Every day, roughly 10,000 people reach retirement age. By 2030, fully 18 percent of the country’s population will be at least 65 years of age. The United States is aging, and nowhere is this more noticeable than in the federal government, where more than one third of employees are projected to be eligible to collect their end-of-career benefits by September 2017.

Like any other major life event, retirement takes planning. From early on in their careers, federal employees invest in their Thrift Savings Plan (TSP), contribute to the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS) and set aside money to supplement Social Security payments. They pay FICA and Medicare taxes, and maintain their health insurance so that an illness or injury will not leave them bankrupt or unable to obtain proper medical treatment.

But despite all this planning, far too often something happens such as an unexpected illness or accident that leaves federal employees or their loved ones unable to perform everyday tasks and in need of a caretaker. Most insurance plans will not cover the vast majority of the expenses associated with assistance for daily activities—dressing, bathing, eating, toileting, continence and transferring into and out of a bed, chair or wheelchair—and paying for this care out of pocket can quickly drain even the most carefully constructed retirement plan.

Retirement should be a celebration, a time to explore old passions and discover new ones. To help protect themselves from the unexpected, federal employees should consider the Office of Personnel Management sponsored benefit of long term care insurance. Long term care insurance is a smart way to help protect your income and assets and remain financially independent should you need long term care services at home, in a nursing home, or at another long term care facility.

But with so much on their plates, how can feds get started preparing for a life after government?

Often the most difficult part is simply knowing where to start.

“I think goal setting is the hardest thing for federal employees, because it seems so overwhelming,” says Tammy Flanagan, senior benefits director for the National Institute of Transition Planning, Inc. “You have to start by understanding the things that are known. It’s like putting a puzzle together: You put the pieces together first that are easiest to fit and then, for that one unknown piece, you have to figure out how you reach that.”

The easiest pieces to examine first are those associated with your federal benefits. FERS and CSRS are two different retirement programs offered to federal employees. Predating the Social Security program by 15 years, CSRS is the older of the two and consequently is designed as a stand-alone program encompassing all the retirement needs of federal employees. FERS, however, is a system designed to work in tandem with the Social Security program, and as such comes with a different set of federal benefits.

Today, only about 5 percent of federal employees are grandfathered into CSRS. The remaining 95 percent will retire under FERS. FERS is a three-tiered retirement plan, meaning that retirees can expect their benefits to come from three different sources: a Basic Benefits Plan, Social Security and the Thrift Savings Plan (TSP). To develop a successful retirement plan, feds have to understand what each of these sources can do for them.

Unlike Social Security and the TSP, which stay with federal employees even if they leave the government before retirement, the FERS basic benefit is only available to those who retire directly from their federal job. Contributions towards the FERS basic benefit are automatically withheld from pay, and the benefit is computed based on an employee’s length of federal service and his or her highest average pay earned during any three consecutive years of service. Generally, the FERS basic benefit amounts to one percent of the highest three-year average pay multiplied by years of creditable service. For many federal employees, the FERS basic benefit will be one of the largest sources of income replacement during retirement.

Investing throughout their career in the TSP is one of the best ways for federal employees to ensure they have adequate retirement income. New hires have an automatic withholding of three percent of basic pay that is deposited to an appropriate lifecycle fund of the TSP, and this contribution is matched by their agency. Federal employees can also expect to see an additional one percent agency contribution to their TSP, meaning that, on day one, all federal employees have the equivalent of seven percent of their basic pay deposited into their TSP. From there, feds have the option of increasing their contribution to the annual elective deferral limit. Should they wish to save more money outside of the TSP, feds can also contribute to individual retirement accounts (IRAs).

Feds can also count on Social Security as an expected source of retirement income once they hit 65, but with an average payment of $1,200 a month, Social Security is not intended as the sole source of income, but rather as a supplement of employer pension or personal savings. Intentionally tilted, Social Security is designed as a form of social insurance, providing more income replacement to those who worked at lower wages than those who worked at higher wages and who, consequently, are expected to have had the ability to save more throughout their career.

