Ep #20: Phase of Retirement – The Year of Retirement

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When it comes to your retirement, it can be a very stressful time—or it can be a very smooth transition. It really comes down to what planning you have put in place to set yourself up for success. In this episode, Micah and Tammy will be sharing the practices you must have in place the year of retirement in order to ensure you can segue out of your working life with confidence.

Listen in as they discuss the perfect time to retire and explain why you should always plan for a sooner retirement. You will learn what to look at the year of retirement, how to ensure you have all the right documentation, and what investments you must look at. If you’re in the process of preparing for retirement, this is the episode for you.

What We Cover:

  • How to determine what your retirement spending may look like.
  • Why you need to have a look at all your investments before retirement.
  • How to add confidence to your retirement.
  • The “best day” to retire.
  • Why you should always plan for a sooner retirement rather than a later one.

Resources for this Episode:


Ideas Worth Sharing:

Get copies of everything that is requested on that retirement application. – Tammy Flanagan Click To Tweet 

Cash flow is king, especially in your retirement. – Micah Shilanski Click To Tweet 

It really comes down to you and what planning you have done for this retirement. –Micah Shilanski Click To Tweet

Listen to the Full Episode:

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Full Episode Transcript
With Your Hosts
Micah Shilanski and Tammy Flanagan

You can spend. You can save. What is the right thing to do? Federal benefits, thrifts, savings plans, too. You can save your own way, with help from Micah and Tammy. You can save your own way, save your own way…

Micah Shilanski:  Welcome back to the Plan Your Federal Retirement Podcast. I’m your cohost Micah Shilanski, and with me as usual is the amazing Tammy Flanagan. Hey Tammy, how’s it going?

Tammy Flanagan:        Hey, Micah, I’m excited about today. This is my wheelhouse, people getting ready to walk out the door. I love that group of federal employees, so I’ve got a lot of tips and you’re going to come at it from the tax and finance side of it, so I think this is going to be a good one. This is going to be a keeper.

Micah Shilanski:  This is good. Yes, this is going to be great. This is the third part of our series about the phases of retirement that we’re going through. And we’re going to have another one after this talking about post retirement as well. But Tammy, as you said, this is such a fun conversation for us to have, if you will, because my job is to help clients get ready and stay retired. And your job is help federal employees understand their benefits to get retired, so this is like the culmination of our goals here when we’re working with people, is getting them to that successful retirement.

                           So, we have a lot of fun, and there’s a lot of things to think about. Because this can be a very stressful time in your life, or this could be a very smooth sailing time in your life. And it really is about you, and what energy and effort you’ve put into planning for this retirement.

Tammy Flanagan:        Yeah, you’re absolutely right. Because I think some people approach retirement with a little trepidation, because they’re just not sure if they dotted all the I’s and crossed all the T’s, and there’s a little, maybe not a little, maybe a lot, on the mental side of it where some people are just excited to begin this next chapter of life. And then other folks are a little concerned about, what’s it going to be like, am I going to be happy? Is this the right decision? So, hopefully most of us are getting excited about it, and have planned for it, prepared for it. Like you said, this is the culmination of our career. This is where the career is ending, and this new hopefully exciting chapter of life is beginning.

Micah Shilanski:  That’s perfect. All right, so before we jump into the year of retirement, and there’s a lot of things we need to chat about the year of retirement. Like a normal podcast, Tammy and I were pre-gaming this, and we have a solid day of content we could go through here. So, we’re going to try to condense this down to the 30 minutes, but Tammy, before we jump into the year of retirement, let’s step back real fast and go to that kind of two years out marker.

                           Two years out, I think is really, really important for a couple of reasons, because I want my clients to live on retirement. I want them to simulate retirement as much as possible, so what’s the retirement spending going to look like? Where’s that cashflow going to come from? How should their investments be set up? I want to do this in advance of retirement. Why? Because it’s going to add confidence into your retirement. And also Tammy, we need to figure out this two years out, what’s the best day to retire? What day are we working towards?

Tammy Flanagan:        That’s right. And I think the two year mark out from retirement is also a good time, if you’re thinking about, “Hey, I’d love to travel after I retire, or I’d like to start something new,” maybe start that something new on the weekends. Maybe start making your plans for that travel on the weekends, so that when the time comes and all the dust has settled, you’re ready to hit the ground running. So, you have a plan at least for the first year or so, not to say plans can’t change, because we might think traveling’s great until we’ve done it for six months, and then we say, “Forget it, let’s change gears.” But start thinking about what life after retirement is going to look like, and maybe even start implementing that plan before you go.

