FERS & TSP Retirement Planning for Federal Employees

Why I Added Federal Employees to My Practice

I have been working for more than 35 years with public employees in Massachusetts—such as teachers, the police, state workers, and school nurses—and I am familiar with their pensions, their 403(b) plans, and the timing of their Social Security benefits. That is the area of work which I know best.

The same kind of question kept coming from federal employees, though the letters varied. They asked about FERS rather than a state pension, about TSP rather than a 403(b), and about a retiree annuity supplement which no one had explained to them. The problems were well known even though the rules weren't. Because I had spent many decades working on pension arrangements and on Social Security claim strategies for public employees, I knew that federal retirement is based on the same two pillars, just under different names.

Reading the Guides and Getting Certified

I sat down with the material as I would expect a client to do. I read both Dan Jamison's The 2026 FERS Guide and The 2026 FERS Guide: Special Category Employees in full. On my own, I completed the coursework required for the Federal Retirement Consultant designation and obtained the FRC℠. I did this not because a client requested it, but because I didn't want to provide a federal employee with a less thorough retirement analysis than I give to a teacher.

Your TSP is the federal version of the 403(b) I manage for MTRS teachers — same role in the plan, same five-index-fund limitation underneath it.

Your TSP Is Built on Five Passive Index Funds

• C Fund — S&P 500 — BlackRock and State Street
• S Fund — Small and mid cap — BlackRock
• I Fund — International — BlackRock
• F Fund — Bonds — BlackRock
• G Fund — Government securities

The L Funds Roll Into the G Fund Over Time

The L Funds are built from these same five funds in different mixes based on your target retirement date. As each L Fund approaches its target date, it matures and merges into the L Income Fund, which is heavily invested in the G Fund — currently 72% G, 6% F, 11% C, 3% S, and 8% I. That shift toward G Fund happens automatically — it is not something you can adjust fund by fund.

The G Fund is a stable value account that earns a short to medium term Treasury rate with no price risk. Useful for near-term income needs. Not a growth vehicle — and the one thing TSP has that an IRA cannot replicate.

You spent your career with the Federal Government; you don't have to spend your retirement years with them: discuss a rollover today.

Why Roll Out of the TSP

Teachers transfer their 403(b) into an IRA since in many cases the 403(b) plan provides high-cost options. With the TSP, there is no such problem — it offers low-cost index funds and L Funds built from those same index funds. If you think the G Fund is too conservative, or that index funds aren't the best vehicle for providing retirement income, it is because those index constituents are generally growth companies, not dividend-paying ones.

See: What is a reasonable rate of return after retirement? →

Your FERS Retirement Plan

Your pension is calculated on a simple formula — 1% of your high-3 average salary multiplied by your years of service. Retire at 62 or older with 20 or more years and that multiplier becomes 1.1%.

At retirement you make a permanent survivor benefit election:

FEHB wrinkle — if you waive the survivor benefit your spouse loses Federal Employee Health Benefits coverage after your death. For a spouse not yet eligible for Medicare that can mean thousands per year in replacement coverage.

Military Service Buyback

• Cost is 3% of military base pay for FERS
• Interest-free if paid within roughly 3 years of your federal hire date
• After that interest accrues at 4.25% annually
• Must be completed before retirement — can’t do it after

Social Security and Your Retirement Income

The FERS supplement bridges income until 62 — at that point it stops and the real decision begins.

• Waiting to 70 locks in 124% of your full retirement age benefit
• When your spouse claims affects your household income picture significantly
• The survivor benefit election on your FERS pension interacts with Social Security survivor benefits

We game out your best strategies — waiting to 70 or full retirement age, spousal benefits, survivor coordination.

Retirement Income Planner →

IRMAA — Minimizing Taxes on Your Pension and TSP Withdrawals

Your FERS pension, TSP withdrawals, and Social Security combined may push your modified adjusted gross income over the IRMAA thresholds — triggering Medicare surcharges. We review whether you are on track for surcharges and where appropriate discuss Roth conversion strategies to reduce future taxable distributions.

How We Work Together

If the analysis shows it is in your best interest to leave your money in the TSP — that is what I recommend. Under the DOL Best Interest standard any rollover recommendation requires documented analysis showing it is in your best interest. You get that in writing.