Some Federal Employees Looking at Early Retirement - Must Consider Long-Term Care Options
Many federal government employees are weighing their retirement options as the federal workforce braces for significant changes under the new Trump administration.
While pensions, benefits, and healthcare coverage are central concerns, the rising cost of long-term care is an issue that many overlook—one that could have a profound impact on their financial security and quality of life in retirement.
Traditional health insurance and Medicare only cover short-term skilled care, leaving retirees vulnerable to out-of-pocket expenses if they require extended long-term care. Many federal government employees ignored acquiring Long-Term Care Insurance when it was offered as an optional employee benefit.
The Federal Long-Term Care Insurance Program (FLTCIP) suspended new applications on December 19, 2022. This suspension was initially set for 24 months but has been extended. As of December 19, 2024, the suspension will continue for an additional 24 months, lasting until December 19, 2026.
New applications are not accepted during this period, and current enrollees cannot apply for increased coverage. However, existing enrollees will maintain their coverage, provided they continue paying premiums and the claims reimbursement process remains unaffected.
Some federal employees have opted for private Long-Term Care Insurance to secure better benefits and consumer protections. However, many still lack coverage, and as they approach retirement, experts stress that long-term care planning should be a top priority.
These future long-term care costs can create a cash flow issue, quickly drain retirement savings, disrupt financial stability, and place an emotional and financial burden on families.
Planning for Long-Term Care is Critical
Matt McCann, a nationally recognized expert in long-term care planning, stresses that early preparation is key to protecting retirement assets and ensuring access to quality care.
Without an LTC policy, retirees risk creating a substantial cash flow problem, depleting their savings, altering their lifestyle, and placing a significant burden on their families.
Long-Term Care Insurance helps you maintain your independence by covering services such as home health aides, assisted living, and nursing home care when you need help with daily living activities or require supervision due to a memory decline.
New Federal Policies Shaping Retirement Decisions
Recent executive orders have introduced several policy changes impacting federal employees:
- Return to Office Mandate: Federal employees must return to in-person work, ending remote arrangements.
- USPS Early Retirement Incentive: U.S. Postal Service carrier employees are being offered a $15,000 early-out bonus.
- Senior Executive Service (SES) Reductions: Some SES positions may be eliminated through demotions or reductions in force (RIF).
- Deferred Resignation Offer: Certain federal employees can opt for an early-out offer, receiving seven months of severance pay through September 30, without work requirements.
- Federal Hiring Freeze: A hiring freeze is preventing employees from transferring between agencies.
These changes instituted by the Trump administration have caused some federal workers to reconsider their retirement plans and think of early retirement.
During the COVID-19 pandemic, many federal employees chose to retire rather than comply with vaccine mandates or return to in-person work. Now, with the Trump administration mandating a full return to the office, some employees have expressed reluctance to comply.
A memo from the Office of Personnel Management outlines sweeping changes, including a mandate requiring most federal employees to return to full-time, in-office work—effectively ending COVID-era remote arrangements.
For those unwilling to comply, the memo introduces a "deferred resignation program," offering what it describes as a "dignified, fair departure" from federal service.
If you choose not to continue in your current role in the federal workforce, we thank you for your service to your country, and you will be provided with a dignified, fair departure from the federal government utilizing a deferred resignation program.
The program will take effect on January 28 and remain open until February 6.
Surge in Federal Retirements Expected in 2025 and 2026
Looking ahead, many observers anticipate a sharp increase in retirement applications in 2025 and 2026 as employees adjust to the new policies. He advises federal workers to start preparing now:
- Check Eligibility: Verify the minimum retirement age and eligibility requirements.
- Attend Seminars: Take advantage of agency-sponsored retirement seminars for valuable insights.
- Seek Professional Guidance: Work with retirement specialists to navigate the process effectively.
Long-Term Care Planning Requires Expert Guidance
Choosing the right LTC Insurance policy requires specialized knowledge. Many financial advisors and general insurance agents lack expertise in LTC Insurance, tax advantages, and policy design.
Tax-qualified Long-Term Care Insurance offers consumer protections and tax benefits. Some policies even provide international benefits for those considering retiring overseas.
Top Long-Term Care Insurance Plans for 2025
For federal retirees, selecting the right LTC Insurance plan can significantly affect financial security. You can use the LTC News Long-Term Care Insurance Education Center to learn more about available options.
Several excellent options are summarized in the 2025 LTC Insurance review and rankings.
As federal employees make critical retirement decisions, factoring in the cost of long-term care is essential to safeguarding their financial future. A well-structured LTC Insurance policy provides peace of mind, protects retirement cash flow and assets, and ensures retirees can maintain their preferred lifestyle.
Most people acquire Long-Term Care Insurance between ages 47 and 67, but age, health, and other factors will impact costs and eligibility for coverage.
Seek a specialist to provide accurate quotes from all the top-ranked insurance companies that offer long-term care solutions.
Planning for future long-term care is typically done before retirement, and with many federal employees now considering retirement, experts say this is the ideal time to put a plan in place.