Making the transition from the workforce to retirement can be demanding. After years as a federal employee, you’re ready to settle into a more comfortable and leisurely lifestyle. As professional financial advisors, we understand the challenges that may lie ahead and present this special report full of expert financial advice to answer your most pressing retirement questions.
An increasing number of Americans, including public sector employees, are wondering whether they can afford to retire. Will their savings last? Is Social Security adequate supplemental income? How will public pensions and other government programs fit into their retirement puzzle?
As a federal employee, effective retirement planning will help provide you with a deeper sense of financial stability and a greater confidence for a bright future.
DO I WANT TO RETIRE?
You’ve seen them in the grocery stores, at restaurants, and at other places of businesses. These are the elderly folks who you imagine should be retired but who obviously aren’t—otherwise they wouldn’t be working at the store, the restaurant, or the business, right? Well, maybe. They could be working because they want to work. After all, many retirees have said they truly enjoyed retirement. The first 24 hours of it, that is. Or they could be working because they don’t have a choice. Their retirement savings fell short of what they needed to survive. Social Security income isn’t adequate, they failed to seek advice from a social security retirement planner, and their other investments just don’t seem to fill the gap.
Another scenario involves the retiree who made adequate plans for the future but failed to utilize the knowledge of wealth management planning professionals. This retiree later learned not-so-wise financial decisions along the way and not-so-golden investment opportunities left them cash strapped and a whole lot of dollars short for the long haul. In other words, they outlived their nest eggs.
There’s the retiree who never listened to any financial advice for retirement. Then retirement happened—and the retiree’s bottom line had the final word: Get back to work!
One more example: This is the retiree on the other side of the checkout line at the grocery store, sitting at the table at the restaurant, or shopping for goods or services at the place of business. This retiree doesn’t work for two reasons: He doesn’t have to and doesn’t want to.
The question is: Which one are you, and how do you plan to utilize expert retirement planning services to reach your personal retirement goals?
CAN I AFFORD TO RETIRE?
Retirement at a certain age or after a number of years may be compulsory for public sector workers. However, contrary to misconceptions, the average retirement age (62) for public sector employees is still about the same as those in the private sector.1 Whether you are a private sector or public sector federal employee, it is imperative to get your retirement planning strategy set as early as possible.
The anxieties and questions government workers on the verge of retirement have are the same as their private-sector peers. With the average retirement lasting 18 years, older Americans are wondering whether they’ll have enough money to make it.2 By listening to sound financial advice from a professional, you can ease the anxiety and enjoy your retirement how you like.
Historically, public employees found reason to have confidence. Robust pension funds with healthy benefits packages promised secure and comfortable retirements. But as bloated government budgets began to quake under the burden of unfunded liabilities, politicians began looking for ways to pull in the financial reins to avoid the prospects of crippling cuts or even bankruptcy. Suddenly, funding of public pensions came into view—with the ax being readied for possible reductions.3
Experts say U.S. state and local government pension system shortfalls have reached $5 trillion.4 Establishing a budget enables you to focus on other, more enjoyable activities during your retirement, as opposed to fretting over politics. Budgets foster a more disciplined outlook on retirement living, which helps alleviate stressing over money matters.
Once you generate some numerical projections for your personal budget and understand expert financial advice regarding your own situation, you’ll be better equipped to decide how you want to spend your retirement.
WHAT WILL MY RETIREMENT LOOK LIKE?
An ancient wise man once said: “Where there is no vision, the people perish.” The same is true for retirement. As a federal employee, planning when and how you’ll retire is important, but envisioning your retirement may be the single most important part of your plan.
Numbers and timelines don’t mean anything if you don’t have a supporting dream to drive them forward. Your retirement vision becomes the foundation for your later years.
Your vision has to be carefully crafted—detail by detail. Once you start imagining what you’ll do, how you’ll spend your time, and where you’ll go, put it in writing. Don’t leave out any parts.
How will you spend your days? What are your short- and long-range plans? Chart it out. Lay it out day by day, month by month, year by year. Do you plan on taking a vacation? When and where?
