The Office of Personnel Management is still dealing with a spike in retirement applications, a result of the large number of federal workers who took the Voluntary Early Retirement Authority (VERA) offer and the deferred resignation program (DRP). In February 2026, OPM issued a justification for a new contract aimed at modernizing its HR systems. In that statement, OPM warned of an “expected doubling of the retirement application backlog.” As of May 2026, OPM’s average processing time for federal retirement cases sits at 76 days (50 days for applications filed digitally and 100 days for those submitted on paper).
Regardless of timing, federal employees would do well to sharpen their understanding of the retirement process — and to separate fact from fiction when it comes to common misconceptions.
Misconception: Retirement pay kicks in immediately
Reality: A retiree’s agency doesn’t forward the retirement paperwork to OPM until the actual retirement date. Only then does OPM begin working through the case. With a current backlog in place, it can take OPM as long as 90 days to start.
Retirees should expect their first estimated annuity payment within two to three months. OPM calls this “interim” pay, typically amounting to around 60-80% of the full annuity amount.
Misconception: The Thrift Savings Plan alone will carry you through retirement
Reality: Federal retirees generally draw income from three main sources: their pension, Social Security, and their TSP account.
When mapping out a retirement budget, it’s straightforward to estimate the monthly income from the first two sources. The TSP exists to fill the gap between that combined income and the monthly cost of the lifestyle a retiree expects to live. Because of this, there’s no universal answer to how much a federal employee should have saved in their TSP — the number is different for everyone.
In addition, the TSP offers several withdrawal methods: partial lump sum, full lump sum, installment payments, or an annuity. It’s generally a good idea for any federal employee approaching retirement age to consider rolling some or all of their TSP funds into a private-sector IRA or Roth IRA. As long as the transfer is made directly into an IRA or Roth IRA, there are no taxes, penalties, or fees involved.
Misconception: Federal Employee Health Benefits (FEHB) disappear at retirement or become more costly.
Reality: Under certain conditions, federal employees are able to carry their FEHB coverage into retirement. The primary requirement is enrollment in FEHB for at least five consecutive years immediately before, and coverage in place on, the actual retirement date. It’s worth noting that eligible spouses, dependent children, and children with disabilities may continue coverage without meeting this five-year requirement. Once an employee retires and becomes classified as an annuitant, the government continues to pay roughly 72% of the FEHB premium.
Furthermore, retirees can also sign up for Medicare Parts A and B, which opens the door to nearly full coverage, with Medicare serving as the primary payer and FEHB as secondary. Some retirees choose a lower-cost FEHB plan to help manage expenses.
Misconception: Federal Employee Group Life Insurance (FEGLI) costs the same after retirement
Reality: Basic FEGLI coverage runs between $10-$30 per pay period — quite affordable while employed — but the cost rises sharply in retirement. The extent of the increase depends on the specific plan chosen; FEGLI offers four options: Basic, Option A, Option B, and Option C. Many federal employees aren’t even sure which plan they’re enrolled in or what they’re paying for it. Getting familiar with their plan details can help soon-to-be retirees make the most of their FEGLI benefits once they leave federal service.
Misconception: Survivor benefits are automatic and come at no cost
Reality: Federal employees must actively make decisions about survivor benefits on their retirement application. The pension is the main area where retirees need to weigh their choices alongside the needs of their potential beneficiaries — most commonly a spouse, though there are exceptions. Each survivor benefit option carries a cost, deducted as a monthly percentage from the overall pension amount. The available options and corresponding percentages differ between the Federal Employees Retirement System and the Civil Service Retirement System.
Misconception: A spouse will automatically stay on FEHB into retirement
Reality: This is the most critical caveat surrounding survivor benefits: If a survivor was on the retiree’s FEHB plan, that health coverage will end unless a survivor benefit is in place. Even a minimal survivor benefit is enough to keep the health plan active. For this reason, prospective retirees and their spouses should consult a federal retirement specialist and look at the full picture — including total household assets, the spouse’s income, financial needs and budget, life insurance coverage, and any additional obligations like debt or college tuition for a child.
How To Maximize Your Federal Retirement Benefits
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- Retirement Qualification Guidelines
- FERS/CSRS Pension
- Special Retirement Supplement
- Survivor Benefits
- FEHB (Health Benefits)
- FEGLI (Life Insurance)
- Social Security Maximization
- Interactive 30-Min Q&A Session
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