If you are planning to retire anytime in the near (or for that matter, distant) future, here’s a critical item that should be on your retirement-countdown-checklist. Hint:

It rhymes with money. Lots of money!

Be prepared for an extended period when your income will drop 20 to 40 percent. Have lots, and lots, and lots of money saved up. Enough to cover your rent, mortgage, car payments and meals for months before your full annuity payments kick in. Don’t count on your credit cards, or your sister-in-law, to fund your first months of freedom from work.

For the better part of this year we’ve been getting a fair number of e-mails and calls from recent retirees. All have the same question/complaint: That it’s taking forever, in their estimation, to get the full payment of their annuity. The interim annuity checks they get from Uncle Sam put many, who didn’t save a bundle or get a quick payment for their unused annual leave, in a financial bind they didn’t anticipate.

For example, this comment from a recently retired FERS employee:

• “…I received a letter from OPM that said I would begin receiving an ‘interim payment’ for my annuity. When I called OPM, they said that this payment would amount to anything from 60% to 80% of the final amount. I asked when that ‘final’ amount would be determined and was told that it would take at least 24 to 25 weeks before that is resolved. It seems a lot of Feds are leaving under buyouts according to OPM, thus causing a major backup. I was also told that the PIN number that the OPM letter referenced to access the OPM website for my account would also not be sent until after the final amount was determined. I can sympathize that there are many Feds retiring, but this wait and lack of access to a website to change address, bank account, etc. is unconscionable. I thought I should pass this on to your readers who are planning to retire. They might want to build their cash reserves in the ‘interim’.” Mike S.

Since buyouts have been few and far between of late in government, we ran Mike’s letter past the National Active and Retired Federal Employees Association which said:

“We too have heard from members on this issue. While the good news is OPM is quick to get most if not all new retirees into the interim pay status so the retiree has some income, the time to finish adjudicating the claim has apparently dragged on and on for many retirees. OPM is the only one that can explain the time it is taking to complete retirement claims, but I know that late last year the US Postal Service offered early-outs to a number of its employees and these, along with the usual end of year retirements, amounted to a flood of pending retirement cases. Much larger numbers than OPM received during the same period of time the previous year. Many of the recent retirees under FERS are really feeling the pinch resulting from delayed completion of their retirement cases. FERS retirees under age 62 who separate on an immediate annuity other than for disability or MRA + 10 provision, may receive a special retirement supplement in addition to their basic FERS annuity. The special supplement is a substitute for the Social Security part of the total FERS benefit they can get at age 62. However, the special supplement that is suppose to provide a level of income before age 62 similar to what they would receive at age 62 is not paid until the retirement case has been finalized. When there are long delays in finalizing these particular FERS cases, the retiree really is going to have a hard time getting by financially”.

Bottom line: Each year, retirement-bound feds ask what is the best date to retire? Good question. But they also should consider the day after retirement. And the first month, and sixth months after retirement. Do you have enough cash reserves to get by until that first full annuity check finally arrives?

To reach me: mcausey@federalnewsradio.com

Nearly Useless Factoid
by Suzanne Kubota

Time magazine reports “the U.S. Mint took more than two years to produce its first million coins, but today the Philadelphia Mint can make approximately that many in 45 minutes.”

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