Welles: Financial planning can’t wait

Whether you are just starting your career or heading for the door, it is not too early to think about your financial planning. Ray Kirk, a benefits specialist at the Office of Personnel Management, told an audience of workforce managers that the time to plan for retirement has shifted from “near retirement” to “career-long planning.”

More than 1,400 people attended OPM’s recent Federal Workforce Conference in Baltimore, and most of them crowded into a retirement planning forum.

The U.S. savings rate is the lowest in the industrialized world, according to the Employee Benefits Research Institute, and consumer debt is at an all-time high. With people living longer and not saving enough, the federal government is placing new emphasis on financial literacy and education.

“Today, choices outpace our knowledge, and there is a lot of opportunity to make a wrong choice in your financial life,” said Dan Iannacola, the Treasury Department’s deputy assistant secretary for financial education.

To help people learn more, the department has brought the financial information of 20 federal agencies to one Web site, www.mymoney.gov. Links include a set of calculators for investments, loans and savings (www.sec.gov/investor/tools.shtml).

Another new Web site worth a look is www.annualcreditreport.com. It gives you a free credit report so you can check your ratings.

For federal employees, OPM is developing planning tools that include a Web-based retirement readiness profile and financial calculators that take federal retirement benefits into account. Expect to hear more about financial education this year.

The most common questions from readers of this column concern finances, especially how to find a financial planner, how to locate information about benefits and when to withdraw funds from Thrift Savings Plan accounts. For general information, you can check OPM’s Retirement Services Web site (www.opm.gov/retire), which answers frequently asked questions. The National Association of Active and Retired Federal Employees also has benefits specialists you can consult (www.narfe.org).

An employee of the Navy Department recently wrote, “I am a [Federal Employees Retirement System] employee and hope to retire early with 25 years of service, over the age of 55. Will I have to wait until I am 62 years of age to draw my retirement?”

For answers to specific questions, your agency’s benefits office should be your first resource. In general, according to OPM, FERS retirement provisions allow retirement at your minimum retirement age and 30 years of service. Your minimum retirement age is between 55 and 57 depending on your year of birth. You can also retire at age 60 with 20 years of service.

One provision allows retirement at your minimum retirement age with 10 years of service. However, under this option, your annuity will be reduced by 5 percent for each year you are under age 60. Your benefits office can tell you which rules apply to you.

Welles is a retired federal employee who has worked in the public and private sectors. She lives in Bethesda, Md., and writes about work life topics for Federal Computer Week. She can be reached at judywelles@fcw.com.