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

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.

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.

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.

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.

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.

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.

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?"

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.

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.