Federal Service Early Retirement

Summary

Podcast Summary: Federal Service Early Retirement

Podcast Information:

• Title: Jill on Money with Jill Schlesinger
• Host: Jill Schlesinger, CFP®
• Episode: Federal Service Early Retirement
• Release Date: July 23, 2025

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Introduction

In this episode of Jill on Money, host Jill Schlesinger engages in a detailed conversation with Maggie, a federal employee from Colorado, who has opted for a Deferred Pension Retirement (DPR) after 34 years of service. The discussion delves into the financial intricacies of Maggie's early retirement, exploring her income streams, savings, and future financial planning.

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Maggie’s Background and Retirement Decision

Maggie joins the show to discuss her recent decision to retire early from her federal position. Having served for 34 years, she is set to retire at the end of September and has been on administrative leave since April.

• Jill Schlesinger [02:24]: "What's going on? How can we help you?"
• Maggie [02:27]: "Well, I'm one of those federal employees that took the DPR. So I'm retiring after 34 years at the end of September."

Jill expresses surprise and seeks to understand how Maggie feels about this significant life change.

---

Pension and Retirement Benefits

Maggie details her retirement benefits, highlighting her Pension and Supplementary Income:

• Pension: $3,000 per month (pre-tax)

• Supplement: Approximately $1,900 per month (pre-tax) for five years until she reaches the age of 62.

• Jill Schlesinger [03:14]: "It's $3,000 a month from your pension plus that $1,900, plus your husband's $8,800. That's the basic income."

Maggie’s spouse, who is 74 years old, has already retired under the older Civil Service Retirement System (CSRS), receiving a substantial pension:

• Husband's Pension: $8,800 per month (gross)

Maggie will also be eligible for Social Security benefits, estimated at $3,200 per month when she reaches her full retirement age of 67.

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Household Income and Expenses

The discussion covers the household's financial standing:

• Total Monthly Income:

  • Maggie’s Pension: $3,000
  • Supplement: $1,900
  • Husband’s Pension: $8,800
  • Total: $13,700

• Monthly Expenses: Approximately $4,142

Maggie confirms that their income comfortably exceeds their expenses, ensuring financial stability.

---

Savings and Investments

Maggie shares an impressive portfolio of savings and investments:

• Maggie’s Savings:

  • Thrift Savings Plan (TSP): ~$1,090,000 (mostly traditional, $90,000 Roth)
  • Roth IRA: $285,000
  • Mutual Fund Brokerage Account: $104,000 (America Fund)
  • Additional Savings: $50,000

• Husband’s Savings:

  • TSP: $230,000
  • Additional Savings: $25,000

• Jill Schlesinger [05:37]: "You have a million bucks. That's amazing."

Maggie emphasizes prudent financial management, including maintaining separate accounts while funneling funds into a joint account for household expenses.

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Real Estate and Debt Management

Maggie and her husband own a home valued at approximately $600,000 with no outstanding mortgage or debts, further solidifying their financial security.

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Financial Health Assessment

Jill commends Maggie’s financial position, highlighting the surplus between income and expenses. Maggie's decision to retire early appears well-planned, with substantial savings to support her lifestyle.

• Jill Schlesinger [08:00]: "It seems to me that you're in fantastic shape. What is your question for us?"
• Maggie [08:08]: "That's just what I wanted to know. Even though hindsight."

Jill reassures Maggie that her financial situation is robust, advising her to enjoy her retirement without concern.

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Future Plans and Recommendations

Maggie outlines her plans to travel more, spend quality time with family and friends, and support her 82-year-old mother financially.

• Maggie [10:22]: "I have a sister in California that I go see at least once sometimes, I hope twice a year now."

Jill emphasizes the importance of estate planning, encouraging Maggie to create wills and establish power of attorney to ensure her assets are managed according to her wishes.

• Jill Schlesinger [11:00]: "Please, please, please, please address this... make an appointment, get it done."

Maggie acknowledges the need to improve in this area, adding it to her to-do list.

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Conclusion

The episode concludes with Jill reaffirming Maggie's strong financial position and encouraging her to embrace retirement with confidence. She also extends her support to other federal employees considering early retirement, highlighting the importance of comprehensive financial planning.

• Jill Schlesinger [12:20]: "Look, you are amazing. You're in great shape. You should travel and do and have fun."
• Jill Schlesinger [12:46]: "Enjoy it. Enjoy it. Can you do that?"

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Key Takeaways:

• Early retirement can be financially viable with proper planning and sufficient savings.
• Understanding and managing various income streams, such as pensions and Social Security, are crucial.
• Estate planning is an essential aspect of retirement that should not be overlooked.
• Maintaining a debt-free lifestyle significantly contributes to financial stability during retirement.

