Author: Kevin O'Leary

The Good, The Bad and the FEGLI, by Kevin O’Leary

The Good, The Bad and the FEGLI

By: Kevin O’Leary

FEGLIThe Federal Government Group Life Insurance Program, also known as FEGLI, is considered to be the largest group life insurance program in the world. This coverage plan provides life insurance protection to more than 4 million Federal employees and retirees, along with many of these individuals’ family members.

 

FEGLI Advantages

There are a number of nice advantages to being a FEGLI participant. First, most Federal employees are eligible. This means that even with certain pre-existing health conditions that would deem an individual unacceptable for an individual life insurance plan, coverage is available – allowing for peace of mind in that loved ones will have at least some amount of benefit to pay off debts and / or to replace lost income.

In addition, the cost of the coverage is shared between the participant and the U.S. Government – with Uncle Sam paying for 1/3 of the premium price. This can equal a nice percentage discount on this necessary benefit.

 

The Drawbacks

Yet, while the FEGLI program is extensive and offers some nice perks, there are also a few drawbacks to be aware of. First, the coverage that is offered is term life insurance. This means that the benefit provided consists of pure death benefit protection, without any type of cash value or investment build up. Therefore, if individuals want to also participate in a long-term tax-deferred savings program like you can get through permanent life insurance policies, they will need to do so elsewhere.

In addition, while the price of term life insurance coverage is typically very affordable for those who are young and healthy, the price tends to increase substantially over time. This is especially the case as an insured reaches his or her 50s, 60s, and beyond. Unfortunately, this is oftentimes when people need life insurance protection the most.

Therefore, for Federal Employees’ Group Life Insurance Program participants who wish to remain covered in their older ages, there are essentially two options. First, be prepared to pay a much higher premium over time if remaining in FEGLI, as the cost of your term life benefits continue to increase.

Alternatively, you could purchase an individual permanent life insurance policy at a younger age and lock in the premium for this coverage for the remainder of your life. This way, you will be ensured of having that policy for life – regardless of your age or health condition – as long as the premium continues to be paid. You will also be able to build up tax-deferred savings – another added benefit with this type of life insurance plan.

 

More about Kevin O’Leary

Kevin O’Leary is a Federal retirement expert who works out of his Southern California office, but helps federal employee clients throughout the country.  Kevin O’Leary is a regular contributor to PSRetirement.com and Kevin O’Leary is a highly sought after speaker and advisor on federal retirement benefits.

You can reach Kevin O’Leary

kevin.oleary@goveb.info

Gov EB Network

30300 Point Marina

Canyon Lake, CA 92587

 

Other Kevin O’Leary Articles

Federal Phased Retirement Program now available, by Kevin O’Leary

Married Fed’s with Fed Spouses Have More SSB Options, by Kevin O’Leary

Taking Early FERS Retirement Could Cost You Your SRS Benefit, by Kevin O’Leary

The High Cost of Waiting – “Buy Back” Military Time Early To Avoid High Interest Charges by Kevin O’Leary

Taking Early FERS Retirement Could Cost You – by Kevin O’Leary

Taking Early FERS Retirement Could Cost You Your SRS Benefit

By: Kevin O’Leary

RetirementFor many people, taking an early retirement may sound appealing. The thought of relaxing on the beach or having time for personal travel can certainly be enticing. However, in some cases, opting out of employment early could come at a price. This may be the case when taking early FERS (Federal Employees Retirement System) retirement.

 

Federal Employees Retirement System Options

There are actually two early retirement options in the Federal Employees Retirement System. These consist of:

  • MRA (Minimum Retirement Age) + 10
  • Early Out, when there is a Reduction in Force (or RIF) offered by an agency

 

MRA + 10 Option

In order to qualify for the MRA + 10 option, an individual must have met their minimum retirement age, and have at least ten years of creditable service with the agency.

While it is a nice early retirement option, the MRA + 10 does have some drawbacks. One such negative is that the individual’s pension will be permanently reduced by 5 percent for every year that they are under age 62.

