FERS Retirement Planning Checklist: A Practical Guide for Federal Employees
Retirement is one of the most important financial transitions you’ll make. For federal employees, it can also be one of the most complex.
The Federal Employees Retirement System (FERS) brings together several moving parts: your pension, Social Security, the Thrift Savings Plan (TSP), and your benefits. Each piece matters on its own, but the real work is understanding how they all fit together and how the timing of each decision can affect the others.
At The Kelly Group, we’ve found that most successful retirements don’t come from last-minute decisions. They come from taking the time to understand the details, ask the right questions, and plan with intention.
This guide is designed to help you do exactly that.
Your FERS retirement checklist: What to review before you retire
Before diving into the details, it helps to step back and look at the full picture.
FERS retirement involves a series of interconnected decisions. Some affect your income, while others impact your benefits, taxes, or long-term flexibility. Looking at them together, rather than one at a time, can help you avoid gaps or missed opportunities.
Use this checklist as a starting point to organize your thinking and identify areas that may need a closer look:
Confirm your eligibility (age and years of service)
Verify your Minimum Retirement Age (MRA)
Review your service history and creditable service
Understand how your pension is calculated
Evaluate your TSP and withdrawal strategy
Confirm eligibility for Federal Employee Health Benefits (FEHB) and Federal Employees’ Group Life Insurance (FEGLI) in retirement
Review survivor benefit decisions
Request estimates and begin paperwork early
Build a plan that brings all of these pieces together
Most people benefit from starting this process one to two years before retirement, even if their retirement date isn’t final.
Understanding how FERS retirement works
FERS retirement planning often feels complex – that’s because it is! In working with federal employees, we’ve seen that the biggest challenges often come from how these decisions overlap, not from any one decision on its own.
You’re not working with a single income source. You’re coordinating a pension, Social Security, and an investment portfolio through your TSP. Each has its own rules, timing considerations, and tax implications.
FERS is built on three primary components:
A pension (your “basic benefit”)
Social Security
The Thrift Savings Plan (TSP)
Each plays a different role. The pension provides a foundation of income. Social Security adds another layer. The TSP often provides flexibility, whether that’s covering gaps, managing taxes, or supporting larger expenses over time.
When these pieces are aligned intentionally, they can create a more stable and flexible retirement plan.
Specialized guidance can make all the difference
Because FERS retirement involves multiple moving parts and agency-specific rules, many federal employees choose to work with an advisor who understands these systems in depth.
The Kelly Group team includes ChFEBC℠-certified advisors who specialize in federal employee benefits and retirement planning. Having that level of familiarity can help bring clarity to decisions that might otherwise feel disconnected or uncertain.
When can you retire under FERS?
Eligibility is the first place to start.
For most federal employees, retirement eligibility is based on a combination of age and years of service:
Age 62 with at least 5 years of service
Age 60 with at least 20 years of service
Minimum Retirement Age (MRA) with at least 30 years of service
Your MRA depends on your birth year and typically falls between ages 55 and 57.
There are also additional pathways, such as retiring at your MRA with at least 10 years of service. In those cases, it’s important to understand how and when benefits begin, as starting early can reduce your pension.
A potential retirement date may look reasonable at first glance, but small differences in timing can have lasting effects. That’s why it’s worth confirming your benefit eligibility carefully rather than estimating.
How your FERS pension is calculated and what affects it
For many federal employees, the pension is the foundation of retirement income. It provides a level of predictability that’s increasingly rare. But while the formula itself is straightforward, the decisions around it are not.
Small changes in timing, salary, or service can have a lasting impact on your benefit. That’s why it’s worth taking the time to understand how your pension is calculated before making any final decisions.
Your pension is based on three core inputs:
Your years of service
Your high-3 average salary, or the highest average basic pay earned during any three consecutive years of federal service
A multiplier (typically 1% or 1.1%)
In general terms:
Most employees receive 1% of their high-3 salary for each year of service
That increases to 1.1% if you retire at age 62 or later with at least 20 years of service
Even though the formula is straightforward, the implications are not always obvious. Timing, salary history, and service details can all influence the outcome.
For many people, this is where taking the time to walk through your specific numbers, rather than relying on a rough assumption, can make a meaningful difference.
A note on creditable service
Your eligibility and pension are both tied to your service record, so accuracy here is especially important.