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Notable Quotes:

• Jill [02:24]: "What's going on? How can we help you?"
• Maggie [08:08]: "That's just what I wanted to know. Even though hindsight."
• Jill [11:00]: "Please, please, please, please address this... make an appointment, get it done."
• Jill [12:20]: "Look, you are amazing. You're in great shape. You should travel and do and have fun."

This comprehensive discussion provides valuable insights for federal employees contemplating early retirement, emphasizing the importance of financial preparedness and proactive planning.

Transcript

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[Jill Schlesinger]

Times may vary and fees may apply. Welcome to the Jill on Money show. It's Wednesday, July 23rd and we are here helping you make more informed or more considered financial decisions. If there's something going on in your life, if you are thinking about any big decision, sometimes it's about buying a house or selling a house, putting kids through college. Maybe it's a retirement plan. Maybe you're shifting your whole career, you're considering a job. It makes less money. Can you still do that? All of these things are financial. They have financial ramifications. Right? So they're financial questions, but they're really big life questions. And if you're struggling with anything that's going on, just give us a Holler. Go to jillonmoney.com, click the contact us button, write us a note and if you'd like to join us on the air, just check the box and Mark will do everything else. While you are on the website, check out all of the content that lives there, our free weekly newsletter. There's blog, there's resources and of course there is a link to the book the Great Money Reset, which is inspired by all of you. All right, today we are talking to Maggie who joins us from Colorado. Hello, Maggie. How are you?

[Maggie]

I'm good, Jill.

[Jill Schlesinger]

What's going on?

[Maggie]

Thanks for having me.

[Jill Schlesinger]

Of course. What's going on? How can we help you?

[Maggie]

Well, I'm one of those federal employees that took the DPR. So I'm retiring after 34 years at the end of September.

[Jill Schlesinger]

Oh my God. Wait a second. Stop. How does it feel to say that?

[Maggie]

Pretty crazy. I've actually been on admin leave since the end of April, so.

[Jill Schlesinger]

Okay. All right. And what will that mean in terms of your pension?

[Maggie]

So I'm lucky that I reached my full. It's called MRA with the government.

[Jill Schlesinger]

Okay. What does MRA stand for?

[Maggie]

Minimum Retirement Age.

[Jill Schlesinger]

Okay. And so how old are you?

[Maggie]

I'm not quite 57.

[Jill Schlesinger]

Almost 57. And so what will the pension look like when you're done at the end of September without the tax?

[Maggie]

It's 3,000amonth for my pension. And I also get that first supplement for five years?

[Jill Schlesinger]

Yep. Until you turn 62?

[Maggie]

Yes.

[Jill Schlesinger]

How much is that supplement?

[Maggie]

I think it's going to be without tax, around $1,900.

[Jill Schlesinger]

Okay, so that's a pension, the supplement. Anything else that we have to look at here in terms of income from this deal?

[Maggie]

No.

[Jill Schlesinger]

Okay. Are you single? Are you divorced? Are you partnered? Are you married?

[Maggie]

Married.

[Jill Schlesinger]

Okay. And does your spouse also work?

[Maggie]

Right now, my spouse is a bit older than me, and he actually already retired from the federal government.

[Jill Schlesinger]

Oh, how old is he?

[Maggie]

He's quite a bit older than me.

[Jill Schlesinger]

Like, quite a bit. Like 30 years older. Like, just.

[Maggie]

He's 74. Okay, so 17 years.

[Jill Schlesinger]

All right, listen, no judgment here. Don't worry about it. So he's also. So he's already retired, and so he has income. And what's his pension look like?

[Maggie]

Gross is 8,800amonth.

[Jill Schlesinger]

Wow. He must be a headshot.

[Maggie]

He retired under the older CSRS system.

[Jill Schlesinger]

Aha. Oh, that's good. And he also. Does he also get Social Security?

[Maggie]

Nope, he won't. Because of that system. I will.

[Jill Schlesinger]

Yes. What will your Social Security benefit be when you get to. Let's look at your full retirement age, like at 67.

[Maggie]

What would your Social Security be without any reductions?

[Jill Schlesinger]

It said 3200amonth, so that's the income that we're looking at. So for now, for just today, it's $3,000 a month from your pension plus that 1,900, plus your husband's 8,800. That's the basic income. Is there any other money coming into the household, actual streams of income?

[Maggie]

Nope.

[Jill Schlesinger]

Okay. And how much do you guys spend?

[Maggie]

So we only spend about 41,4200amonth.

