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Finding the Benefits and Eligibility for CSRS Retirement

Finding the Benefits and Eligibility for CSRS Retirement

There are not too many federal workers who are part of the CSRS now. The workers who are part of it are close to retirement age, or have already reached it.

When you’re under CSRS, workers have the option to retire right away if they meet the service and age requirements They are as follows: the worker must be 55 years of age and have served for 30 years; 60 years of age and served for 20 years; 62 years of age and served for 5 years. Under certain conditions, you can retire even earlier. Some examples of situations like this include during a reorganization, reduction-in-force, you’re given the chance to leave by your agency, or a transfer of function.

If you’re allowed to retire early under one of these, you can be a minimum of 50 years of age and you must have served for 20 years. But you can retire at any age if you’ve served for 25 years. Those who take retirement early will have a 1/6 of 1% reduction in their annuity per month until they’ve reached 55 years of age. That comes out to a 2% reduction for each year. However, this system was made unavailable to new applicants who got hired after 1984. That is why most of today’s CSRS workers don’t have this.

To figure out the retirement annuity of CSRS, you can compute it as follows:

1.5% * your high-3 * service for 5 years, +

1.75% * your high-3 * total years and months served from 5-year mark to 10-year mark, +

2% * your high-3 * total years and months served after 10 years.

“Your high-3” means the average amount of your highest 3 years served consecutively (78 basic pay periods that were bi-weekly). Your retirement eligibility is dependent on your years served and your age.

Under this formula, your earned amount of annuity is given. This amount cannot be over 80% of your high-3. When you have sick leave that you didn’t use, it won’t help give you retirement eligibility. Instead, your sick leave gets added to the number of served years while making your annuity increase. If your sick leave has added up to 174 hours of credit, then it’ll count as one month added to your service record.

Lastly, your annuity will receive a cost-of-living adjustment once you are retired. The adjustment must be authorized, though, and it was not authorized this year. The adjustment amount depends on the annuity roll and how many months you were on there.

Thousands of TSP Participants Missing Out On Agency Contribution Matching Funds

Thousands of TSP Participants Missing Out On Agency Contribution Matching Funds

Several thousand Thrift Savings Plan participants attained their yearly contribution limit before year end, and are missing out on their respective agency’s full matching contribution.

The TSP, which is handled by the Federal Retirement Thrift Investment Board, noted this is an extremely common situation. The agency is looking at some way of letting these folks know what actions they need to take to benefit from their agency’s full-matching contribution all year long.

According to the FRTIB, a little more than 75 percent of the Federal Employee Retirement System participants contributed at least five percent of their income to the TSP in the last 2017 quarter. The amount last year was roughly the same.

What Contributing More Early On Is Leading To

FRTIB Chief of Business Intelligence Geof Nieboer said the trend wasn’t unexpected. He said a closer statistical look showed that the main reason for the late year drops is that some participants are contributing a higher amount of their income toward the contribution and reaching that yearly limit before the year’s end.

Although well-intentioned, what they fail to understand is that stopping the contributions means not getting the matching contribution the agency provides. This, in turn, means missing out on money.

TSP participants can decide how much income of their bi-monthly pay period can be contributed to the program. From that amount, they get a matching contribution from the agency. However, too much contribution in the earlier part of the year means missing out on the income they’d get from their agency.

The FRTIB would like 80 percent of the participants to contribute enough where they get the agency’s matching contribution. However, similar to 2017, the agency knew it would see a decline in participation.

TSP enrollees can use the FRTIB’s contribution calculator to plan out their contributions better.

The agency will also let employees know about the amount of payroll periods in each year to ensure TSP participants can make the necessary adjustments to their contributions.  For instance, the Interior Business Center has let employees know there would be 27 pay periods in 2018; this is an increase of one from 2017.


What The FRTIB Is Doing To Inform Participants

Currently, the FRTIB has not been sending customized messages to those who max out their contributions early. However, FRTIB Communications Director Jim Courtney said, it will start doing so next year to address the “problem.” He said the only surefire way to get the message through to people is to personalize the message.

The FRTIB has been collecting email addresses from the TSP participants over the last two years and roughly has three million of them to date.

For now, the TSP does not demand that new enrollees give their email address.

The TSP agency has been issuing board announcement or news bulletins to reach the masses about new features or the relaxation of certain rules. However, it’s never sent targeted messages to certain groups of people.

The FRTIB, however, said it projects fewer hardship withdrawals to have been made in 2017 compared to previous one. The agency processed 607 of them in relation to Hurricane Harvey, more than 1,100 for Hurricane Irma and just 179 for Hurricane Maria. The agency couldn’t say why there were less TSP participants needing hardship withdrawals even though the FRTIB relaxed rules for situations like the Californian wildfires and the hurricanes.

Director of Participant Services Tee Ramos said he could make some guesses as to why such as a stronger economy. However, there’s no information stating why either way.



Self-Made TSP Millionaires

Self-Made TSP Millionaires

Between January 2016 and August 2017, the number of self-made government worker millionaires jumped drastically. It went from 3,272 to 16,475. The rising stock market is helping more and more people join this millionaire retirement club each and every month. In addition to the millionaires, in August, there were over 46,000 people with account balances between $750,000 and $999,000. This had increased from about 19,000 in January 2016.

So how did these people do it?

Early TSP millionaires were political appointees including members of the House or Senate. Many others were lawyers who were named federal judges. They all brought their outside accounts with them and into the Thrift Savings Plan. This is likely the least expensive investment option that exists.

For federal investors, it is very important to take advantage of that 5% match that the government offers employees. For a TSP investor making $100,000 a year, the government match translates into a tax deferred pay raise. As the salary increases, so does the value of the match.

When you talk to a self-made TSP millionaire, they all have a few things in common. First, they have all been investing for a long time. In fact, the average investment time for these self-made millionaires is 28 years. They also have all, or at least most, of their money in the C and S funds. Even when the market tanks, like it did in 1997 and again in 2008, they continue to buy the stock funds. In fact, they got more shares because they considered them on sale. Then, they proceed to benefit from compounding.

Patience and smart investing can potentially help make you one of these self-made millionaires.

Creating a TSP Withdrawal Plan

Indexed Universal Life

Creating a TSP Withdrawal Plan

At the beginning of 2017, the Office of Personnel Management obtained over 15,000 new staff retirement claims for those who filed at the end of 2016. The figures for 2017’s year-end retirements won’t be revealed until February 2018, but they’re expected to be just as high.

Besides filing retirement benefit claims under the Federal Employees Retirement System or Civil Service Retirement System, most retiring personnel file withdrawal elections for payments using their Thrift Savings Plan accounts as well.

