Seasoned federal employees who survived the turmoil of 2025 might be thinking: Should I retire in 2026?

You should make this most crucial and personal of decisions on the basis of where you want to be in life in terms of work and family. Essentials of a quality retirement include regular social interaction, activities that give a sense of meaning and purpose, and maintenance of good health.

Still, it also takes money. Also essential, therefore, is that you take steps to optimize your other decisions with the best possible financial arrangement.

Practical matter A concerns your government pension payments, known in federal parlance as your annuity. Retirement applications go to the Office of Personnel Management. You apply online, but there’s a lot of documentation to accompany your application. One virtue of an online application: You can check its status online to find out what’s holding it up.

And that’s the rub. In a perfect world, you would retire Friday, say this June 26^th, and you find your first annuity check deposited July 6, the first Monday of that next month, or whichever day of the week is on your (former) agency’s schedule.

In reality, OPM takes weeks, sometimes months, to calculate a person’s annuity. The current average runs around two months. The agency has been under stress from its own reduction in force and from the spike in retirements caused by early Trump administration workforce policies. Plus, many agencies have had RIFs in their own human resources ranks, potentially slowing down the movement of paperwork and information.

Keep in mind that the more you’ve moved among agencies, or in an out of government, throughout your career, the more complicated the calculation of your retirement pay.

In the meantime, you do receive an estimated annuity. It generally errs on the low side so you won’t be stuck having received overpayments. You can make a rough estimate of your Federal Employee Retirement System (FERS) annuity from these OPM formulae.

The upshot: Plan your spending activities in advance so you don’t outrun your annuity while OPM figures out the final amount.

Roth or not?

Of course, your FERS annuity is only part of your retirement financial picture. For many retirees, withdrawals from their Thrift Savings Plan accounts will form another piece of their income.

A new option from the TSP board this month, on the 28^th to be precise, lets account holders convert regular accounts into Roth accounts.

Quick review: You pay into traditional TSP (or individual retirement accounts) with pre-tax dollars. Contributions therefore reduce your tax obligation in the year you make them. You pay taxes at the point of withdrawal – presumably in retirement, on the assumption you’ll be in a lower tax bracket.

Roth contributions are paid in after-tax dollars, so there’s no tax benefit during the year when you contribute, but also no tax later, when you withdraw the funds.

Younger employees or those starting out in their federal career should consider at least a portion of their contributions going to a Roth account from the outset. You’ll pay full taxes each year on income that includes Roth contributions but have peace of mind later when whatever you withdraw won’t be taxable.

But conversion from traditional to Roth comes with the tax due now, on the amount you transfer. Each, say, $10,000 that you convert adds $10,000 to your taxable income in the year you convert. That could be a hefty chunk for the IRS. So why should you consider an in-plan conversion?

As with so many financial decisions, it depends on many questions. For example:

• Might you find yourself in a higher tax bracket when you retire? Then balance future liability by converting now when you pay taxes within a lower bracket.
• Because Roth IRA’s do not have required minimum distributions, you might deliberately keep your retirement income a bit lower to avoid creep in Medicare Part B premiums, which rise with income. (Credit to certified financial planner Art Stein for that insight.)
• Do you have enough extra cash around outside of your TSP to cover the tax levy from the conversion?

While it offers conversion, the TSP managers neither recommend nor discourage it. What they do urge: Consult a tax professional before you proceed.

What’s your high 3?

FERS annuities derive from each employee’s three consecutive three years of highest pay. Typically, those are the final three years of a career. But not necessarily.

That’s why if other life and financial factors weigh in favor of retiring during the coming year, it may be wise to proceed with that plan rather than inch the high-3 forward and wait until 2027. The 2026 pay raise proposed by the president is a mere 1%.

On the other hand, allowable TSP contributions are also up in 2026, from a limit of $23,500 in 2025 to $24,500 this year. Standard contributions may go into a traditional TSP plan, a Roth or some combo. Plus, the catch-up contribution for those over 50 jumps from $7500 to $8,000. So $31,000 to $32,500.

And if you are 60, 61, 62, or 63, you can make a so-called super-catchup contribution of $11,250. But if your individual income exceeds $145,000, catchups must go in as after-taxes Roth contributions. (Check out this STWS article detailing 2026 contribution options.)

All this means your decision on whether to retire requires you to balance a potential increase in your FERS annuity, your tax liability and the final size of your TSP account before you cease making large annual contributions.

Again, retirement is not solely a financial decision. Once you’ve decided it’s time, though, make the effort to fully understand the financial implications so you go in with eyes open.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC.
Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Serving Those Who Serve is not a registered broker/dealer and is independent of Raymond James Financial Services.
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