Federal Employee Benefits You Didn’t Know Could Give Your Wallet a Serious Boost in Retirement

Krista Wilson
December 31, 2025

Key Takeaways

You might be sitting on hidden federal employee benefits that can significantly pad your wallet in retirement if you know how to use them.
From healthcare perks to retirement savings strategies, the right combination of federal benefits could mean thousands more in your pocket each year.

Welcome to the Land of Hidden Federal Benefits

Let’s face it—navigating the maze of federal employee benefits can feel like you’re trying to decipher an ancient script. Sure, you probably know about your basic pension or the Thrift Savings Plan (TSP), but what if I told you there are some benefits buried within your package that could give your wallet a serious boost in retirement? Some of these perks might not even be on your radar yet, but trust me, they can make a world of difference when you’re no longer clocking in at the office.

In this guide, I’ll walk you through some lesser-known benefits that could help you retire with more cash than you originally thought possible.

The TSP Matching Contributions: Your Secret Wealth Builder

If you’re a federal employee, the Thrift Savings Plan (TSP) isn’t just another boring retirement account. It’s like finding money under your couch cushions—except this time, it could be thousands of dollars. In 2024, federal agencies are matching up to 5% of your salary in TSP contributions.

This matching contribution is essentially free money that could grow significantly over time. If you haven’t been maxing out that match, you’re leaving money on the table—literally. Plus, with the TSP’s solid performance (the C Fund saw returns of over 20% as of September 2024), every dollar you put in gets the chance to grow exponentially. And don’t forget about the catch-up contributions for those of us over 50—you can contribute an extra $7,500 on top of the $23,000 limit in 2024. That’s a significant chunk of change you’ll thank yourself for later.

The Federal Employees Health Benefits (FEHB) Program: A Lifelong Safety Net

We’ve all heard horror stories about how healthcare costs can drain retirement savings, but as a federal employee, you’ve got an ace up your sleeve. The Federal Employees Health Benefits (FEHB) program is a goldmine, allowing you to carry your health insurance into retirement without having to shop around for private plans.

And here’s the kicker: even after you retire, the government will continue paying the same percentage of your premiums as it did when you were working. Considering the rise in healthcare costs, this can save you thousands annually. In fact, FEHB premiums are set to increase by about 13.5% in 2025, but with your federal benefits footing part of the bill, you’re still in a much better position than most retirees.

FEGLI: Don’t Overlook Your Life Insurance

Now, let’s talk about the Federal Employees’ Group Life Insurance (FEGLI) program. Sure, life insurance might not sound as exciting as a retirement fund or healthcare benefits, but it’s a key player in the federal benefits package. The FEGLI coverage you’re paying into while working can carry over into retirement, potentially easing the financial burden on your loved ones. And unlike private life insurance policies, you don’t have to undergo a medical exam to keep your coverage.

One thing to watch out for, though: as you age, the premiums for additional coverage options (like Option B) can become quite expensive. If you find that FEGLI is eating too much of your retirement budget, you might want to consider reducing your coverage before you retire, but the fact that you even have this option is a plus.

Sick Leave and Annual Leave: Time Is Literally Money

This one’s a game-changer for many federal employees. Did you know that unused sick leave can be converted into additional service time when calculating your pension? That’s right—the more sick leave you have banked at retirement, the larger your annuity could be. As of 2024, every day of unused sick leave counts toward increasing your service time, which in turn boosts your pension payout. This could add up to months or even a year of extra credit.

And don’t forget about your unused annual leave. When you retire, you’ll get a lump-sum payout for any unused annual leave, and this payout is based on your salary at the time of retirement. This means you could walk away with a significant one-time payment just for not taking all your vacation days. It’s like getting paid to retire.

FERS Special Retirement Supplement: Bridging the Gap

If you’re retiring before age 62, the Federal Employees Retirement System (FERS) has another surprise for you—the FERS Special Retirement Supplement. This benefit is designed to bridge the gap between your retirement and when your Social Security kicks in. The supplement is calculated based on your years of service and can provide a nice cushion during those early retirement years.

Here’s how it works: the supplement is designed to mimic what you would receive from Social Security if you were eligible at the time you retire. It’s available to those who retire under FERS with at least 30 years of service at their Minimum Retirement Age (MRA) or with 20 years of service at age 60. So if you’re planning to retire early, this little-known benefit can help you keep your income steady until your full Social Security kicks in.

Federal Long-Term Care Insurance Program (FLTCIP): Future-Proofing Your Retirement

One of the most overlooked federal benefits is the Federal Long-Term Care Insurance Program (FLTCIP). Many retirees don’t think about long-term care until they’re in a situation where they need it—and by then, it’s too late to plan. The good news is, as a federal employee, you have access to long-term care insurance that can cover things like assisted living, home care, and nursing home expenses.

Long-term care costs can easily drain your retirement savings, especially when you consider that in 2024, the average cost of a private room in a nursing home is over $100,000 a year. The FLTCIP can help offset these costs and ensure that you won’t have to dip into your retirement funds or burden your family financially if you need extended care.

FEHB and Medicare: The Power Combo

When you hit 65, Medicare becomes part of the equation. If you coordinate your FEHB benefits with Medicare Part A and B, you can significantly reduce out-of-pocket healthcare costs. As of 2024, federal retirees are expected to enroll in Medicare Part B to maintain their FEHB coverage under the Postal Service Health Benefits (PSHB) program.

Combining Medicare with FEHB coverage can help you avoid large medical bills, as Medicare becomes the primary payer and FEHB picks up the rest. It’s the kind of coordination that private sector retirees would love to have, and it’s one more reason your federal employee benefits package is one of the best deals out there.

Boost Your Retirement Income by Maximizing Federal Benefits

Retirement planning as a federal employee isn’t just about knowing your basic pension or savings options. By digging a little deeper into the full range of benefits available to you—whether it’s matching contributions to your TSP, leveraging sick leave, or tapping into long-term care insurance—you could give your retirement income a much-needed boost.

With a solid strategy in place, you’ll be better equipped to enjoy retirement without financial stress. So, take a close look at what you’re entitled to, and make sure you’re not leaving any money on the table!