There are many people who choose not to retire despite turning 65. Millie Parson, a notable FBI employee retired at the age of 88 after working for over 62 years. She lived for another 11 years in retirement till the age of 99. There is also Emil Corwin, who started at the US FDA till the age of 74 and the retired at 96. Corwin passed away shortly before turning 108 years old.
Not everyone is thinking about working for this long, more people are deciding to keep working over the age of 65.
In 2018, there were over 104000 employees at the federal level aged 65 plus, compared to just over 30227 in 1998.
Working longer can help add more retirement savings. The monthly retirement income from various federal employee and Social Security plans also goes up when people work longer.
People wanting to work for a longer time can consider delaying their Social Security withdrawals and taking advantage of their delayed retirement benefits. People born before 1943 can enjoy a Social Security benefits growth rate of 8% a year, provided they delay withdrawals till the age of 65. However, this benefit is no longer applicable once you hit age 70, even if you delay withdrawals or not.
Folks who work over 65 can make tax-free contributions to their health-flexible spending accounts. The contributions limit for 2020 to limited expense or healthcare FSA are to be increased to $2750.
You may want to think about delayed enrollment in Medicare Part B, without having to incur a 10% penalty that is applicable for every twelve months that you could’ve been covered by Part B. In case you are already covered by a group healthcare coverage plan thanks to your employment, or via the healthcare insurance provided to your spouse, you do not have to have these penalties when your current employment is over.
During your employment period, you can raise your FEGL insurance level regardless of what age are at when you go through an eligible life event & during open enrollment periods. Also, your Option B and Basic FEGLI health coverage also increases when your income goes up.
Optional FEGLI coverage premiums are subject to increase as you grow older. Coverage is not affected no matter what age you are at. In case you’re 65 plus at the time of retirement, post-retirement FEGLI reductions commence immediately once the separation is over.
Thrift Savings Plan
If your age is 59½ or more, you can withdraw from your TSP account even though you may still be employed. You must pay tax on your withdrawal’s taxable portion, unless you roll it over or transfer to either an eligible employer savings plan or an IRA.
It is also important that you are aware of various tax-related issues before you retire and understand how your actions regarding Social Security, retirement benefits, lumpsum annual leave payments, and TSP distributions might play out.