Author: Paul Kalra

Paul has been providing financial services for over 25 years to doctors, business owners and others nearing or in retirement. After a successful career with John Hancock Financial Services, in 2002, he founded his own firm, Signature America Financial Planning Services, Inc. in Lake Forest, CA. In his practice as a financial planner, Paul hasfound that when people are nearing their retirement years, they are faced with confounding decisions about their retirement plans, 401(k)’s, IRA’s, Social Security, Medicare, life insurance, wealth-preservation and estate planning. What motivated him to focus his practice on helping people in their 50’s and 60’s was when Paul began facingsuch decisions himself and realized that the answers would have been very tough if he were not a financial planner.

Calculating the FERS Supplement by Paul Kalra

A Lesson on Calculating the FERS Supplement by Paul Kalra

FERS Paul Kalra

There are many FERS annuitants who are able to retire prior to the age of 62, and who are eligible for the SRS (Special Retirement Supplement). You can meet such requirements if you have retired:

  • Following the MRA (Minimum Retirement Age) after putting in at least 30 years of service;
  • At age 60 with at least 20 years of service; or
  • Upon either an early voluntary or an involuntary retirement at age 50 after having 20 or more years of service, or at any age after at least 25 years of service, when it has been determined that your agency is undergoing a major reorganization, a RIF (reduction in force) or a transfer of function. (In this situation, you will not receive the SRS until you have reached your Minimum Retirement Age).

As Social Security retirement benefits cannot be received until you reach at least the age of 62, the Special Retirement Supplement can help you with bridging your income until the time that these benefits are paid out.

In order to determine roughly how much you will receive from your SRS, you should first obtain an estimate of benefits from the Social Security Administration. Each year, Social Security provides a statement of estimated benefits, so you will be able to easily find the dollar amount of estimated benefits that you are likely to be receiving at age 62.

Next, take this dollar amount and multiply it by your years of FERS service (rounded off to the nearest whole number). Once you have done so, divide this figure by 40. This will provide you with the approximate amount of FERS supplement that you should receive.

As an example, if the amount of Social Security benefit that you are estimated to receive at age 62 is $5,000 and you have put in 30 years of FERS service, then the calculation will be as follows:

$5,000 X 30 / 40 = $4,500

In running this calculation, your estimated FERS Supplement benefit would be approximately $4,500 per month. It is important to note, however, that certain situations such as obtaining outside employment following retirement could have an impact on the amount of benefit that you ultimately receive.

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FEGLI and the Living Benefit by Paul Kalra

Paul Kalra, FEGLI and the Living Benefit

Paul KalraPaul Kalra is a financial planner and federal retirement expert in Lake Forest, California.

Although most people purchase life insurance for the death benefit protection that it provides, many may not realize that there are other ways in which this financial tool can be used in taking care of additional needs while the insured is still alive.

Commonly referred to as “living benefits,” some life insurance policies today will allow an insured to access the death benefit funds if he or she meets certain criteria, such as being diagnosed with a terminal illness. Today’s FEGLI (Federal Employees’ Group Life Insurance) plans may allow a participant to access this type of feature.

Should the enrollee have a documented medical prognosis whereby he or she has a life expectancy of nine months or less, then they may elect to access a lump sum of cash from their FEGLI plan.

The amount of the lump sum that can be accessed is equal to the participant’s Basic life insurance amount, plus any amount of extra benefit for those who are under the age of 45, that is in effect nine months following the date that the Office of Federal Employee’s Group Life Insurance receives the completed living benefits claim form.1

It is important to note that when living benefits are accessed from a FEGLI policy – or from any life insurance policy – the amount that is taken from the policy will reduce the amount of funds that will be payable to the policy’s beneficiary at the time of the insured’s death.

In the case of living benefits on a FEGLI policy, an annuitant is not eligible to elect only a partial amount of benefit from the plan. Therefore, while an employee may opt to take just a portion of their insurance funds, if an annuitant elects living benefits, his or her survivors will not be eligible for any Basic insurance benefits at the time of the individual’s death.