“If you’re somebody who doesn’t make a lot of money, and you don’t have a lot left over once you pay your rent, your car payment and your insurance, that’s okay,” Flanagan says. “For that employee, their Social Security and FERS basic benefit could end up replacing 60 or 70—sometimes even 80—percent of their income. If they have just a little bit of savings to come up with for the unexpected expenses, they’ll be fine. But on the other hand, if you’re somebody who’s going to work their way up to a GS-15 or SES level, and you’re going to be making $150,000 or $180,000 a year, then social security will replace only 10-15% of your income. Your FERS basic benefit may be another 30-40%, so you’re still going to need to replace a good portion of income with your savings.”

Simply put, there’s no “magic number” that all federal employees should be setting aside toward retirement. Instead, feds should ask themselves how much money they need to live comfortably and at what age they would like to retire. Then, they should examine what they can expect to receive in benefits and how much they can realistically afford to save per month, and work backwards to determine long-term retirement plans. For some employees, that means studying on their own and figuring out how to save, invest and make that money grow; for others, it means hiring a financial advisor to help them set that goal.

No matter how meticulously planned your retirement is, it’s impossible to know exactly how it will play out. No matter how meticulously planned your retirement is, it’s impossible to know exactly how it will play out. Often these surprises are welcome—new grandchildren, partners, friends, hobbies, experiences. But unfortunately, sometimes these surprises make it necessary to address head-on scenarios you hoped to never face.

One of the most common challenges confronted later in life is that of long term care. According to the U.S. Department of Health and Human Services, 70 percent of people turning age 65 will need long term care at some point during their lives. By 2050, it is expected that 27 million people will be using long term care services—more than double the 13 million needing long term care assistance in 2000.

Long term care is needed when you can no longer perform everyday tasks—such as bathing, dressing, toileting, eating and transferring into and out of a bed, chair or wheelchair due to a chronic illness, injury, disability or the aging process. This type of care is categorically different from care received in a doctor’s office or hospital, termed “skilled care,” and as such is typically not covered under Medicare or medical insurance plans. Whereas skilled care is intended to help people progress towards recovery, people receiving long term care often cannot expect their condition to improve.

To see where long term care may be needed in daily life, click on the + icons below

“When most people call about long term care, they’re in crisis,” says Lisa Canfield, senior care coordinator at the Federal Long Term Care Insurance Program (FLTCIP). “They don’t know where to turn to, what to do, because they’ve never had to face this situation before. We do see people get better and recover—people who have a short-term condition that lasts at least three months but from which they can get better and are again able to take care of themselves. But most of the time it is a chronic condition that’s going to last for quite a long time, unfortunately.”

Despite the prevalence of long term care needs, a recent Government Business Council (GBC) poll of federal employees found that only 31 percent of respondents have a long term care plan. This is especially concerning since, without insurance, long term care is generally extremely costly.

“I just don’t think we realize that the cost of long term care can be $300 per day, or more,” Flanagan says. “People think that’s just unimaginable, but it’s a reality. Long term care is not cheap, and it’s going to go up greater than the rate of inflation.”

Annual cost of long term care in the United States

Click on one of the labels at left to see the cost of long term care by state

To protect themselves and their retirement savings, federal employees should consider long term care insurance, which can alleviate the costs of long term care and the emotional and financial strain of caregiving by their loved ones.

Like non-feds, federal employees are free to purchase private long term care insurance, but are also uniquely eligible for the Federal Long Term Care Insurance Program (FLTCIP), sponsored by the Office of Personnel Management. As of March 2015, more than 273,000 federal civilians and annuitants, active and retired members of the uniformed services and qualified relatives were enrolled in FLTCIP.

So, what should federal employees look for when they shop plans?

“First of all, you should figure out where you want to be cared for,” Flanagan says. “Would it bother you to be moved to a nursing home? Really think about that and, if you’re not sure, go visit one. Do you have family members who might be around and willing and able to provide that type of care? And how much do you have saved and invested? Is it important to you to protect that investment to leave to a spouse or your children as a legacy, or is it not important?”

There are pros and cons to both private and federal plans, and which works best for you is a personal choice. Unlike many private plans, FLTCIP only sells individual insurance; it does not have combined family or spousal plans. However, the two key differentiators of FLTCIP are its generous informal caregiver benefit and its stay-at-home benefit. Under the informal caregiver benefit, friends, family members and other non-licensed caregivers can be trained and compensated for providing long term care at home. With nearly 66 million informal and family caregivers providing long term care across the United States, the ability to use long term care insurance benefits for informal care is often a deciding factor when choosing a plan. Many federal employees simply would prefer to be cared for by those they already know and trust.

