The Federal Employees Retirement System, or FERS, is a retirement savings plan for federal civilian employees. Money that is saved in the plan can be used as a “base” in the future for generating income.
There are three components to the FERS retirement system. These include the:
- Basic Benefit Plan
- Social Security
- Thrift Savings Plan (TSP)
The Basic Benefit Plan is an annuity that will provide you with a preset amount of income in retirement. The dollar amount of this incoming cash flow is based on how long you have worked in the FERS system, along with a formula that considers your highest three consecutive earning years of service.
Social Security also considers the amount of income you earned over time (the top 35 earning years), as well as the age you are when you file for these benefits. There are many different Social Security claiming strategies, so there are ways that you could maximize the amount that you receive, based on your marital status, your age at the time you file for these benefits, and other income sources that you may have.
The Thrift Savings Plan (TSP) is somewhat similar to the 401(k) retirement plans offered by companies in the private sector. For instance, with a traditional TSP, you may contribute up to a maximum dollar amount per year on a pre-tax basis.
The growth that takes place on the TSP investments is tax-deferred, allowing for more growth over time. There are several different funds to choose from when investing your TSP savings.
To maximize the cash flow that you receive in retirement, the income you receive from the FERS plan – along with any other personal savings or investments that you have – should ideally all be coordinated.
With that in mind, it is beneficial to work with a financial advisor who is well-versed in the federal employee’s retirement system and retirement income strategies. If you would like to discuss the options you have available for generating retirement income, feel free to reach out to us directly by calling 813-926-9909 or by sending us an email at firstname.lastname@example.org. We look forward to hearing from you.