Micah Shilanski:  I really like that. The other thing to think about in this side of things, is as your planning, again, experimenting with that a little bit. What are those things, as you said, that you want to do, and how do you incorporate those in your day-to-day life? Those are really important things to make sure, again, we have this smooth transition to retirement.

Tammy Flanagan:        Absolutely. When it does come to setting the retirement date, that magic date as some people call it, and I have to say I take some credit for the saying that, of the magic date. Because we used to do that all the time when I worked at the FBI, is help our employees choose a really good date to retire. And then the Washington Post picked up on it and they started interviewing me every year for, “What’s the magic date this year?” And under the old system under CSRS, there was this magic date, because it was a single benefit plan. You didn’t have to invest and save, social security wasn’t part of it. But under FERS, there’s a lot of magic dates. We have the date of your actual FERS commencement, we when do you turn on social security? What do I do with my thrift and when?

                           But when it boils down to just the FERS basic benefit, there’s a couple of ground rules. Knowing that your FERS retirement is going to start the first day of the month after you retire, that’s something important to know. So, whether I retire March 1st, March 15th or March 28th, my retirement doesn’t start until April 1st, no matter which one of those dates I pick. Which is why we often tell FERS employees to retire towards the end of the month, so that their retirement begins shortly after their paycheck stops accumulating. So, that’s the one rule.

                           And then the other rule about choosing the best date is if you’re trying to really, I call it, design your own buyout, by saving up a lot of annual leave before you retire. So, if you leave at the end of the leave year, you not only can get paid for what you carried over from the past year, but you can also save up all of your accruals for the last year you worked. And I’ve seen, I know you’ve seen it too, some really substantial lump sum refunds, that are tens of thousands of dollars because someone’s getting paid out for 448 hours of unused annual leave. So, the end of the year is for someone who really wants to get that big lump sum, and then the end of the month is always a good time for a FERS retirement.

Micah Shilanski:  Tammy, you said something I want to pull out right there that was really, really important, is you said it can be a good time for those people that want a big lump sum. What does that mean? This is your retirement date. This is what I try to harp on people, don’t go based on some article that was written. And Tammy, nothing against the best quote, “Best day to retire.”

Tammy Flanagan:        I created a monster.

Micah Shilanski:  I know. People come in with these sheets and the leave calendars, and all this things and picking out these dates. And I’m like, “No, no, no, no. This is your retirement day. This should be a happy day. What’s a great day?” The end of the year is generally a good time. And I like to pause people, again I live in Alaska. On January 1st, we have a couple of things going for us in Alaska: dark and cold. So, okay, when you’re not going to go to work for 40 hours, what’s your plan? Now, if you’re going to travel and be out for January, perfect, that’s a wonderful time. But again, what’s your plan that you’re going to do? And make sure this is your retirement date, not just based on something else, take all that other information, dilute it down to you, and how does it apply to your situation? All right, I’ll get off my soap box on that one.

                           Jumping back on the best day to retire, the other thing I want to throw out there, Tammy, then let’s jump into the year of retirement, there’s a lot of stuff we’ve got to cover there. But the one thing on what date you should retire, is I always say pick the soonest date. Sometimes clients are going to come to me and they’re going to say, “Well Micah, there could be a couple of dates that I want to go. Maybe it’s this date, maybe it’s that date. I’m not sure which one.” Great. For planning, pick the soonest date. Why? Because it is super easy to extend your retirement and say, “You know what? I don’t want to go out in July, I’m really going to go out in December.” Okay, perfect. But if you go the opposite way, if you go to June and say, “You know what? That December date’s not looking good anymore. I want to retire next month,” now it’s more hectic. So, always pick the sooner if you’re going back and forth.

Tammy Flanagan:        That’s a good point. I think that makes perfect sense.

Micah Shilanski:  Perfect. All right, so Tammy, let’s dive into now… So, they’ve gone through, they’ve looked at the magical date for them, they’re going to pick the retirement. We’re going to say a year, we’re saying 12 months. So, they’re going to retire in March. Perfect, then we’re talking 12 months before March. And what are some things that they should be looking at, Tammy, that year of retirement? When do they let their agency know? When do they request applications? What other things do they need to put in place?

