{"id":90901,"date":"2025-07-25T08:27:11","date_gmt":"2025-07-25T08:27:11","guid":{"rendered":"https:\/\/www.europesays.com\/us\/90901\/"},"modified":"2025-07-25T08:27:11","modified_gmt":"2025-07-25T08:27:11","slug":"why-federal-retirements-are-spiking-this-year","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/90901\/","title":{"rendered":"Why federal retirements are spiking this year"},"content":{"rendered":"<p>The Office of Personnel Management received 70,351 retirement applications by the end of June\u2014nearly a 40% increase over the same period in 2024, when 50,305 applications were filed.<\/p>\n<p>The uptick is not unexpected. Federal workforce reductions have been underway since <a href=\"https:\/\/www.govexec.com\/workforce\/2025\/01\/trump-reportedly-will-offer-buyouts-all-2-million-federal-workers\/402571\/\" rel=\"nofollow noopener\" target=\"_blank\">the \u201cFork in the Road\u201d memo<\/a> was issued in late January. That program, now closed, introduced a Deferred Resignation option that allowed employees to stay on the payroll without performing duties, with the expectation they\u2019d resign or retire by Sept. 30, 2025.<\/p>\n<p>But many employees didn\u2019t wait.<\/p>\n<p>A spike in May and June retirements appears to be driven by concerns over changes to retirement benefits that were initially outlined in the \u201cBig Beautiful Bill,\u201d signed into law July 4.<\/p>\n<p>In the end, <a href=\"https:\/\/www.govexec.com\/pay-benefits\/2025\/06\/all-provisions-targeting-federal-worker-benefits-unions-stricken-senate-reconciliation-package\/406395\/?oref=ge-author-river\" rel=\"nofollow noopener\" target=\"_blank\">none of the proposed cuts to federal retirement benefits<\/a> made it into the final version of the bill.<\/p>\n<p>The high-three salary calculation remains in place. FERS employees who retire before age 62 with an immediate, unreduced annuity will continue to receive the Special Retirement Supplement, bridging the gap to Social Security eligibility at age 62.<\/p>\n<p>Still, many employees rushed into retirement without fully preparing for the long-term financial impact. If you\u2019re one of them\u2014or are considering retirement\u2014here are some critical questions to ask yourself:<\/p>\n<ul>\n<li>\n<p>Are your savings enough to supplement your FERS and Social Security benefits?<\/p>\n<\/li>\n<li>\n<p>If married, do you understand the cost and value of the survivor benefit election?<\/p>\n<\/li>\n<li>\n<p>Do you know your options for continuing FEGLI coverage?<\/p>\n<\/li>\n<li>\n<p>Have you accounted for potential long-term care costs?<\/p>\n<\/li>\n<li>\n<p>Did you save enough in the Thrift Savings Plan?<\/p>\n<\/li>\n<\/ul>\n<p><strong>A Closer Look at the Numbers<\/strong><\/p>\n<p>Let\u2019s say you earned $105,000 annually, with take-home pay of $73,500 after withholdings.<\/p>\n<p>If you retire under FERS with 30 years of service, your benefit would be about 30% of your high-three salary, or $30,000. Add the Special Retirement Supplement\u2014roughly $15,000\u2014and your gross benefit would be $45,000 annually.<\/p>\n<p>If you elect the full survivor benefit, your FERS annuity would be reduced by 10%, lowering your total to $42,000.<\/p>\n<p>After taxes and insurance, that could drop to around $32,000\u2014$41,500 less than your pre-retirement net income, or about $3,400 less per month.<\/p>\n<p>Even with a $1 million TSP balance, you\u2019d need to plan carefully to close that gap\u2014especially after taxes.<\/p>\n<p><strong>Key Questions to Consider<\/strong><\/p>\n<ul>\n<li>\n<p>How much will you need to withdraw from your TSP each year?<\/p>\n<\/li>\n<li>\n<p>Will you need to cut spending to make ends meet?<\/p>\n<\/li>\n<li>\n<p>Do you need to match your net income in retirement\u2014or just get close?<\/p>\n<\/li>\n<li>\n<p>Will your benefits keep up with inflation?<\/p>\n<\/li>\n<\/ul>\n<p><strong>Longevity Is a Risk\u2014But One You Can Prepare For<\/strong><\/p>\n<p>A lack of &#8220;longevity literacy&#8221; is hurting retirement planning, according to a 2023 survey by the TIAA Institute and the Global Financial Literacy Excellence Center at George Washington University.<\/p>\n<p>Fewer than 40% of adults correctly estimated average lifespan at age 65. One in four people who are 65 today will live past 90. One in 10 will live beyond 95, according to the Social Security Administration.