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June 25, 2018

Public Sector Retirement News

Federal Employee Retirement and Benefits News

Category: Articles


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Michael Wood | Optional FEGLI Premiums Rising After Age 50

MICHAEL WOOD – FEGLI provides coverage to federal employees and is employer-sponsored. Interestingly, it is the largest insurance program of its kind in the USA.   

The program was created in 1954 and covers federal employees, their families and retires. Currently, the Office of Personnel Management administers the program with MetLife Insurance Group underwriting its processes.


FEGLI offers four types of coverage options. The first option is Basic coverage, which the federal government subsidizes. In this arrangement, employees foot two-thirds of their premiums and the government pays the rest. Even so, employees foot 100% of premiums in the optionsFEGLI cover. But all FEGLI coverage is a Term Life Insurance that does not earn any interest or cash value.



Basic Coverage


With FEGLI Basic coverage employees receive automatic coverage unless one opts out. Typically, basic coverage has three death benefits that insure employees for a sum equal to their annual basic salary to the nearest $1,000 plus an extra $2,000.


Example: let’s assume Jane Doe comes to Michael Wood’s office and she makes $37,400 in a year. Based on the above rule, Jane’s death benefit would be $40,000.


Besides that, Basic FEGLI coverage adds additional funds equal to Jane’s annual basic pay. But upon attaining35 years, this figure reduces by 10% until age 45 when it ceases to apply. Below is a table showing how this works every year beginning at 35 years of age.


Age at Death Basic Insurance Extra Benefit Total Basic
Under 35 $40,000 $40,000 $80,000
35 $40,000 $40,000 $80,000
36 $40,000 $36,000 $76,000
37 $40,000 $28,000 $72,000
39 $40,000 $32,000 $68,000
38 $40,000 $28,000 $64,000
39 $40,000 $24,000 $64,000
40 $40,000 $20,000 $60,000
41 $40,000 $16,000 $56,000
42 $40,000 $12,000 $52,000
43 $40,000 $8,000 $48,000
44 $40,000 $4,000 $44,000
45 and over $40,000 $0 $40,000


Keep it in mind that the additional coverage figure reduces annually until it no longer applies.


Another type of coverage under the Basic FEGLI coverage is Accidental Death and Dismemberment. ADD coverage pays an amount equal to the FEGLi’s basic coverage if an individual’s death arises from a covered accident. An equivalent amount is paid where an individual loses two of the following an accident:

  • A foot
  • A hand
  • Or an eye

If lose of one of the above occurs, Basic coverage pays a $20,000 benefit.

FEGLI Optional Covers

FEGLI offers Optional Coverage that an employee pays for 100%. These options include:


Option A


This option lets employees purchase extra coverage worth $10,000. Althoughbenefitsremainconstantover time, employees graduate to higher premium brackets every five years. Below is a table detailing how premiums increase every five years upon attainingthe age of 35 years.


Age Group Costs of Option A Coverage Over Time
Under 35 $0.20
35 to 39 $0.30
40 to 44 $0.40
45 to 49 $0.70
50 to 54 $1.10
55 to 59 $2.00
60 to 64 $6.00
65 to 64 $6.00
70 to 74 $6.00
75 to 79 $6.00
80 and above $6.00



NB: Coverage premiums increases are charged biweekly not monthly whenever an employee attains the age of 50 years. Term life issuance premiums are higher than those found in the private insurance marketplace.


FEGLI Option B


This optionalcoverage plan lets employees acquire coverageworth five times the valueof basic coverage. Similar to Basic coverage, this is term life insurancethat accumulatesno cash valueand earnsno interest. Plus, employees pay 100% of all coverage premiums. Option B coverageremainsconstantthroughout its duration but premiumcosts increase every five years after anemployee attainsthe 35 years. The example below demonstrates option B coveragethat is fivetimesthe value of basic coverage.