Tammy Flanagan:        Yeah, I would say it’s a little too early to actually turn in your retirement application, but it’s not too early to start gathering the documents, start filling out the application. And there are a number of documents that some of you will need in order to retire. For instance if you’re married, you might need a copy of your marriage certificate to include with your retirement application. And maybe that’s at the courthouse, maybe it’s not in the bedroom closet like you thought it was. So, gather those things together, make sure you have what you need, and you’ll know better what you need if you review the retirement application. Because it’s going to tell you on there, if you’re married, include a copy of the marriage certificate. If you served in the military, we need copies of your military records. If you paid your military deposit, do you have a copy of that?

                           So, get copies of everything that’s recommended or requested on that retirement application. And the retirement application is not the only thing you need. Maybe you’re going to continue life insurance into retirement, so there’s a form to do that as well. Maybe your records don’t show that you’ve had five years of health benefit coverage, because you were covered under your spouse’s Tri-Care or your spouse’s FEHB plan. So, make sure you can show proof of five years of coverage if that’s not already in your personnel file. So, there are some things that you can do to help make the process go a whole lot smoother, and you’ll be prepared when the time comes, to turn in that application two to three months before you retire. But start that process a year out, maybe even 18 months out.

Micah Shilanski:  Now, if you want this information that Tammy’s talking about, and you don’t want to hit the rewind button and go and write it down, well then shoot us an email because we’re going to have it on our website. And you can email us at [email protected]. And staying there, this is episode 19, you want the show notes from episode 19. And also, we can throw in there what we call a retirement timeline. We’ve actually done out graphically, what this retirement process should look like. When do you request your application, when should you follow up with your HR? What is retirement, when should you be getting your first check? All good expectations, so if you do want a copy of that, just email us. Again, and that is [email protected]. Sorry Tammy, little housekeeping items.

Tammy Flanagan:        That’s perfect. That will definitely come in handy and make it a lot easier if everything’s all in one place.

Micah Shilanski:  So, they’ve gone through and says, “All right, we’ve started to request all these documents, we’re getting all those things in place.” The other thing I’m going to throw in there the year of retirement, and again, I know I’ve said this in every single podcast talking about retirement, and I’m going to keep saying it, because cashflow is king, especially in retirement, you got to know your spending. So again, I asked you last week or two weeks ago when the podcast dropped, I said, “How much a month are you spending?” Do you know that? If you don’t, you need to go figure that one out, especially that year of retirement, how much are you spending?

                           Then the second part of that question, Tammy, where’s that money going to come from? So when you retire, how much is your pension going to be? You’ve already done your estimates, because we talked about that when you’re five years out, we should know what that’s going to be. But where are your investments? How are those things situated? And again, just like two years prior to retirement, I want your investments lined up. The year of retirement, guess what? The same thing. I want my retirees to set their TSPs up, their IRAs, their Roth IRAs, any investment account, like they were already retired. They’re ready for distributions.

                           Now, we may not be turning those distributions on, because we’re still getting a paycheck, we don’t want to pay taxes on that money. Okay, sure. But I want everything set up in what we call our buckets of money. And Tammy, the big reason that we talk about this with clients, and I know you know, is what happens if you pick your retirement date and your retirement date happens to be right before the next 2008? And the market drops by 50%, or the next COVID, or the next Y2K or the next whatever, whatever apocalypse du jour is going to be out there, the next one is going to happen. You got to get things set up where a market drop like that is not going to affect your retirement. And I know Tammy, you and I have both seen people delay retirement because they’ve kept everything invested, waiting until after they retire to get ready.

Tammy Flanagan:        Yeah, I guess that does make sense to me as well, to take some money out of the market that you’re going to need for that first year of spending. So, I guess once you figure out what’s your retirement benefits going to be, maybe think about claiming or not claiming social security if you’re old enough, those are things that come every month for the rest of your life. So, once you turn them on, they’re on forever, for lifetime. But then it comes into what to fill in the gap with. Do I take money from my TSP, or oh, I have that IRA, or that inheritance that Uncle Bob left me. So, where’s that money going to come from for that filling in the gap of what’s not covered, by recurring lifetime income payments? So yeah, that type of planning is so critical, and most of us don’t do it. We don’t know how.

Micah Shilanski:  Yeah. There’s a course we have on our website called Three Critical Concepts, we launch it a couple of times a year, so stay tuned for that because we’re going to go through these concepts. One of them is the buckets of money. How do you get distributions out? For most of the time with our clients, we look at a five percent distribution. So, if you had $500,000 in your investment assets, five percent is 25,000 bucks. You can probably pull it with the right strategy, you could probably pull $25,000 a year off of that money and make it last your entire life, which would be great. But how does that fit into the overall plan, plus your pension, plus your social security, et cetera? These are things you have to set up before you actually retire.

Tammy Flanagan:        Right. That old saying goes, “Prepare for the worst, but expect the best.”

Micah Shilanski:  That’s right.

Tammy Flanagan:        So, set up the worst case scenario and you’ll be prepared for whatever comes down the road.

Micah Shilanski:  Perfect. All right, Tammy, so when should everyone let their agency know or their bosses know that they’re going to retire?

Tammy Flanagan:        Yeah, that’s a good one. I remember working at the FBI, and having people come in, or not even come in the office, they would slide it under my door, and it would be sealed with duct tape and it would say, “For your eyes only,” because they didn’t want anyone to know they were leaving. This was back in the days when, if you said you were retiring, somebody would be measuring your chair and your desk to see if it fit them. And if you changed your mind, they would be totally devastated because they were ready to walk into your position. And maybe there’s a little bit of that going on today, maybe not so much as there was back in the 70s and 80s. But yeah, a lot of people want to keep a wrap on it, they don’t want everyone to know. Some people don’t want fanfare when they’re leaving, and somebody planning a big party.

                           So, it’s okay just to tell your retirement specialist, your HR office, and do that if you can, especially in a big organization like Department of Defense agencies, or HHS or some big organization where there’s a lot of people retiring every month. Give them 60 days, better yet give them 90 days notice. That means have everything filled out, everything signed, dated, ready to submit to them, three months before you’re going to walk out the door. That’s ideal.

                           Because they have, they being HR office, has work to do. They have to break apart your official personnel records, and get evidence of your health benefits, your beneficiary forms, recalculate your retirement one last time for OPM’s purposes. So, there’s a lot of work that they have to do before you walk out the door. And if you don’t give them notice, they’ll be doing that after you left, and nothing’s going to OPM until that’s all finished. So, it’s really in your best interest to give some notice. Smaller agencies, Department of Labor Relations Board or something that only has a few hundred employees, they can probably get away with 30 days notice. Some of them will even say two weeks, we can do it. But most federal employees work for larger organizations with tens of thousands of employees.

Micah Shilanski:  And I guess there’s two components to there, right? So, one of the things that I heard, Tammy, was one, find out what’s unique about your agency and how much time they need. I’ve heard some people say, “You know what, Micah? It’s my retirement, and I’m going to give him my retirement paperwork the day I walk out the door.” You know what? There’s nothing illegal about that to my knowledge.

Tammy Flanagan:        You can do it.

Micah Shilanski:  Yep. Now, this may not be best for you, just to be clear, because your HR still has to process retirement. And I don’t think if you waited to the last day, that HR person is going to stop everything they’re doing to process your retirement. They’re going to kick you out of payroll, that’s going to happen pretty quick, but then they got to get around to doing all your retirement paperwork. And this is going to cost you time, and it’s going to delay you getting your pension. So, I’m a big fan of asking your agency. I love that, Tammy. Ask them how much time do they need? Perfect, then back into that.

Tammy Flanagan:        Yeah, and you might be surprised. Some agencies still have some level of retirement counseling that they’ll offer, which might help you choose that best date. They might be able to give you a better idea of once you add your sick leave onto your service, “Hey, if you move your retirement up one more day, you’ll have another month in the calculation.” So, ask if they provide retirement counseling for you, and they’ll be able to tell you when’s the best time to turn in the application based on their workload. So, have that conversation if you can. Now, I know we’re in this age of everything being consolidated in regional personnel centers, and a little less personal help that’s available. So, if don’t have that, you’re not alone. I’d probably say the majority of federal employees don’t really have the benefit of true retirement counseling. But if you do, take advantage of it. Sometimes you’ll find that that can be very helpful in the process as well.

