Planning to retire? Ready to sail off to your golden years, with more time for the grandkids, travel, gardening, friends or aged parents? If so, here’s a set of composite tips from some recent retirees:
DON’T DO IT!
Don’t even think about retiring, unless…
You recently won a megamillion dollar lottery.
You had the foresight to marry above your financial/social level and he or she has stuck with you despite everything you’ve done wrong in the last three decades.
Your mortgage and car are paid off.
You don’t mind tapping your TSP account months or even years before you had planned. And using it to pay bills, not for fun or travel.
You plan to move to a remote spot part of Alaska and are prepared to live off tasty dishes of moose and tree moss.
You have six to 12 months worth of cash reserves and enough canned food and water to get you through a terrorist attack, a hurricane or earthquake or some other long-recovery disaster.
Better yet, all of the above.
A problem some people have is that they think exclusively about what they will not have to spend when they retire: Fewer clothes, transportation, etc. They sometimes don’t realize that while working — even if you are being furloughed — you know how much you’re going to earn and take home each pay period. Once you retire things can change drastically, especially if you get in a long waiting line for your first full annuity check.
For the first couple of months after retirement, you may get an annuity check that is 80 to 90 percent of what your estimated full payment will be. You can use any savings, plus any payment for unused annual leave, to get by until your first full pension check arrives. The problem is you don’t know when that will be. What happens if you have to wait months. Or a year?
Much of your government work record, including military service and breaks in service, transfers, etc., is on paper. Once you retire, that paperwork is sent to the Office of Personnel Management where it must be eye-balled by experienced experts before the final annuity is approved. Two years ago, the average time to clear the process was 120 days. OPM then set a goal of processing 90 percent of the claims within 60 days. At the same time, the Postal Service was offering buyouts and early-outs adding to the number of retirees in the clearance pipeline. Plus, overtime has stopped — a victim of sequestration.
The problem is who and what is “average”. And what happens if you are part of the 10 percent that can and does take much, much longer. We reported this week that OPM last month missed its goal of processing most new retiree’s first full pension check within 60 days.
Whatever the goal is, the bottom line is about where you fall in that equation. If you are one of the unlucky (for any reason) 10 or 20 percent, you are toast!
Could you go a year on half rations? Consider this email from Bonnie a not-very-happy new retiree:
“Mike, I retired from the IRS on Jan. 3, 2013. It’s now August and I’m still not receiving my full annuity check! This is creating a very real hardship. It is impossible to reach a live person at OPM and they have not been responsive to my congressional representatives. Are you perhaps aware of anything remaining that can be done to complete the process of my retirement application? Are others having waits as long as eight months? Thanks for any info you might be able to provide.”
On our Your Turn show today we’ll have two experts on the subjects of retirement and legislation. Jessica Klement is legislative director of the National Active and Retired Federal Employees Association (NARFE). Sean Reilly is a senior writer with the Federal Times. They’ll bring us up to speed on what Congress and the White House have planned for federal and postal workers and retirees. And maybe provide some tips for people planning to retire — or for those who are still waiting for their first full check.
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