<\/p>\n<p>Only 12% of respondents demonstrated strong longevity literacy by correctly answering related questions.<\/p>\n<p>Spending may actually increase in early retirement, as retirees pursue long-postponed travel, hobbies, or family goals like helping kids with weddings or college.<\/p>\n<p><strong>Survivor Benefits and Life Insurance<\/strong><\/p>\n<p>Have you considered:<\/p>\n<ul>\n<li>\n<p>How much income your spouse will need if you pass away first?<\/p>\n<\/li>\n<li>\n<p>Whether life insurance can replace the survivor benefit?<\/p>\n<\/li>\n<li>\n<p>How long you and your spouse might live\u2014and how inflation could affect your finances?<\/p>\n<\/li>\n<\/ul>\n<p>Basic FEGLI coverage continues at no premium after age 65, though it gradually reduces. Optional coverage is available but comes with rising premiums. You\u2019ll elect FEGLI continuation using form SF 2818.<\/p>\n<p><strong>Planning for Long-Term Care<\/strong><\/p>\n<p>Long-term care is one of the biggest threats to retirement security.<\/p>\n<p>Medicare doesn\u2019t cover it, and Medicaid eligibility requires meeting strict income and asset thresholds\u2014often as low as $2,000 in assets for individuals.<\/p>\n<p>According to Morningstar, baby boomers can expect to spend an average of $250,000 on long-term care in retirement.<\/p>\n<p><strong>Don\u2019t Count on an Inheritance<\/strong><\/p>\n<p>Many people assume they\u2019ll inherit enough to cover gaps in retirement funding. But medical bills, divorce or longevity may drain your parents\u2019 assets.<\/p>\n<p>A better plan is to save independently\u2014then any inheritance is a bonus, not a necessity.<\/p>\n<p><strong>Retirement Myths That Can Hurt You<\/strong><\/p>\n<ul>\n<li>\n<p><strong>\u201cI have time to save later.\u201d<\/strong> You lose out on compound interest by waiting. Start now, even with a small amount.<\/p>\n<\/li>\n<li>\n<p><strong>\u201cI won\u2019t live that long.\u201d<\/strong> Average lifespans have risen, and 25% of people 65 today will live past 90.<\/p>\n<\/li>\n<li>\n<p><strong>\u201cMy kids\u2019 college comes first.\u201d<\/strong> There are loans for school, but not for retirement. Make both priorities if you can.<\/p>\n<\/li>\n<li>\n<p><strong>\u201cI\u2019ll work in retirement.\u201d<\/strong> Many who plan to work can\u2019t, due to age discrimination or health issues.<\/p>\n<\/li>\n<li>\n<p><strong>\u201cI\u2019ll need less money in retirement.\u201d<\/strong> That might not be true, especially in the early years when you\u2019re more active.<\/p>\n<\/li>\n<\/ul>\n<p><strong>Bottom Line<\/strong><\/p>\n<p>You can\u2019t change the past, but you can start making better financial decisions today.<\/p>\n<p>Don\u2019t let misconceptions\u2014or wishful thinking\u2014undermine your future. A thoughtful retirement plan can help ensure your post-federal life is secure, fulfilling, and free from financial regret.<\/p>\n","protected":false},"excerpt":{"rendered":"The Office of Personnel Management received 70,351 retirement applications by the end of June\u2014nearly a 40% increase over&hellip;\n","protected":false},"author":3,"featured_media":90902,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[64,20478,41271,255,700,17702,708,696,39301,17584,67,132,68],"class_list":{"0":"post-90901","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-early-retirement","10":"tag-federal-employees-retirement-system","11":"tag-personal-finance","12":"tag-retirement","13":"tag-retirement-benefits","14":"tag-retirement-planning","15":"tag-retirement-savings","16":"tag-thrift-savings-plan","17":"tag-tsp","18":"tag-united-states","19":"tag-unitedstates","20":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114912929363836535","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/90901","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=90901"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/90901\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/90902"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=90901"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=90901"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=90901"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}