Many staff members file for FERS and CSRS retirement benefits prior to their intended date of retirement. However, until your agency’s payroll office notifies them that you’re no longer employed there, the TSP won’t be able to process a post-separation withdrawal form. The soonest a new retiree can submit a TSP withdrawal request is approximately a month after they retire. For instance, if you intend to retire on Dec. 31, 2017, it would be prudent to submit your application on Jan. 31, 2018 for a complete or partial TSP withdrawal.


For post-separation withdrawals, use the following forms:


In addition to waiting a month prior to submitting one form or the other, consider the following suggestions when choosing a strategy for TSP withdrawals:

  • Prior to signing a form, think about using the TSP Withdrawal Wizard on the internet for withdrawal requests. In response to several queries you’ll be asked, it will automatically fill out the applicable portions of your form and aid you in bypassing errors that could result in your form being declined or postponed.
  • Keep in mind the advantages of obtaining your payments from the TSP instead of transferring your TSP funds to an annuity product (or an IRA that may come with more expensive commissions or rates).
  • While the TSP Modernization Act is still new, the adjustments won’t kick in right away. There is a Q&A prepared by the TSP to describe the scenario. Dan Jamison addressed a quote from the FERSGuide newsletter Q&A that pointed out a shocker: besides the modifications that were created by the new law, you can now be specific with regards to how much should be conventional; withdrawals at the moment are released pro rata from either source.
  • The TSP says that, when the new rules kick in, and you already have an account balance, even if you’ve started getting payments monthly or have taken some of your withdrawal before that, you’ll have the ability to capitalize on the new withdrawal features.
  • At the moment, individual staff members can opt to take a single or partial distribution of their TSP account balance. After the TSP Modernization Act rules take effect, individual personnel can elect numerous partial withdrawals even if they’re currently obtaining monthly payments.
  • The earnings connected to after-tax Roth TSP contributions are allocated tax-free if it has been five years since January 1 of the calendar year your initial Roth contribution was made, if you have a long-term disability, or are at least 59.5 years old.
  • There are a few ways to withdraw your TSP account: monthly or single payments (either a figure as per your life expectancy or precise amount), or life annuity.
  • A complete withdrawal doesn’t mean that you need to withdraw the whole balance at once.
  • Using the TSP Retirement Income Calculator, you can get an idea of what your monthly payments will be.

Necessary Minimum Distributions

You might need to start necessary minimum distributions from your TSP account if you were older than 70.5 years old when you separated from federal service. The TSP will notify you that you need to start monthly payments or opt for an alternative withdrawal choice to bypass extreme fines for not taking the necessary election.

If the necessary deadline passes and you fail to make a withdrawal election, your account balance will be sent to the TSP by default. Your account can be reclaimed, but your balance won’t accrue earnings once it’s forfeited. Be mindful that if your TSP account record has a wrong separation or birth date, or if your service or agency is not on time reporting the separation date, you might not obtain a payment that meets the minimum distribution necessity by the relevant deadline. In such events, you might have to pay a 50% penalty tax to the IRS on the amount that wasn’t paid to you when you expected it.

For people who are retiring on before or on Dec. 31, 2017, and were at least 70.5 years old on the date of separation, the TSP is obligated to pay them the initial RMD by April 1, 2018. If no withdrawal was made, the RMD will be paid by the TSP in March 2018. If a withdrawal election is made, the TSP will make sure that the withdrawn amount pleases the RMD. By retiring at least one day after, the RMD is postponed until April 1, 2019. This can give you some room to breathe rather than forcing you to make a withdrawal choice hastily.

When confronted with RMD, you needn’t take all the withdrawal funds at once. In December 2018, the TSP will send a supplemental payment to accommodate the 2018 RMD if their threshold for 2018 isn’t satisfied by your withdrawal election.

When putting together your withdrawal strategy, think about how your decision can produce revenue and how it could affect your financial planning, retirement planning, and tax strategy. The TSP contact center can be contacted for assistance, as they handle approximately 60,000 electronic messages, 2.5 million phone calls, and over 80,000 written correspondence messages annually.

Retirement Processing Efforts Doubled Before Surge in January

Indexed Universal Life

Retirement Processing Efforts Doubled Before Surge in January

The Office of Personal Management was very busy last month, especially compared to November. The agency was preparing for an annual rush of new requests for retirement claims. In December, OPM processed more than twice the number of claims they processed in November.

In the past few months, fewer retirement claims were being processed for two reasons. First, staff members were prepping for the rush of claims that comes each January. Also, the OPM did not have adequate funding to pay for the overtime that would have been necessary to process more claims.

However, in December, the agency drastically increased its efforts in processing claims. In that November, they processed 5,138 claims. In December, they more than doubled this number to 10,347. This is the highest number of claims they have processed in a single month since March 2017.

This crackdown on processing retirement claims, as well as a fairly low number of claims received in December, led to a large dent in the retirement backlog. That number is now at only 14,515. OPM’s target backlog number is 13,000.

OPM’s monthly report also stated that the agency is changing how it measures the success of its processing efforts. The agency has always provided information on the percentage of claims processed within 60 days and the average time it takes to process a case both within and beyond 60 days. Starting in April, OPM will provide the raw numbers as well as the average processing time on both a monthly and fiscal-year-to-date basis.

With this new reporting system, the average processing time on a monthly basis decreased from 68 days in November to just 60 days last month. Fiscal 2018 began on October 1. So far in this fiscal year, the average processing time for a claim was 63 days. This is down 3 days from what was reported in November.

January is usually a very busy time for OPM in regards to retirement claims. The agency often receives over 15,000 claims each January.

Move to Cut Federal Employee and Retiree Benefits May Begin This Year

Move to Cut Federal Employee and Retiree Benefits May Begin This Year

After the recent threat of partial government shutdown, federal employee organizations have warned that the next set deadline could eventually lead to a reduction in the benefits that both federal retirees and employees enjoy.

A few days before the Dec. 22 deadline, Congress accepted to continue agency spending authority temporarily. Congress passed a bill to extend funding beyond Jan. 19. The move to raise the spending limits for both domestic spending and defense was one of the policy issues that were set aside.

If the spending caps are not raised, similar ‘sequestration’ that occurred in 2013 (that resulted in furloughs in some government agencies and affected employees were not paid), could be triggered by the budget measures that are under consideration for the remaining part of the fiscal year.

Raising these caps, however, will lead to a cost-offsetting move with less spending in other areas. According to federal employee organizations, Congress usually looked to the federal workforce, considering the repercussion of this decision, such as double increment in employee contributions to retirement. Although, this applies to the workers first hired after these caps are raised.