More about Paul Kalra, CFP, ChFC, CLU:

Paul Kalra has been providing financial services for over 25 years to doctors, business owners and others nearing or in retirement. After a successful career with John Hancock Financial Services,in 2002, Mr. Kalra founded his own firm, Signature America Financial Planning Services, Inc. in Lake Forest, CA.

In his practice as a financial planner, Paul Kalra has found that when people are nearing their retirement years, they are faced with confounding decisions about their retirement plans, 401(k)’s, IRA’s, Social Security, Medicare, life insurance, wealth-preservation and estate planning. What motivated him to focus his practice on helping people in their 50’s and 60’s was when Mr. Kalra began facing such decisions himself and realized that the answers would have been very tough if he were not a financial planner.

How Do TSP Investments Compare? by Paul Kalra

Paul Kalra Paul Kalra is a financial planner and federal retirement expert in Lake Forest, California.

TSP Investment Advice from Paul Kalra

Despite the roller coaster stock market over the past few years, it seems that, on average, the account balances in the TSP (Thrift Savings Plan) appear to be going up. The participants who assumed more risk – or at least those who seemed to do so – by going with the S and I funds, attained a return of just under 5% for the first half of 2015. And, those who stuck it out with a bit more volatility in foreign stocks were rewarded with just under a 6.5% return during the same time frame.1

By almost year-end 2015, FERS held an average balance of nearly $117,000 in their TSP plan, with an average Roth account balance for these same individuals of just over $7,100.2 If you are a CSRS employee, the average was closer to just under $119,000 in the TSP plan, with a Roth balance of just a tad over $11,500.3

How is the Money Distributed?

In terms of where the funds are being distributed by TSP plan holders, there seems to be a larger percentage of allocation being placed in both the G Fund and the C Fund, at 35% and 28% respectively.4

The remainder of the TSP fund balances sort out as follows (as of November 2015):

  • L Funds – 17%
  • F Fund – 5%
  • I Fund – 5%
  • S Fund – 10%5

Tracking Your TSP Investments

If you have money invested in the Thrift Savings Plan and you want to see how you’re doing – or even if you just want to check a hypothetical example – Check out the Thrift Savings Plan official page for information on TSP Fund prices and historical performance.

More about Paul Kalra, CFP, ChFC, CLU:

Paul Kalra has been providing financial services for over 25 years to doctors, business owners and others nearing or in retirement. After a successful career with John Hancock Financial Services,in 2002, Mr. Kalra founded his own firm, Signature America Financial Planning Services, Inc. in Lake Forest, CA.

In his practice as a financial planner, Paul Kalra has found that when people are nearing their retirement years, they are faced with confounding decisions about their retirement plans, 401(k)’s, IRA’s, Social Security, Medicare, life insurance, wealth-preservation and estate planning. What motivated him to focus his practice on helping people in their 50’s and 60’s was when Mr. Kalra began facing such decisions himself and realized that the answers would have been very tough if he were not a financial planner.

The Federal Employees Health Benefits (FEHB) and Self + 1 by Paul Kalra

Federal Employee Health Benefits (FEHB) Advice from Paul Kalra

Paul Kalra

If you missed the chance to enroll in the new FEHB (Federal Employees Health Benefits) Self Plus One plan that was available in the fall of 2015, you have another chance in February 2016 to obtain these benefits if you choose to do so.

Back in 2013, as a part of the Bipartisan Budget Act, the Self Plus One plan was established. This plan covers one employee / enrollee, plus one eligible family member that the enrollee designates to be covered.

This differs from other current plans. For example, with the Self Only plan, only the enrollee is covered by the benefits, whereas with the current Self and Family plan, the enrollment will provide coverage for the enrollee along with all of his or her eligible family members.

