04 Dec The Most Common Mistakes Federal Retirees Make (and How to Avoid Them in Florida)

The Most Common Mistakes Federal Retirees Make (and How to Avoid Them in Florida)

Federal retirement is one of the most benefit-rich systems in the country — but it’s also one of the most complex. For federal employees retiring in Southwest Florida, including Bonita Springs, Naples, Marco Island, Estero, and Fort Myers, avoiding certain pitfalls can make a meaningful difference in long-term income, taxes, and financial stability.

At Nova Wealth Management, we help FERS and CSRS employees transition into retirement with a coordinated strategy that aligns pensions, TSP withdrawals, Social Security, healthcare decisions, and tax planning.

Below are the most common (and avoidable) mistakes federal retirees encounter — and how to prevent them.

1. Misunderstanding FERS Pension Calculations

Your FERS Basic Benefit is calculated using:

• Your high-3 salary

• Years of creditable service

• Your retirement category (MRA+30, early, deferred, disability)

• Potential additions like unused sick leave

Common Mistake:

Assuming the pension estimate on your statement is exact.

Why It Matters:

Small differences in service credit or retirement date can shift income meaningfully.

Avoid It:

Have a professional review your service computation and model different retirement ages.

→ Related: Federal Retirement Planning

2. Taking TSP Withdrawals Without a Tax Strategy

Many retirees withdraw from the TSP “as needed” instead of using a structured income plan.

Common Mistake:

Withdrawing too much too early or ignoring Required Minimum Distributions (RMDs).

Impact:

Can lead to higher federal taxes, IRMAA surcharges, or faster depletion of savings.

Avoid It:

Create a coordinated withdrawal sequence that includes:

• Pension

• TSP

• Social Security

• Roth accounts

• Taxable assets

→ Learn more: Retirement Income Planning

3. Ignoring Roth Conversion Opportunities in Florida

Because Florida has no state income tax, retirees often benefit from evaluating multi-year Roth conversion strategies that may reduce federal taxes later in retirement.

Common Mistake:

Waiting until RMD age to address tax planning.

Why It Matters:

Once RMDs begin, flexibility decreases and taxable income often rises.

Avoid It:

Evaluate conversions during lower-income years or before Social Security starts.

→ Related: Retirement Tax Planning

4. Overlooking FEHB, FEGLI, and Survivor Benefit Decisions

Federal retirees often face complex decisions around:

• FEHB continuation

• Survivor Benefit Elections (SBP)

• FEGLI premium changes

• FEDVIP coverage

Common Mistake:

Choosing options based on short-term premiums rather than long-term needs.

Impact:

Healthcare and survivor decisions heavily influence retirement expenses and cash flow.

Avoid It:

Review your options annually and coordinate with your spouse’s benefits if applicable.

→ Related: Health Care Retirement Planning

5. Claiming Social Security Without Running the Numbers

Federal retirees under FERS are eligible for Social Security, but timing matters.

Common Mistake:

Claiming benefits at 62 by default.

Why It Matters:

Early claiming reduces lifetime benefits and may not coordinate well with pension and TSP withdrawals.

Avoid It:

Run an integrated Social Security optimization plan that weighs tax impact, life expectancy, and cash-flow needs.

6. Not Coordinating Federal Benefits With Estate Planning

Federal retirees often have multiple accounts and beneficiary-driven assets:

• TSP

• FERS pension survivor benefits

• FEGLI

• IRAs

• Roth accounts

• Real estate (Florida homestead rules)

Common Mistake:

Assuming all benefits transfer automatically or omitting updates after major life changes.

Impact:

Inconsistency can cause delays, taxation surprises, or assets passing outside intended wishes.

Avoid It:

Integrate beneficiary designations with your estate plan and review annually.

→ Related: Legacy & Estate Planning

7. Not Reviewing the Plan Annually

Life changes. Markets change. Tax laws change.

Common Mistake:

Never revisiting the original retirement plan.

Impact:

Even strong plans drift over time and lose alignment with goals.

Avoid It:

Conduct routine reviews to ensure:

• Income is sustainable

• Taxes are optimized

• Investment risk is appropriate

• RMDs and healthcare needs are addressed

TL;DR — The Most Common Federal Retirement Mistakes

• Miscalculating your FERS pension

• Taking unplanned TSP withdrawals

• Missing Roth conversion opportunities

• Making suboptimal FEHB/FEGLI/survivor elections

• Claiming Social Security too early

• Not coordinating federal benefits with your estate plan

• Failing to review the plan regularly

Avoiding these mistakes can help federal retirees build a more confident and organized retirement in Florida.

Next Steps

If you’re a federal employee or retiree in Bonita Springs, Naples, Marco Island, Estero, or Fort Myers, we can help you build a retirement strategy that integrates pensions, TSP, taxes, and long-term planning.

Contact Us
Call 1-888-677-9910 with your questions.

Disclosure: This content is for informational purposes only and should not be interpreted as individualized tax, legal, or investment advice.