While Congress debates FERS COLA parity, inflation continues chipping away at federal retirees’ standard of living. The recent CRS report (FedWeek) confirms what many Federal Employees fear – their pensions may not keep pace with rising costs.
3 Ways the COLA Gap Impacts You
💸 Reduced Purchasing Power
- Example: A $40,000 FERS pension loses $12,000 in value over 15 years at current COLA rates
📉 TSP Dependency Increases
- Retirees must withdraw 15-20% more from savings to compensate
🏛️ State Residency Matters More
- Pension-friendly states can offset 2-5% of COLA losses through tax savings
Smart Strategies for Current Employees
✅ Boost High-3 Salary – Seek promotions or overtime in final years
✅ Implement a TSP Bridge Strategy – Structure withdrawals to cover early retirement years
✅ Plan a Phased Retirement – Combine part-time work with partial pension
Headlines about potential changes to federal employment policies, such as past efforts to alter layoff procedures, often cause a ripple of concern among Federal Employees. While it’s easy to focus on job security, these moments also offer a valuable opportunity to think about something even more powerful: career resilience. True security isn’t just about keeping a job; it’s about having the financial freedom to navigate any career transition with confidence. This is where your Federal Benefits and a proactive Federal Retirement Planning strategy become your greatest assets.
Building financial independence now gives you options and control over your own career path. You can start by viewing your Retirement Benefits through a new lens:
- Your Thrift Savings Plan (TSP) as a “Freedom Fund”: Beyond getting the full agency match, consider increasing your contribution. That extra amount is more than just retirement savings; it’s a “freedom fund” that can provide the flexibility to take a new job, start a business, or weather any unexpected event.
- Statistic: The power of compound interest means even small increases in your TSP contributions can have a massive impact over time. Increasing your contribution by just 1% can add tens of thousands of dollars to your final balance.
- Your FERS Pension as a Current Asset: Research your FERS pension to understand its value now. Learning about your eligibility for a deferred retirement can be incredibly empowering. Knowing you have already vested a future pension benefit, even if you were to leave federal service, is a tangible asset you have already earned.
- Insurance as a Safety Net: Take the time to understand your options for continuing your Federal Employees Health Benefits (FEHB) through Temporary Continuation of Coverage (TCC) if you were to leave your job. This knowledge can remove a major point of anxiety about ever transitioning out of the federal system.
Building Your Own Career Resilience
Proactive Federal Retirement Planning is about more than just the finish line. It’s about building a strong financial position that gives you control throughout your career.
You can start building your resilience by:
- Viewing your TSP as a tool for flexibility, not just retirement. Are you contributing enough to build a fund that gives you options?
- Knowing the value of your vested FERS pension. Understand what you’ve already earned and what your options are for accessing it under different scenarios.
- Demystifying your other Federal Benefits. Learn the rules for FEHB, FEGLI, and other benefits in the event of a career change.
Navigating the complexities of these benefits and creating a personalized strategy can be challenging. Consulting with specialists in Federal Benefits, like the advisors at Internal Benefit Advisors, can provide immense clarity. They can help you understand all your options and build a plan that supports not just your retirement, but your resilience and freedom today.
Ultimately, your greatest strength is your own preparedness. By taking full advantage of your Federal Benefits, you can build a financial foundation that makes you resilient to any changes in the professional landscape.
Why Top Performers Choose Internal Benefit Advisors
We help Federal Employees combat COLA limitations through:
✔ Customized inflation-protection portfolios
✔ Tax-efficient withdrawal sequencing
✔ State-specific retirement relocation analyses
“The most successful federal retirees don’t just rely on COLAs – they build multi-layered income streams.” – Patricia M., Federal Benefits Director
Your Action Plan
📊 This Month: Calculate your projected COLA shortfalls
💡 Next Quarter: Meet with a benefits specialist
📍 Within a Year: Develop a comprehensive inflation protection strategy
Keywords: Federal Retirement Planning, Retirement Planning, Federal Employees, Thrift Savings Plan, Federal Benefits, Retirement Benefits
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Don’t let inflation undermine your retirement – schedule a consultation today to build your defense.
