For Federal Employees: Is Everyone Retiring?

Periodically, the Office of Personnel Management (see link below) releases statistics that track the number of federal employees filing for retirement and the inventory of people currently in the process. January is always projected as an extraordinarily high month for workers filing. On average, the government projects a monthly pace of 5,000 to 8,000 new retirees with the exception of January 2012 where a figure of 21,000 was estimated. 21,479 individuals decided to elect to receive their pension in that month. So what does this tell us? It is a positive sign that so many individuals are confident in their financial situation to make this transition to retirement and/or a career change. The question is: who will fill these jobs once they retire or will they get filled at all?

Also listed in government’s data is the inventory of retirees who are in the process and awaiting their initial pension payment. The good news is that the inventory of retirees continues to decline. In January 2012, 61,378 were in the inventory; however, by November 2012 only 33,978 were in process. For those planning their retirement transition, the process appears to be going more quickly which allows them to proceed with their decision making.

So what is involved in the decision of whether or not to elect your pension? Several factors exist and working with someone who guides people through the process on a daily basis can be a great strategy. Will you work at another job or retire completely? If you do work, what tax environment will you be in with the combined incomes of your new salary and the pension? What are your monthly expenses and how will they grow over time? Will you move upon retirement and if so, how does changing your state of residence affect how your pension is taxed? What happens to your household income if you pass away or got sick and needed care? How much risk should you take with your investments if your pension covers some or most of your monthly bills? Questions like these may be important to discuss with someone who can offer an independent perspective and take into account any unique aspects to your financial situation.

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Securities offered through Triad Advisors, Member FINRA / SIPC.  Advisory Services offered through Planning Solutions Group, LLC.  Planning Solutions Group, LLC is not affiliated with Triad Advisors.  PSG Clarity is a division of Planning Solutions Group, LLC.