Here’s What Retirement Really Looks Like With a $900 Monthly FEHB Premium and 2% COLA

July 01, 2025

You followed the rules. Saved diligently. Stayed in the system.

Now you’re retired—or close—and suddenly, the benefits you counted on aren’t covering what they used to.

What happened?

The Math That Makes You Flinch

Let’s break it down.

Say you’re a federal employee retiring at 62 with:

  • A $2,800/month FERS pension

  • A projected $1,600/month Social Security benefit

  • Around $300,000 in TSP, drawing down 4% per year

Sounds workable—until the realities hit:

  • $900/month in FEHB premiums for you and a spouse

  • $500–$700/month in taxes on your pension, Social Security, and TSP

  • $174.70/month per person for Medicare Part B (if you enroll)

  • And a 2% COLA that doesn’t touch real inflation or premium hikes

That $2,800/month pension?

After deductions, it behaves more like $1,600 or less.

And that’s without a major health event.

Worried your TSP might not stretch far enough?

The Slow Squeeze Retirees Rarely See Coming

The real risk isn’t a stock market crash or a policy change—it’s the creep:

  • FEHB costs rising 5–7% annually

  • COLAs capped at 2% (if that)

  • Mandatory withdrawals that push you into higher tax brackets

  • Fixed income that can’t keep up with flexible expenses

Tom, a retired GS-14 with 32 years of service, thought he’d done everything right. But today, between rising FEHB premiums, a surprise property tax hike, and out-of-pocket costs for his wife’s prescriptions, his “guaranteed” income feels less like a retirement cushion—and more like a trap.

This is how good savers with strong pensions still end up making hard choices.

What you can do (before you’re stuck):

  1. Re-run your retirement budget using net income—not agency projections.

  2. Model 10 years of FEHB increases and how they’ll pressure your cash flow.

  3. Consider partial Roth conversions before RMD age to reduce your future tax drag.

  4. Explore non-market assets that aren’t tied to inflation or interest rate risk.

What Smart Feds Are Doing with Their TSP

You don’t need to overhaul your plan. But you do need options that your pension and traditional TSP alone may not provide.

That’s why thousands of federal retirees are moving part of their TSP into self-directed Gold IRAs—not because they’re panicking, but because they’re planning.

  • Inflation hedge? ✅

  • Outside of Wall Street? ✅

  • Still 100% penalty-free over age 59½? ✅

Retirement was never supposed to be a guessing game.

But the rules keep shifting—and the system doesn’t adjust fast enough to protect you.

You don’t need to panic.

But you do need to plan—on your terms, not theirs.

Retirement is still yours.

Let’s make sure it stays that way.
—FWR

P.S. If you're curious but unsure how a Gold IRA works, this free walkthrough breaks it down in plain English: How a TSP-to-Gold IRA Rollover Actually Works