Key Takeaways
- FERS pension has specific rules—understand your options
- TSP has excellent low fees—consider leaving it
- Security clearance is valuable—use it before it expires
Government & Federal Worker Playbook
"What about my pension?" — It's more complicated than private sector retirement.
Federal Employee Specifics
If you were a federal employee, you have unique considerations:
| System | What It Is |
|---|---|
| FERS | Federal Employees Retirement System (pension) |
| TSP | Thrift Savings Plan (like 401k) |
| FEHB | Federal Employee Health Benefits |
| FEGLI | Federal Employee Group Life Insurance |
FERS Pension
| Factor | Details |
|---|---|
| Vesting | 5 years minimum service |
| Deferred annuity | Can start at retirement age |
| Immediate annuity | Available at MRA (minimum retirement age) |
| Calculation | 1% × high-3 average × years of service |
Your options depend on age and years of service:
| Age/Service | Options |
|---|---|
| Under 5 years | Refund of contributions only |
| 5+ years, under MRA | Deferred annuity at 62 |
| At MRA with 30 years | Immediate unreduced |
| At MRA with 10 years | Immediate reduced |
TSP (Thrift Savings Plan)
TSP has the lowest fees of any retirement plan. Consider your options carefully:
| Option | Pros | Cons |
|---|---|---|
| Leave in TSP | Lowest fees, G Fund safety | Limited investment options |
| Roll to IRA | More investment choices | Higher fees typically |
| Roll to new 401(k) | Consolidation | Depends on new plan |
| Withdraw | Immediate access | Taxes + possible penalty |
Important: If you have a TSP loan, you must repay within 90 days of separation or it becomes a taxable distribution.
Security Clearance
If you have a security clearance:
| Status | Duration |
|---|---|
| Secret | Valid for 10 years |
| Top Secret | Valid for 5 years |
| SCI | Varies |
| After separation | Remains "current" for 2 years |
Your clearance is extremely valuable. After separation, your clearance remains "current" for 2 years (assuming no security violations and investigation hasn't expired). Focus your job search on positions that require clearance before it lapses.
2025 Note: Thousands of cleared professionals face uncertainty due to DOGE-related government cuts. Defense contractors and cybersecurity firms actively hiring cleared workers.
| Employer Type | Clearance Value |
|---|---|
| Defense contractors | High |
| Intelligence community | High |
| Cybersecurity firms | High |
| Consulting (government practice) | High |
FEHB Continuation
| Option | Details |
|---|---|
| Temporary Continuation of Coverage (TCC) | Up to 18 months |
| Cost | Full premium + 2% admin fee |
| Alternative | ACA Marketplace (compare costs) |
Similar to COBRA but for federal health benefits.
What is a key advantage of keeping retirement funds in the TSP (Thrift Savings Plan)?