Federal employee organizations expect that retirement contributions will be up for discussion by Congress, just like the ideas that have been addressed by Congress over time (some of these were just supported in 2017 by Congress). Some of the ideas are Paying Cost-of-Living Adjustments (COLAs) below the inflation rate for federal retirees and requiring Federal Employees Health Benefits (FEHB) enrollees to shoulder the larger share of the total cost of the premium.

All those proposals are very likely going to be considered by Congress because they would minimize government spending for a short time, but to the detriment of active employees and retirees. Other ideas like putting an end to the FERS Supplement for future retirees, basing future annuities on the high-5 salary years instead of high-3, and abolishing the defined benefit plan for future employees, will have great impacts for a longer time.

Deadlines like the one set for Jan. 19 has forced Congress to enact temporary extensions purposely to push the spending cap issued aside again. Nevertheless, such delays are short-lived. Any extension beyond January 31 means that the deliberations on the 2018 budget may extend into the fiscal 2019 process.

10 Boxes to Check Before Leaving Federal Service

10 Boxes to Check Before Leaving Federal Service

Are you thinking about leaving federal service at some point? Based on some some research and investigation, it appears that there are some necessary things you need to take care of before saying goodbye to your life as a federal employee. Make sure that these 10 things are done before you part ways with your government career:

  1. Learn the difference between retirement eligibility and “being able to afford to retire”:  You might be thinking of leaving federal service before you’re eligible to retire, but the wisest thing you can do before making such decision is check how much you could lose when it comes to benefits and pension versus whatever you’ll gain from what you’re leaving for, and go for whichever is more profitable to you.
  2. Find out when you qualify for retirement: Specific requirements regarding age and service level exist for federal retirement. There are additional provisions for federal employees who may be considering early or deferred retirement under special provisions (like law enforcement retirement and disability).
  3. Calculate Your Investments: Everyone has their own retirement goal, and if we’re to apply good thinking, a financial goal has to be set and achieved to provide adequate savings and possibly, a stream of income. Proper diversification and rebalancing of your TSP account can help you to achieve your retirement goals.
  4. Find out if all of your federal service is creditable: Your entire service must be documented and meet the test of creditable service in order to be credited towards your full length of service for retirement eligibility, and computation of your federal retirement benefit. In a case where some of your service isn’t creditable, you’d have to pay a service credit deposit to the retirement system.
  5.  Calculate your high-three: Your retirement benefit is calculated based on the average of the three highest years of basic pay, which is usually the last three years of your career. Understanding the calculation and the definition of the basic pay rates used in computing your highest three years of basic pay is very important as it will enable you understand the process more.
  6. Consider insurance needs: Reevaluating your life insurance to determine your level of coverage is important because it is necessary to meet the five-year test to continue your federal health and life insurance coverage if you wish to retire from service. To be on the safe side, it’s wise to consider the possibility of needing long term care at some point.
  7. Locate important documents: It is important that you track down and sort and arrange all important documents, like your beneficiary designated forms, Federal Employees Group Life Insurance, unpaid compensations and TPS forms. Be sure to have a copy available to your beneficiaries and update these documents after each major or life changing event (i.e. marriage, death, divorce, birth etc.).
  8. Understand the role of Social Security in retirement: The replacement of your pre-retirement income is determined by the level of your wages; either you’re a low wage earner or a high wage earner. The age at which you claim your benefit also determines your pre-retirement income, and if you have dependents, they might be entitled to some benefits from your social security earnings records.
  9. Ask yourself what happens after you leave: Filing for retirement mostly ends up leaving you with the two most basic and important options. You can either go for the benefit that is payable only during your lifetime or the one reduced during your lifetime, which provides a survivor annuity to someone else. There are also spousal and dependent children benefits which are payable under Social Security. Make understanding these benefits a priority, because they will help you know what’s best for you.
  10. Life after retirement: This is one point that cannot be emphasized enough. Retirement is not the end of all activity in your life; it’s just the end of your official working career, and like every other day in your life before retirement, there has to be a plan to get you through to live your ideal lifestyle in retirement.

If you need assistance or have additional questions on any of this information, it is advised that you seek counsel from a financial professional near you.

Social Security: Important Information on Disability

Social Security: Important Information on Disability

Most of us aren’t directly faced with a disability. The truth of the matter is a 20-year-old worker only has a 25% chance of becoming disabled before he attains the age of retirement. This statistic alone makes it pertinent that you know more about Social Security Disability Benefits.

The most important thing to know about Social Security Disability is its definition of disability, which is the inability to work as a result of a serious condition that is expected to last for a year or result in death.

The benefits derived from Social Security Disability replaces a portion of your income when you become disabled and are no longer capable of working. There are other disability programs that may offer partial disability or short-term disability. However, federal laws demand that a much more strict definition for Social Security Disability benefits. Typically this definition of “disability” that is used to explain Social Security Disability Insurance is the same being used to explain Supplemental Security Income benefits.

A lot of people emphasize the seriousness of their medical condition when requesting disability benefits and offer medical records as evidence. In addition to medical records, work information is required as well since Social Security defines disability as not being able to work.

When providing details about your work and your medical condition, you need to make sure you’re providing an accurate representation of your current situation.

Below are examples of information that may be needed for your previous work experience:

• Main responsibilities of your job(s)
• Main tasks you performed
• Dates you worked (month and year)
• Number of hours a day you worked per week
• Rate of pay you received
• Tools, machinery, and equipment you used
• Knowledge, skills, and abilities your work required
• Extent of supervision you had
• Amount of independent judgment you used
• Objects you had to lift and carry and how much they weighed
• How much you had to sit, stand, walk, climb, stoop, kneel, crouch, crawl, balance
• How you used your hands, arms, and legs
• Speaking, hearing and vision requirements of your job(s); and
• Environmental conditions of your workplace(s)

The future can be unpredictable, which is why it’s important to plan for the unexpected. Educating yourself about disability benefits and providing all the correct and necessary information helps the process go much smoother when filing for benefits if you should ever find yourself in a position that requires you to do so.


Widest Ever Margin for Public/Private Pay Gap

Wildest Margin Ever for Public/Private Pay Gap

Depending on where you focus your attention, the various studies looking into federal employee compensation will normally bring different numbers. However, the Cato Institute has been working on a project entitled ‘Downsizing the Federal Government’ in which the pay and compensation gap for public and private workers has been shown to be at its largest point yet.

