5 Reasons Why Federal Employees Should Seek Advice
Federal employees have unique circumstances compared to private-sector employees. That’s why it’s important to seek specific financial advice catered to your unique retirement needs.
Preparing for retirement is something that most, if not all, employees do. However, as a government employee, you should plan your finances differently. That’s because your benefits are unique. In fact, some of your benefits are not offered to by private-sector employers to their workers.
The Thrift Savings Plan, which is a combination of retirement savings and investment plans, is for federal employees and uniformed personnel.
Generally, there are two categories of retirement benefits for federal employees: (1) The Federal Employees Retirement System (FERS) which covers all government workers who started their federal jobs after January 1, 1987. (2) The Civil Service Retirement System (CSRS) which includes all federal employees who started before 1987 and have chosen not to convert to FERS.
FERS employees are eligible to receive Social Security benefits. The amount will be based on your annual income, as well as the number of years you have been in service.
You can opt to receive your Social Security paycheck in full once your reach your retirement age. However, you may also choose to delay the collection of your benefits. Another option is to elect to receive these benefits at the age of 62, which is earlier than the retirement age. If you choose this option, you’ll get a lower amount each month.
While everyone has access to loans, certain types of loans for federal employees may not be available to workers from the private sector. An example of this is allotment loans.
These are loans designed specifically with federal employees in mind. They provide affordable, fixed interest rates with manageable payment terms. No collateral is required, and loan payments are deducted from your monthly salary.
Federal employees are also members of a unique life insurance program. This program is the Federal Employees’ Government Life Insurance or FEGLI.
Most federal employees are qualified for basic insurance coverage. For the premium, the government pays 1/3 of the cost while the employee pays for the rest. You can also increase coverage amounts and add other family members to your plan.
Federal employees have many options for healthcare benefits. You can opt for a consumer-driven and high deductible plan. With this, you can enroll in a tax-deductible flexible spending account or Health Spending Account (HSA).
You can choose a fee-for-service plan (FFS) with or without Preferred Provider Organizations (PPO). Another option is Health Maintenance Organizations (HMOs). Federal employees are also eligible for Dental and Vision insurance.
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