Key Takeaways
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Many federal employees overlook valuable benefits that can enhance their retirement security and financial well-being.
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Understanding and strategically using these benefits can significantly improve your long-term financial stability.
Hidden Perks: Unlocking the Benefits You Already Have
As a federal employee, you have access to a robust set of benefits designed to support you during and after your career. However, many workers fail to take full advantage of these offerings simply because they don’t realize what’s available. From extra retirement savings options to lesser-known insurance perks, maximizing these benefits can make a substantial difference in your financial future. Let’s explore six federal employee benefits you might not be fully utilizing—and how to get the most out of them.
1. Survivor Benefits: Protecting Your Loved Ones
Your federal pension doesn’t just support you—it can provide financial security for your family after you’re gone. The Federal Employees Retirement System (FERS) allows you to set up survivor benefits, ensuring that a spouse or other eligible beneficiary continues receiving a portion of your annuity after your passing.
How It Works
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You can elect to provide a survivor annuity when you retire, which reduces your pension in exchange for ongoing benefits for your spouse.
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The two main options include a 50% survivor benefit (which reduces your annuity by 10%) or a 25% survivor benefit (which reduces your annuity by 5%).
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Your survivor will also retain eligibility for health insurance through the Federal Employees Health Benefits (FEHB) program.
Take Full Advantage
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Carefully review your survivor benefit election before finalizing your retirement paperwork.
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If your spouse relies on your income, opting for the higher benefit may be a smart choice.
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Consider other financial planning tools, such as life insurance, to supplement survivor benefits and provide additional security.
2. Federal Employee Group Life Insurance (FEGLI): More Than Just Basic Coverage
Many employees are automatically enrolled in Basic FEGLI coverage, but fewer realize they can enhance this benefit with additional options. FEGLI provides affordable life insurance that can be adjusted as your needs change throughout your career.
How It Works
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Basic coverage equals your salary rounded to the nearest $1,000, plus an additional $2,000.
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You can elect Option A, B, or C to increase your coverage for yourself and your family.
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Coverage remains available after retirement, although premiums increase with age.
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Option B allows you to select coverage of up to five times your salary, providing significant financial protection.
Take Full Advantage
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Assess your coverage periodically to ensure it aligns with your current financial responsibilities.
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If you have dependents, consider supplementing FEGLI with other financial planning tools to maintain security.
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Compare FEGLI rates with private insurance options to determine the most cost-effective plan for your needs.
3. Thrift Savings Plan (TSP) Matching Contributions: Free Money for Retirement
Your Thrift Savings Plan (TSP) is one of the most powerful retirement tools available to federal employees. What many don’t realize is that failing to contribute at least 5% of their salary means leaving free money on the table.
How It Works
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The government matches up to 5% of your salary if you contribute the same amount.
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TSP offers both traditional (pre-tax) and Roth (after-tax) contributions, allowing you to customize your retirement savings strategy.
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Investment options include Lifecycle Funds, government securities, and stock index funds to help grow your savings.
Take Full Advantage
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Always contribute at least 5% to maximize matching contributions.
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Consider increasing your contribution each year to build a stronger retirement fund.
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Take advantage of the catch-up contribution option if you are 50 or older, which allows you to save even more tax-advantaged dollars for retirement.
4. Unused Sick Leave Can Boost Your Retirement Annuity
Many federal employees don’t realize that unused sick leave adds time to their retirement service calculation, increasing their annuity. This means that taking fewer sick days over your career could result in higher monthly retirement payments.
How It Works
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At retirement, 2,087 hours (one full year of sick leave) equals one additional year of service credit.
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This extra service credit increases your FERS pension calculation, leading to higher lifetime benefits.
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Unused sick leave does not count toward meeting the minimum retirement eligibility requirement, but it does enhance your final annuity.
Take Full Advantage
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Use sick leave only when necessary to maximize your service credit.
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Before retirement, check your accumulated sick leave balance to estimate its impact on your pension.
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Plan ahead if you are nearing retirement—small changes in sick leave usage can lead to significant increases in lifetime annuity payments.
5. Federal Long-Term Care Insurance Program (FLTCIP): Planning for Future Needs
Long-term care can be a significant expense in retirement, but many federal employees overlook the FLTCIP, which helps cover these costs.
How It Works
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FLTCIP provides coverage for home care, assisted living, and nursing facilities.
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Available to federal employees, retirees, and eligible family members.
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Premiums are based on your age at the time of enrollment.
Take Full Advantage
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Apply early in your career to secure lower premiums.
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Compare FLTCIP with private long-term care insurance options to find the best coverage.
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Consider how long-term care planning fits into your overall retirement strategy.
6. Flexible Spending Accounts (FSA): Save on Taxes for Healthcare and Childcare
Flexible Spending Accounts (FSAs) allow you to set aside pre-tax dollars for medical and dependent care expenses, reducing your taxable income and saving you money.
How It Works
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The healthcare FSA lets you use pre-tax money for medical expenses.
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The dependent care FSA covers childcare or eldercare expenses.
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Funds must be used within the plan year, although some accounts allow limited carryover.
Take Full Advantage
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Calculate your expected expenses each year to maximize tax savings.
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Keep track of eligible expenses to ensure you use the funds before the deadline.
Making the Most of Your Federal Benefits
Federal employment offers a generous benefits package, but to truly benefit, you need to understand and actively manage these resources. By maximizing your retirement savings, insurance options, and other perks, you can secure a stronger financial future. Taking the time to plan now will help ensure a comfortable and stable retirement.
Want to make informed decisions about your federal benefits? Get in touch with a licensed agent listed on this website for guidance tailored to your specific situation.