Micah Shilanski:  I’d also say, so the second part of this retirement, asking your agency, is one on the HR side of it, actually processing those forms. The other side is your boss’s side of it, too. What position do you have? And a lot of my federal employees retiring, they were committed to their mission for 20, 30 years, and they don’t want to leave abruptly and then have a gap that’s going to be there in order for it. So, great. How long is it going to take to fill your position? When does your boss need to know about that? And I think that’s another consideration that you need to make, because sometimes, especially the higher up you are, sometimes we need a year notice from your boss’s level, so they can start thinking, great, how are they going to fill your role? But granted, your HR only needs 60 days to process your retirement. Those are two different things.

Tammy Flanagan:        They are, they absolutely are, and you’re right. And sometimes people can work that out with their boss, that they could retire, let’s say the end of March, and then come back as a reemployed annuitant on April first to finish up that project, or to mentor the next person who’s going to take your place. So, there could be alternatives to just a cold turkey retirement, whether it’s reemployed annuitant, whether it’s a phased retirement, some agencies are offering phased retirement. So, there’s other alternatives that you might want to have that discussion with your boss.

Micah Shilanski:  Yeah, or even come back as a contractor, right? On the self-employed side. That’s another option. There’s all sorts of different things. So, you don’t have to jeopardize your retirement date because of the mission. You can do a hybrid, you can blend different things that work out really nice.

Tammy Flanagan:        Yeah. I kind of like that, because it’s more of a phasing into it rather than just jumping into the deep end right off the bat. And having that open communication, because I’m all about transparency. I wouldn’t want someone just to call me up Monday morning, telling me, “Friday was my last day.” That’s not a good way to separate.

Micah Shilanski:  Well, as a small business owner, granted I’m not a federal employer or a federal agency here, but just as a small business owner, two weeks isn’t even enough time to replace a position, right? It takes months to find someone. So, my position from my team, if they were going to leave, I would want to know in advance to help make sure everything is taken care of. But we have a pretty positive work environment, sometimes that’s not always out there. So, sometimes it needs to be a little different. Again, this is a you question. What’s unique in your situation, that’s going to dictate these terms?

Tammy Flanagan:        And Micah, one other thing. We were talking about the application and the forms, and I forgot to mention about people who have gone through divorce. Because that can create some confusion, it can create some misunderstandings about, “What is payable to my former spouse?” Sometimes nothing, right? Sometimes you said, “You go your way. I’ll go my way, and we’ll keep our retirements totally separate,” which in my opinion would be the best alternative or the best solution. But sometimes that can’t be, because maybe my spouse was following me around the world, and I owe my spouse part of my retirement because they gave up their career to follow that. So, make sure you understand what it says in your final court order, the divorce decree. Hopefully that’s already been on file with OPM’s court order section, so that they’ve had a chance to review it, if there is a apportionment to your former spouse, to part of your retirement or an election of survivor benefits that is in there.

                           So, be sure you understand that. Because once that’s paid out, that leaves you with less money and it may not be enough like you thought it was going to be, based on your retirement estimates. So, be sure to factor that into your financial planning, make sure you understand what the apportionment that really means in dollars. And also, don’t forget that leaving part of your retirement, and leaving survivor benefits are two different things. Some divorces provide both, sometimes it only provides a survivor benefit and no retirement benefit. So, really read through that, and make sure you understand what it says.

Micah Shilanski:  That’s the key thing right there. When I meet with a lot of clients and I find out they had a previous marriage, I require the divorce decree. This is not optional to work with me. And the reason for this, is so often we think it says one thing, but then when I read it I read something completely different. And a lot of reason is that, because I’m going to look at it from a dispassionate point of view. There’s a lot of emotions baked around divorces, and so sometimes we’re not really seeing those documents, just like any other emotional situation. And you got to reach out to someone else, if you’re doing this yourself, you’ve got to have somebody else review that divorce decree for what it really says, and what OPM says it’s going to mean. It’s not what do you think that interpretation says, how is OPM going to take that interpretation of your pension? Because that’s a big thing that I see get missed a lot. Or people saying that, “Oh, well my ex will never know when I retire so this doesn’t apply.” Nope, Nope, Nope. That’s not how the law works.

Tammy Flanagan:        Yep. No, you have to answer those questions honestly, because there is a chance that you could be prosecuted if you don’t do it right. So, you’re assigning documents that are very important. And the other thing I’ll mention here in terms of, this is a little bit off track but it’s important since we’re talking about former spouses. I had a friend of mine recently, who found out that her ex-husband who was a federal employee had passed away, and he had retired probably 15 years ago. And in the divorce decree, it said something to the effect of, he can’t change his beneficiary on his life insurance, that he had to maintain government life insurance so that she could receive the benefit.

                           Well, when she looked into it, she found out he had canceled his life insurance. Well, what do you do now? It’s canceled, he’s gone, he can’t reinstate it because he’s dead. So, the thing to do if you’re the former spouse, and you’re hoping to get that final payment of life insurance, have the court order indicate that they need to assign that coverage to you, so that you take over ownership and then it can’t be canceled, then it can’t be changed. You’ll remain the beneficiary. So, OPM can’t enforce life insurance that doesn’t exist.

Micah Shilanski:  Yeah, makes it a little challenging, right?

Tammy Flanagan:        Yep. So, assignment of life insurance is something to learn about if you’re on the receiving end of that benefit.

Micah Shilanski:  So, let’s pivot a little bit Tammy, because the FERS benefits, which is probably what most of our audience are talking about, is based on three things: you have a pension, you have your social security, and you have your investments, as in your TSP. So, we talked about the pension side of it, let’s dabble a little bit with social security. Now, we had a pretty in-depth podcast, I think it was episode 14. So, if you go to planyourfederalretirement.com/14, that was with Mary Beth on social security planning. We went through a ton of stuff, but with our retirees, especially those who are going to retire before 62, we got to be thinking about the supplement, we got to be thinking about changing incomes. How does all that play together?

Tammy Flanagan:        Yeah. So, a lot of people want to know how do I file or apply for the first supplement if I’m entitled to it? Well, the answer is you apply for it when you apply for FERS retirement. Even though, and I’ve looked for it, there is no mention of FERS supplement anywhere on the FERS application. But when you file for FERS retirement, OPM will take into account your age at retirement, and the way that you retired. Was it an immediate retirement, was it deferred? Was it at age 57, with 30 years of service, or was it at age 60 with 10 years? So, OPM is going to determine if you’re entitled to a supplement. That supplement’s going to kind of bridge the time between your retirement and qualifying for social security, generally at age 62.

                           So, I would say, I think last numbers I saw was less than half of all the FERS retirees are entitled to the supplement. Many people retire after 62, some people retire under the MRA+10, don’t get a supplement, but if you’re entitled to it, OPM will provide it for you when they finalize your claim. And that claim can take six months to finalize in the year of COVID, with all the delays and teleworking that’s going on. So, keep in mind that even though that supplement might provide you another $1,500 a month in income in some cases, you’re not going to get it until the claim is done. So, if you’re counting on that income, this goes back to your buckets of money, make sure you have some cash reserves to cover that income that you’re going to need to pay your bills, while you’re waiting for the dust to settle.

Micah Shilanski:  And thinking about it too, in recent years, I’ve only seen one mistake with OPM with regards to a FERS supplement, so they’re really, really good on it. In this case, it was a VERA, and confusion when the VERA went through with the agency, et cetera. And good news is everything got fixed, but it took an extra four months in order to get fixed and get back paid on the supplements. So Tammy, back to your point, this is a cashflow question. OPM is good about making sure you get the benefits you’re owed, but they can make mistakes. And so when you go to fix it with them, they’re good about fixing it, but that doesn’t mean they’re timely. That doesn’t mean it’s going to happen right away. This is a months, with an S, process in order to get errors or issues fixed with your retirement. This again, is where cashflow is really, really important.

Tammy Flanagan:        Yeah. And a couple other things on the FERS supplement, is that you might lose it after you start getting it, because your idea of retirement might be to start a second career. So, you will have to report earned income wages, salary, self-employment income, after you start receiving the supplement. And OPM will let you know, they’ll send you an earnings survey every spring, where you can report what your earnings were for the previous year. So, that’s going to happen after you start getting it.

                           The other thing that I hear people ask about in regards to the supplement is, what happens at age 62? So let’s say I’ve been getting the supplement for five years since I was 57, does it just stop? Does my social security start? How does that transition from FERS supplement to social security work? And the answer is, it’s kind of abrupt. So, one month after you turn 62, you’re going to notice in your bank account, you’re short some money. OPM stopped paying it to you the month after you turned 62.