[Jill Schlesinger]

What happens if your husband passes away? Do you get some benefit of his, or does that go away? Yes. What's yours?

[Maggie]

Part of his deductions from his pension are a spousal benefit.

[Jill Schlesinger]

And how much would you. Would you get? The same 8800 or something different?

[Maggie]

No, no. I would probably get. I'm assuming this is after taxes, too. I could get 3,300, 3,400amonth, though.

[Jill Schlesinger]

With all this income, are you thinking of going back to work after you're done in September?

[Maggie]

Nope.

[Jill Schlesinger]

Nope. Okay. That's good. I don't blame you, frankly. What is the savings that you guys have cobbled together?

[Maggie]

So I have tsp.

[Jill Schlesinger]

Okay.

[Maggie]

And I have about a million ninety thousand.

[Jill Schlesinger]

Wow.

[Maggie]

Yeah.

[Jill Schlesinger]

Incredible. And that's not been taxed yet, right?

[Maggie]

Most of it, unfortunately, or fortunately, is in the traditional. Only about 90k of that will be Roth, because it started pretty late for me.

[Jill Schlesinger]

Okay. But still, it's a million bucks. That's amazing. All right. What else you got?

[Maggie]

I got a Roth IRA.

[Jill Schlesinger]

Yeah.

[Maggie]

And it's got 285,000 right now.

[Jill Schlesinger]

Okay. What else?

[Maggie]

I have one mutual fund. It's about 104,000 right now.

[Jill Schlesinger]

Just one fund with all that money in it?

[Maggie]

Yeah. I've had it for a really long time. I don't know if you want me to tell you who it is.

[Jill Schlesinger]

Yeah, why not?

[Maggie]

It's the investment company, America America Fund.

[Jill Schlesinger]

Oh, American funds are good. That's good. Okay. That's great. And that's just in a brokerage account, Right. So no tax implication of that, except capital gains.

[Maggie]

Yeah.

[Jill Schlesinger]

Okay. Is that it for your assets?

[Maggie]

I have some savings.

[Jill Schlesinger]

What you got?

[Maggie]

I have 50,000.

[Jill Schlesinger]

Good. Now, do you and your husband keep your money separate? Because you. You're. You're breaking it out. Like I have versus he has. Is that. Is that on purpose?

[Maggie]

Yeah, we've always. I've had an account. He has an account, but then we funnel things into a joint account for them.

[Jill Schlesinger]

That's cool. Whatever works for you, dude. You know? Yeah. You guys have kids? No. Okay.

[Maggie]

And also, my husband still has some money in the TSP.

[Jill Schlesinger]

Oh, what does he have?

[Maggie]

He has about 230,000, but he has.

[Jill Schlesinger]

To take that out for minimum required. Minimum. Okay.

[Maggie]

Yeah.

[Jill Schlesinger]

What else do you do?

[Maggie]

And that's all traditional? Yeah, he has some savings. About 25,000.

[Jill Schlesinger]

All right. That's great. How about a house? You guys have a house?

[Maggie]

Yes.

[Jill Schlesinger]

How much is it worth?

[Maggie]

About 600.

[Jill Schlesinger]

Any mortgage? No. No. No debt. You're not debt people?

[Maggie]

No, no, we got no debt, no car loans.

[Jill Schlesinger]

All right, so let me ask you a question. It seems to me that you're in fantastic shape. What is your question for us?

[Maggie]

That's just what I wanted to know. Even though hindsight.

[Jill Schlesinger]

Okay. Here's the thing. It's so. I feel like so many people who are in the government have been contacting us. Like, do.

[Maggie]

Did I screw up?

[Jill Schlesinger]

Because it's like you get scared. But, I mean, obviously you guys don't spend a ton of money and you have a bunch of assets. I mean, there's nothing bad that's going to happen here. It's really. It's a good story. And, you know, frankly, even without all of this money that you have saved, you guys have the income. I mean, your husband must be. I mean, together, just not your. I shouldn't say that. But like, your husband at 8,800amonth, it can't be that you're spending all that money. So what happens to that money over time? Is it building up into. Are you spending it someplace that I'm not accounting for? Because you have a lot of money coming in. So where is it all going?

[Maggie]

I mean, some of that is before he gets stuff taken out because he pays for high health insurance, Medicare, B.

[Jill Schlesinger]

Yeah, yeah, yeah, yeah.

[Maggie]

And then my spousal benefits. So he's netting 5,500amonth.

[Jill Schlesinger]

But even 5,500 covers the 4,100. Right. Or 4,200.

