53 percent of feds don’t believe they will achieve their desired retirement destination

Randy Silvey, president of Silverlight Financial, highlights a new survey from his firm and Federal News Radio about just how ill-prepared federal employees are...

In a new survey hosted by Federal News Radio and Silver Light Financial, 557 federal employees revealed discouraging evidence concerning their retirement outlook.

When asked how they would rate their overall understanding of federal retirement benefits, less than 33 percent felt they were “well” informed, and only 5.95 percent felt “fully informed.”

When asked what it would take to entice them to attend retirement benefits training, over 74 percent stated they would need no incentive at all, they just want the training.

Ralph Waldo Emerson is credited with saying, “Life is a journey, not a destination.” This has always been one of my favorite axioms. (Even if Emerson didn’t really say it). For the purpose of shedding light on retirement issues that are distressing the federal workforce, I will place my own spin on both “journey” and “destination.”

When attempting to maneuver toward federal retirement (aka “the destination”), feds are impeded by an inability to know how to navigate through their “journey.” What is the journey? It is the informed and considered financial retirement preparations feds should be making throughout their working careers.

Randy Silvey, president of Silverlight Financial
Randy Silvey, president of Silverlight Financial

It’s like feds have been offered the keys to their very own luxury (retirement) vehicle and informed this vehicle can take them to their desired (retirement) destination. The catch — feds haven’t been taught how to drive…and it’s a stick!

This survey revealed feds desperately seek and require retirement benefits and retirement planning instruction. It boggles the mind why there is so much spent on benefits and so little put into edification. A little driver’s education would likely allow feds to seize a modicum of intelligent control over their retirement journey.

Additional survey results:

  • More than 9 out of 10 (93 percent) of respondents would contribute MORE to their Thrift Savings Plan if they understood how that additional participation could make a meaningful impact on their retirement. Specifically, how it may allow for an earlier retirement date than they currently anticipate. With a better understanding, a staggering 59.27 percent stated they would add at least 5 percent MORE, each year, to their TSP.
  • 2 out of 3 (66 percent) feds who responded said they would retire at their minimum retirement age (MRA) if they felt financially confident.
  • Only 36 percent of the respondents say they would anticipate retiring at their MRA.
  • 53 percent of those, not anticipating retirement at MRA, cite fear of being unable to financially sustain their lifestyles, as the reason.

Conclusions: If feds had a better understanding of their retirement income benefits and retirement planning, they would:

  • Contribute more to their TSP.
  • Potentially own larger retirement income streams and greater retirement savings.
  • Retire, in greater numbers, at MRA.
  • Retire with increased financial understanding and confidence.

A few assumptions:

  • Aging feds, eager to retire, wouldn’t feel trapped to remain in their positions.
  • Younger feds and prospective feds would see a greater opportunity for advancement as the aging feds would be retiring sooner.
  • Overall greater employee morale.
  • Greater productivity — a happy workforce is likely to be a more industrious workforce. We all understand that there are no guarantees for a long and healthy life, But there are measures in place that could improve someone’s chances — such as seat belts, stop lights and airbags. These things are in place to improve our chances at a safer and longer lifespan. The argument has been made, there is no guarantee a fed who knows more about their retirement benefits will prepare and/or save any better than anyone else. True, but, seat belts are no guarantee that someone will survive a car accident either. Yet, it can substantially improve their chances.

It seems obvious that the federal workforce is in desperate need for consistent and structured retirement benefits/retirement preparation training. Many feds are introduced to the subjects when they are hired, then not again until they reach an age that puts them within five years of their MRA.

Anyone else thinking about the proverbial “barn door” and “missing horses?”

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All federal employees do have access to the OPM.gov website. It offers significant amounts of information designed to direct and inform about various aspects of retirement planning and federal retirement benefits. Another source of information is HR departments. Often they have literature and online training options. However, both options have a rather “hands off” approach. They rely, a great deal, on employees ploughing through the mountains of information, on their own, to uncover the information they need.

Professional, consistent, reoccurring and supportive retirement training is generally missing until the end of a feds career. Knowledge (like many other things) can be positively influenced by the power of compounding. The longer we are exposed to a subject, the more we understand.

I recently met a fed who embodies the overall statement this survey seems to make.

Richard (not his real name) is a federal employee who has been considering retirement. He would like to retire now (at age 60 with 30 years of service).

Fortunately, he first requested a free (no obligation) Federal Retirement Readiness Review (FRRR), the results painted a clear if not desired picture.

Richard thought he was well informed and had a handle on his retirement benefits and plan. What we learned:

  • He was mistaken about how his FERS pension would be calculated.
  • Although he had the ability, he never placed more than 5 percent, into his TSP.
  • He planned to work part time (as a consultant) when he retired. He didn’t realize that some of his part time earnings, would decrease his supplemental retirement income and later SSA.

In all, much of what Richard thought he knew was incorrect. Richard learned that he was one of the many feds that had become victim to, not knowing what they didn’t know.

Good News — During Richard’s FRRR, he developed a new found comprehension about his long-term retirement outlook. Richard has decided to postpone his retirement two-to-four years. At that time, he feels he will be able to step down, better prepared and with more clarity.

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In the days when the federal retirement income plan was only CSRS, perhaps extensive retirement training wasn’t as imperative. Still, a structured training plan, on how to save and prepare for retirement, would have been nice.

However, the majority of the CSRS employees’ retirement income, would be satisfied by their outstanding CSRS Federal pension. Arguably, not as much training would be needed.

But, there are no new CSRS employees. FERS employees have much greater personal responsibility to their retirement preparations. FERS employees have:

  • A less robust retirement pension than CSRS.
  • Greater expectations for their TSP accounts.
  • Greater need to know how to participate in and manage their TSP.
  • Access to SSA.
  • Potential SRS (bridge) payments.

Therein lies the rub, that our survey has seemed to reveal. FERS employees have several additional parts to their retirement planning. Yet, no greater (benefits and/or planning) awareness, than their CSRS predecessors.

In my opinion the journey, leading up to federal retirement destination, is now more important than ever. It carries crucial consequences for potentially hundreds of thousands of federal employees.

It seems there just must be a decisive change in the philosophy of training feds about their retirement benefits and retirement planning measures. Without it, countless lifelong feds will likely, yet needlessly, financially fail during retirement.

Isn’t it time to instruct feds how they can confidently accept the personal culpability of their retirement journey?


Randy Silvey is the published author of: “You FIRST, Federal Employees Retirement Guide,” one of the bestselling books of its kind on Amazon and Kindle. He has 14 years’ experience guiding feds to pursue a youthful and wealthy retirement. Randy can be reached at 816-524-515 or www.silverlightfinancial.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities offered through LPL Financial, member FINRA/SIPC.

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