How often? What will you do during the day? Where will you go, and what exactly will you do? Do you want to travel, visit family and friends, or join social or recreational groups? Write out your answers.
Once you’ve laid the foundation of your vision, start building upon it. You’ve already assembled the numbers. You’ve already listened to the financial advice regarding retirement. You’ve already determined the income flow. Now it’s time to Shape your retirement vision to suit the financial reality you’ve built during your working years.
HOW WILL I PAY FOR MY HEALTH CARE?
Better treatments for cardiovascular and infectious diseases have extended life expectancy and improved quality of life. Today’s retirees can expect to live nearly two more decades.5 Although retirees are living longer, healthier lives with better access to health care, costs remain their primary challenges, especially against the backdrop of changing political perspectives on the government’s role in insurance coverage and health care. Financial planning analysts estimate that federal employees and their spouses preparing for retirement will need at least $250,000 to cover medical bills, which doesn’t include long-term care costs.6
That figure also doesn’t include costs for early retirees whose Medicare coverage hasn’t taken effect. The estimate, however, includes costs for deductibles and copayments, premiums for additional coverage for physician visits, prescription drugs, and other expenses not included in Medicare. Medicare recipients should expect to spend 15% of their household budgets on health care.7
WHAT ARE MY PLAN OPTIONS?
As financial advice professionals, we understand that evaluating your different retirement plan options can get intimidating and sometimes overwhelming. Your aim is to choose the right plan to suit your vision. As your retirement approaches, you should have all the details and arrangements in place to make the transition smooth and stress-free.
A financial advisor can help you overcome the obstacles and clear the unexpected hurdles to retirement. Advisors can help direct you to areas in your plan that may need attention and that you may have overlooked in the last few years of your employment.
As a federal employee, you want to know your choices and the options available for a prosperous retirement. Here is a list of the top plans to aid your financial planning:
-DEFINED BENEFIT PLANS
-DEFINED CONTRIBUTION PLANS
-HYBRID RETIREMENT PLANS
WHAT DO I DO BEFORE RETIRING?
While retirement paves the way for a fuller lifestyle with more opportunities for recreation and leisure, it also poses a few challenges for those who enter into it unprepared. Here is a summary of financial advice for retirement:
Paint the vision of your retirement future. Dream big. Use your imagination.
Carefully calculate your retirement expenses. The more exact you are, the better equipped you’ll be later on when facing unanticipated expenses.
Examine your anticipated income sources. This may include pensions, retirement savings plans, and Social Security benefits.
Take a look at your health-care coverage options. Watch Medicare and insurance deadlines.
Read and review wills, trusts, medical directives, beneficiary information, powers of attorney, and other legal documents.
Contact your plan sponsor to get information about retirement requirements, distribution options, and pertinent documents.
Talk with a qualified financial professional who specializes in clients like you.
WHAT DO I DO NEXT?
You’ve created your retirement vision; you’ve painted the picture of your new life. Retirement empowers you with the liberty and hopefully the resources to retire in style.
However, employing the services of a financial professional can instill a sense of clarity and confidence and help insure your retirement plans remain securely on track.
WHO DO I CALL?
We hope you’ve found this financial planning guide interesting, informative, and reassuring. We want to show you some simple steps you can take to make your retirement more secure. We’re ready to encourage and support you as you move into the next phase of your life.
We offer ourselves as a resource to you and your family. We are happy to answer any questions you may have and offer any useful financial advice for your personal financial situation and future goals. If you have any questions about the information in this article or want to talk about your retirement, schedule a free financial consultation with our team of industry experts, dedicated to see your money grow. We would be delighted to talk. Contact us today at 303-741-9772.
1 http://www.fedweek.com/publishers-perspective/retirement-numbers/
2 https://www.fool.com/retirement/index.aspx
5 https://www.forbes.com/sites/simonmoore/2018/04/24/how-long-will-your-retirement-last/
7 https://www.aarp.org/health/medicare-insurance/