Micah Shilanski:  No notice, it just-

Tammy Flanagan:        Nothing. Yeah, it just kind of happens. So, it’s up to you to figure out when do I want to begin receiving the real thing, the social security benefit from the Social Security Administration? It might be that I want it right then. I’ll apply for it three months before I turn 62. But on the other hand, my idea might be to delay social security, because of any number of reasons. And like you said, we covered all that claiming strategy with Mary Beth Franklin. So, that’s something you need to think about well before you turn 62, so you know what your choice is going to be, what are you going to do so you’re prepared to implement it? Whether it’s applying for social security, or starting to draw more out of my savings to make up for losing the supplement. So, there’s a lot of things there I can do.

Micah Shilanski:  Yeah. And all of this is plannable. It can seem a little overwhelming, this is like an elephant, it’s just one bite at a time. And this is why we stress so much the importance of listening to these podcasts now, planning in advance of your retirement. Because guess what? If you figure this out, when we were talking about our five year out podcast, if you figure this out when we were talking about that, and two years out from retirement, this is a breeze to go through the year of retirement. You’re just checking boxes. All right. Were are my assumptions correct? Do I review all of these things again with my clients the year of retirement? Absolutely. Even if we did the same work a couple of years ago, let’s confirm our assumptions that we have.

                           This is still our plan with our pension, this is still our plan when the supplement ends, this is still the plan for our TSP distribution, social security income. These are great things to check box. And if you’ve already done the planning, again, this year of retirement becomes smooth sailing versus a stressful event, which is what you want to do.

Tammy Flanagan:        Absolutely. Yep, I think that pretty much covers what you want to do during that time. So, are we ready for our checklist of to do items?

Micah Shilanski:  Yes, ma’am. Let’s do some action items for our listeners, because this podcast is all about action items. It’s not just about Tammy and I getting together, even though we thoroughly enjoy that, it’s hopefully benefiting you with information and giving you some clean action items of things to do. So, I’m going to piggyback on the same thing I said last time. Number one action item, figure out how much are you spending a month? This is really, really important, and very, very few people actually know that number.

Tammy Flanagan:        Yeah, mine would be to get the application for retirement, get the application to continue FEGLI, look into TSP withdrawal options and start to fill out that application, especially for FERS. Even though you’re not going to turn it in for a year, see where your questions are. What decisions are they asking you to make that you’re not sure about? That’s going to give you a heads up that, “I need to learn more about survivor benefits,” or, “I need to look closer at my court order once I start to fill out the forms.” Because there are some pretty big decisions you have to make on that form.

Micah Shilanski:  I like it. Third action items, is this isn’t self-serving I promise, but email us, [email protected] and ask for the copy of the Retirement Roadmap. We’re delighted to send that to you. It’s a quick little one pager, nice little graphics on it, but it’s going to give you some big milestones to make sure you’re checking all the boxes as you get ready for retirement. So, make sure you’re looking at that so you can get the most out of your benefits.

Tammy Flanagan:        Absolutely. Yeah Micah, I think that’s the important thing too, is to take advantage of these opportunities that you provide, that we counsel employees, that you might even have at your agency, to learn as much as you can because that’ll just make you all the more prepared. Because there are some big choices you have to make, and this is a big change in your life. This is a big transition. So, be prepared, I guess, just like the Boy Scouts slogan.

Micah Shilanski:  That’s right. Zing zing, bomb bomb. If you’re a Boy Scout, you know what that means. All right, so last action item of course, is share this. Share this podcast with a coworker, with a friend, it’s growing quickly and we owe that to you, our listeners, so thank you very much. That’s how you show Tammy and I your love, is by more people downloading this, and more people giving us some great five-star reviews on iTunes, and growing this podcast. Because we want to make a meaningful difference in federal retirement. That is Tammy and I’s goal, is that when federal employees get ready to retire, they can retire with confidence, because they know and understand their benefits, and they’re getting the most out of it. And you are an important part of that, in helping us spread that message. So, thank you for sharing this. And until next time, happy planning.

Hey, before you go, a few notes from our attorneys. Opinions expressed
herein are solely those of Shilanski & Associates, Incorporated, unless
otherwise specifically cited. Material presented is believed to be from
reliable sources, and no representations are made by our firm as to other
parties, informational accuracy, or completeness. All information or ideas
provided should be discussed in detail with an advisor, accountant, or legal
counsel prior to implementation.

Content provided herein is for informational purposes only and should
not be used or construed as investment advice or recommendation
regarding the purchase or sale of any security. There is no guarantee that
any forward-looking statements or opinions provided will prove to be
correct. Securities investing involves risk, including the potential loss of
principle. There is no assurance that any investment plan or strategy will be

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