Retirement dilemma: How do FERS employees know they are financially ready?

Randy Silvey, president Silverlight Financial, answers seven questions for federal employees as they decide whether to retire or not.

When approaching retirement, countless federal employees become virtually paralyzed. They are disorganized and lost when trying to perform their retirement preparations. Retirement is a crossroads that most only face once in a lifetime, so who can blame them? Confusion, stress, fear, doubt and skepticism embrace them in a grip they are nearly powerless to escape.

A reoccurring mantra is shared again and again from federal employees, “I don’t know what to do or where to go to find the answers I need.”

Randy Silvey is president of Silverlight Financial.
Randy Silvey is president of Silverlight Financial.

What training they do receive seems to come late and is like being introduced to a foreign language.

Even basic retirement questions go unanswered or the answers are too intricate for the average fed to fully understand. We’ll review some of these questions and some possible solutions:

  1. How much retirement savings do I need to retire?
  2. What is the right time for me to retire?
  3. How can I know if I am making the right financial decisions?
  4. How will taxes impact my retirement income?
  5. Should I rollover my TSP into an IRA?
  6. How do I know when to start taking money out of my retirement accounts?
  7. Can I work part-time after I retire?

These are all excellent questions. Unfortunately, much of the federal workforce doesn’t have the faintest idea how to find the answers. And nothing spells potential retirement disaster like “winging it.”

So here are some basic answers to these questions:

Question 1: How much retirement savings do I need to retire? Like most things in life, there is no one-size-fits-all answer to this question. However, I suggest going at it in reverse. First, imagine a “dream retirement.” Build it from top to bottom and from beginning to end. Don’t start by thinking about money. Start by thinking about what a perfect retirement will look like. Then put dollar amounts on that dream.

Example: Retirement travel — two major trips a year to exotic and faraway places. Some research should be done to provide an estimate for each trip. When a figure is settled on for these trips, place them into a comprehensive (include current monthly expenses, plus any anticipated retirement increases and minus any anticipated retirement decreases) annual retirement budget.
Complete this process for each part of the dream. Once the dream is built and priced, it is possible to back into the number that will answer the question of how much savings is needed.

Questions 2-6: These questions take a little more thought and work to answer properly. Many federal employees will try to manage these questions on their own. Unfortunately, several will likely regret that choice later in life. Locating an advisor may be a wise choice at this juncture. Most feds only retire once, FFA’s deal with federal retirement needs every day.
Here are two examples of why the FFA makes sense.

Examples of not working with an FFA: Two retired federal employees —we will call them John and George. Each has been retired between five-and-seven years. Neither sought the advice of an FFA prior to retiring. Both were experiencing faster than expected depletion of their retirement savings.

John began working with a “general advisor” when he retired. This was an experienced, intelligent and respected registered advisor. But, he did NOT specialize in federal benefits/retirement planning.
George felt he didn’t need the advice of any advisors.

Both soon realized they had areas of concern with their retirement plans. While Johns’ situation was bad, we were able to develop a new plan that slowed down his retirement asset bleeding. He will likely be able to salvage the core of his retirement goals.

George was not so lucky. He miscalculated income needs prior to retiring and made some poor withdrawal decisions after he retired. His retirement savings had decreased in value by 42 percent in less than seven years. Last I heard he was looking for a job, at 71 years of age.

Question 7: Can I work part-time after I retire? The short answer is yes… with a resounding… BUT! If a federal employee is receiving the Special Retirement Supplement (SRS) or SSA retirement benefits, they can earn additional income from other sources. HOWEVER, there are limits to how much they can earn in addition to their SRS or SSA income. According to, that limit in 2016 is $15,720.

If SRS income is being received and outside income is being earned, there is a two-to-one trade-off for any monies earned over the $15,720 limit.

Example: A federal employee retires, is receiving SRS payments, takes on a part-time job and earns $25,000 per year from that job. The fed will receive a reduction from SRS of $4,640. ($25,000 – $15,720 = $9,280). $9,280 is extra income above the $15,720 limit. For every dollar earned above the limit, $0.50 is reduced from SRS. Therefore $9,280 x 50 percent = $4,640.

The same holds true with SSA income until the age of “full retirement” is reached. That age will typically range from 66-to-67-years old (depending on the year of birth). At that point, there is no income limit.

Poor training and insufficient knowledge will likely leave many federal employees unwitting participants in their own retirement adversities. However, there are sources dedicated to providing some clarity. For federal pension information — For basic Thrift info — For retirement planning, tax planning and distribution needs, federal employees should locate and vet a qualified/experienced advisor to  help them learn if they are financially ready to retire.


Silverlight Financial donates free/no obligation Federal Retirement Readiness Reviews (FRRR). These reviews culminate with a no-costs, one-on-one, hour-long phone meeting with founder, Randy Silvey. To personally request your FRRR, email me.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risks, including the loss of principal. No strategy assures success or protects against loss. For a list of states in which I am registered to do business, please visit

Securities offered through LPL Financial, member FINRA/SIPC. These are hypothetical examples and are not representative of any specific investment. Your results may vary.

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