Is the USPS Running Out of Money?

The USPS continues to face significant financial challenges. While the Postal Service generates revenue through the sale of postage, products, and services, rising operating costs, declining mail volumes, and its universal service obligation have placed ongoing pressure on its finances. To improve its long-term outlook, the USPS launched its 10-year Delivering for America plan. Recent actions, including deferring certain retirement contributions, underscore the need for long-term financial reform rather than temporary solutions.

Is My FERS Pension Safe?

Your earned FERS pension is established under federal law. While the USPS has temporarily deferred certain employer retirement contributions as a cash-management measure, employees continue to earn retirement credit for eligible service. Because retirement laws can change over time, it's important to understand how your pension fits into your overall retirement strategy.

Is the USPS Borrowing from Retirement Funds?

Not directly. The USPS is not taking money from employees' TSP accounts or removing earned pension benefits. Instead, it has temporarily deferred required employer contributions to the Federal Employees Retirement System (FERS). These obligations remain and must ultimately be addressed through future funding or legislative action.

Will My TSP Be Affected?

Your Thrift Savings Plan (TSP) is your individual retirement account and remains separate from USPS operating finances. However, USPS restructuring, retirement timing, and changes in your career plans may affect your TSP contribution strategy, withdrawal planning, and overall retirement income. Understanding how your TSP coordinates with your pension and Social Security is an important part of retirement planning.

Can Congress Change Postal Retirement Benefits?

Congress has the authority to pass legislation affecting federal retirement programs, including benefits for postal employees. While earned benefits generally receive significant legal protections, future laws could affect eligibility rules, contribution requirements, healthcare, or retirement programs. Staying informed helps you prepare for potential changes.

Will Delivering for America Eliminate Jobs?

The Delivering for America plan is transforming USPS operations by modernizing processing facilities, consolidating delivery operations, and improving efficiency. While the Postal Service has stated that the plan is designed to strengthen long-term operations, some employees may experience changes in work locations, assignments, or career opportunities as implementation continues.

What Happens If My Post Office Closes or Consolidates?

If your facility is consolidated into a larger Sorting & Delivery Center or another USPS location, your reporting location, commute, job responsibilities, or work environment could change. Depending on your circumstances, these changes may also influence your retirement timeline or career decisions.

Should I Retire Early?

Early retirement is a highly personal decision that depends on your age, years of service, retirement eligibility, financial readiness, healthcare needs, and long-term income goals. Rather than reacting to organizational changes, it's generally better to understand all of your retirement options before making a decision.

How Does USPS Restructuring Affect Retirement?

USPS restructuring does not automatically change your retirement eligibility, but it may influence when you choose to retire and how you coordinate your pension, TSP, Social Security, healthcare, and survivor benefits. Understanding how these benefits work together can help you make more informed decisions.

What If I'm Offered an Early Retirement or Voluntary Separation Incentive?

If you become eligible for a Voluntary Early Retirement Authority (VERA), Voluntary Separation Incentive Payment (VSIP), or another retirement program, carefully evaluate how accepting the offer could affect your lifetime retirement income, healthcare, survivor benefits, and taxes before making a decision.

What Happens to My FEHB When I Retire?

If you meet eligibility requirements, you may be able to continue your Federal Employees Health Benefits (FEHB) coverage into retirement. Understanding enrollment rules, premiums, Medicare coordination, and survivor coverage is essential before retiring.

Can I Keep FEHB After Retirement?

In many cases, yes. Employees who retire on an immediate annuity and
meet the applicable participation requirements may continue FEHB
coverage into retirement. Maintaining FEHB can be an important part
of your long-term healthcare strategy.

Will Social Security Change?

Social Security laws can change over time, but future changes depend on Congressional action. For postal employees, one of the most important decisions is not simply whether Social Security changes, but how claiming benefits fits into your overall federal retirement strategy alongside your FERS pension and TSP.

Does USPS Financial Trouble Affect My Pension?

Current USPS financial challenges do not eliminate earned pension benefits. However, financial pressures have resulted in temporary measures such as deferring employer retirement contributions. These developments reinforce the importance of understanding your retirement benefits and remaining informed about legislative and organizational changes.

How Do I Know If I'm Retirement Ready?

Retirement readiness involves much more than reaching a certain age. You should understand your FERS pension, TSP, Social Security claiming strategy, FEHB, FEGLI, survivor benefits, taxes, and retirement income needs. A comprehensive review can help identify opportunities and potential gaps before you retire.

What Is the Biggest Mistake Postal Employees Make Before Retiring?

One of the most common mistakes is making retirement decisions in isolation. Claiming Social Security too early, overlooking survivor benefits, misunderstanding FEHB eligibility, or failing to coordinate TSP withdrawals with pension income can have lasting financial consequences. Taking time to understand how your benefits work together can help you avoid costly mistakes.

Should I Meet with a Federal Benefits Expert?

Every postal employee's situation is unique. Your years of service, retirement eligibility, military service, healthcare needs, family circumstances, and retirement goals all influence your options. An educational benefits review can help you better understand how your federal benefits work together so you can make informed decisions with greater confidence.

What Is the USPS Delivering for America Plan?

Delivering for America (DFA) is the USPS's 10-year strategic plan to improve financial sustainability, modernize operations, and enhance service. The plan includes investments in new vehicles and facilities, the consolidation of mail processing and delivery operations into larger Sorting & Delivery Centers (S&DCs), network modernization, and efforts to improve efficiency. While intended to strengthen the Postal Service, the plan may affect work locations, daily operations, and retirement decisions for some postal employees.

Can Postal Employees Collect Both a FERS Pension and Social Security?

In many cases, yes. Most postal employees covered under the Federal Employees Retirement System (FERS) may receive both a FERS pension and Social Security benefits if they meet the eligibility requirements for each. Your Social Security benefit is based on your earnings history and claiming age, while your FERS pension is based on your federal service and salary. Coordinating both benefits can significantly affect your lifetime retirement income.

How Much Sick Leave Counts Toward My Retirement?

Unused sick leave can increase your creditable service when calculating your FERS pension. While sick leave cannot be used to qualify you for retirement eligibility, it may increase the amount of your monthly annuity by adding additional service time to your pension calculation. Understanding how much unused sick leave you have—and how it affects your retirement—is an important part of retirement planning.

Can I Retire at My Minimum Retirement Age (MRA)?

It depends on your years of creditable federal service. Under FERS, your Minimum Retirement Age (MRA) ranges from age 55 to 57, depending on your year of birth. Some employees may retire at their MRA with at least 30 years of service, while others may qualify under different retirement provisions. Before retiring, it's important to understand how your age and service affect your pension, healthcare, and retirement income.

How Does Military Service Affect My USPS Retirement?

If you served on qualifying active duty before becoming a federal employee, you may be eligible to receive retirement credit for that service by making a Military Service Credit Deposit, commonly called a Military Buyback. Purchasing eligible military service can increase your years of creditable service and potentially increase your FERS pension. Every situation is different, so understanding your eligibility and potential benefit is important before retiring.

What Happens to My FEGLI Life Insurance After Retirement?

If you meet eligibility requirements, you may be able to continue your Federal Employees' Group Life Insurance (FEGLI) into retirement. However, you'll have important decisions to make regarding Basic Insurance and any Optional coverage you carry. Your elections can affect future premiums, coverage amounts, and benefits for your beneficiaries, making it important to review your options before retirement.

How Is My FERS Pension Calculated?

For most FERS employees, your annual pension is calculated using a simple formula:

High-3 Average Salary × Pension Multiplier × Years of Creditable Service

For many employees, the multiplier is 1%. If you retire at age 62 or later with at least 20 years of service, the multiplier may increase to 1.1%. Your High-3 is the average of your highest-paid consecutive 36 months of basic pay. Additional factors, such as unused sick leave and military service credit, may also affect your pension calculation.

Should I Pay Off Debt Before Retiring?

There isn't a one-size-fits-all answer. Some retirees benefit from entering retirement with little or no debt, while others may choose to maintain low-interest debt if doing so supports their broader financial goals. The right decision depends on your retirement income, savings, healthcare costs, taxes, and long-term financial strategy. Reviewing your entire retirement picture can help determine the best approach for your situation.

When Should I Apply for USPS Retirement?

Most retirement experts recommend beginning the retirement planning process at least 6 to 12 months before your desired retirement date. This gives you time to verify your service history, estimate your pension, review your TSP, evaluate healthcare and life insurance options, complete required paperwork, and coordinate your retirement with Social Security and Medicare decisions.

How Long Does the USPS Retirement Process Take?

The retirement process begins well before your final day of work. While many employees start preparing six months or more in advance, the processing of retirement paperwork and the transition from salary to retirement benefits can take several weeks or months after separation. Preparing early, ensuring your records are accurate, and completing required forms promptly can help reduce delays.

What Age Can I Retire from the USPS?

Your retirement eligibility depends on your age, years of creditable federal service, and retirement system. Many USPS employees covered under FERS become eligible at their Minimum Retirement Age (MRA) with sufficient years of service, while others qualify at age 60 or 62. Understanding your eligibility before submitting retirement paperwork is essential.

How Do I Know If I'm Eligible to Retire?

Retirement eligibility is based on your age, years of creditable service, and whether you're covered under FERS or CSRS. Reviewing your service history and retirement estimates can help confirm when you're eligible to retire.

How Much Will My USPS Pension Be?

Your pension depends on your High-3 average salary, years of creditable service, retirement age, and retirement system. Additional service credit from unused sick leave or military buyback may also increase your pension.

Does Overtime Count Toward My High-3 Salary?

Generally, no. Most overtime pay is not included when calculating your High-3 average salary. Your High-3 is based primarily on basic pay.

What Happens to My Annual Leave When I Retire?

Most USPS employees receive a lump-sum payment for accumulated annual leave upon retirement, subject to applicable taxes.

Can I Use Sick Leave to Retire Earlier?

No. Unused sick leave cannot be used to meet retirement eligibility requirements, but it may increase your creditable service when calculating your pension.

Can I Change My Retirement Date?

In many cases, yes. However, changing your retirement date may affect your benefits, leave balances, pension commencement, and retirement paperwork.

What Happens If I Delay Retirement?

Continuing to work may increase your years of service, pension amount, TSP contributions, and Social Security benefit, depending on your circumstances.

USPS Benefits FAQs

What Happens to My FEHB Health Insurance When I Retire?

Eligible retirees may continue FEHB coverage into retirement if they meet participation requirements. Maintaining FEHB can provide valuable healthcare coverage throughout retirement.

Can I Change My FEHB Plan After Retirement?

Yes. Retirees generally may change FEHB plans during Open Season or following certain qualifying life events.

Do I Need Medicare If I Have FEHB?

Many federal retirees enroll in Medicare Part A and evaluate whether Medicare Part B fits their healthcare needs. The best choice depends on your personal circumstances and how Medicare coordinates with FEHB.

What Happens to My Dental and Vision Insurance?

FEDVIP dental and vision coverage may generally continue into retirement if you remain eligible and continue paying premiums.

TSP FAQs

When Can I Withdraw Money from My TSP?

TSP withdrawal options depend on your age, employment status, and retirement. Understanding withdrawal rules before retiring can help avoid unnecessary taxes or penalties.

Should I Leave My Money in the TSP After Retirement?

Many retirees choose to leave some or all of their savings in the TSP because of its low costs and investment options. Others may choose different strategies based on income needs and retirement goals.

How Are TSP Withdrawals Taxed?

Traditional TSP withdrawals are generally taxable as ordinary income, while qualified Roth TSP withdrawals may be tax-free. Your tax situation depends on your account type and withdrawal strategy.

Should I Take My Entire TSP as a Lump Sum?

For many retirees, taking the entire balance at once may create significant tax consequences. Understanding your distribution options before withdrawing funds is important.

The Latest USPS News, Retirement Guidance, Benefit Changes
& Answers to Your Most Important Questions

Have a question? We’ve got USPS answers.

With the USPS announcement around how your FERS (pension) will be funded, more responsibility is shifting to you.

Here’s the reality: Your FERS pension was designed to be a foundation, but your TSP may now carry more of the weight.

• Know how your contributions are invested

• Understand the difference between G, F, C, S, I, and L funds

• Make sure old accounts (from prior service or jobs) aren’t sitting idle

• If your money is scattered, your strategy is too

This is the time to truly understand your benefits and take control of designing the future you want.

Your future deserves more than guesswork.

Federal Solutions has been helping Federal Employees understand their benefits for more than 30 years.

Because your Best Decision is an Informed Decision.

Financial Planning FAQs

Should I Pay Off My Mortgage Before Retiring?

The answer depends on your retirement income, interest rate, cash flow needs, taxes, and financial goals. There is no single answer that fits every retiree.

How Much Income Will I Need in Retirement?

Every retirement is different. Your income needs depend on housing, healthcare, taxes, lifestyle, inflation, and personal financial goals.

What Is the Biggest Retirement Mistake USPS Employees Make?

Many employees focus on one benefit—such as their pension or TSP—without understanding how all of their federal benefits work together. Retirement decisions are often interconnected, making comprehensive planning important.

How Often Should I Review My Federal Benefits?

Reviewing your benefits annually—and whenever major life or career changes occur—can help ensure your retirement strategy remains aligned with your goals.

What Questions Should I Ask Before I Retire?

• Am I eligible to retire?

• How much will my pension be?

• When should I claim Social Security?

• What happens to my FEHB and FEGLI?

• How should I withdraw my TSP?

• Do I have enough retirement income?

• Have I reviewed survivor benefits?

• Is my military service properly credited?

  Social Security FAQs

  When Should USPS Employees Claim Social Security?

  The best claiming age depends on your retirement income needs, health, life expectancy, marital status, and overall retirement strategy. Claiming too early may permanently reduce your monthly benefit.

  Does My USPS Pension Reduce My Social Security?

  Most FERS employees receive both a pension and Social Security. Your individual situation depends on your work history and retirement system.

  Can My Spouse Receive Social Security Benefits?

  Spouses may qualify for Social Security benefits based on their own earnings or their spouse's record if eligibility requirements are met.

  Career Change FAQs

  What Happens If My USPS Position Is Eliminated?

  Depending on your situation, you may have options that include reassignment, retirement eligibility, voluntary separation programs, or other employment opportunities within USPS.

  What Happens If My Commute Changes After Consolidation?

  Some employees may experience longer commutes if operations move to a Sorting & Delivery Center. Evaluating how these changes affect your career and retirement plans may help guide future decisions.

  Should I Accept a Different USPS Position?

  Career decisions should consider retirement eligibility, salary, benefits, commute, quality of life, and long-term financial goals.

  Military FAQs

  Is Military Buyback Worth It?

  For many eligible employees, buying back military service can increase creditable service and future pension income. Whether it's worthwhile depends on your military service history and retirement goals.

  How Long Does Military Buyback Take?

  The process can take several months, depending on service verification and payment arrangements. Starting early is generally recommended.

USPS is Using Employee Retirement Funds to Operate

By: Eric Steffy, Federal Solutions Support

Latest USPS News & Updates

The USPS isn't just cutting costs, it's fundamentally restructuring how it operates. Through its 10-year Delivering for America plan, the Postal Service is consolidating operations by moving letter carriers from local post offices to larger Sorting & Delivery Centers. These changes are already underway and has important implications for employees' careers, benefits, and retirement planning. It appeared to improve efficiency on paper, but for the workers, it has often resulted in longer commutes, unfamiliar routes, new schedules and increasing uncertainty about future job security.

Although implementation has not met the USPS's original timeline, the restructuring has not stopped. In 2022, the Postal Service unveiled plans to consolidate up to 100,000 carrier routes into 400–500 larger Sorting & Delivery Centers. Today, with roughly half of those consolidations complete and approximately 133 facilities activated, the transformation is continuing and its impact on employees is becoming increasingly evident.

Paying for this brokenness are not only postal service employees who have had their retirement funds leveraged, but the impact of Delivering for America has consequences. USPS has been moving letter carriers out of the back of local post offices and into larger Sorting & Delivery Centers, known as S&DCs. On paper, it is an efficiency effort. For postal employees, it can mean longer commutes, unfamiliar routes, changed schedules, and growing uncertainty about the future of their jobs.

One postal worker described the change this way: “Last year, I reported to my local post office’s delivery unit, prepared my mail, ran my neighborhood carrier route, and went home. Now I drive an hour to the nearest Sorting & Delivery Center, drive an hour back to my neighborhood to deliver the same route, return to the S&DC to close out, and then drive an hour home. That adds four hours to my day. Is anyone looking at that? I used to love this job, but I don’t know how I can keep doing this.”

As USPS sinks deeper into crisis, postal workers are being asked to keep the nation’s mail moving while the system defers the very health and retirement obligations they have earned.

The USPS says this change in operations has produced more than $1 billion in savings to date, potentially generating billions more annually if fully implemented. But, an audit from the United States Postal Service Office of Inspector General found it also created $1.4 million in added overtime costs and about $19 million in additional labor expenses. This raises concerns about whether the savings are as clear as the USPS suggests.

Although postal workers' TSP accounts aren’t being raided, nor are their pensions disappearing, suspending employer contributions to the Federal Employees Retirement System (FERS) to save money isn’t a sustainable solution. While it may be saving the USPS roughly $100 million per week, or $2.5 billion in the current fiscal year, using those would-be contributions to employees’ retirement funds just to keep the lights on is only multiplying future indebtedness.

Eventually, those missed payments will have to be restored, restructured, or addressed by congress. For postal workers, it also raises an important question: how will the agency afford to pay back both missed and future payments.

Postal workers aren’t the only ones impacted by this financial crisis. While taxpayers may not be paying USPS’ operating costs now, that doesn’t necessarily mean they won’t in the future. When a public service is legally required to serve every American address, but can’t sustain itself financially, the bill doesn’t go away. It gets pushed onto workers, customers, communities, and potentially taxpayers.

The USPS can no longer afford to be expected to operate like a business while fulfilling a public mission. Unlike commercial carriers chasing profitable routes, the Postal Service is the only carrier legally obligated to deliver to every address in America; from densely populated cities to the most remote rural communities, regardless of whether the route pays for itself.