A new retirement system, the ORA, promises a modern and streamlined process, but it's leaving federal retirees with more uncertainty than ever.
The Retirement Revolution: A Double-Edged Sword
Thiago Glieger, a financial planner, sheds light on the challenges of this new system. While it aims to simplify the retirement process, it has created a complex web of issues. The old paperwork, SF-3107, has been replaced, but the transition is far from smooth.
A Confusing Transition
The ORA system, designed to make retirement easier, has instead overwhelmed HR departments. With a surge of federal employees retiring, HR teams are struggling to keep up, leading to a backlog of questions and concerns. Retirement, already a stressful process, is now even more anxiety-inducing due to a lack of clear information and support.
OPM's Optimism vs. Reality
OPM initially promised a faster, more efficient system, but the reality is quite different. With tens of thousands of federal employees retiring, the system is struggling to keep pace. The first wave on 9/30 was just the beginning, and another wave is expected on 12/31, putting immense pressure on the ORA system.
The Retirement Process: A Step-by-Step Guide
For federal employees considering retirement, the process is now more complex. Agencies used to run the GRB platform retirement estimator, but many have cut it, leaving employees in the dark about their retirement estimates. The first step is to notify HR, but with HR departments overwhelmed, this can cause delays.
Once HR initiates the ORA process, employees gain access to the online system, replacing the SF-3107 form. While the system asks questions and pre-fills the form, it expects employees to make crucial financial decisions in real-time, such as tax withholding and life insurance, without proper guidance.
The Long Wait
The timeline for retirement processing is uncertain. It can take a month or more just for payroll to finalize hours, and then there's the wait for OPM to process the application. With OPM handling an unprecedented number of retirements and navigating a new system, processing times are increasing, leaving retirees in limbo.
Financial Planning for the Unknown
Financial planner Thiago Glieger offers advice for retirees. He suggests boosting cash reserves, reducing TSP contributions to increase take-home pay, and considering a TSP loan for those under 55. Having cash readily available is crucial to bridge the gap between leaving a job and receiving a pension.
Navigating Uncertainty
For those going through this uncertain period, Glieger advises relying on thorough planning. Being prepared for various scenarios, such as market crashes or delays, can provide peace of mind. He also recommends utilizing resources like the OPM Retirement Quick Guide and the benefits officer directory to stay informed and find answers.
The new ORA system, while well-intentioned, has introduced a host of challenges for federal retirees. It remains to be seen if the system will improve over time, but for now, retirees must navigate a complex and uncertain path to retirement.