This may include:
Civilian federal service
Military service (if a deposit has been made)
Certain prior service, depending on the circumstances
One point that often causes confusion:
Unused sick leave can increase your pension calculation
But it doesn’t count toward retirement eligibility
It’s a small distinction, but an important one. Misunderstandings here can lead to retiring earlier than intended or with different benefits than expected.
Planning for your Thrift Savings Plan (TSP)
For many federal employees, the TSP becomes one of the most flexible parts of retirement.
After leaving federal service, you generally have the ability to:
Keep your funds in the TSP
Adjust your investments
Choose from several withdrawal options
The key question is not simply what your options are, but how those options fit into your broader plan.
For example:
How will withdrawals interact with your pension and Social Security?
How might they affect your taxes over time?
How should your investment approach evolve in retirement?
These decisions tend to be more effective when they’re made in coordination with your overall income strategy, rather than in isolation.
How health and insurance benefits carry into retirement
For many federal employees, maintaining health and insurance benefits in retirement is just as important as income planning. These decisions aren’t just about whether you have coverage now but whether you’re eligible to keep that coverage once you retire.
FEHB (Health insurance)
To continue your health coverage into retirement, you generally must:
Be enrolled for the five years immediately before retirement, or
Be covered since your first opportunity to enroll
For a spouse to maintain FEHB if you pass away, they must have FEHB coverage and you must elect a survivorship option for your pension
If you meet these requirements, you can typically carry your FEHB coverage into retirement with the same provider options available to active employees.
Because health care costs tend to increase over time, this is often one of the most valuable benefits federal employees have. Losing eligibility, even unintentionally, can significantly change your long-term planning.
FEGLI (Life insurance)
Life insurance decisions tend to require a bit more review.
To carry FEGLI coverage into retirement, you must meet eligibility requirements tied to your enrollment and retirement status. But beyond eligibility, it’s also important to understand how that coverage changes over time.
For example:
Some FEGLI coverage options reduce in value as you age
Premiums can increase depending on the coverage you elect
The role of life insurance may shift as your financial situation evolves
Because of this, many federal employees take this opportunity to reassess whether their current coverage still aligns with their needs.
The FERS Annuity Supplement
For certain retirees, the FERS annuity supplement provides additional income before age 62.
It is designed to approximate the Social Security benefit earned during federal service and applies in specific retirement scenarios.
A few important points:
It is temporary and typically ends at age 62
It may be reduced if earnings exceed certain limits
Not all retirees qualify
Understanding whether it applies and how it fits into your overall income can help avoid surprises later.
Common FERS retirement mistakes and how to avoid them
Most retirement challenges don’t come from a single major mistake. They tend to come from smaller assumptions that go untested over time.
Some of the more common ones include:
Assuming eligibility without fully verifying service history
Choosing a retirement date before understanding the pension impact
Overlooking how different benefits interact with one another
Treating the TSP as a separate decision rather than part of a plan
Waiting too long to review health and insurance eligibility
These are all manageable issues. In most cases, they can be addressed simply by starting earlier and working through the details step by step.
A practical timeline for planning your FERS retirement
Retirement planning tends to go more smoothly when it’s spread out over time.
12–24 months before retirement
Confirm eligibility and service history
Review pension estimates
Begin thinking through TSP and benefits decisions
6–12 months before retirement
Refine your retirement date
Review elections and options
Begin gathering paperwork
Final 2–3 months
Submit retirement application
Confirm all decisions
Prepare for the transition in income
This kind of timeline creates space for thoughtful decisions, rather than rushed ones.
Bringing your FERS retirement plan together
FERS retirement is not just about meeting eligibility requirements. It’s about understanding how each piece of your benefits works and how those pieces come together over time.
When that coordination is done well, it can help you:
Make more confident decisions
Reduce the risk of avoidable mistakes
Transition into retirement with greater clarity around your income and options
Our team includes ChFEBC℠-certified advisors who specialize in federal employee benefits, and we approach this process by helping you step back and see the full picture, not just individual decisions in isolation.
If you are within a few years of retirement, now is a great time to begin organizing your plan. Even scheduling a review of your benefits, timelines, and options can provide clarity and direction.
Starting early gives you the flexibility to make decisions on your timeline, not under pressure.
The Kelly Group is a trade name of Kelly Financial Group, LLC, a registered investment adviser with the Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply any level of skill or training. For more information about our services, please see our Brochure and Relationship Summary, available on the SEC’s website at www.adviserinfo.sec.gov, and on The Kelly Group’s website at www.kellyria.com.