Age Group The premium for Option B Coverage
Under 35 $3.80
35 to 39 %5.70
40 to 44 $7.60
45 to 49 $13.30
50 to 54 $20.90
55 to 59 $38.00
60 to 64 $83.60
65 to 69 $102.60
70 to 74 $182.40
75 to 79 $342.00
810 and above $501.60


NB: Option B coverage rates increase rapidly after attaining 50 years. At 50 years of age, employees pay $20.90 per payment period equivalent to $45.28 per month. At age 55, employeespay $38.00 per payment period equivalent to $82.33 per month. At this rate, premiums are bound to become unmanageableby the age of 65 years as well as premiums building no cash value during this time.


Option C


FEGLI Option C coverage lets employees acquire term life coverage for their families (spouses and any children). Accordingly, it covers spouses for $5,000 and children for $2,500. Besides that, emplo0yees can opt to obtain coverage that is five times the value of the initial lump sum for both spouses and children. However, all selected multiples must be of equal value.


OptionC covers unmarriedchildren from birthuntil the age of 21 years. Also, any disabledor handicapped childrenare allowed to remain under this coverage after the age of 22. Just like Options A and B amountof coverageremainsconstant though premiumsbeginto increaseuponattaining35 years. Below is a ratestablefor Option C coverage.


Age Group Costs per Payment Period
Under 35 $1.10
35 to 39 $1.35
40 to 44 $2.05
45 to 49 $2.95
50 to 54 $4.60
55 to 59 $7.40
60 to 64 $13.50
65 to 69 $15.70
70 to 74 $19.15
75 to 79 $26.30
80 and above $36.00

NB: Option C rates increase at a fat rate from 60 years onwards. Even so, Option C children coverage may no longer apply at this age.


Comparing Between FEGLI Life Insurance Options and Private Market InsuranceOptions


The chart below illustrates the rates applicable to individuals making $96,100 annually with five multiples of Option B and Option C coverage


AGE Total Death Benefit Bi-Weeklypremiums Monthly premiums Annual premiums
50 to 54 $594,000 $73.30 $160.12 $1,921.40
55 to 59 $594,000 $121.25 $262.71 $3,152.50
60 to 64 $594,000 $247.75 $536.79 $6,441.50
65 to 69 $594,000 $486.45 $1,053.98 $12,647.70
70 to 74 $594,000 $920.15 $1,993.66 $23,923.90
80 and above $594,000 $1,337.25 $2,897.38 $34,768.50


According to this rates chart spread outover30 years, the total costs payable by the employer amount to $314,005. Interestingly, no matter how committed employees are to their life insurance policies not many can afford to pay the above figure. Fortunately, affordable alternatives exist in the private insurance market.


Private FEGLI Option A Alternatives


Acquiring similar coverage at age 50 in the private sector, one gets to pay cheaper premiums. What’s more, the table below depicts the considerable savings of obtaining private sector insurance.


Age Bracket Total Death Benefit Bi-Weekly Premiums Monthly Premiums Annual Premiums
50 to 54 $594,000 $193.59 $2238.04
55 to 59 $594,000 $193.59 $2238.04
60 to 64 $594,000 $193.59 $2238.04
65 to 69 $594,000 $193.59 $2238.04
70 to 74 $594,000 $193.59 $2238.04
80 and above $594,000 $193.59 $2238.04


Apparently, private provider chargehigher rates that FEGLI’s group rates. This isbecauseFEGLI typically levies higher premiums on healthapplicants to offset shortfalls in less healthyapplicants. Nonetheless, in the private sector,this is not the case. The private marketplace pays a totalof $67,141 for a death benefit of %594,000 equivalentto asavingsof $246,864.

Michael Wood

Michael Wood is the principal and owner of Integrity Retirement Planning, LLC with offices located in Cambridge, Maryland. Michael began his career in Insurance and Financial Services with Bankers Life and Casualty in 1999 where he practiced insurance until 2002 at which time he started his own company.

Michael Wood has been a licensed professional for almost 20 years, and he has focused exclusively on those consumers who are close to or already retired. He has a unique skill set and can help consumers carefully plan for federal retirement, long-term care, retirement income, Medicare, and Estate Planning. People who are getting close to retirement, or who have already retired, often find that the integration of the different components of their unique situation can be challenging to understand and plan for without help.