Normally FERS retirees will enjoy a ‘special retirement supplement’ (SRS) payable by OPM until they are eligible to receive Social Security benefits at age 62. This is in addition to their FERS pension annuity. However, the SRS  is not payable to employees who retire on a reduced (MRA+10) or deferred retirement.

Furthermore, the individual’s pension will not be eligible to receive Cost of Living Adjustments until he or she reaches age 62 – and when they do reach that age, they will not receive any retroactive increases. This can make a substantial difference in the amount that you end up receiving over time.

Early Out Option

Although an Early Out is considered to be a “voluntary” early retirement, this option can really only be chosen if and when it is offered by your agency. There are typically only two times when this may occur. One is when there is a Reduction in Force. The other is when there is a major reorganization in the agency.

In addition, an individual will also need to meet certain requirements in order to take an Early Out retirement. These criteria include the person being either at least 50 years old and having a minimum of 20 years of service with the agency, or being any age and having at least 25 years of service.

Also, it will be required that the person has actually separated from service prior to the end of the Early Out period – and, the individual must have been on the rolls of the agency that is offering the Early Out for at least 30 days prior to the agency making the Early Out request.

Unlike with the MRA + 10 early retirement, however, the Early Out option will not result in a reduction in pension benefits and the retiree would be eligible to receive SRS payments when they reach their MRA although they are already retired. In fact, this particular option may even come with additional incentives such as a lump sum dollar amount in order to make the Early Out offer more attractive.

 

SRS Benefit Determination

The SRS (Special Retirement Supplement) amount will be based on the number of years of service you have provided, as well as the amount of your expected amount of Social Security benefit. With that in mind, taking an early retirement can have an effect – and in some cases, a substantial effect – depending on how early you retire from service.

 

More about Kevin O’Leary

Kevin O’Leary is a Federal retirement expert who works out of his Southern California office, but helps federal employee clients throughout the country.  Kevin O’Leary is a regular contributor to PSRetirement.com and Kevin O’Leary is highly sought after speaker and advisor on federal retirement benefits.

You can reach Kevin O’Leary

kevin.oleary@goveb.info

Gov EB Network

30300 Point Marina

Canyon Lake, CA 92587

 

Other Kevin O’Leary Articles

Federal Phased Retirement Program now available, by Kevin O’Leary

Married Fed’s with Fed Spouses Have More SSB Options, by Kevin O’Leary

The Good, The Bad and the FEGLI, by Kevin O’Leary

The High Cost of Waiting – “Buy Back” Military Time Early To Avoid High Interest Charges by Kevin O’Leary

 

Married Fed’s with Fed Spouses Have More SSB Options, by Kevin O’Leary

Married Fed’s with Fed Spouses Have More SSB Options

By: Kevin O’Leary

retirementAs a married Federal employee, choosing retirement benefits can mean more than just simply deciding on how to receive long-term income. It can also refer to how your survivor will be able to go on should you pass away.

In deciding how your spouse will be able continue paying his or her ongoing living expenses, there are a number of different options that you can choose from – starting with how much of your own retirement income you estimate that your survivor will need going forward.

Other considerations include other assets or pensions your spouse has as well as life insurance death benefits available to your spouse after you die.

 

Determining a Survivor Annuity Amount

Participants in the FERS retirement system have several options when it comes to continuing their pension income for their survivors. The plan allows for one of three choices – including full, partial, or no amount of continued pension income.

If the “full” survivor option is chosen for your survivor, it means that he or she will be able to continue receiving 50 percent of your regular monthly pension amount once you have passed away.

Should you opt for this pension continuation feature for your survivor, there is a “cost” of 10 percent of your monthly pension income, deducted regularly throughout the remainder of your life.

If you should alternatively choose for your survivor to receive a reduced amount of your pension once you pass away, this means that he or she will start receiving 25 percent of your monthly pension income amount following your death.

As with the full pension, there is also a cost for this option. The reduced survivor pension option cost is a deduction of 5 percent of your monthly pension income each month throughout your lifetime.