Additionally, the stay-at-home benefit allows feds to use a certain amount of insurance benefits towards options that support care in a home environment. Often the stay-at-home benefit is used towards home modifications such as the addition of a chairlift, wheelchair ramp, accessible shower or elevated ADA-compliant toilet, that allow those with less severe needs to stay at home longer they otherwise might. This benefit can also be used to implement emergency medical response systems, add durable medical equipment or train caregivers.

"If you want a family member to be able to care for you, then you want to make sure your policy has an informal care benefit," Canfield says. “If you want to be able to receive care at home, you want to make certain your policy does not cover only care in a facility. So look at what type of benefits are available, the waiting period, and the daily benefit amount when determining what plan works best for you.”

After purchasing a policy, federal employees also need to know how to access their benefits should the need arise because, unlike with medical insurance, it’s not as simple as going to your provider and presenting your insurance card. Triggers have to be met in order to benefit eligible. These triggers fall under two categories: activities of daily living and cognitive impairments. To be eligible under activities of daily living, you must be unable to perform at least two activities of daily living for a period expected to last at least 90 days due to a loss of functional capacity; to be eligible under cognitive impairments, you must experience a deterioration or loss in intellectual capacity that places you in jeopardy of harming yourself or others, thereby requiring substantial supervision.

Despite the benefits of long term care insurance, often federal employees choose not to invest in it because of its expense, or because they believe they can set aside money themselves. They think that they could spend the money better elsewhere, or that they will be adequately prepared if disaster does strike. However, only 35 percent of feds in a recent GBC poll said they are prepared to manage the potential costs of long term care for themselves or a loved one.

“I hear people say all the time: ‘Why don’t I just take the $200 per month I was going to spend on a policy and invest it. By the time I’m 85 years old, that $200 I’ve put away and invested every single month will be enough to cover the cost of my care,’” Flanagan says. “Well, if that would work, we would do that for everything. We wouldn’t have to buy insurance if we could save for it. The way insurance works is that we all put in a little bit of money and we hope that we never get our money’s worth. We hope that that money is going towards somebody else’s cost of care. But that’s how it works, because we can’t invest that $200 a month ourselves and come up with the same type of benefit that that insurance plan is going to be worth.”

But with so many other demands on their money, many federal employees are unsure how to finance long term care insurance. One common method is to trade premiums with other policies you’ve purchased, essentially reorganizing your spending so that it better aligns with your current or anticipated needs. Typically, what makes most sense is for feds to reduce the amount they’re spending on their option B Federal Employees Group Life Insurance (FEGLI) policy. Under FEGLI option B, feds can purchase life insurance worth up to five times their basic pay. However, this coverage gets more expensive as federal employees age; every five years the premium goes up, and starting at age 50 it almost doubles.

Trading premiums works because often the time at which FEGLI becomes cost-prohibitive coincides with when people begin to consider purchasing long term care insurance. By the time federal employees are in their 50s and 60s, often their kids are grown, their house is paid off and they no longer have the need to carry such a large amount of life insurance. By taking some of the money they were spending on FEGLI and putting it towards a long term care policy, they’re better protected.

To some extent, long term care insurance is essentially a disaster preparedness plan that helps federal employees and their families during a difficult and highly stressful time. Setting aside money for care, making it clear how you would like to live if you need assistance and taking care of other necessary precautions—such as assuring that somebody you trust has financial and medical power of attorney—can save family members a lot of additional anxiety during a crisis situation.

“I think we underestimate the scope that long term care can really mean,” Flanagan said. “If it’s just someone who needs a little help or needs somebody to watch over them, that’s one thing. But true long term care, when you need help with dressing and feeding and bathing and toileting, that’s three 8-hour shifts. That’s 24/7 on call duty.”

Instead of having to worry about logistics or if they are caring for you as you’d have wanted, family members can act with the certainty that they’re following your wishes to the best of their abilities given the circumstances. This knowledge can greatly reduce the responsibility on loved ones.

“You don’t know what tomorrow is going to bring,” Canfield says. “That’s one thing as a nurse you learn—that people’s lives change in an instant. And you have to be prepared for that.”