Most federal retirement mistakes aren't bad decisions. They're reasonable decisions made on bad information — and most of them are irrevocable.

The break room economy

I've been doing this since 2008. And in almost twenty years of sitting across from federal and postal employees, the pattern that shows up most often isn't people making bad decisions. It's people making reasonable decisions based on information that was wrong.

Not wrong because anyone lied to them. Wrong because it came from the break room. From a coworker who retired three years ago under different rules. From a well-meaning HR rep answering a narrow question narrowly. From a blog post written for private-sector 401(k) holders that has nothing to do with how federal employee retirement benefits actually work.

Here's the uncomfortable part: most of these mistakes are irrevocable. You make the election, you sign the form, and that's the shape of the rest of your financial life.

So let's clear out seven of the most expensive myths I run into. Some will confirm what you already suspected. At least one is probably going to surprise you.

Myth 1: "HR will tell me everything I need to know."

Your HR office is good at what it does. What it does is compliance. They will make sure your paperwork is correct, your dates are right, and your forms are filed on time. That matters enormously and I'm grateful they exist.

But compliance is not optimization. HR is not going to model what happens if you retire in December versus January. They're not going to run a survivor benefit analysis against your spouse's own retirement income. They're not going to look at your TSP allocation and tell you your tax exposure at 70 looks rough. They're not going to flag that your Medicare Part B enrollment window has consequences that last the rest of your life.

That's not their job. Nobody assigned it to them. But it affects your money, and the absence of that conversation is where most of the damage happens.

Myth 2: "My taxes will be lower in retirement."

This is the single most expensive assumption in federal retirement, and it's the one almost everybody makes without examining it.

You are going to retire with a pension. A FERS annuity — 1% of your high-3 for each year of service, or 1.1% if you go at 62 or later with 20+ years — is fully taxable, arrives every month, and gets a cost-of-living adjustment. Stack Social Security on top of that. Stack required minimum distributions from a traditional TSP on top of that.

For a career federal employee with a solid TSP balance, the retirement tax bracket often looks a lot like the working tax bracket. Sometimes higher, once RMDs kick in.

And there's a second bill most people don't see coming. In 2026, the standard Medicare Part B premium is $202.90 per month. But if your modified adjusted gross income crosses $109,000 filing single or $218,000 filing jointly, IRMAA surcharges start — and total monthly Part B premiums climb as high as $689.90 at the top bracket. It's a cliff system, not a slope. One dollar over a threshold triggers the entire tier for the full year.

Your IRMAA in any given year is based on your tax return from two years earlier. Which means the TSP withdrawal you take at 63 shows up on your Medicare bill at 65.

Myth 3: "I should decline the survivor benefit and buy life insurance instead."

Sometimes that's the right call. Often it isn't, and the reason has nothing to do with the death benefit.

Under FERS, electing a 50% survivor annuity reduces your own annuity by 10%. A 25% survivor annuity costs you 5%. Those are real dollars and it's fair to question them.

But here's what gets missed. Your surviving spouse's ability to keep FEHB coverage after you die depends on a survivor annuity being payable. If your spouse doesn't have federal health coverage in their own right, and you decline the survivor benefit entirely, you have not just declined an income stream — you've ended their access to federal health insurance for the rest of their life.

A life insurance policy does not solve that. It pays a lump sum. It does not provide FEHB.

This is one of those rules that genuinely catches people off guard, and it shouldn't. It should be the first thing anyone says when you ask about the survivor election.

Myth 4: "FEGLI is my life insurance plan for retirement."

FEGLI is excellent coverage during your working years. It becomes something else entirely after 65.

For Basic coverage, if you elect the 75% reduction at retirement, your coverage begins shrinking 2% per month after age 65 until it settles at 25% of its original value — and at that point it's free for life. That's a reasonable deal if you understand you're keeping a quarter of what you had.

Option B works differently. If you elect full reduction, your Option B coverage reduces 2% per month after 65 until it reaches zero. Nothing left. If you elect no reduction to keep the coverage, the premiums keep climbing with age — and in your late seventies and eighties, they climb steeply.

So the real question isn't "should I keep FEGLI." It's "what is this coverage actually for, how long do I need it, and what does it cost per year of protection compared to the alternatives." That's a math problem, and it has a right answer for your specific situation.

Myth 5: "As a postal retiree, Medicare Part B is optional for me."

Postal employees and retirees now live under the Postal Service Health Benefits Program, and the Part B rules are different from FEHB.

Under PSHB, postal annuitants who are newly entitled to Medicare — and their Medicare-eligible covered family members — are generally required to enroll in Medicare Part B to keep health coverage in retirement. If you decline Part B and no exception applies, you are not eligible for PSHB coverage as an annuitant.

