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The pandemic has made its mark on federal retirement

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Fewer federal employees have retired so far in 2020 than during this point 2019, according to a Federal News Network analysis of data from the Office of Personnel Management.

A total 66,510 federal employees have retired between January and August – 7,543 fewer retirements than the same period last year.

In January, 17,134 federal employees filed for retirement, by far the highest total during any of the last 22 months. But the January number would appear to be an anomaly in 2020.

During each month since March, retirements haven’t reached above 7,000. An average of 6,683 federal employees have retired during each of the last five months. And if the trend continues, 2020 could mark a record low for federal retirements, at least in recent years.

There are many factors that impact an employee’s decision to retire, but federal financial planners say the pandemic is one of them.

The economic fallout from the pandemic has prompted many employees to take a closer look at their Thrift Savings Plan. Those with large sums in their TSP saw their investments suddenly drop by tens of thousands of dollars or more in March. The number of TSP millionaires fell from nearly 50,000 at the end of 2019 to slightly more than 27,000 at the end of March.

The stock market volatility may have scared those would-be retirees from making the leap.

“The market swung way low in March after a 10-year bull market,” said Tammy Flanagan, an independent federal retirement benefits specialist. “It shocked some employees who had been mainly C Fund investors.”

The stock market has recovered from March’s losses, but many employees may fear more volatility and are hesitant to take the plunge into retirement.

Spouses not in government may have lost a job due to the pandemic, Flanagan said, prompting federal employees to reexamine their savings and set new plans for the future.

Before the pandemic, long commutes and stresses at the offices often motivated retirement-eligible employees to leave.

But as telework has replaced the long commute to the office, employees are no longer as anxious to leave their agencies, Flanagan said.  Those employees are willing to hang on longer and continue working – and contributing to the TSP.

For feds who are anxious to leave public service this year, the TSP isn’t the only cushion in retirement.

Most retirement eligible employees have accrued time toward their pensions, and Social Security is available as well.

But for those feds who do wish to retire but are concerned about their investments in the TSP, there is a bit of good news. The stock market has bounced back almost entirely from its pandemic panic “trough” on March 23. The TSP millionaires, those who stayed the course and rode the market’s highs and lows have nearly recovered after the volatility in March. As of the end of June, there were 45,219 investors with $1 million or more in their TSP accounts, almost a complete bounce-back to 2019’s total.

In a pandemic, there are few things federal employees can control. But financial planners often advise employees to control what they can – how much they’re contributing and investing in the Thrift Savings Plan — and stay the course.

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