Most current and former federal workers are or will be eligible for monthly Social Security benefits. For most feds it will be the third source of retirement income along with their Federal Employees Retirement System annuity and investments in the Thrift Savings Plan.
The amount of the indexed-to-inflation Social Security benefit will be important for some people. For those with little or no post-retirement income that steady Social Security payment will be critical.
While Social Security is available as early as age 62, benefits expert Tammy Flanagan said most people can dramatically boost that monthly payment by delaying it. If they wait until age 70 the value it will be worth 76% more than if taken at age 62. Despite that, she said that 72% of Social Security recipients are receiving reduced benefits, and will for life, because they took them before their full retirement age.
On the other hand, there are times when it is best for individuals to take benefits as soon as they are eligible. Confusing, right?
That’s because planning for retirement is not easy. It involves asking the right questions of the right people, and knowing what those questions are. And it takes realizing that many people working today, when they do decide to retire will be alive, kicking, spending and traveling for decades to come. In many cases some of you will be retired longer than you worked. Check your local newspapers obits, do the math.
Then, seriously, do the math. Ask the right questions, know the rules, be aware of what you don’t know but can find out. Which is where Tammy Flanagan comes in. She’s my guest today on our Your Turn radio show, and she is also doing a pre-retirement webinar Thursday for National Active and Retired Federal Employees at www.narfe.org. Check both of them out.
And remember our show will be archived so you can listen later, listen again or pass it on to friends and coworkers. While aimed at members of the federal family many of the tips from Tammy apply to private sector types as well as state and local government workers. For instance:
Should a married couple — one’s a fed, one’s in the private sector — enroll in one of the Federal Employees Health Benefits Program plans during the upcoming open enrollment period? Or, should they take the private sector plan if it is better, less expensive or both? Generally speaking the answer is take the FEHBP plan. It could save you tens of thousands of dollars down the road, and maybe permit you to retire five years earlier than you thought. Or at least it could save you from having to work five more years just to qualify for FEHBP coverage in retirement.
If there’s a married couple, one of whom is still working for Uncle Sam and the other retired from the government, who should buy the family or self-plus one health plan — the worker or the retiree? Make the wrong decision and you will still have excellent coverage. But it will cost you a lot more. Spoiler alert: Let the still-working fed get the insurance.
Although delaying Social Security increases its eventual value to you, are there times when taking it earlier is the smart move? Short answer: Yes. But there are a lot of “it depends” involved. It’s complicated but Tammy does a good job of explaining it.
If your agency offers you a pre-retirement seminar, take it. If you have a spouse, bring him or her. Ever hear of the-wisdom-of-the-crowd? Often at such sessions somebody will ask a question that never occurred to you, and the answer could boost your lifetime annuity and/or prevent you from making a costly mistake.
Should you take Medicare Part B? Often it’s the smart thing to do, especially if you pick an FEHBP plan with wrap-around benefits to cover what Medicare doesn’t. But how do you know? Listen today.
Tammy is going to try to cover all the basics and then some, to help put more money in your monthly retirement income and reduce costs to you. Tune in at 10 a.m. EDT today at www.federalnewsnetwork.com or 1500 AM in the Washington, D.C. metro area.
Before alarm clocks were widely available or reliable, during the Industrial Revolution in Britain and Ireland people known as a knocker-up or knocker-upper were responsible for waking people so that they could get to work on time. They used batons to knock on clients’ doors, or a long and light stick to reach windows on higher floors; sometimes they even used pea-shooters to hit windows.