Federal Employee Retirement System (FERS): Checklist for Retiring in 2026
This checklist is designed to help federal employees who are planning to retire by the end of this year, to ensure a smooth transition into retirement by maximizing their annuity and avoiding common pitfalls. Overlooking critical tasks can lead to delays in retirement payment, reduced retirement annuity, or loss of coverage.
Confirming Eligibility and Strategic Retirement Date
Confirming youreligibility for retirementand selecting the optimal retirement date are the first steps in the retirement planning process, and should probably occur before you're in your last year of service. Choosing the right date can also affect your benefits and overall retirement experience, click here to learn the best dates to retire in 2026.
Selecting a strategic retirement date involves factors, like the end of a pay period, leave accrual, and continuation of Federal Employees Health Benefits (FEHB) coverage. Each decision can have a financial impact on your retirement income and retiree benefits.
Attend a Federal Retirement Webinar to learn more.
Importance of Service Computation Date Validation
The Service Computation Date (SCD) determines your total years of creditable civilian service, directly impacting your retirement annuity calculation. Accuracy is vital here. Errors can lead to reduced benefits, so verifying and correcting your SCD is a vital step in the retirement process.
Use our Federal Benefit Calculator to see how years of service can impact your annuity.
Reviewing Your Federal Service Summary
Requesting and reviewing your Certified Summary of Federal Service is the next step in the retirement planning process. This document, SF 3107-1, contains a comprehensive record of your federal civilian service history. Early review allows for the identification and correction of any discrepancies.
SF 3107-1 includes all periods of federal service, military time, and any temporary or prior agency service. It is a detailed account of your career as a federal employee and serves as the basis for calculating your retirement benefits. Know what service is considered creditable service for the FERS calculation.
Addressing Errors in Federal Employee Service Credit Record
Discrepancies in your service record can delay your retirement application and affect your retirement annuity. Common errors include missing periods of service, incorrect dates, or inaccurate salary information. Addressing these errors early on helps with making a smooth transition into retirement.
If you believe there is an error, contact your agency's human resources department to provide documentation to OPM retirement services supporting any corrections needed. Delaying this process can lead to significant delays in the processing of your FERS application and subsequent pension payments.
Completing Required Military Deposits and Redeposits
Completing any required military deposits or redeposits may boost your annuity. These payments allow federal employees to receive credit for their military service when calculating their retirement benefits.
Understanding the Role of Deposits in Pension Calculation
Deposits and redeposits allow federal employees to receive credit for prior service, including military service, which can increase the amount of their retirement annuity. These deposits essentially "buy back" service time, adding to your total years of creditable civilian service.
It's crucial to complete all required deposits and redeposits before you leave federal service. Failure to do so can result in a reduced retirement annuity. Be aware of the deadlines and plan accordingly to ensure you receive full credit for your service years.
Evaluating FEHB Coverage and Dental and Vision Plans
As a federal employee approaches retirement, it's crucial to evaluate their Federal Employees Health Benefits (FEHB) and Federal Employees Dental and Vision Insurance Program (FEDVIP) coverage. Ensuring continuous coverage and understanding the premium changes are vital for a secure retirement transition.
Confirming Eligibility Under the 5-Year FEHB Rule
To continue FEHB into retirement, federal employees must meet the 5-year rule, meaning they must have been enrolled in FEHB for the five years before retiring, although the 5 Year Rule can be waived in some circumstances. Confirming this eligibility ensures uninterrupted health coverage during retirement and avoids potential gaps in essential services.
Assessing Plan Options and Changes
During the retirement planning process, federal employees should carefully assess their FEHB and FEDVIP plan options. The retirement plan should align with their current and future healthcare needs. Changes to plans can be made during the Open Season to ensure optimal coverage.
Understanding Premium Changes After Retirement
After retirement, FEHB premiums are typically deducted from the annuity payment. It's essential for federal employees to understand how premiums are deducted before and after retirement, ensuring they are prepared for the deduction and maintain continuous coverage. Unlike while in service, the premiums are not taken out pre-tax but are paid with after-tax dollars.
Making Survivor Benefit Elections
One important decision U.S. government employees face when retiring under FERS is making a survivor benefit election. This decision impacts the retirement annuity and future financial security of the survivor.
Options Available for Survivor Benefits
Federal employees have the following to choose from -
- Full survivor benefit
- Partial survivor benefit
- No survivor benefit
Selecting a survivor benefit reduces the retiree's annuity but provides a continuing payment to the surviving spouse upon the retiree’s death. The annuity reduction depends on the level of survivor benefit chosen, impacting both current and future income streams. If none are elected and the federal retiree passes away before their spouse, then their surviving wife or husband will not be eligible for FEHB plans anymore.
Spousal Consent Requirements Explained
A federal worker needs spousal consent to elect less than the maximum survivor benefit. This consent must be notarized, ensuring that the spouse understands the implications of waiving a portion of their potential future benefits.
