessarily everything. But it can be very, very important. Like when you retire.
By picking the right date (or dates), feds can maximize their income for that year, minimize taxes for the following year and get the most $$$ out of their unused annual leave.
Whether your retirement target date is late 2015 or so far off you can't envision it, there are a variety of things you can do that will maximize your lifetime post-work income. While you may be in the bloom of youth now, comb overs, Botox and crows-feet wrinkles will — like retirement planning — eventually pop up on your radar. And some people, according to a growing number of financial planners/doomsayers, may have to work a lot longer than they planned. Or hit their expiration date while still working.
So what can you do right now, as in starting today, to maximize your CSRS or FERS benefit, the size of your TSP account and get the most out of Social Security whether you are a federal lifer, or planning to move into the private sector someday?
CSRS employees are in the Cadillac of retirement plans. The longer they work, and the higher their salary, the bigger their annuity. Many will retire with a starting benefit equal to 55 percent of their final salary. Some will be able to delay tapping their TSP accounts until the IRS (at around age 70 1/2) requires them to start taking required minimum distributions each year. And their CSRS benefits are fully indexed to inflation.
FERS employees need to do a little more to get equal — or in some cases even better — benefits than CSRS retirees. For one thing, they must — as in absolutely must — kick in at least 5 percent to their TSP to qualify for the full 5 percent government match. For many FERS employees, the money they build up in their TSP will account for one-third of their retirement income. For some, it will be 50 percent or more.
So what should you be doing right now? And five years from now? What's the best date to retire? For many it is either Dec. 31 or Jan. 3. But for others there are "best" dates throughout the year.
Jump-start your retirement income-building by listening to our Your Turn radio show today at 10 a.m. ET. It's on your computer at federalnewsradio.com or, if you are in the D.C. area, you can catch us at 1500 AM. The us is me and benefits expert Tammy Flanagan. Tammy is with the National Institute of Transition Planning. She's done hundreds of onsite sessions in agencies across the world. In short, she knows it all, including the all-important best ate or dates to retire. Also she is taking part in her own phased-retirement program, and will tell you what your options may be when/if your agency, adopts it. Call in if you like (during the show) or email questions in advance to mcausey@federalnewsradio.com
It'll take about 40 minutes of your time, but, trust me, for many of you it will be worth it. To you and, as a training aide, to your agency.
Posted by: sarah_oz@yahoo.com
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