Dedicated to Civilian Federal Employees since 1943

Dedicated to Civilian Federal Employees since 1943

waepa retirement and financial planning

3 Frequently Asked Questions About Preparing For Retirement

Retirement planning is an essential part of life but can be confusing and difficult to maneuver. You must set your retirement goals, diversify investments and income, and make well-informed decisions. But what should you know before jumping in? Here are three frequently asked questions about retirement planning for federal employees;

 

How Much Do I Need to Save?

The answer to this question depends on various factors, including how much you’ll spend, what tax rates will be, what your return on investments will be, what types of medical expenses you’ll experience, and how long you’ll live. 

Your monthly pension will differ from what you were used to in your employment days. Retirement includes living on a fixed income, and this means that you need to save enough to support a comfortable lifestyle. Create an estimate of how much you currently spend in a month as a guideline towards how much you need to save, be sure to analyze miscellaneous items like hobbies, dining out, and travel.

 

How Should I Take My Pension?

When it comes to retirement planning for federal employees, many pensions offer either a monthly payment or a lump sum, based on the beneficiary’s single life or presence of survivors. Too many retirees decide on one option without carefully analyzing the outcomes of that particular choice. 

If you have a survivor, then you need to consider their life after your death. In this case, the annuity option based on joint-and-survivor may be a much better choice than a lump sum. This option may lead to a reduction in the amount of payment but doesn’t end if you predecease your survivor. Pre-retirement planning calls for thoughtful consideration of the available options concerning your entire financial situation.

 

What About Medical Expenses?

Retirees often underestimate how much they’ll need for medical expenses. Hospital and specialist bills have the potential to become a typical cost, so you will need to have a plan that will address those arising needs. Many individuals believe that healthcare is free for retirees older than 65, but this is not always the case. 

Only Medicare Part A is free for most federal employees but will just cover 50% of your total health care expenses. You would still be expected to pay out-of-pocket costs for dental care, eye care, and hearing. Medicare Parts B, C, D, Medigap, and long-term care insurance come at a premium. Generally, medical expenses vary from one place to another, but the fact remains, you don’t want health-care costs to ruin your retirement.

You may not know where to start or even whether you’re eligible for retirement but worry not, WAEPA is here to help. With a diverse collection of helpful webinars and other resources, you can learn about every aspect of retirement planning. If you’re a federal employee or federal retiree, don’t wait another day. Become a WAEPA member to access these helpful resources along with the other benefits that WAEPA provides. 

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This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.