Key Takeaways:
- Federal employees and retirees have experienced significant changes in pay raises, healthcare premiums, and retirement benefits in 2024. Staying informed is essential.
- With COLA increases, rising healthcare costs, and legislative proposals, 2024 brings both opportunities and challenges for your retirement planning.
What Are the Big Changes in Pay for Federal Employees in 2024?
If you’ve been keeping an eye on your paycheck this year, you’ve probably noticed the 5.2% pay raise
- Also Read: Federal Workers, Here’s How to Make Sure Your Family Is Protected with Survivor Benefits
- Also Read: Survivor Benefits for Federal Employees: Here’s What You Need to Know to Keep Your Family Safe
- Also Read: USPS Employees, Here’s How Your Retirement Benefits Will Look Under the New Health Plan Rules
Why? Because the pay raise affects more than just your immediate paycheck—it also has a direct impact on your high-three salary average, which is the foundation of your pension calculation. For anyone planning to retire soon, this bump in salary could mean a more substantial pension over time. Even though inflation seems to have cooled somewhat this year, the 2024 pay raise helps federal employees stay competitive with private sector wages and adjust to ongoing price increases.
Now, if you’re still working and wondering what to do with that extra income, consider funneling it into your Thrift Savings Plan (TSP). Contributing the maximum amount now can help build up your retirement savings, especially as the TSP contribution limits have also increased for 2024.
What’s the Latest on the 2024 COLA?
One of the most significant changes impacting retirees in 2024 is the cost-of-living adjustment (COLA). This year, federal retirees under the Civil Service Retirement System (CSRS) received a 3.2% COLA, while those under the Federal Employees Retirement System (FERS) got a 2.2% increase. While these increases are smaller than last year’s high 8.7% adjustment, they’re still important in helping retirees keep pace with inflation.
If you’re living on a fixed income, you’re probably already feeling the pinch of rising healthcare and housing costs. While COLA does provide some relief, it’s important to note that it may not fully cover the increase in your day-to-day expenses. This is especially true if you’re managing higher healthcare premiums through the Federal Employees Health Benefits (FEHB) program.
Reviewing your budget and reassessing your spending in light of the smaller COLA this year can help you avoid dipping too much into your savings. It’s also a good time to explore ways to manage expenses in areas like healthcare, which leads us to the next big update for 2024.
How Have FEHB Premiums Changed in 2024?
If you’re enrolled in the Federal Employees Health Benefits (FEHB) program, you’ve probably already noticed that premiums have gone up in 2024 by an average of 7.7%. That’s a significant increase, and it’s essential to factor it into your monthly budget, especially if you’re retired and living on a fixed income.
Healthcare is one of the most substantial expenses for retirees, and rising premiums can quickly eat into your COLA adjustments and other retirement income. If you’re nearing Medicare eligibility, consider how your FEHB plan interacts with Medicare. Many retirees find that enrolling in Medicare Parts A and B, alongside their FEHB coverage, helps to balance out the cost of rising premiums while ensuring comprehensive coverage.
Open season is your chance to review your current health plan and see if it still meets your needs at an affordable cost. With premiums rising, it may make sense to switch to a plan with better coverage for your specific health needs, or even explore Medicare Advantage plans that coordinate with FEHB.
TSP Contribution Limits: 2024 Brings Opportunities to Save More
One bright spot in 2024 for federal employees is the increased Thrift Savings Plan (TSP) contribution limits. For those of you still working, the limit for 2024 has risen to $23,000 for regular contributions, with an additional $7,500 catch-up contribution available for employees aged 50 and older. That means you could save up to $30,500 this year in your TSP account.
Maximizing your TSP contributions is one of the best ways to prepare for a secure retirement, especially if you’re nearing the end of your federal career. The TSP offers various funds, from the safer G Fund to the more aggressive C Fund, giving you the flexibility to tailor your investments based on your risk tolerance and retirement timeline.
If you’re already retired and managing TSP withdrawals, keep an eye on market fluctuations. With the economy still somewhat volatile, adjusting your withdrawals to more stable investments, like the G Fund, could help preserve your savings while providing a steady income.
Legislative Changes: What’s on the Horizon for Federal Benefits?
While 2024 has already brought changes to pay raises, COLA, and healthcare costs, it’s also important to keep an eye on the legislative landscape. Congress is constantly reviewing and proposing new bills that could affect federal employees and retirees. One area to watch is healthcare reform, which could influence the structure of the FEHB program and potentially bring new costs or changes to your coverage.
Another area of legislative interest is the Federal Employees Retirement System (FERS), particularly discussions around potential pension reforms or changes to retirement eligibility. Any shifts in these areas could have significant long-term impacts on your retirement planning, so staying informed is key.
While no major legislation has been passed yet in 2024, keeping an eye on proposals is critical to ensure you can adjust your financial planning if necessary.
Preparing for Government Shutdowns: Could They Impact Your Benefits?
One of the recurring concerns in federal employee news is the potential for government shutdowns. While the threat of a shutdown often looms, it’s something federal employees and retirees need to be prepared for.
If you’re still working, a shutdown could mean temporary furloughs and delayed paychecks. This may be especially concerning if you’re nearing retirement and trying to process paperwork before you leave your job. Retirees generally continue to receive their pension payments during a shutdown, but any paperwork or changes to benefits could be delayed if federal offices aren’t fully operational.
It’s wise to prepare for these situations by staying on top of your paperwork and submitting any necessary retirement documents well ahead of time. If a shutdown seems likely, check in with your human resources or benefits office to ensure that any pending issues with your benefits are handled promptly.
Managing Your Benefits Through the Rest of 2024
As 2024 progresses, it’s clear that staying informed about federal employee news is crucial to navigating the changes that could affect your retirement and benefits. From pay raises and COLA adjustments to rising healthcare premiums and legislative updates, being proactive will help you make the most of your financial situation.
Take time to review your budget, health coverage, and retirement savings strategy to ensure that you’re well-prepared for any changes that may come your way. By staying ahead of the curve, you can ensure that your benefits work for you, helping to maintain a secure and comfortable retirement.