Preparing Your Thrift Savings Plan (TSP) Withdrawal Strategy
The Thrift Savings Plan (TSP) is a significant component when planning to retire from the government. Developing a strategic withdrawal approach is critical to maximize retirement income while minimizing tax liabilities. Careful planning ensures employees use their TSP effectively throughout retirement.
Learn more at a Thrift Savings Plan webinar.
Withdrawal Options Available to You
Upon retirement, you can take money out of your TSP account with one of the following methods -
- Single payments
- Installment payments
- A Lifetime Annuity
Each option has different tax implications and suitability depending on individual financial needs and goals.
Tax Considerations for TSP Withdrawals
TSP withdrawals are subject to income tax, but the tax implications vary depending on whether the funds are from traditional or Roth accounts. Understanding these tax considerations is essential for minimizing your tax burden and maximizing your after-tax retirement income when you retire from federal services.
Reviewing and Simplifying TSP Allocations
Before retirement, federal employees should review and simplify their TSP allocations. Consolidating investments and ensuring beneficiary designations are up-to-date are crucial steps. Simplifying your portfolio can help reduce risk and make managing your funds easier during retirement from federal jobs. Be sure to review your investment strategy with a fed-expert financial planner.
Estimating First-Year Cash Flow
Estimating first-year cash flow means identifying potential income sources and expenses and creating a realistic budget for the initial retirement phase, where reduced interim payments are received until the FERS application to OPM is finalized. These initial payments may be smaller than expected as the Office of Personnel Management (OPM) processes the retirement application and payment.
Preparing for Temporary Out-of-Pocket Costs
During the transition to retirement, there might be temporary out-of-pocket costs, such as FEHB premiums, FLTCIP premiums, or adjustments to tax withholding. Preparing for these expenses ensures that you have sufficient funds to cover essential needs during this adjustment period when you retire.
Financial Buffer for Transition with Long Retirement Processing Times
Creating a financial buffer equivalent to 3-6 months of living expenses provides a safety net during the retirement transition. This cash reserve helps cover unexpected expenses and ensures financial stability while waiting for full annuity payments to begin when federal employee retires.
Gathering Required Retirement Documents
Gathering core documents is a fundamental step for any federal employee preparing for retirement under FERS. Essential documents include a marriage certificate, divorce decrees, DD-214 (if applicable), and updated beneficiary forms. Working with a financial planner that specializes in federal retirement can help make sure you've got everything you need before submitting your application to OPM.
Components of the Application for OPM Retirement Center
The retirement application consists of several key components, including the SF 3107 form, W-4P form, direct deposit information, and receipts for any deposits or redeposits made for prior service.
FERS Retirement Final Review with Agency HR
Before submitting your retirement application, schedule a final review with your agency HR department to verify key numbers such as your sick leave balance and annual leave payout estimate.
Reviewing the Complete Retirement Package
During your final HR review, carefully examine the entire retirement package to ensure all forms are complete, accurate, and consistent. Ask about any agency-specific requirements that may affect your retirement benefits or application processing. Addressing discrepancies early can prevent pesky delays.
Understanding Annual Leave Payouts
Understand how unused annual leave will be paid out upon retirement. This lump sum payment could have tax implications, so consider the timing and potential impact on your overall financial plan when you leave federal service.
Sick Leave Credit Conversion Benefits Explained
Sick leave balances can increase your retirement annuity because unused sick leave is credited towards your years of service, but will not help in terms of eligibility. Avoid “burning” sick leave before retiring, as converting it to additional service credit can significantly enhance your retirement payments for life. Unused sick leave can be used to get a 10% boost to your FERS pension.
Reviewing Your Social Security Strategy
Review yourSocial Security claiming options as a federal retiree, considering whether to claim early, at full retirement age, or to delay benefits. Each option has different implications for your monthly payments, affecting the overall federal retirement annuity.
Integrating Social Security with Your FERS Benefits
Coordinate your Social Security strategy with your FERS pension and TSP withdrawals to create a comprehensive retirement income plan. Understanding how these different sources of income integrate helps you maximize your benefits and secure a financially stable future after retirement from your federal job and services.
Finalizing and Submitting Your Retirement Application
Before submitting your retirement application, meticulously double-check all benefit elections, including survivor benefits, tax withholding preferences, and direct deposit information. Errors in these elections can have long-term financial consequences, so accuracy is key.
Retirement Annuity Submission Process and What to Expect Next
Submit your completed retirement application to your agency HR department and retain copies of all documents for your records. Contact OPM if you are running into obstacles during this time.
Next Steps in Financial Planning for After You Retire
Consider taking additional steps such as consulting a financial planner, refining your TSP strategy, and optimizing your Social Security claiming decisions. These measures ensure your retirement income is maximized and aligns with your long-term financial goals after you leave federal services and look at your financial future.
