Inflation’s Impact on Your 2025 Federal Pension COLA

How could you get through the first few months of retirement without income?

That’s the big question many federal employees face when stepping away from service. Too often, pensions are delayed for months, leaving retirees stressed and scrambling. But there are smart, proactive steps you could take so you don’t have to just “wait it out.”

At CD Financial, we work with federal employees day in and day out. Our role is to help create written retirement income plans that may provide confidence and clarity as you move into retirement. Let’s walk through how you could handle those critical early months.

Why Pension Delays Happen

When you retire, there could be a lag in how quickly OPM codes you as “retired.” That delay may mean your pension check does not show up for several months. Imagine being ready to start the next chapter of your life, but your money isn’t ready to start with you.

That’s where planning could come in.

The Power of a TSP Rollover

One potential solution is available if you’re still working and you’re 59½ or older. You could roll over money from your TSP into an IRA.

Now, I can hear your concern: “Charles, wouldn’t that create taxes? I can’t afford more taxes.”
Not necessarily. If you take money from your TSP and roll it directly into an IRA in your name, the IRS may treat it the same way—no taxable event occurs. It’s still tax-deferred.

Here’s the key: link that IRA to your bank account. That way, when retirement comes, you don’t have to wait on TSP to process your paperwork. If OPM hasn’t coded you as retired yet, you still could have access to your money.

Creating a Retirement Cushion

Think of it like this: you’re 60, you just retired, and you may need income right away. With an IRA connected to your bank, you could set up three or four thousand dollars a month in income. Build yourself a cushion of four or five months.

That’s not just money—it could be peace of mind.

When you structure part of the IRA in cash, it’s liquid. Accessible. You press a couple buttons, and boom—your income may be there when you need it.

Military TSP: A Hidden Opportunity

A second option—less common, but powerful for those who qualify—is using a military TSP.

You might be thinking: “That account only has $20,000—what difference does that make?”

Here’s the difference: if you’ve left the military, that account could already be coded as retired. Rolling it into your IRA means you instantly may have a bridge of accessible money. For those first months of retirement, that link could make all the difference.

The Cash vs. Assets Dilemma

It’s surprising, but I see it all the time. Federal employees with $1.5 million sitting in their TSP—and less than $10,000 combined in checking and savings.

No judgment here. You’ve been working hard to make your money grow, and you want it invested. But that may leave you vulnerable in the short term.

The solution may not be working longer. The solution could be planning smarter.

Why You May Need a Written Retirement Income Plan

When you have a plan, you don’t have to guess. You don’t have to stress. You could simply follow the steps.

And when that plan is created with a fiduciary who understands federal benefits like the back of their hand, you know your strategy may be built around your reality, not just generic advice.

The Bottom Line

You don’t have to let pension delays or COLA adjustments derail your retirement. With the right rollover strategy, liquidity cushion, and income plan, you could move into retirement with confidence and calm.

Remember, it may not be about working longer. It could be about working smarter—with a better plan.

👉 Ready to explore a written retirement income plan? https://calendly.com/charlesdzama/complimentary-15-minute-phone-call-youtube

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