5 Years from Retirement? Lock These In or Risk Permanent Losses

Miss it—and you may never get those benefits back.

May 14, 2025

If you're within 5 years of retirement, you’ve officially entered the most high-stakes phase of your federal career.

This is the window where smart planning can boost your income for decades—or where one overlooked detail can lead to permanent benefit losses.

Here are 5 essential actions you need to review before you submit your retirement paperwork:

✅ 1. FEHB Eligibility: Miss This, Lose It Forever

To carry your federal health insurance (FEHB) into retirement, you must:

  • Be enrolled in FEHB for the 5 years immediately before retirement, or since first becoming eligible

  • Retire with an immediate FERS annuity

🩺 Why it matters: Without this, you lose access to lifelong health coverage. And private plans in retirement? Often double or triple the cost.

✅ 2. Shape Your High-3: Max Out Your Pension Value

Your FERS annuity is based on your highest-paid 3 consecutive years of base salary.

  • Locality pay counts, but bonuses and overtime don’t

  • Promotions or detail assignments near the end of your career can tip the scale

💡 Pro tip: Even a short stint in a higher-paying role could increase your annual pension by thousands—for life.

✅ 3. Sick Leave Conversion: Know When It Helps (and When It Doesn’t)

Unused sick leave adds to your service time, increasing your pension. But there’s a catch:

  • It can’t make you eligible to retire—it only counts after you’re already eligible

  • 2,087 hours = 1 full year of credit

🧠 Use it smart: Hoarding sick leave is powerful—but only if you’re timing it with the right retirement eligibility window.

✅ 4. TSP Catch-Up Contributions: Don’t Leave Free Tax Sheltering on the Table

If you're 50 or older, you can contribute an extra $7,500/year to your TSP (on top of the $23,000 limit for 2025).

  • This boosts tax deferral now

  • And builds a cushion for rising health costs, inflation, or future Roth conversions

💸 The move: Max this out while you're likely earning the most and spending the least. It’s your last chance to accelerate growth.

✅ 5. Plan Your Exit Date Strategically

Your retirement date affects:

  • Leave payouts

  • COLA eligibility

  • Timing of your first pension check

📅 Best practice: Retire at the end of a leave period or just before a COLA cutoff. A well-timed date could mean more income, faster.

🧭 Bottom Line:

You’ve earned a strong retirement. But finishing strong isn’t automatic.

These last 5 years are where the best federal retirements are won or lost.
Double-check your eligibility. Secure your benefits. And step into retirement knowing you left nothing on the table.

Best,
Federal Wealth Retirement