In 2016 alone, federal employees earned 80% more than private sector workers while they also earned over 40% more than state and local government workers. Of course, the pool of workers is much smaller – 2 million vs 114 million – but the federal average wage has been growing at a faster rate over the past 15 years.

In addition to this, benefits are also more advantageous with retirement and health care additions. In 2016, federal compensation hit $127,000 while this was just $70,000 for the private sector. Although many lawmakers have suggested changes to federal pay and benefits, federal employee groups are suggesting these comparisons are actually useless. Furthermore, they suggest the federal government should be seen as a model employee for top talent.

Of course, this news comes not long after the Congressional Budget Office’s report which showed the government spending 17% more on compensating all employees. In addition to this, it seems as though education is now playing a large role with federal employees earning a high school diploma (or less) earning around 50% more than the same group in the private sector. With bachelor’s degrees, this is 21% more. This being said, it isn’t a universal system since those with a doctorate earn 18% less compared to the private sector.

Other Studies

As mentioned at the beginning, there have been several reports and studies into this relationship with many choosing different data or measures. If we look towards The Heritage Foundation as an example, they found federal salaries to be 22% higher than the private sector while The American Enterprise said the same statistic was 14%.

Every year, we also get an assessment between federal and private pay from the Bureau of Labor Statistics and Office of Personnel Management. On average, they say federal employees earn 34% LESS than private sector workers. Why the difference? For BLS and OPM, they calculate their pay gap using data provided by the Occupational Employment Statistics Program and the National Compensation Survey. Regarding the numbers, they compare pay alone (without benefits and compensation). To calculate locality pay rates, the Federal Salary Council uses this measurement.

Back in the 1990s, a law was passed by Congress which started the journey towards eliminating the pay gap using these calculations, but the funding has never been provided by lawmakers. According to some sources, the solution can be found in partial wage freezes, and we actually saw this between 2011 and 2013 with the Obama Administration. Alongside this, experts suggest changes to the retirement system to reduce the disparity between private and public workers.

For example, the defined benefit pension plan could be coming to an end in the coming years, and there are also rumors of some public sector jobs being privatized, and this includes air traffic controllers, postal workers, and Amtrak employees.

Although we need competent workers in all areas of the federal government, many are struggling with the fact they’re the third-highest paid industry in the country. With a reduction in federal pay, a larger turnover would occur, and this might just open the government up to younger employees and fresh ideas!

TSP Withdrawal Tips

TSP Withdrawal Tips

The Thrift Savings Plan (or similar retirement savings plan) can be a great vehicle for an inflation-indexed, lifetime source of income, but it’s necessary to have the right TSP withdrawal strategy. Your FERS annuity and Social Security are both considered lifetime, inflation-indexed income, but unlike those, the TSP is not guaranteed to last your whole life, and it does not include a Cost of Living Adjustment (COLA).

There are two withdrawal choices under the TSP’s existing options which, if carefully adhered to, can provide a lifetime source of income that can be altered for inflation on an annual basis.

They include:

  1. Utilizing the substantially equal monthly payouts based on the IRS life expectancy table.
  2. A life annuity plan with rising payments.

Let’s look at the amount of income each of these withdrawal choices will offer an employee who retires at the age of 57 with $400,000 in their TSP, using the TSP Retirement Calculator.

If we make use of the substantially equal monthly payouts method, the employee will receive a monthly payment of $1,194.74 at the age of 57; they will receive a monthly fee of $1,985.93 at the age of 69. They will get a payment of $1,280.21 each month at the age of 70, and end up with $2,692.04 at the age of 90. The employee is likely to have more than $350,000 in his or her account to pass on to beneficiaries, according to the TSP Calculator.

In another case, the life annuity plan offered by MetLife can provide a monthly payment of $1,022 to the employee at the age of 57. It is also important to remember that there is no RMD in the annuity plan and the number did not reduce at the age of 70, but instead went up to $1501 per month. By the time the employee reaches the age of 90, the monthly payment would have been increased to $2,711. This plan will not leave any money to be inherited by their heirs as the person would have collected the purchase price of the annuity in payouts before his or her death.

Some TSP contributors make the choice to roll over their TSP into an outside annuity with a financial planner. Various forms of annuities with several attributes are available.

No matter which route you choose to go, it’s important to pay careful attention to the way you handle your TSP withdrawals. Before making and decisions, it’s always wise to reach out to a financial professional for help and advice.




Military Members Should Make These 5 Financial Moves

Military Members Should Make These 5 Financial Moves

A military career can be rewarding on many levels. However, it is extremely important that you do not neglect your finances.

If you’re in the military, here are some things to cross off your individual checklist.

A Contribution should be made to a thrift savings plan

Thrift Savings Plans work very much like 401(k) plans. They are specially designed for federal employees, including military members.

Thrift Savings Plan has two benefits:

One of them is getting an immediate tax break on the funds you’ve contributed. Secondly, you are given the option to invest that money at a very low cost.

The contribution limits annually for Thrift Savings Plans are similar to that of a 401(k). Up to $18,000 of tax-free money can be kept in your account for the current year if you’re under 50.

You are given a $6,000 catch-up if you’re 50 years or older. This raises the limit to $24,000. In 2018, there will be an increase of the annual contribution limit to $18,500 for younger savers, or $24,500 for those aged 50 years and above.

An opportunity to snag a little extra tax savings can be taken by contributing the max.

A Roth-style Thrift Savings Plan should be considered

Contribution to a traditional Thrift Savings Plan is beneficial because it can enable you to get an instant tax break for the money you put in. However, since the military members had already received a host of tax benefits, such as food allowances and tax-free housing, you may not require the tax break instantly.

Nonetheless, once you become older and no longer serving within the military, it’s possible for your tax bracket to escalate, this makes the act of funding a Roth Thrift Savings Plan a very sensible decision.

Though Roth contributions do not give an immediate tax break, your Thrift Savings Plan withdrawals can be taken tax-free immediately when you reach age 59-1/2.

You may have to pay taxes on those distributions with a Thrift Savings Plan.

If your taxes are not a major issue at the moment, but you wish to try to avoid paying taxes in the long run, then a Roth Thrift Savings Plan could be the perfect choice.

Estate planning is necessary

Though estate planning is vital for civilian workers, it is very important that military members get the right documentation in order.

If you do not have a will ready, be sure to draft one immediately. Ensure your beneficiary information is up to date if you already have a will.

This should also be done for beneficiary designations on your retirement accounts and life insurance policy.

Prepare for deployment

Having your present-day finances in order can help make deployment less stressful for you and your family.

If you have expectations to be deployed in the near future, your finances should be reviewed and outstanding issues you have not resolved should be tackled. For example, report an error on your credit card when noticed before leaving.

If you have bills that are outstanding, get them paid. Create an automatic payment system for your recurring expenses so would not have to worry about paying your bills late.

Finally, create a power of attorney for your spouse or another member of your family. This way, even in your absence that person will have the authority to make financial decisions.

G.I. Bill benefits should be explored

The G.I. Bill is specifically designed to enable military members to pursue a higher education. The Post-9/11 G.I. Bill offers educational benefits for military members who serve actively for ninety days or more after Sept. 10, 2001.

The total time you’ve served determines your eligibility for those benefits. However, if you stay on active duty for a period of 36 months, the full cost of in-state tuition and fees at a public college may be covered by the bill for up to four academic years, including a stipend for books and housing.

If you are a military member who has served for a long time, you may be eligible to transfer your benefits to your children or spouse. Make it a point to read the bill to know more.

There are benefits to serving your country. However, there are financial challenges you may come across in the course of your military career.

Observe your finances carefully, if you are lucky, you can enjoy the long-term stability that you deserve. If you have any questions regarding financial decisions, be sure to reach out to a financial professional.


Use FEGLI Option B to Give Yourself a Raise

new update

Use FEGLI Option B to Give Yourself a Raise

This may come across as some bad news, but if you are participating in the Federal Employee Group Life Insurance (FEGLI) Option B plan then you might really be paying too much for your life insurance protection. This is especially true if you are currently in good health.

Not to worry though! You could potentially save a lot of money with a simple review of your FEGLI Option B benefit and by discussing it with a reliable financial professional who is well-versed in FEGLI.

You may be aware that the Option B coverage is determined based on your chosen multiple of your income (1x by 5x of your yearly salary). Your premium is dependent on total coverage multiplied by an insurance charge rate at your current age.

This is the part where it gets confusing – that premium goes up every five years, starting the month following your 35th birthday, all the way up to up to age 80. Your premium inside your check stub slowly increases while your take-home pay just reduces equally. This happens without warning or notification. Surprisingly, it can be as high as a 120% immediate increase, which is the equivalent of paying $100 a month and then $220 the following month for the same life insurance security.

To be clear, we are not discussing FEGLI Options A or C.  These actually seem like excellent benefits for many federal employees. Additionally, FEGLI Option B is an outstanding opportunity for the employees either under 35 years of age or those who are facing health issues and are not eligible or can’t afford private life insurance.  In case you fall within any of the categories above, it’s recommend that you max out the FEGLI Option B value to the point at which you can afford it.

If you are healthy enough and/or above 36 years of age and enjoy the life insurance protection, then you definitely have some options. Financial planners or life insurance agents are helpful when it comes to addressing your personalized options. This is especially true if they specialize in FEGLI.

Evaluating your FEGLI Option B Life Insurance rates right away is the best way to give yourself a raise. If it’s possible to lock in lower rates then swapping coverage should be a no-brainer. However, only cancel your FEGLI Option B after a formal life insurance underwriting from a reliable life insurance company has been received.

Reach out to your local financial professional for more information.


To Keep or Not to Keep Your TSP

To Keep or Not to Keep Your TSP

As a federal employee, when it comes time for you to retire, there are numerous financial decisions you may need to make. One of those is whether or not to withdraw from your Thrift Savings Plan.

The TSP has the lowest administration fees in the business. The Lifecycle funds automatically adjust over time, which is very convenient for the investor. More active or diverse investment choices outside of a TSP usually have much higher administrative fees. Even if the returns are better, the higher fees may negate those gains. For others, it may just be easier to leave the money in the TSP where it has always been.

Once a federal employee closes their TSP account, they can never come back to reopen their TSP. However, as long as they have a minimum of $250 in their TSP, they can return to it. The Federal Retirement Thrift Investment Board cashes out accounts of $200 or lower automatically. Keeping $250 in your TSP account is a safe way to keep your TSP account.

This $$250 is a way of keeping your options open. You can have most of your money in more active investments, while keeping your TSP account. With such low administration fees, there is very little reason (if any) to get rid of it.

It does look like Congress has recently approved a bill that will make the TSP more user friendly. It should also make the withdrawal process more flexible. However, it can be complicated, complete with red tape and limitations. If this bill does become a law, the TSP should become more attractive to investors who may otherwise take their money with them when they retire or leave their government job.

If you have any concerns regarding your own TSP, please contact a local financial professional for assistance.



FEGLI or (Federal Employees’ Group Life Insurance Plan) is a group life term group insurance plan for Postal and Federal workers and retirees. This program is administered by the Office of Personnel Management and it also selects the premiums. MetLife or the Metropolitan Life Insurance Company has entered into a contract with OPM to offer this type of life term insurance. An office known as OFEGLI or Office of Federal Employees’ Group Life Insurance is set up at MetLife. OFEGLI works as the contractor which arbitrates claims made according to the FEGLI plan.

New Employees and FEGLI

Employees of the postal department and federal government automatically get enrolled for FEGLI’s Basic Life Insurance, unless they opt to waive such insurance coverage. Basic Life Insurance comes into play from the very first day that employees enter a duty and salary status. In addition to such basic insurance coverage, 3 other options are also provided by FEGLI. You do not need to provide any proof or evidence of insurability for Basic coverage or other kinds of optional coverage selected by you during the initial 60 days election duration. After that period, employees may need to provide evidence of insurability for any coverage changes.

A period of sixty days from the appointment date is available for new employees to select additional optional coverage. For election of optional insurance, it is important for employees to be enrolled in Basic term life coverage. It is important for employees to fill out the SF-2817 or Life Insurance Election Form before the due date and submit it to their human resources office. It is also a good option for employees to submit a completed Designation of Beneficiary form or SF-2823 to the HR office.

Three kinds of optional insurance coverage are available for both federal and postal employees. They are standard insurance (or Option A), additional optional (or Option B), and family optional insurance (or Option C).

  • Option A coverage offers $10,000 of extra insurance.
  • Option B coverage is available in multiples of 1, 2, 3, 4, or 5 of the yearly basic pay rate.
  • Option C insurances provides coverage for the spouse for up to five multiples of $5,000 or/and eligible kids for up to five multiples of $2,500.

After a specific type of life insurance is elected by the employee, there is automatic enrollment into the specified coverage every year till the time an employee is eligible for the FEGLI program. Re-enrollment into program every year is not needed. It is however, possible for employees to reduce the insurance coverage whenever they want. A scheduled regular open season for making changes to FEGLI is not present.

Different opportunities of electing FEGLI

All federal and postal employees have the below listed chances to make changes to their coverage for FEGLI:

  • At any time of an Open Season
    • Unlike the FSAFEDS or Federal Flexible Spending Account Program, the FEHB or Federal Employees Health Benefits Program, or the FEDVIP or Federal Employees Dental and Vision Insurance Program, Open Season for FEGLI is not held on a yearly basis. Open season occurs only when it gets scheduled specifically by the OPM or Office of Personnel Management.
  • By offering medical documents
    • If one year has passed since an employee waived or cancelled Basic coverage, then ‘Option B – Additional’ or ‘Option A – Standard’ insurance can be elected by the employee by offering satisfactory medical documentation, at his/her own expense, to show proof of insurability. Option C or any increase in multiples of Option C cannot be availed of by employees via the option of providing medical documents.
  • At the time when a qualifying event of life occurs
    • Employees who suffer from a qualifying event in life can select Basic coverage, plus all or any Optional coverage, i.e., Option A; Option B for up to not more than five multiples; and Option C also for up to not more than five multiples. A few qualifying life events under FEGLI are divorce, marriage, adoption or birth of kids, or death of spouse.
  • When getting deployed as a non-military civilian as a support for some contingency program or operation
    • Employees who get deployed as support for some contingency plan as defined under Title 10’s section 101(a)(13) have the option to choose Basic Option A and Option B for up to not more than five multiples. It is important to make this election within sixty days after the date of deployment notification.

FEGLI for employees who previously worked for federal government

For people with prior federal or postal service, insurance as per FEGLI is available after getting rehired. This coverage is however dependent on the duration of the break or gap in service between the old employment and the new appointment.




Federal Employee Annuities

Federal Employee Annuities

The FERS or Federal Employees Retirement System was created by the US Congress in 1986 and came into effect from 1st Jan 1987. Since then, retirement coverage of all new civilian workers of the Federal government falls under FERS.

FERS can be defined as a retirement program which offers benefits via 3 varied sources, i.e., Social Security, a Basic Benefit Plan, and TSP or Thrift Savings Plan. TSP and Social Security follows you to your next workplace in case you resign as a federal employee before retirement. The Social Security and Basic Benefit sections of FERS make it mandatory for employees to pay their share every month from their paychecks. Your agency keeps the cost of Social Security and Basic Benefit from the paycheck as deduction from payroll. Some money is paid/contributed into these funds by your agency as well. Later you should get federal employee annuity payments every month after retirement for the remainder of your life.

The Thrift Savings Plan which forms a section of FERS, can be described as an account automatically created by the agency for each federal worker. Every payroll day, the agency will deposit a sum of 1 percent of your basic pay earned during a specific period into your TSP account.  Employees can also willingly contribute a percentage of their earnings into their TSP account which can be matched by the agency up to a certain limit. Such contributions to TSP are deferred from taxation. The Federal Retirement Thrift Investment Board administers TSP.

Listed below are some important points that federal employees need to note with regards to federal employee annuities:

  • Eligibility for federal employee annuities is determined by the number of years that you were in credible service and your age. In certain instances, employees must be of MRA (Minimum Retirement Age) to get the federal employee retirement benefits.
  • Different types of retirement include ‘immediate retirement’, ‘early retirement’, ‘deferred retirement’, and ‘disability retirement.’
    • Federal employee annuities in case of immediate retirement begin within thirty days from the day you stopped working. Employees, who take retirement at MRA with a minimum of 10 years, but not more than 30 years of credible service, get benefits that will decrease by 5% per annum for each year that the employee does not reach 62 years of age. However, for employees with 20 years of service, the annuities begin when you turn 60 or older.
    • Federal employee annuities in case of early retirement can be availed in some cases of involuntary separation as well in instances of voluntary separations due to decrease in force or a major restructuring.
    • In case of deferred retirement, payment of federal employee annuities is delayed till certain criteria are met. Employees, who retire from federal service before meeting the service and age requirements for access to benefits of immediate retirement, may become eligible for benefits of deferred retirement.
    • In case of disability retirement, employees must have at least 18 months of service. Also, the disability must have occurred while being employed in a post that was subject to Federal Employees Retirement System, due to some injury or disease, for efficient and useful service in the current post. It should be recognized that the disability will continue for a minimum of 1 year. A certificate must be provided by the agency stating that the employee’s disability cannot be accommodated by them in the current post and that the agency has considered the employee for some vacant post in the same agency at a similar pay/grade level, inside the same area of commute, for which the employee has the qualifications for getting reassigned to.
  • The OPM will consult with the personnel of your agency as well as the payroll office to verify and process your federal employee annuity claim. Irrespective of the type of retirement, the personnel office must take certain actions to be able to process the claim. Employees can decrease any possible delays in processing of the retirement annuity claim by ensuring that your application is submitted well in advance and that your OPF/Official personal folder is properly and completely filled. Early submission of your paperwork will assist the payroll and personnel offices to finish all the required action before your date of retirement.
  • The basic federal employee annuity is calculated according to the length of creditable service and average of ‘high-3’ salary.
    • You need to add all the months of service and remove any fractional periods from the total to calculate your total federal service period.
    • The average of ‘high-3’ pay refers to the highest basic pay average earned by an employee during any three successive years of creditable service. These 3 years of highest pay typically occur during the last 3 years of service before retirement. It can however also occur during an earlier time of your service if the basic pay was more during that earlier time.


How the Tax Bill Can Impact Your Retirement

How the Tax Bill Can Impact Your Retirement

A new $1.2 trillion tax overhaul bill passed recently and it may impact your retirement.

Under the new tax bill, retirement accounts will no longer reap benefits such as lower contribution limits, or the option to switch from traditional retirement accounts to Roth individual retirement accounts. However, the new tax plan does nearly double the standard deduction and pays special attention to individual retirement accounts, which could influence how retirees itemize their charitable donations. The changes under the new tax bill will affect those filed in 2019, as 2017 tax returns are due on April 17.

Additionally, the new tax bill prohibits “recharacterizations” of IRAs, meaning retirement savers can no longer reverse decisions made to convert accounts to Roth IRAs. If you are a retirement saver and have already made this conversion, think now whether or not you would like to reverse your decision because after the New Year, the option is no longer available.

Higher contributions should be made to charities less frequently

Beginning in the New Year, the only deductions that retirees will have available are property and state income taxes, as well as charitable contributions. Because of this, some predict that retirees won’t be itemizing. However, retirees will have the option to send donations directly to charitable organizations from individual retirement accounts using Qualified Charitable Distributions. If retirees are over 70.5 years old, these donations will not need to be itemized. There will be a standard deduction increase, so retirees may find it in their best interest to donate more money to charities, but less frequently. Experts say that this will be beneficial to retirees that donate because taxpayers will be able to have tax write-offs above the standard limit. Rather than donate cash, it’s advised to invest in donor-advised funds.


Lower personal income taxes are still important

Under the new tax bill, the majority of households can expect lower personal income taxes in amounts of 10%, 12%, 22%, 24%, 32%, 35% and 37%. Those who are retired should keep keep an eye on their income levels because they don’t want to end up in a higher tax bracket. While this may sound like useless information for retirees, income includes ordinary income, required minimum distributions, and any withdrawal from a retirement account. However, if those who have large balances and are currently under 70.5 years old begin distributions early, they could avoid being pushed into a high tax bracket. While this action could truly save retirees money later in life, there are careful calculations required and predictions of future income in order to avoid this high tax bracket.

Less retirement accounts may be offered by small businesses

Many large employers offer 401(k) plans, but these types of contribution benefits are too expensive for smaller employers to offer. However, the new tax bill may make it even harder for smaller employers to try to offer any of these contribution benefits plans. While the new tax bill does provide smaller employers with lower income tax rates, it says nothing about contributing to retirement plans, which is the largest incentive for employers to offer plans like the 401(k).

Retirees should consider moving

The new tax bill did not alter mortgage tax rates whatsoever, which means that local property taxes of up to $10,000 can be deducted on a federal level. Because of this, experts explain, states that don’t charge income taxes may be preferable for retirees to live in. Retirees usually have the most freedom when it comes to moving around anyways, as they don’t have jobs dictating their schedules, so they should take the income taxes into consideration when moving from state to state. The best states for retirees to check out, due to their income tax laws, are New Mexico, Nevada and Wyoming.

Lastly, under the new tax bill, the maximum amount of mortgage debt allowed by one person for their first or second residence has decreased. If a married couple files for taxes jointly, the maximum amount is now $750,000 or $375,000 each for married couples filing taxes individually, which is a hefty reduction from the previous $1 million maximum. If the home sale closed prior to the first of April 2018, these laws are irrelevant to home purchases made before December 16, 2017.

Retiring with your FEGLI Coverage

Retiring with your FEGLI Coverage

If you have Federal Employees Group Life Insurance (FEGLI) and you want to keep these benefits after you retire, then there are some things you need to know. There are certain conditions you must follow if you’re receiving Basic life insurance and any of the first three optional coverages. These are Family (Option C), Additional (Option B), and Standard (Option A). The conditions are as follows:

– You must choose an immediate annuity which starts within one month after you retire.

– Before your annuity starts, you must have had insurance for 5 years already or during the time when you were eligible for coverage.

– Your life insurance policy was never converted into an individual policy.

The 5-year rule applies if either you already chose coverage in the open season of September 2016 or if you elected for new FEGLI coverage. The September of 2016 election took effect in October of 2017, so you can’t apply it to your retirement if you’re leaving prior to October of 2022.

The FERS rule states that if you have given 10 years of duty and retire at the minimum age allowed, then annuity eligibility is included with an immediate annuity.

Therefore, if you find that you meet all the requirements listed above, then your life insurance coverage can remain in effect after retirement. It doesn’t even matter if you’re postponing your annuity. If you are postponing it, then you won’t be covered until you start receiving the annuity.

To keep your previous coverage from prior to the retirement, you will get it again once you start receiving the monthly payments. This also applies if your life insurance policy is converted into an individual policy after officially retiring.

If your life insurance coverage can’t continue or you don’t want it to continue after retirement, then you will be allowed to turn it into an individual policy. If you want your insurance protection to continue, the individual policy must be applied for and the first month’s premium must be paid directly to the insurance company. You will have an extended coverage period of 31 days for which you will have to do this.

Electing a Survivor Benefit

Electing a Survivor Benefit

If you’re married and about to retire, you need to decide on whether you’re going to elect for your spouse to receive a survivor benefit.

If you choose to do so, the amount of the annuity you receive will be reduced. This reduction amount will be based on the size of your annuity, whether you have a reduced annuity or full annuity.

An employee of the Civil Service Retirement System can elect for the survivor benefit to be a minimum of $1 annually or up to 55% of what their base annuity is. If you were to die first and your spouse wants to continue getting coverage from the Federal Employees Health Benefits program, then a survivor benefit must be elected first. That is why someone might want to take the minimum amount for the survivor benefit just to get into the program.

If you are an employee of the Federal Employees Retirement System, the benefit can either be 25% of your base annuity or 50%.

A CSRS employee with a full survivor benefit will see about a 10% reduction in their annuity. A FERS employee will have an approximate deduction of 10%. If you’re under CSRS, it will be cheaper for you to have a survivor annuity that is reduced. How much less is determined by the election amount. If it’s under FERS, the option of 25% will mean there is a 5% annuity reduction. This gets taken from the base annuity. As you probably know, the annuity is how much money you have coming to you before anything gets deducted from it for things like taxes or healthcare benefits.

It is good to choose a survivor annuity because your spouse will have income for the rest of their life after you’re deceased. However, if the spouse is under 55 and they remarry, then their survivor annuity ends.

The money from the base annuity that you have is what will be paying for your spouse’s survivor annuity income. The survivor annuity will grow from all the future cost-of-living allowances that are received.

You might think it would be better to invest your money in an insurance policy rather than a survivor annuity, but that isn’t the wisest choice. The government offers you a much better deal for your spouse than an insurance company would.

If you have a former spouse that is receiving a survivor annuity and you now have a new spouse, a survivor annuity can still be elected for them. However, they could only receive the benefits if your former spouse becomes unqualified to continue receiving them, like if they remarry and they’re under 55.

Getting the Best Deal on Life Insurance

Getting the Best Deal on Life Insurance

For Basic FEGLI coverage, federal employees must pay two-thirds of the premium rate while employers in the private sector typically cover the cost of their employee’s basic coverage. Once covered by FEGLI, everyone pays the same premium no matter their health status, which differs from the individual coverage where premiums usually depend on the health of the person seeking coverage. Because of this, FEGLI could appear relatively more expensive, especially if healthier federal employees compared it with plans that they could potentially receive from private individual coverage.

Basic FEGLI and Option B (the option that covers your life for one to five multiples of your annual basic salary) automatically increases in value as your salary increases. This is the case regardless of pre-existing health conditions and age. The option B and C (which covers the lives of your eligible children and spouse) can also be increased in the event of a birth, marriage, divorce, adoption of a child or the death of a family member, without proof of insurability. One way that Option C can be used is to cover an individual who may not be eligible for life insurance on the private market because of poor health or age. Option C has a major drawback though since no more than $25, 000 in life insurance is provided on your spouse.

Due to Optional FEGLI’s increasing premiums, it’s wise to revisit your life insurance needs after every five years (when the premium adjusts). Insurance policies that were necessary at the time you got married or began a family may not be relevant once you are close to retirement, or your children become adults, or your mortgage is finally paid off. Also, don’t forget to update your beneficiary designation!

Bear in mind that you are covered by FEGLI regardless of your hobbies or occupation, and beneficiaries typically get paid no matter what the cause or place of death was. Unlike many other private sectors, FEGLI also provides coverage for retirees.

Survivor Annuity vs. FEGLI

Upon death, FEGLI provides a tax-free, lump sum benefit to your beneficiary. However, this should not be considered a substitute for the survivor annuity election (under either the Federal Employees Retirement System or the Civil Service Retirement System). For example, let’s say a federal employee would receive a $20,000 benefit (payable from FERS basic retirement). If that employee were to stick to the FERS spousal survivor benefit, then the retirement could be reduced by $2, 000 per year, or 10 percent, thus, leaving a benefit worth $18, 000 (as a reduced taxable retirement income). When the maximum survivor benefit is chosen, then the surviving spouse will be provided with a lifetime annuity of 50 percent of the unreduced retirement benefit, which also includes future adjustments for inflation.

If that same federal employee decides to keep FEGLI Option B coverage up until retirement and beyond, and has held this coverage for five years before retirement, then if that employee dies before their spouse, the proceeds of the insurance could be used by the surviving spouse. Also, it can serve as a replacement for the income from Wanda’s FERS retirement benefit. Let’s say Wanda’s five multiples of Option B coverage worth is $320, 000 ($64, 000 x 5). The coverage costs $138.67 per month before Wanda turns 60, at age 60, the premium would have doubled to about $304.86 a month. When she clocks 65, the cost would also have reached $374.40 monthly, and until she is 80, this will steadily rise every five years.

Always bear in mind that the money used for the settlement of these premiums are derived after deducting tax and the surviving spouse is entitled to a minimum of survivor annuity to continue coverage under the Federal Employees Health Benefits Program. Despite the fact that a surviving spouse may require more income than the spousal FERS or CSRS, if you die first, the survivor annuity has a provision of replacing your retirement benefit, in later years, FEGLI can become prohibitory to cost and is not a perfect substitute.


In conclusion, these are some of the things you should remember about FEGLI:

  • FEGLI provides accidental death and dismemberment insurance for employees as part of its basic coverage at no additional cost.
  • If you cancel FEGLI, there is no refund of premiums.
  • If you are diagnosed with a terminal illness, FEGLI includes a “living benefit,” which is payable from your basic life insurance before your death.
  • It is group term life insurance. It does not build up cash value.
  • Although your beneficiary will be paid irrespective of the cause or location of your death, if your beneficiary causes your death intentionally there is however an exception.
  • You can’t take a loan out against your FEGLI insurance.
 If you need additional information when it comes to your own FEGLI, contact your local financial professional.

How Much of 2018’s Federal SSI Benefits Can You Receive?

How Much of 2018’s Federal SSI Benefits Can You Receive?

Determine the amount of financial assistance you can obtain from the Supplemental Security Income program.

When the topic of Social Security is brought up, people tend to concentrate on the retirement benefits they’ll get once their careers are over. However, the Social Security Administration also runs more programs for millions of people in the USA. One benefit is the Supplemental Security Income that people in financial straits can get if they are eligible.

For 2018, the SSA just issued the SSI benefit amounts, and they’ve increased moderately from the year’s prior levels. The SSI federal standard amount of payment is $750 monthly in 2018, an increase from $15 in 2017. The corresponding amount for families will go up to $1,125 monthly, up by $22. That said, each payment will differ substantially based on each person’s financial circumstances and location. Further, there are complex calculations that must be done to determine the precise amount you’ll receive from Supplemental Security Income. You’ll find more information out shortly, but before that, here are some fundamentals regarding the SSI program.

What does SSI cover?

Supplemental Security Income is developed for people whose normal Social Security benefits aren’t enough to meet their essential financial obligations. Only people on restricted budgets, seniors older than 64, and disabled or blind individuals are entitled to SSI. Those who are eligible for SSI receive disability or retirement benefits from Social Security also.

That said, SSI doesn’t operate the same way as normal Social Security. Work history isn’t required to receive SSI payments. Plus, the program usually coordinates with other state and federal programs for people with restricted financial abilities. Since state coordination is a factor, SSI payments vary per state based on if specific jurisdiction supplements amount to the federal standard.

Am I eligible for SSI?

To obtain SSI payments, you need to meet a pair of fundamental tests: one for income and another for financial resources. Those who receive SSI can have as much as $2,000 in assets if they are single. For families, that figure is $3,000. With that in mind, not each asset counts as part of that limit. For example, you can possess a property, an automobile, and regular household items, as well as personal things, none of which count towards the limit of financial resources. Further, unique things like burial funds, life insurance policies, grants for educational costs, or scholarships are allowed without counting towards the maximum.

The income test operates differently. Instead of a set limit, SSI reduces the monthly payment amount of your countable income. That said, countable income doesn’t factor in towards your entire income. Specifically, you’re permitted to have the following income (which won’t count towards decreasing your SSI benefit):

  • The initial $65 monthly earnings and half of earnings over $65
  • The initial $20 of many monthly income types.
  • Income tax refunds
  • The worth of several benefits, such as need-based local and state assistance programs, food stamps, help form nonprofit agencies, home energy assistance, and disaster assistance
  • Scholarships or other education-related gifts/grants
  • Dividends or interest on countable financial resources
  • Earnings of a maximum of $1,790 monthly for students younger than 22, subject to a $7,200 annual total

This list only goes over a portion of the exclusions. You can obtain a more thorough list on the SSA website.

Any outstanding income is countable, and the amount you’ll receive from SSI is equivalent to the federal benefit, as well as any additional payment made by your state, minus your countable income. As such, for 2018, assuming you’re single, residing in a state with no extra benefits, and you receive a monthly countable income of $100, then you’ll obtain $650 monthly from SSI.

Receive the benefits you’re entitled to

Supplemental Security Income doesn’t provide a large payment, and its subject to income restrictions that lower its effect even more. However, for people who need it, SSI can be a fundamental lifeline during retirement to make ends meet. Try to determine what you need to obtain the SSI benefits you’re entitled to.

Don’t hesitate to contact a financial professional if you need assistance.