Considering a Self + 1 Plan

In most cases, changing plans is only allowed outside of enrollment Open Season if a participant has what is considered to be a “qualifying event” in their life. This can include events such as a:

  • Marriage or divorce
  • Birth of a child
  • Change in employment status

However, because the new Self Plus One option because available as a new plan option, FEHB enrollees will essentially have what is a second chance to enroll in this coverage throughout the month of February 2016.

The February time frame does not apply to those who are federal employee annuitants, as well as certain others such as TCC (Temporary Continuation of Coverage) enrollees and those who do not participate in premium conversion. This is because these participants are allowed to decrease their plan enrollment at any time throughout the year.1

More about Paul Kalra, CFP, ChFC, CLU:

Paul Kalra has been providing financial services for over 25 years to doctors, business owners and others nearing or in retirement. After a successful career with John Hancock Financial Services,in 2002, Mr. Kalra founded his own firm, Signature America Financial Planning Services, Inc. in Lake Forest, CA.

In his practice as a financial planner, Paul Kalra has found that when people are nearing their retirement years, they are faced with confounding decisions about their retirement plans, 401(k)’s, IRA’s, Social Security, Medicare, life insurance, wealth-preservation and estate planning. What motivated him to focus his practice on helping people in their 50’s and 60’s was when Mr. Kalra began facing such decisions himself and realized that the answers would have been very tough if he were not a financial planner.

Making the Most of TSP Contributions by Paul Kalra

Thrift Savings Plan (TSP) Advice from Paul Kalra

Paul Kalra Paul Kalra, CFP, ChFC, CLU

If you are a FERS (Federal Employees Retirement System) employee who contributes to the TSP (Thrift Savings Plan) each year, there are some important things to know when it comes to making your contributions. This is because maxing out your deposits too early in the year could actually put you at risk of losing some of your matching contributions.

Each year, the government can contribute up to 5% of your salary to the TSP plan in a number of different ways. These include:

  • Agency automatic 1% contributions
  • Dollar-for-dollar contributions (on the first 3% of pay that you contribute)
  • 50 cents on the dollar (on the next 2% of pay that you contribute)

While it is a good strategy to obtain as much of the employer matching as possible, because there is an annual limit on TSP plan contributions, by “maxing out” your annual contributions too early in the year, employer matching contributions can be lost by not making any deposits after the plan has met its annual contribution limit.

Things to Consider

When it comes to making your annual TSP contributions, there are several important factors to consider. For example, you need to be aware of when you actually reach you annual contribution limit for the year. This is because when this limit has been reached, your employee contributions into the plan must be suspended for the rest of the year. In fact, the TSP system won’t even allow any contribution by an employee to be processed if it will cause the total amount of deposits for that year to exceed the annual limitation.

In addition, if you have reached your annual contribution limit prior to year-end – and further deposits have been suspended – this also means that agency matching contributions will also be suspended. This is because these contributions are based on the amount of contribution that an employee makes into the TSP in each pay period. Therefore, if you aren’t making any contributions, then there won’t be anything to match.

It is important to note, however, that if you are a FERS employee, your agency is still required to make an automatic 1% contribution – even if your employee contribution and agency matching contribution has been suspended.

More about Paul Kalra, CFP, ChFC, CLU:

Paul Kalra has been providing financial services for over 25 years to doctors, business owners and others nearing or in retirement. After a successful career with John Hancock Financial Services,in 2002, Mr. Kalra founded his own firm, Signature America Financial Planning Services, Inc. in Lake Forest, CA.

In his practice as a financial planner, Paul Kalra has found that when people are nearing their retirement years, they are faced with confounding decisions about their retirement plans, 401(k)’s, IRA’s, Social Security, Medicare, life insurance, wealth-preservation and estate planning. What motivated him to focus his practice on helping people in their 50’s and 60’s was when Mr. Kalra began facing such decisions himself and realized that the answers would have been very tough if he were not a financial planner.