Somebody in your break room has told you something about federal employee retirement that sounded very confident. "Oh, you don't need Medicare, you have FEHB." "Your pension is just 1% a year." "The COLA is the same as Social Security."

Maybe. Maybe not. Here's the thing: the person who said it usually heard it from somebody else who heard it from somebody else, and the rules changed somewhere along the way. I've been in this industry since 2008, and I have watched smart, hardworking people make expensive decisions based on break-room math.

Confusion about your benefits is not a character flaw. The system was built to be complex. So let's clear up seven myths, one at a time, with real numbers.

Myth 1: "My FERS Pension Is Always 1% Times My Years of Service"

Close, but not always. The basic FERS pension calculation is 1% times your high-3 average salary times your years of service. But if you retire at age 62 or older with at least 20 years of service, the multiplier goes up to 1.1%.

On a high-3 of $85,000 and 30 years of service, that's $25,500 a year at 1%, or $28,050 at 1.1%. That's an extra $2,550 every year for the rest of your life, and it comes from nothing more than the age on your retirement paperwork. This is not a small number.

Myth 2: "I Automatically Get the FERS Supplement"

Nope. The FERS Supplement is a bridge payment for people who retire early with an immediate, unreduced annuity, and it ends at 62. Take the reduced MRA+10 annuity, and you don't get it. Go back to work after retiring early, and the earnings test can shrink it. The limit is $24,480 in 2026 and $25,560 in 2027, and for every $2 above it, you lose $1 of Supplement.

If you're planning an early exit, this is worth getting right before you set a date.

Myth 3: "My COLA Matches Social Security"

This is the one that makes people mad, and honestly, it should. For 2027, Social Security and CSRS get a 3.6% COLA. FERS retirees get 2.6%. That's the "diet COLA": when inflation is above 3%, FERS is one point lower.

If your plan assumes your pension rises with full inflation every year, it may be overstating your future income. Build your plan on what FERS actually pays.

Myth 4: "I Have FEHB, So I Don't Need Medicare Part B"

Let me be direct, because this one can cost you real money. Keeping FEHB in retirement is great. But FEHB as a retiree doesn't count the way coverage through active employment does, so if you skip Part B when you're first eligible and decide to sign up later, you can face a permanent late-enrollment penalty of 10% for each full 12-month period you could have had it.

The standard Part B premium in 2026 is $202.90 a month, with a $283 annual deductible. A 10% penalty on that is about $20 extra a month, forever, and it grows with every year of delay. On the other side, for many retirees, Part B plus FEHB works together to reduce out-of-pocket costs. Whether it's worth it for you is a real calculation, not a guess.

And if you're postal, pay close attention. PSHB has its own Medicare rules, and Medicare-eligible postal annuitants and covered family members are generally expected to enroll in Part B to stay in the plan, with certain exceptions. Do not assume your old FEHB rules still apply.

Myth 5: "Catch-Up Contributions Are Always Pre-Tax"

Not anymore, for higher earners. For 2026, the TSP elective deferral limit is $24,500. If you're 50 or older, you can add an $8,000 catch-up. If you're 60 to 63, the catch-up goes to $11,250. But if your prior-year Social Security wages from your TSP-contributing employer were above $150,000, your catch-up contributions must be Roth.

That is not bad news by itself. Roth money grows tax-free, and plenty of people want more of it. But it changes your paycheck, your tax picture now, and your tax picture later. A surprise on your first paycheck is not the way to learn it.

Myth 6: "Medicare Premiums Are the Same for Everyone"

This one hits people who did everything right. Medicare uses something called IRMAA, an income-related surcharge on top of the standard premium. For 2026, it starts when your income from two years earlier (2024) is above $109,000 for a single filer or $218,000 for a couple filing jointly.

The first surcharge tier adds $81.20 a month to Part B, which is about $974 a year, and it climbs from there. Here is the part that catches federal retirees: it's a cliff, not a slope. Cross a threshold by a dollar, and the full surcharge applies. And large TSP withdrawals, Roth conversions, or a big one-time income event can push you over it. IRMAA looks back two years, so what you do in your last working year or your first retirement year can follow you around.

The right TSP withdrawal strategy is the difference between being pushed over a threshold and staying under it on purpose.

Myth 7: "HR Will Walk Me Through Everything I Need to Know"

I wish. HR is compliance, not optimization. They will help you fill out the paperwork correctly. They will not model your survivor benefit options against your life insurance and your spouse's needs, or tell you how your retirement date interacts with Medicare timing, the Supplement, and your TSP taxes. That's not their job, and they aren't allowed to give advice the way a planner does.

The survivor benefit alone is a big one. Choosing a full survivor annuity reduces your pension by 10%, and a partial one reduces it by 5%. It's a major election that is difficult to change later. Make it with a model in front of you, not a gut feeling.

What These Myths Have in Common

Every one of these comes down to the same thing: the federal benefits system is not designed to explain itself to you. That information gap is the problem. A myth sounds like a shortcut, and it usually costs the most when you find out too late.

Take a retiree I'll call Denise (a composite, not a real client). She assumed her coverage and her pension would work out fine without checking the details, and she found out about a gap in her plan only after she'd already made the decision. She wasn't careless. She just trusted the break room. The difference between understanding your benefits and not understanding them can be five or even six figures over a lifetime.

The most expensive retirement mistake is rarely a bad investment. It's waiting too long to understand what you actually have.

So, Have You Run Your Numbers?

Go back through the seven myths and be honest. How many of them were you quietly assuming? One? Three? All seven?

No judgment here, just a plan. When you know your numbers, the weight lifts. You stop wondering and start deciding.

Get your Federal Retirement Blueprint and see where you stand: quiz.fedsecure.org.

Frequently Asked Questions

How is the FERS pension calculated?

The FERS pension is 1% of your high-3 average salary multiplied by your years of creditable service. If you retire at age 62 or older with at least 20 years of service, the multiplier increases to 1.1%.

Do I need Medicare Part B if I keep FEHB in retirement?

It depends on your situation, but skipping Part B can lead to a permanent late-enrollment penalty of 10% for each full 12 months you delay, because retiree FEHB does not count as active-employment coverage. Many retirees find that Part B and FEHB together lower their costs, so it is worth modeling before you decide.

What is the 2026 TSP contribution limit?

The 2026 TSP elective deferral limit is $24,500. Participants age 50 and older can contribute an additional $8,000 in catch-up contributions, and those ages 60 to 63 can contribute $11,250. Catch-up contributions must be Roth if your prior-year Social Security wages from your TSP-contributing employer exceeded $150,000.

What is IRMAA and who pays it?

IRMAA is an income-related monthly adjustment amount added to Medicare Part B and Part D premiums for higher-income beneficiaries. For 2026, it applies when income from two years earlier exceeds $109,000 for single filers or $218,000 for joint filers.

Does the FERS COLA match the Social Security COLA?

No. When inflation is above 3%, FERS retirees receive one percentage point less than the inflation rate. In 2027, Social Security gets 3.6% while FERS retirees receive 2.6%.

This article is for education only and is not tax, legal, or individualized financial advice. Medicare, TSP, and IRS figures change, so confirm current numbers with the official source or your benefits office. Client examples are composites and are not real individuals. FedSecure and Gigi Bodwin may be compensated if you choose to work with us.