Financial Awareness for FERS Employees

Financial awareness is more than budgeting—especially for federal employees like you. It’s about understanding how your benefits, taxes, and monthly lifetime income sources come together for your ideal retirement lifestyle. And the earlier you get clear, the more confident your decisions become.

Let’s walk through the key areas every FERS employee should understand—and how a little awareness today can prevent costly mistakes tomorrow.

What Does “Financial Awareness” Actually Mean?

If you’re like most federal employees, you’ve heard terms like “FERS annuity,” “high-3,” or “TSP withdrawals” tossed around without a real explanation. You don’t need to become a financial planner—but you do need to know how these pieces work together.

Financial awareness means knowing:

• How much income you’ll actually receive in retirement
  

• What taxes and insurance premiums will come out of it
  

• What gaps might exist—and how to fix them
  

Think of it like this: if your retirement is a road trip, financial awareness is the map. It tells you where you’re starting, how far you need to go, and where the detours might be.

The Big 5 Areas to Build Financial Awareness

1. Your FERS Annuity

Your pension is the foundation—but it’s rarely enough on its own.

To estimate it accurately, you need to know:

• Your high-3 average salary
  

• Your creditable years of service
  

• The multiplier (1% or 1.1%)

Even small mistakes in service history or retirement type (voluntary vs. MRA+10) can change the outcome by thousands per year, and in some cases even months! 

“We caught a service date error that boosted Mike’s pension by $275/month. That’s real money—for life.”

2. TSP Withdrawals and Tax Strategy

Your TSP is your largest pot of money, but it’s also 100% taxable (unless you are funding the Roth side). That means withdrawal strategy is key.

Awareness tip:

• Are you planning to delay Social Security or draw from TSP first?
  

• Do you know the newest Required Minimum Distribution age?
  

• Do you have a Tax-Free income strategy or is all your monthly income taxable for retirement?

Smart sequencing could lower your lifetime tax bill—and help your savings last even longer.

3. Social Security Timing

Claiming early vs. waiting until 67 or 70 changes your monthly check—and your surviving spouse’s benefit.

Some federal employees don’t realize they’re eligible for both FERS and Social Security. But the best timing? That depends on your full monthly income desires and overall financial picture.

4. Healthcare and FEHB Eligibility

FEHB is a huge retirement perk—but only if you:

• Stayed enrolled for the 5 years before retirement (5 year rule for spouse too)
  

• Retire with the right eligibility (MRA+10 is barely enough to pay for healthcare premium)
  

Premiums can eat up a big chunk of your pension. Financial awareness means running those numbers before you file your application to retire.

5. Long-Term Care and “What-If” Protection

LTC coverage is one of the most overlooked gaps in retirement planning. Without a plan, a single event could drain your TSP in a matter of months.

Awareness doesn’t mean buying the first policy offered—it means understanding:

• How you’ll pay for extended care
  

• What your spouse would need if something happened to you
  

• Whether FLTCIP or alternatives make more sense
  

What Happens If You Skip Financial Awareness?

• You may retire into a surprise tax bill or income shortfall
  

• You might miss out on benefits you already earned
  

• You could delay retirement unnecessarily due to bad estimates
  
  

Bottom line: financial awareness gives you control. You don’t have to be perfect—you just have to be proactive.

Want to Make Smarter Retirement Decisions?

I’ve helped thousands of federal employees like you untangle their benefits and walk into retirement with confidence, clarity and certainty. It starts with one phone call and ends with a plan that fits your life.

📲 Let’s Chat:
Want personalized guidance?
Text me at 813-686-2208 or head over toJustCallMelinda.com. I’ll help you create a tax-smart plan that supports your long-term retirement income goals.