The CSRS options are more flexible regarding the percentage of your pension you can leave to your spouse and the maximum is higher at 55%.

 

Choosing No Survivor Benefit Option

In some cases, the “no survivor benefit” option will be chosen. While all cases and situations are different, it is extremely important to consider all angles prior to making this particular choice. One factor to keep in mind here is that, by going with no survivor annuity income benefit, your survivor will also be ineligible for FEHB health insurance benefits following your death as well.

However, If your spouse is also a Federal Employee and chooses no SSB on your retirement papers he or she could continue FEHB on his or her own record if you die first in most cases. You could do the same for your spouse’s retirement papers and substantially increase the total household retirement income without concern over the surviving spouses access to the FEHB. This might be a good option if the couple already has substantial assets or life insurance that would be available to the surviving spouse.

Should you make any of the choices above and then have second thoughts about the options that were decided upon, you will have a 12 month “window” of time following the date of your retirement in order to make changes to the choices on your survivor annuity benefits. However, once this time period has elapsed, you will be unable to make any type of revisions to your plan other than if you get married or divorced, or if your survivor passes away.

 

More about Kevin O’Leary

Kevin O’Leary is a Federal retirement expert who works out of his Southern California office, but helps federal employee clients throughout the country.  Kevin O’Leary is a regular contributor to PSRetirement.com and Kevin O’Leary is highly sought after speaker and advisor on federal retirement benefits.

You can reach Kevin O’Leary

kevin.oleary@goveb.info

Gov EB Network

30300 Point Marina

Canyon Lake, CA 92587

 

Other Kevin O’Leary Articles

Federal Phased Retirement Program now available, by Kevin O’Leary

Taking Early FERS Retirement Could Cost You Your SRS Benefit, by Kevin O’Leary

The Good, The Bad and the FEGLI, by Kevin O’Leary

The High Cost of Waiting – “Buy Back” Military Time Early To Avoid High Interest Charges by Kevin O’Leary

 

Federal Phased Retirement Program Now Available, by Kevin O’Leary

Federal Phased Retirement Program now available

By: Kevin O’Leary

Retirement In many industries, phased retirement programs are now being used that can allow employees who are approaching retirement age to continue working, but with a reduced workload, while they transition into full-time retirement. The Federal Employees Retirement System (FERS) has begun to offer a phased retirement program to its employees.

With the phased retirement program, full-time employees will be able to work part-time schedules, while starting to draw on their retirement benefits. In doing so, those who are “phasing out” will also be able to mentor current employees with their knowledge, while at the same time preparing themselves for retirement. This option also allows these individuals to essentially keep a portion of their retirement annuity for the time when they entire into full retirement.

When an employee elects the phased retirement option, he or she will be considered as “partially” retired, and will start to receive approximately half of their annuity. They will work at 50 percent, or on a part-time status, and will receive approximately one-half of their pay. Twenty percent of their working time must, however, be spent in mentoring activities.

Regarding TSP considerations the employee is still considered working and can continue to contribute and receive matching contributions but cannot access the post service withdrawal options until fully retired.

For the purpose of the phased retirement program, mentoring is considered to be a “process that focuses on providing guidance, direction, and career advice.” This can provide an opportunity for problem solving and goal achievement for both the current employees, as well as for the retiree.

Some of the activities that can meet the mentoring requirement include the transfer of particular knowledge, the management of knowledge, succession planning, and even career development for the employees.

 

Who is Eligible to Participate in the Phased Retirement Program?

In order to be eligible to participate in the phased retirement program, you must meet the following criteria:

  • You must have been a full-time employee for at least the three years prior to entering into the phased retirement program;
  • You must be eligible for immediate retirement as per either of the following:
  • FERS: You must have met your minimum retirement age and have at least 30 years of service, or be at least age 60 and have a minimum of 20 years of service;
  • CSRS: You must be at least age 55 and have 30 years of service, or be at least age 60 and have a minimum of 20 years of service.

There are certain employees who are specifically excluded from the phased retirement program. These include:

  • Law Enforcement Officers
  • Fire Fighters
  • Air Traffic Controllers
  • Nuclear Materials Couriers
  • Capital Police and Supreme Court Police
  • Some Customs and Border Protection Officers

Those employees who wish to participate in the phased retirement program are required to pay all civilian deposits, military deposits, and redeposits prior to beginning the program.

 

More about Kevin O’Leary

Kevin O’Leary is a Federal retirement expert who works out of his Southern California office, but helps federal employee clients throughout the country.  Kevin O’Leary is a regular contributor to PSRetirement.com and Kevin O’Leary is a highly sought after speaker and advisor on federal retirement benefits.

You can reach Kevin O’Leary

kevin.oleary@goveb.info

Gov EB Network

30300 Point Marina

Canyon Lake, CA 92587

 

Other Kevin O’Leary Articles

Married Fed’s with Fed Spouses Have More SSB Options, by Kevin O’Leary

Taking Early FERS Retirement Could Cost You Your SRS Benefit, by Kevin O’Leary

The High Cost of Waiting – “Buy Back” Military Time Early To Avoid High Interest Charges by Kevin O’Leary

The Good, The Bad and the FEGLI, by Kevin O’Leary

 

The High Cost of Waiting – Military Buy Backs by Kevin O’Leary

The High Cost of Waiting – “Buy Back” Military Time Early To Avoid High Interest Charges

By: Kevin O’Leary

militaryToday, there are a lot of federal employees who have also had previous military service. So, when considering buying back military time with regard to federal retirement, many employees are curious as to whether or not it could make sense for them to do so.

For example, if you do a military “buy back,” it can increase the number of years in service that are used in the calculation of your retirement pension annuity. And, the more years that you have, the higher the amount that your retirement pension income will typically be.

You should first estimate your retirement benefit both with and without your military time included so you can have an idea if the benefits will outweigh the costs.

How Much Will The Buy Back Cost You?

If you do opt to implement a buy back, though, there are some factors to consider. First and foremost, most people need to determine just how much it will “cost” them to do so. The answer to this will depend primarily on the following key factors.

First, it will be dependent on when exactly your service took place. In addition, the amount that you were paid will also play a role, as well the amount of interest that has accrued since that time. The other big determinant will be whether you are in the Federal Employees Retirement System (FERS) or in the Civil Service Retirement System (CSRS).

In determining the amount that you were paid, it helps if you have access to your military pay records. However, if you do not have copies of this information, submitting a copy of your DD-214 form and sending a request to your branch of the military’s pay center can also obtain this necessary information.

Once you have obtained the information that you require, you will need to multiply the pay number by a particular percentage – depending on which of the retirement systems that you are in. For example, if you are in FERS, multiply the amount of your military base pay by 3 percent. Alternatively, if you are in CSRS, multiply the amount by 7 percent.

Once this figure has been determined, interest will be added. For most people the principal amount is relatively small because it is a percentage of your military base which is usually small to begin with. However, interest over a 20 or 30 year Federal career can add up to several times the principal amount owed if you procrastinate.

 

More about Kevin O’Leary

Kevin O’Leary is a Federal retirement expert who works out of his Southern California office, but helps federal employee clients throughout the country.  Kevin O’Leary is a regular contributor to PSRetirement.com and Kevin O’Leary is highly sought after speaker and advisor on federal retirement benefits.

You can reach Kevin O’Leary

kevin.oleary@goveb.info

Gov EB Network

30300 Point Marina

Canyon Lake, CA 92587

 

Other Kevin O’Leary Articles

Federal Phased Retirement Program now available, by Kevin O’Leary

Married Fed’s with Fed Spouses Have More SSB Options, by Kevin O’Leary

Taking Early FERS Retirement Could Cost You Your SRS Benefit, by Kevin O’Leary

The Good, The Bad and the FEGLI, by Kevin O’Leary