Federal agencies frequently reach out to federal retirees as a potential source of recruits, particularly for highly specialized positions or when a sudden increase in work necessitates it. They prefer to hire individuals with experience in government services instead of new entrants.
Meanwhile, some federal retirees look for re-employment because they feel they still have more to offer the workforce or because retirement is not going as well as they had hoped financially or in other ways.
However, there are a few unique considerations when returning to work after retirement.
If you willingly retire, you will still be paid your annuity, but your new job’s income will be lower because of that pension. For instance, you would receive just $60,000 ($100,000 – $40,000) if your annuity was $40,000 and your salary was $100,000.
However, if your retirement were forced due to a RIF, job abolition, transfer of function, reorganization, or right-sizing, your annuity would end, and you would start receiving the entire income of your new position. Therefore, you would share the same employment status with any other government employee holding a similar post and a comparable service record.
You will also become eligible for a supplemental annuity if you worked full-time, continuously for at least one year, or its equivalent if you worked part-time.
On the other hand, if you worked for at least five years or the equivalent, you would typically be entitled to a re-determined annuity that would take the place of the one you are presently receiving. To be eligible for those extra benefits in either scenario, you must contribute to the retirement fund while working or until your next retirement.
You would also need to meet the age and service criteria if your annuity ceased when you started your new job to be able to retire again.
In exceptional circumstances, you might be able to get both your annuity and your total wage. Initially, this exception only applied to jobs for which it was difficult to find or keep a qualified employee, where there was an immediate danger to your life or property, or when an emergency situation called for employment.
But over time, several other authorities have increased this payment for additional reemployed annuitants. Limited-time appointments are a government-wide authority, and agency-specific regulations are mostly in DoD. Ask if one of the exceptions applies to you if you are a retiree being considered for re-employment.
Impact of going back to work after retirement.
1. The Good: Health Insurance
The natural aging process can result in future increases in healthcare expenses. These expenses can deplete your funds, depending on your health benefits.
Health insurance may be the main reason for returning to work for those who retire before they reach 65 (especially considering the costly out-of-pocket costs of private insurance).
Consider returning to work if you’re purchasing pricey private health insurance before turning 65, when you would be eligible for Medicare.
In most circumstances, enrolling in a group health plan through your job could be less expensive than paying for your own health care out of pocket.
2. The Bad: Social Security
Your Social Security benefits can reduce if you opt to re-enter the workforce, depending on your age at retirement. According to the Social Security Administration, the full retirement age (FRA) is 67 for those born in 1960 or after.
The amount of Social Security payments you might get will reduce if you retire before FRA. If you haven’t reached FRA, there is an offset that, dependent on when you retire, can reduce your Social Security payment.
For every $2 you earn over the annual cap while not at FRA, the Social Security Administration will withhold $1 from your benefit payments. That cap is $19,560 for 2022.
They’ll also take $1 from your benefits for every $3 you earn over $51,960 in the year you attain full retirement age (FRA).
3. Potentially Bad: Pension Suspension
Your pension from your previous agency may be affected if you start working again. If you re-join the workforce for a different agency, you can still be eligible to receive pension benefits from your previous employer. However, regulations may vary from plan to plan.
By collecting pension payments from your previous employer while being paid a salary at a new one, you’ll be able to expand your revenue stream further. Payments might halt if you decide to work for your former agency once more.
The agency paying your pension will often stop paying benefits if you work for them again, though regulations may differ based on your employer’s pension plan. If you decide to return to your old job, speak with the firm to learn more about how your pension can be impacted.
Contact Information:
Email: [email protected]
Phone: 8007794183
Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”
Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.
A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.
Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.
