Congress has provided guidance to OPM in committee meetings to provide better financial awareness among federal employees. While some agencies have long worked to provide this type of guidance through their retirement support specialists, others still lack the resources and programs to guide the nearly 600,000 federal employees now eligible for retirement.
As that number grows, and the number of questions and concerns in this population increases, the need for internal guidance grows. There are several areas in which such programs can be implemented, with programs that vastly improve overall literacy.
One-on-One Counseling
Because of the unique nature of employment within the federal government, standard financial planning often isn’t enough. While there are financial planners who specialize in working with federal employees, most employees have access to this level of one-on-one counseling.
Although workers can be eligible as early as age 55, they should understand how working longer (and ensuing salary increases) will affect their annuity and other parts of their retirement package. Employees also need to understand all the components of their retirement package (the annuity, TSP funds, social security, elections of health, dental, vision, and life insurance policies) and ensuing tax implications.
A retirement calculator supports your agency’s HR specialist with this one-on-one counseling by its ability to quickly and accurately estimate a variety of retirement scenarios (e.g., immediate retirement vs. postposed retirement). It then generates a detailed output report which the specialist can share and review directly with the employee. This not only aids in the employee’s understanding of how current decisions will affect their retirement, it also opens the door to communication and understanding what type of information is needed to generate a complete and accurate retirement package.
Agencies can support financial literacy in their civilian workforce with the implementation of one-on-one counseling for things like retirement planning, retirement processing, and general financial planning.
>>> Download our Tips for Supporting Retirement Actions in the Federal Government.
Financial Literacy Seminars
One-on-one counseling may not be manageable at scale in some agencies, but seminars offer an opportunity to reach many people with targeted information that addresses major concerns. Seminars can be produced for:
- Retirement planning, including processing requirements, common questions, and data collection.
- Debt management and financial planning for future retirement actions.
- Special circumstances such as dividing retirement benefits in divorce.
- Preparation for early out and calculation of retirement benefits in unique situations.
Depending on the size of the agency, these seminars can be presented live or with on-demand video presentations that can scale automatically to accommodate.
Tools for Calculating Retirement Benefits
The federal retirement system is more complex than many traditional private-sector systems. With several different regulations depending on service time, start date, and grade, any given retiree will be faced with several options they need to evaluate, starting well before full retirement age. This is where tools for calculating retirement benefits can be most useful.
A good retirement calculation tool can provide the following benefits to help retirees make the right decision for their financial situation:
- Post-Retirement Income Sources – Evaluation of federal retirement annuities, social security benefits, and private investments.
- Calculations for Early Outs – Those who are retirement eligible before age 62 often have special circumstances and their retirement packages will reflect this.
- Side-By-Side Retirement Scenario Evaluation – For those evaluating when to retire, these tools can help to calculate what each scenario looks like, taking many factors into consideration.
- Faster Retirement Processing – The average processing time for more than 40% of applicants is 60 days or longer. Modern technology can greatly reduce this time and help with the planning process.
These tools will reduce time required to support the retirement process while providing better insights with which your employees can make decisions.
Addressing Gaps in Financial Literacy for Federal Employees
Financial literacy is important to all Americans, even more so for federal employees whose retirement will involve many scenarios and income sources. By providing the resources outlined above, you can improve this experience and ensure employees exit the federal workforce ready for decades of retirement.
EconSys has been worked with more than 100 federal agencies to provide support at the retirement level, improving processing speed, supporting counseling and employee guidance and modernizing key systems. Learn more about what we have done for these agencies and how to improve retirement computation to see similar benefits:
