5 Retirement Planning Tips for Washington State Employees in 2025

Planning for retirement is one of the most impactful financial steps you can take, and for Washington State employees, 2025 brings new opportunities to optimize savings and maximize benefits. Whether you’re just starting out or nearing retirement, these tips can help you make the most of your resources and retire with confidence.

1. Understand Your Pension Plan

Washington State offers two main pension plans for employees: Plan 2 and Plan 3. Here’s a quick breakdown:

• Plan 2: A defined benefit plan where your annual pension is calculated as:
• Plan 3: A hybrid plan combining a 1% defined benefit with a defined contribution portion that grows based on your investments. This plan offers more flexibility but requires active portfolio management to maximize returns.

Take time to evaluate whether early retirement might be a good fit for you. While early collection reduces benefits, it can still align with your financial goals by unlocking cost-of-living adjustments (COLAs) sooner.

2. Maximize Retirement Contributions

In 2025, contribution limits for retirement accounts are increasing:

• Under age 50: $23,500
• Age 50 and older: $31,000 (including a $7,500 catch-up)
• Ages 60-63: Eligible for an additional $11,000 under the new enhanced catch-up provision, totaling $34,500.

Adjust your payroll deductions early to ensure you hit these limits, especially if you plan to retire mid-year. For those eligible for the enhanced catch-up, this is a great chance to boost savings significantly.

3. Review Healthcare and Long-Term Care Plans

Healthcare costs can be a major concern in retirement. Start the year by:

• Evaluating Your Health Plan: Ensure it aligns with your needs and planned medical expenses.
• Considering VEBA Plans: Convert unused sick leave into a tax-free VEBA account to cover future healthcare expenses.
• Planning for Long-Term Care: Options like long-term care insurance or leveraging home equity can prevent financial strain. Be proactive to avoid burdening loved ones.

4. Double-Check Beneficiaries

Outdated beneficiary information can lead to unnecessary delays and legal challenges. Review:

• Pension plans
• 401(k), 403(b), and DCP accounts
• Life insurance policies

Make updates as needed, especially after major life events like marriage or the birth of a child. If you’ve established a trust, ensure it’s correctly listed as a beneficiary.

5. Set Clear Financial Goals

Goals provide focus and motivation. Examples include:

• Saving an additional $500 per month
• Reducing expenses by 10%
• Generating $100,000 in investment income

Use a simple tracking tool, like a Google Sheet, to monitor your progress. If you need accountability, join a community of like-minded individuals who can help you stay on track.

Take Action Today

Retirement planning is an ongoing process that requires attention to detail and proactive adjustments. By understanding your pension, maximizing contributions, and planning for healthcare and long-term care, you can confidently build a secure future.

Let’s connect!

• Join our free community for exclusive tools and insights tailored to Washington State employees. Click here to join.
• Ready to take control of your retirement? Schedule a personalized meeting with us here.
• Get expert investment advice on your TRS 3 and DCP plans here.

Let’s make 2025 your best year yet!