An executive order signed on Monday by President Trump officially set up his non-governmental efficiency commission Department of Government Efficiency, led by billionaire Elon Musk, and charged with "modernizing federal technology and software to maximize governmental efficiency and productivity."
This order does not mention Musk's previously stated goals to roll back government headcount, spending and regulations nor what President Trump initially said DOGE would do: "dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies," but those words were not forgotten by federal workers. This Day 1 action, along with other executive orders and speeches presented that target the end of telework, changes to retirement benefits, and the end of federal agencies such as the IRS and Education Department, have federal workers on high alert.
It is a good idea for federal employees to prepare for the worst by getting their retirement "ducks in a row" if these threats start to become reality. Although there may be changes ahead, it is best not to move into panic mode and let your emotions overtake rational behavior.
It is, however, a good idea to be prepared for the "what-if" situations of a possible early retirement offer, severance pay eligibility, and the ability to retire comfortably or the need to change gears and complete your career outside of federal employment. It will take time to implement changes, and not all changes will become the harsh reality that many fear. After all, some of these changes have resurfaced from the first Trump administration (and other administrations as well) as I wrote about in a 2017 "Retirement Planning" column, when the president's budget contained the following provisions:
- Cost-of-living allowances for current and future FERS retirees would be eliminated altogether.
- COLAs for CSRS retirees would be reduced by 0.5% each year from what they would have been otherwise.
- FERS employees would see employee contributions to their annuities increase by 1% each year for the next six years, without any corresponding benefit increase.
- The FERS annuity supplement would be eliminated for new retirees starting in 2018. That change would save the federal government $5 billion by 2026.
- Federal pensions would be based on the average of the highest five years of salary instead of the highest three. According to the Congressional Budget Office estimates, that change would save the federal government $2 billion from 2018 to 2026.
So far, none of these proposals have taken effect, however, they have resurfaced and could affect future benefits. So, what to do now? Here are three tips that may help you prepare for whatever reality is going to bring:
Keep copies of everything
The Office of Personnel Management provides agencies with guidance for submitting "healthy" retirement application packages.
You should use it as a guide, too. Once you have completed and signed your retirement forms, (SF 3107 for FERS and SF 2801 for CSRSf) make a copy for your records. These could include your retirement application, continuation of life insurance (SF 2818) and for CSRS employees, Voluntary Contributions forms (SF 2804) and (RI 38-124). If you are not eligible for an immediate retirement, review the application for a deferred or postponed retirement (RI 92-19).
You should also maintain copies of the records of your federal employment and the benefits you will be continuing in retirement. Once you are off the rolls of your agency, you will lose access to your electronic Official Personnel Folder. If possible, make a copy of the entire folder, but if that isn't an option, be sure to keep personnel action statements that showg jobs, retirement coverage and salary changes, designation of beneficiary forms, and records of health and life insurance coverage, especially those that document the five years of coverage necessary to carry health insurance into retirement.
Make it easy for OPM
We've all heard stories of retirements that take many months to process. Your retirement forms are all fillable forms and can be completed online and then printed out and signed. Become familiar with OPM's policy regarding accepting electronic signatures for many of the forms needed for retirement. OPM will consider these electronic signatures as effective for purposes of processing, if the electronic signatures meet the requirements listed in the guidance provided to agency benefits officers in a 2022 Benefits Administration Letter.
Although not recommended, you can fill out the forms by hand, but make sure you print legibly with a black ink pen. OPM will not accept corrections (such as scratch-outs, white-outs or lineouts) in most sections of the retirement applications.
When you submit your application, be sure to include the documentation that OPM is asking for, including military service records, a copy of your marriage certificate (if applicable), any court orders that might affect the distribution of your annuity and form W-4P indicating your federal income tax withholding. Gather these documents now, so that they are available when you decide it is time to apply for your benefits.
Prepare for the worst and hope for the best
Be sure to have enough cash reserves on hand so that you can manage your finances when there are delays in processing your annual leave lump sum payout, your first retirement checks and initial distributions from your Thrift Savings Plan account. A good rule of thumb is to be prepared to cover your living expenses with cash on hand for a few months. It's possible you'll make mistakes in a process that is probably unfamiliar to you. Many federal employees are no longer provided one-on-one retirement counseling, which may leave you on your own to navigate the requirements and to consider the pros and cons of your retirement decisions. If your agency provides individual retirement counseling or pre-retirement training, be sure to take advantage of this valuable service - you will learn something new, especially when you ask questions. Here are some resources to get you started:
Governmentwide, approximately 85% of retirement claims submitted by federal agencies are "healthy" and don't need further documentation, but that leaves an average of 15% of cases that suffer delays due to missing, inconsistent or inaccurate information.
As you face uncertainty, evaluate your options and your retirement preparedness. Make changes, if necessary, and continue to do your government work in the dedicated and hard-working manner you have always provided. Many Americans are depending on you. Whether they are applying for Social Security, waiting for an important piece of mail, planning a visit to one of our historic and beautiful National Parks, or enjoying the freedoms and protections provided by our Defense and Homeland Security departments. After all, even our president is a "bureaucrat."
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