There are a lot of moving parts when it comes to your retirement. Many of us become overwhelmed when faced with all of the federal retirement choices and decisions we need to make.
Your retirement planning is a series of choices. Some are minor, while others can have major consequences on your future and financial security.
Given our extensive work with federal employees, we see the end result of planning—and not planning—every day.
Here are some of the important choices that federal employees face in retirement:
3 Crucial Federal Retirement Choices
1. FEHB & Medicare
Good health is often key to a great retirement. Unfortunately, the cost of healthcare is rising at an incredibly fast rate. Sure, your federal health insurance will continue to cover you for the rest of your life without adding Medicare Part B and paying the additional Part B premium.
Many federal employees think that if their FEHB coverage has served them well throughout their federal careers, it should be enough to see them through retirement. However, you shouldn’t decline Medicare without at least looking further at all your options. In some cases, it makes sense to have both FEHB and Medicare part B to fill in some of the gaps.
For example, Medicare can provide additional benefits beyond your FEHB coverage for medical equipment, treatment for chronic conditions, home health care during recovery from an illness or injury, and more. Whatever plan or combination you choose, it’s essential that you make sure you have the coverage you need if anything serious should happen.
2. Long-Term Care
Another concern that retirees have is the loss of independence – and with the cost of nursing homes rising as well, retirees will want to make sure they have a plan to pay for this coverage, if needed.
According to a recent report, 70% of adults over the age of 65 will need some kind of long-term care. As a federal employee, you have the Federal Long Term Care Insurance Program (FLTCIP), as well as several private insurance options available to you to help you address this very startling statistic.
NOTE: Unfortunately, the Office of Personnel Management (OPM) suspended applications for coverage under the Federal Long Term Care Insurance Program (FLTCIP) as of December 2024. The suspension will remain in effect for 24 months, unless OPM issues a subsequent notice to end or extend the suspension period.
Without a current employer-sponsored program, there are a lot of creative options in the private sector to help federal employees manage this very real problem. But you must qualify for them, so don’t wait to explore these options!
When it comes to long-term care insurance, most people are afraid of paying too much for a program they may never use. However, remember that statistically, we know that 70% of us will end up needing some sort of long-term care. Be sure to explore the different products to determine which is best suited for your family’s needs.
No matter where you are in your career, I would encourage you to at least consider the prospect of needing long-term care insurance. The right coverage can help protect your retirement savings and assets in the event you or your loved ones ever need long-term care.
3. Life Insurance
At retirement, federal employees are required to consider how much Federal Employees Group Life Insurance (FEGLI) they want to carry into retirement and how much they want to maintain past 65. As you get closer to retirement, make sure that your life insurance still fits your needs.
For example, when your kids are grown and the house is paid off, your overall need for life insurance may go down – so you may be able to discontinue Option B if it’s no longer needed. Of course, you may have a NEW desire to have life insurance if you wish to leave a legacy to your grandchildren.
Life insurance is based on two simple factors:
1) how much insurance you are applying for, and
2) your age and health.
It’s important to consider that life insurance becomes more expensive to obtain and maintain as you get older. For this reason, you should at least consider the value of Basic FEGLI. Based on cost, it’s generally worth keeping, regardless of your need for other life insurance.
Retirement should be an incredible time full of great experiences and enjoying your golden years. In my experience, those that are able to plan and make informed decisions are those that are able to enjoy a worry-free retirement. So be sure to get the information you need to make these critical choices and retire ready.
