In the first quarter of 2025, layoffs and job cuts have been announced across various sectors:
- Federal layoffs impacted several departments, including the IRS, Health and Human Services, and the Department of Education. These cuts are creating a ripple effect as agencies must rethink contracts and funding for private companies, nonprofits, and local governments.
- In the private sector, companies including Boeing, Amazon, L3Harris, and UPS have announced layoffs that could impact a significant number of employees during 2025.
Federal employees facing layoffs or considering early retirement likely find themselves evaluating financial strategies and career options. That’s why the Wealth Management team at PBMares wrote this article, which lists a few critical considerations.
Given how important these decisions are for your future, it’s important to consult with a fiduciary financial advisor and/or a career counselor. These professionals can help provide clarity and insights about retirement planning, investment strategies, and potential career transitions.
CSRS vs. FERS: Considering the Impact on Retirement Benefits
To make the right decision about your future, it’s critical to understand how certain decisions may affect future retirement benefits — especially for those in the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS).
CSRS employees who leave before meeting age and service requirements may:
- Be eligible for deferred retirement benefits, provided you have at least five years of civilian service
- Incur a reduction in their annuity
FERS employees who leave before qualifying for immediate retirement benefits may:
- Be eligible for deferred retirement, contingent upon having completed at least five years of creditable civilian service
- Incur a reduction in pension benefits
Your pension benefits are based on several factors, including years of service and payscale level.
As you make this decision, it helps to become familiar with the expected balance of your federal pension benefits and plan for how those benefits will support your retirement goals.
Impact on My Thrift Savings Plan (TSP)
Workforce reductions can also impact your thrift savings plan (TSP). Although you can leave any funds in the TSP untouched, upon separation:
- Your contributions to the TSP will stop
- For FERS employees, agency contributions — including the automatic 1% and any matching contributions — will also stop
Review your TSP balance and consider how this may impact your retirement savings strategy.
Is Early Retirement the Right Choice?
If you’re thinking about early retirement, begin by asking yourself these questions:
- Are the assets you’ve accumulated so far will support the lifestyle you expect to have in retirement?
- What will be the impact of taking social security benefits or retirement distributions before full retirement age?
By examining these questions and developing a long-range financial plan, you can help make a decision that is right for you.
Learn More
At PBMares, our strongest motivation is to help our clients create the future they envision for themselves and their families.
As an independent registered investment advisory firm, our fiduciary standard of care requires us to make decisions in your best interest. Our evidence-based approach is informed by academic research. This enables us to properly diversify your assets, while keeping expenses and tax considerations in mind to ultimately support your objectives for the future.
Let us become part of your financial team. Our driving philosophy is to do what is best for you, your family, and your future.
About the Author:
Daniel H. Yoo, CFP®, CEPA®, CM&AA®
Senior Wealth Advisor
As a Senior Wealth Advisor and Certified Financial Planner™, Daniel Yoo simplifies the financial lives of entrepreneurs, executives, and their families. He is also a Certified Exit Planning Advisor® to help business owners understand and optimize the value of an exit strategy.
