A former federal employee himself, Edward Zurndorfer of EZ Accounting and Financial Services in Silver Spring, Md., a CFP, who advises on an hourly fee basis, reports that more than half of his clients are federal employees—and all benefit from guaranteed pension retirement income.

The biggest lesson he has to impart to them, he says, “You are the lucky ones. You can afford to take risks associated with the stock market because you have guaranteed income for life.”

During those bleak years when the Dow Jones Index nosedived in 2008 and 2009, Zurndorfer dispensed almost comical advice to his clients who came in fretful and insisting that they had to “stop the bleeding” and pull out of the stock market. “I would just tell them to not open the envelopes when the reports on their assets and portfolios were delivered,” Zurndorfer recalls.

Gerald Cannizzaro, a planner at Ticknor, Atherton & and Associates in Reston, Va., also advises many retired former federal workers with defined benefit pensions and he teaches classes to them on a regular basis. He agrees they need reassurance and constant reminders that by definition their defined benefit pensions mean income for life.

When he starts working with a retired client, Cannizzaro has them list out all their income sources, including their pensions. If with that kind of inventory, they feel pinched or if they worry about stock market slides hurting their overall wealth, Cannizzaro has a readymade answer. He tells them to start planning on saving rather than spending any Cost of Living Adjustments.

Some years, COLA adjustments have equaled as much as 3%. So a federal employee with a $100,000 a year pension, not an uncommon amount for a bureaucrat who reached the top of his heap, that means $3,000 extra invested every 12 months.

With those kind of assurance-providing steps during the recession, Cannizzaro says he managed to talk many retired clients down from the ledge of pulling out of the stock market. As it happened only one of his more than 100 clients pulled out and lost money then, he says.

Miriam Rozen, a Financial Planning contributing writer, is a staff reporter at Texas Lawyer in Dallas.

Miriam Rozen

Miriam Rozen, a Financial Planning contributing writer, is a staff reporter at Texas Lawyer in Dallas.