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Financial Advisors for Federal Government Employees


Federal employees have unique needs when it comes to financial and retirement planning. Because of these unique concerns, financial advisors who work with them should have a special understanding of federal government employees’ benefits. Such advisors can help U.S. government employees maximize pension income and choose payout strategies for surviving spouses, among other challenges. If you’re a government employee, consider working with a financial advisor as you develop the strategies best suited to your goals and timetable.

Why Federal Workers Need Specialized Financial Advice

Federal workers have some of the best benefits among workers in the United States, but their benefits can be complex. As a result, they often need specialized financial advice both when working and when retired. This should come from someone who is experienced in dealing with similar complex situations. Here are some of the important and complex situations that you may need advice for:

  • When Working: Federal employees should be informed even while working so they can make good choices regarding TSP, their Basic Benefit Plan, Federal Employees’ Insurance, the Federal Employees Health Benefits Program (FEHB), etc. With so many choices, it may not be easy for federal employees to determine their best choice of benefits without assistance.
  • When Retired: When federal employees retire, they can take full advantage of the Federal Employees Retirement System (FERS), the federal employee retirement system. However, federal employees often need help understanding FERS. Unlike the Civil Service Retirement System, which has just one component, FERS has three components: a Basic Benefit Plan, a Thrift Savings Plan (TSP) and Social Security.
  • Basic Benefit Plans: The Basic Benefit Plan is a pension plan for federal employees. It is calculated using the employee’s “high-3 average pay,” which is the average of their three highest-earning years. Generally, the formula is 1% of the average times their number of years of service.
  • TSP Plans: The Thrift Savings Plan is a tax-deferred saving and investment plan similar to a 401(k). These plans reduce taxable income for federal employees and even provide matching contributions.
  • Social Security: Unlike CSRS, FERS participants pay into Social Security and receive Social Security benefits. These benefits are much like what private-sector employees receive, including monthly benefits after 62 and for disabled people, plus survivorship and death benefits.

Who Can Offer Financial Advice to Federal Workers

Federal workers have plenty of options when seeking financial advice, including choices in both the public and private sectors. It’s important to find a financial advisor that can deal with the situation that you’re in now, but you’ll also want to make sure that they can meet your financial goals for the future. Here are some options you have when seeking competent help.

In the Private Sector

Within the private sector, federal employees have many options when seeking financial advice. Here are a few options to consider:

  • Chartered Federal Employee Benefits Consultants: ChFEBCs are trained in federal benefits and are available in all 50 states plus D.C., Puerto Rico and the U.S. Virgin Islands.
  • Certified Financial Planners: CFPs are certified by the CFP Board and usually in certain areas of financial planning. Some CFPs specialize in assistance for federal employees.
  • Other private advisors: There are other private organizations that can help with federal employee benefits, such as Federal Employee Tax Planners and Federal Employee Benefits Advocates.

In the Federal Government Sector

There are also several options in the government sector to consider:

  • Employee Assistance Program: EAP is a private firm under contract to the government that can help federal employees achieve their financial goals.
  • Office of Personnel Management: OPM is a government agency that offers many services for employees, including information on FERS, CSRS and retirement FAQs.
  • Robo-resources: Sometimes it helps to just run a quick calculation. The government sector offers resources to help, such as GuidedPlanner, the Federal Ballpark E$timate and a FERS eligibility checker.

Maximizing Pension Income for Federal Employees

financial advisor for federal government employees

Retirement planning can be complex for anyone, but it can be even more complicated for federal employees because they have special types of benefits not available to private-sector employees or even state employees. Federal employees who worked for the government before 1983 may be covered by the CSRS. However, Congress created the FERS in 1987, which fully replaced CSRS for federal employees on Jan. 1, 1987.

There are a few key differences between FERS and CSRS. One of the biggest is that CSRS is just a pension plan, whereas FERS has three parts (discussed below). Other differences include Social Security – CSRS participants don’t pay into the system and thus don’t receive benefits, while FERS participants do. Also, CSRS participants receive cost of living adjustments (COLA) the entire time they participate, while COLA doesn’t start for FERS participants until the earliest retirement age.

FERS Payout Strategies for Surviving Spouses

FERS provides a survivorship benefit that varies depending on the circumstances. For example, suppose a federal employee dies while still working. If that person had at least 18 months of service, a surviving spouse will receive a lump sum payment plus the higher of ½ of the annual pay rate or ½ of their high-three average. In other words, surviving spouses receive 50% of the federal employee’s pay plus a lump sum.

While this is the general rule for what surviving spouses receive, there are several stipulations; for example, the surviving spouse and the federal employee must have been married at least nine months or have a child together. If the death resulted from an accident, that also makes the surviving spouse eligible.

Financial advisers can help spouses navigate all the criteria and stipulations for receiving benefits. Another thing to think about is that survivorship benefits are considered taxable income. So, again, for tax purposes, surviving spouses will need a strategy that considers their own benefits, such as a pension or Social Security.

Bottom Line

financial advisor for federal government employees

Federal employees have one of the most generous benefits packages of any group of employees in the United States. However, FERS, the retirement system for federal employees, is more complex than the system it replaced, known as CSRS. This means planning for retirement is a little more complicated for federal employees. Financial advisors experienced with federal employees can help them put a plan together that optimizes retirement income, taking things like their income needs and taxes into consideration.

Tips for Retirement Planning

  • A financial advisor can help you achieve your financial planning goals. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • You should also have some idea of how much money you will have in retirement. However, it can be tough to figure out where you stand with your retirement savings. SmartAsset’s retirement calculator can help you estimate what your retirement income will look like.

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