There are exceptions, and they matter:

• Postal annuitants who retired on or before January 1, 2025 and are not already enrolled in Part B are not required to enroll
• Postal employees who were age 64 or older on January 1, 2025 are not required to enroll after they retire
• Postal annuitants who, as of January 1, 2025, are not entitled to Medicare Part A are not required to enroll in Part B

If you're a postal employee who doesn't fall into one of those buckets, "I'll skip Part B and save the premium" is not a decision available to you without losing your health plan. Know which side of that line you're on well before you get anywhere near your retirement date.

Myth 6: "My financial advisor handles this."

Let me be direct about this one, because it's the one that costs the most and gets discussed the least.

Most financial advisors are competent professionals who have never seen a FERS annuity computation in their lives. They don't know what a Service Computation Date is. They don't know how sick leave converts. They can't tell you the difference between an MRA+10 and a deferred retirement, and they've never had to explain why a supplement stops at 62.

They will do a fine job with your investment accounts. But your investment accounts might be the smallest piece of your retirement. Your pension is the biggest asset you own, and it doesn't show up on a brokerage statement.

The stakes here are too high to work with someone who's guessing at the federal part.

Myth 7: "I'll figure it out when I'm closer to retiring."

Here's the problem with waiting. The decisions with the biggest dollar impact are the ones that require the most lead time.

Your high-3 is built over three years. Your service credit deposits — military buyback, temporary service — get more expensive with interest the longer you wait. Your traditional-to-Roth balance in the TSP takes years of contributions to shift meaningfully. Your retirement date optimization depends on knowing, well in advance, what each additional month of service is worth.

By the time you're six months out, most of the leverage is gone. You're not planning anymore. You're filling out forms.

The most expensive retirement mistake isn't a bad investment. It's waiting too long to understand what you actually have.

What clarity actually looks like

Confusion about your benefits is not a character flaw. The federal benefits system is genuinely complex, it changes, and no single office is responsible for explaining the whole thing to you. That asymmetry of information is the real problem here — not you.

But it's solvable. The people I work with describe the same moment: they sit down, they see their actual numbers laid out — annuity, supplement, TSP, health coverage, survivor election, taxes — all in one place, for the first time. And the weight lifts. Not because the news is always good. Because they finally know.

You've spent decades serving this country. Your retirement should serve you back. But that only happens if you plan it correctly, and planning it correctly starts with knowing where you actually stand.

Find out in a few minutes. The Federal Retirement Blueprint walks through your situation and shows you which of these decisions are already working for you — and which ones need attention before they become permanent. Get your Federal Retirement Blueprint at quiz.fedsecure.org.

Frequently Asked Questions

Will my taxes really be lower after I retire from federal service?

Often they are not. A FERS annuity is fully taxable, Social Security is largely taxable at federal retiree income levels, and required minimum distributions from a traditional TSP add more taxable income later in retirement. Many career federal employees retire into the same tax bracket they worked in, and some move higher once RMDs begin.

What does the FERS survivor benefit cost?

Electing a 50% survivor annuity reduces your own FERS annuity by 10%. Electing a 25% survivor annuity reduces it by 5%. The reduction is calculated on your base annuity, before deductions for health premiums or taxes.

Can my spouse keep FEHB if I decline the survivor benefit?

Generally no. A surviving spouse who does not have FEHB coverage through their own federal employment or retirement must be receiving a survivor annuity in order to continue FEHB coverage after your death. Declining the survivor benefit ends that eligibility.

What happens to my FEGLI coverage after age 65?

If you elect the 75% reduction for Basic coverage, it reduces 2% per month after age 65 until it reaches 25% of its original value, then stays there premium-free for life. Option B with full reduction elected reduces 2% per month after 65 until it reaches zero. Option B with no reduction continues in full, but premiums increase substantially with age.

Do postal retirees have to enroll in Medicare Part B?

Under the Postal Service Health Benefits Program, postal annuitants newly entitled to Medicare are generally required to enroll in Part B to keep PSHB coverage in retirement. Exceptions apply to those who retired on or before January 1, 2025 without Part B, those who were age 64 or older on January 1, 2025, and those not entitled to Medicare Part A as of that date.

How much is Medicare Part B in 2026?

The standard Medicare Part B premium in 2026 is $202.90 per month. Beneficiaries whose modified adjusted gross income exceeds $109,000 filing single or $218,000 filing jointly pay IRMAA surcharges, with total monthly premiums reaching as high as $689.90 in the top income bracket. IRMAA is based on your tax return from two years prior.