Planning for Retirement in Five Years

• Beginning to plan for retirement
• Help from your employer
• When to start planning
• Keeping your health insurance benefits after you retire
• Keeping your life insurance coverage after you retire
• Review your service history
• Check your eligibility for Social Security benefits

Beginning to plan for retirement

You should begin planning several years before the date you have set for retirement so that you will know what is required to continue certain benefits into retirement.  There are many factors related to retirement planning, and it is literally never too early to begin.  The best place to begin is with your local personnel service center.  They can provide personalized assistance and they have your employment records.

Your health and life insurance coverages are of immediate concern now because you must carry coverage continuously for at least five years before your retirement or you may be ineligible to continue them.

Help from your employer

Your agency will guide you through the retirement process, supplying all of the information you need about retirement and insurance.  They provide the information you need to plan for retirement, but should not advise you on what to do.  You should contact your local personnel service center for assistance because they have your employment records.

When to start planning

The five year period before retirement is important because you must have insurance coverage for five years immediately before retirement to keep it after retirement.  You may also need some preliminary information to make decisions about when you can afford to retire and whether to make any necessary payments to receive credit for military or non-contributory service or repay any retirement contribution refunds.

Keeping your health insurancebenefits after you retire

You may continue your heatlh insurance coverage only if you meet the following conditions:

• Your annuity must begin within 30 days or, if you are retiring under the Minimum Retirement Age (MRA) plus 10 provision of the Federal Employees Retirement System (FERS), health and life insurance coverages are suspended until your annuity begins, even if it is postponed.
• You must be covered for health insurance when you retire.
• You must have been continuously covered by the Federal Employees Health Benefits Program, TRICARE, or the Civilian Health and Medical Program for Uniformed Services (CHAMPUS):
  • for five years immediately before retiring; or
  • during all of your federal employment since your first opportunity to enroll; or
  • continuously for full periods of service beginning with the enrollment that started before January 1, 1965, and ending with the date on which you become an annuitant, whichever is shortest.

Waiver of the requirement for continuing health insurance coverage

We have the authority to waive the five-year participation requirement when it is against equity and good conscience not to allow an individual to participate in the health insurance program as a retiree.  However, the law says that a person’s failure to meet the five-year requirement must be due to exceptional circumstances.  When someone is retiring voluntarily, a waiver may not be appropriate because he or she can continue working until the requirement is met.  When circumstances under these conditions otherwise warrant a waiver, we will notify the individual's employer.

Keeping your life insurance coverage after you retire

You can keep your basic life insurance in retirement if all of the following conditions are met:

• You have coverage when you retire;
• You have not converted coverage to an individual policy;
• Your annuity begins within 30 days, (However if you are retiring under the Minimum Retirement Age (MRA) plus 10 provision of the Federal Employees Retirement System (FERS) and you have postponed the commencing date of your annuity, health and life insurance coverage is suspended until your annuity begins), and,
• You were insured for life insurance for the five years immediately preceding retirement or the full periods of service when coverage was available.

You can keep your optional life insurance in retirement if all of the following conditions are met:

• You are eligible to continue your basic coverage; and,
• You were covered by the optional life insurance for the five years immediately preceding retirement or the full periods of service when coverage was available, if less than five years.

Waiver of the requirement for continuing life insurance coverage into retirement

We have no authority to waive the requirements for continuing life insurance coverage. If you are not eligible to continue it, you will be given the chance to change it to an individual policy.

Review your service history

You should review your Official Personnel Folder (OPF) to make sure that there is verification of all of your military and civilian service.  If any of the records are missing, your employer should help you document the service and obtain any missing records.  If you have civilian service for which you must pay retirement contributions or repay a refund of contributions, your employer should tell you about what impact payment or non-payment has on your eligibility and the amount of your retirement benefit.

If you owe a payment to receive credit for military service you performed after 1956, you must make that payment before you retire. If you are receiving military retired pay, you should discuss whether or not you must waive the retired pay with the personnel officer at your agency.  Your personnel officer can also tell you about receiving credit in your annuity computation for various types of service and about the payments described above, as well as help you with service documentation.

Check your eligibility for Social Security benefits

You should ask for a form SSA-7004-PC, Request for Earnings and Benefit Estimate Statement, from your local Social Security Office or visit their website at http://www.ssa.gov.   If you submit this form, you will get a statement that provides information on your future eligibility for Social Security benefits and estimates of these benefits at specified dates.  These estimates do not reflect any reduction for the Government Pension Offset or the Windfall Elimination Provision (WEP).

Government Pension Offset

Some of an employee’s spousal Social Security benefit may be offset if the employee has a government pension from work not covered by Social Security.  The offset does not apply to the employee’s own Social Security benefit, only the benefit that comes from a spouse’s employment.  If the Government Pension Offset applies, the spousal Social Security benefit will be reduced by two-thirds of any Federal pension based on employment not covered by Social Security.

Some employees are exempt from the Government Pension Offset.  They are employees who are automatically covered by the Federal Employees Retirement System (FERS), Civil Service Retirement System (CSRS) Offset, and those who elected to transfer to the FERS before January 1, 1988, or during the belated transfer period which ended June 30, 1988.  Employees who were covered by the CSRS and who elected FERS coverage after June 30, 1988 must have five years of Federal employment covered by Social Security to be exempt from the offset.

Windfall Elimination Provision

If you receive a Federal pension and are also eligible for Social Security benefits based on your own employment record, a different formula may be used to compute your Social Security benefit. T his formula will result in a lower benefit.  The Windfall Elimination Provision affects workers who reach age 62 or become disabled after 1985 and are first eligible after 1985 for a Federal pension.

The Windfall Elimination Provision does not apply if:

• You were eligible to retire before January 1, 1986; or,
• You were first employed by the government after December 31, 1983; or,
• You have 30 or more years of substantial earnings under Social Security.

Estimating the amount of the Windfall Elimination Provision reduction

At your request, using the form SSA-7004, the Social Security Administration will send you a Personal Earnings and Benefits Statement (PEBES) that will list your earnings from employment covered by Social Security and provide a Social Security benefit estimate assuming retirement at alternative ages, 62, 65, and 70.  You should contact your local Social Security office to determine the effect of the Government Pension Offset and the Windfall Elimination Provision on your Social Security benefits.