[Maggie]

Yeah. I'm guessing it's going into savings. We did recently have a large home project. We did. So he did have to pull.

[Jill Schlesinger]

All right, so what is your. I mean, so you're in great shape. There's no problem here. Absolutely no problem. Frankly, thank goodness you have that spousal benefit also, because even if it were gross, Even if it's 3300, let's just pretend it was a gross amount, that if something happened to him, you would get 3,300amonth. You'd add it to your $3,000 a month. You also have your supplement to age 62. And put that all together. Even if you take tax out, you're meeting your spending needs. You're in great shape. So there's no reason to do anything different than what you're doing now. What are you going to do with all of your free time? You're almost 57. You're going to live for, I don't know, let's say, 35, 40 years. What's on the bucket list? What's going on? What's going to happen?

[Maggie]

I mean, I would like to travel a little more. We're not big travelers.

[Jill Schlesinger]

Okay.

[Maggie]

I still have.

[Jill Schlesinger]

Feel free to.

[Maggie]

Yeah. I have a sister in California that I go see at least once sometimes, I hope twice a year now. Go three times and just spend time, more time with family and friends. My mom's still here.

[Jill Schlesinger]

Oh, how old?

[Maggie]

Just across Denver. She's 82.

[Jill Schlesinger]

Is she okay financially? You gonna have to help her or not?

[Maggie]

No, no. She's. She's been very good and she taught me a lot. So she's in great shape.

[Jill Schlesinger]

Let me tell you something. I want you to tell your mother she did a fantastic job. You've done a great job. You and your husband have done a great job. There is nothing here that is scary, worrisome, anything like that. Do you guys have your estate documents? You have a will and a power of attorney and all that fun stuff?

[Maggie]

That is one area that we definitely need to improve.

[Jill Schlesinger]

Okay, so now I'm going to. Just.

[Maggie]

So that would be on my bucket list.

[Jill Schlesinger]

All right, that's not a bucket list thing. That's a to do. So here's the to do. Please, please, please, please address this, maybe even perhaps make it a priority that, you know, before I start collecting all this pension money and anything else happens, make an appointment, get it done. There's nothing fancy that has to happen. You know, it's a will. So I leave you everything, honey, you leave me everything. And you know, if something were to happen to both of you, where does all this money go? That's really the issue. And maybe for you it's like it goes to your sister. Maybe for him it goes to someone else, but like, put it down on paper, you know?

[Maggie]

Okay.

[Mark]

I'm just curious. What was the original plan before this early retirement option, you know, fell in your lap? What were you thinking?

[Maggie]

I probably would have kept working for the heck of it year. Yeah, I was really lucky. I've been working from home. My job was pretty. Well, they're still paying me. It's pretty high paying.

[Jill Schlesinger]

How much do you make?

[Maggie]

Right Now I gross 118 a year.

[Jill Schlesinger]

That's great. That's awesome. I mean, look, you are amazing. You're in great shape. You should travel and do and have fun. I have no doubt that you are in good shape and you don't have to stress about anything. The decision you made was a good decision. And that's it. That's it. Like, enjoy it. Enjoy it. Can you do that?

[Maggie]

Yep.

[Jill Schlesinger]

All right, good. I feel very much, Mark, like, that we are going to find out from Maggie that she's doing something completely different. Like maybe even different than she ever thought. In this next phase, just my two cents. People who work a lot and 34 years in one place, pretty amazing. So if you are looking at some sort of offer that is made to you. By the way, this is not just about people in the government. There are people who are being offered buyouts all the time. I work with some of them and some of them don't have the ability to retire at age 56 because they're worried about health insurance. And a lot of these places, when they buy you out, you don't get health insurance. So if something's going on for you, big changes are afoot or offers have been made to you, or you're thinking about doing something different, get in touch with us go to jillonmoney.com click the contact us button, write us your note, and if you'd like to join us live, check the box. Mark will do everything else. You can subscribe to us on the Odyssey app. You can also subscribe to our sister broadcast called Money Watch. Or you can subscribe to us Wherever you find your favorite podcast, try to lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

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[Jill Schlesinger]

Hey.

[Brian]

There cats and kittens. It's Brian from the commercial break, the mediocre comedy podcast where my best friend Chrissy and I attempt to make sense of the world. We talk about the absurd, the ridiculous, and the stuff no one asked for, like Internet weirdos, pickup artists, and why everyone is obsessed with crystals and colonics. It's all gotta stop. The show is free, it's frequent and it's probably not for everyone. You can go to tcbpodcast.com, [e-mail] thecommercial break or check out the show wherever you listen to podcasts. We'll see you on the next commercial break. And best to you.