More Articles by Michael Wood: Is your Pension Safe?

2017 TSP Modernization Act Comes with Surprising Benefits

Rick Spruill: How to Determine if FEGLI is Right for You

Rick Spruill Talks About Optimally Leveraging your FEGLI Coverage Options

RICK SPRUILL – Use the following three factors to help determine whether FEGLI is a sustainable coverage option for you. The first factor addresses your ability to satisfy underwritersrequirementsforindividualFEGLI protection. Doing so entails meeting criteria established by your lifestyle, social habits, age, and health. A second factor that determines whether you are eligible for FEGLI protection is the duration of protection. Keep it in mind shortly, a large percentage of federal employees in their 50s and 60s will have their FEGLI coverage revoked. Finally, your life protection needs also determine your qualification status.

Presently, the Federal Employee GroupLife Insurance provides the most extensive coverage policies in the world. Accordingly, coverage plan offers you plans that require no medical underwriting with competitively priced death benefits. Besides that, death benefits begin immediately upon enrollment. However, the flipside is that FEGLI premiums increase over time for all insurees. These changes are attributed to policy design innovations within this industry over the past couple of years.

TSP and FERS are important parts of your retirement

But What If I Am Terminally Ill with Cancer, Suffer a Stroke or Heart Attack?


If this happens to you, expect to pay higher premiums. Subsequently, your ability to pay bills will adversely be affected. However, if you are eligible for living benefits, access to accelerated tax-free payments of your death benefits is available. But to do so, you need to make an application based on your needs.


On the other hand, the optional FEGLI offers nothing. So if you don’t have access to enough emergency funds or sick leave, you can apply for a hardship withdrawal. Even so, this can potentially wipe out of your reserves. Besides that, taxes will eat a significant chunk of your retirement assets as well as incur a 10% early withdrawal penalty.


With medical innovations increasing the average lifespans of most Americans, most federal employees are concerned about living longer than expected.


Although that is true, all types of insurance policies are geared towards ensuring that you maintain a comfortablelifestyle for your family. But families need to identify the kindof protection they require on an individual basis. Doing so can help these families prioritize their insurance needs and budgets.


Nonetheless, if insurance were free, then it would be possible to protect families against any conceivable harm. For this reason, most of us would opt to have full protection against multiple disasters. If we can potentially foretell the future, individuals would select optimal protection. In retrospect, it is not possible to do that, which means that we often cannot foretell what kind of protection is necessary. Consequently, selecting the best protection mandates that we identify the best coverage options at pocket-friendly prices.



Accordingly, this is a risky consideration when shopping for a comprehensive coverage option. For instance, polls of federal employees reveal that not many of them have significant savings to afford a cancer policy. Although one might have cancer coverage and then dies from a heart attack, than any cancer and LTC coverage they have is a waste of resources. Nonetheless, having a policy with multiple covers is the ideal situation. According to Rick Spruill, a perfect policy should cover all possible outcomes minus the additional costs, risks, or complications of acquiring use or lose it coverage.

So, who requires FEGLI coverage?

Initially, FEGLI coverage is suitable for federal employees under 45 years of age, why is that so? It is because at this age there is no Basic Extra Benefit as well as diminishing 5-year cost increases. This means that you have access to affordable alternatives and increased flexibility of LivingBenefits. Also, FEGLI is ideal for those with preexisting health conditions or risky lifestyles(read sea divers or tobacco smokers) that cannot be converged under a conventional insurance policy.


Although FEGLI coverage for all federal employees, its premiums are equal for both chain-smoking fast food aficionados and physically active vegans. What’s more, premiums are expected to rise by 2066% for both groups between the ages of 35 and 65. Here is a calculator to help you compute FEGLI premiums if you are 65 and above.


So, What Will You Do?

You need to ponder over these questions before settling for FEGLI as your desired coverage option. Alternatively, you could shop around for an affordable option that has Living Benefits.However, to do so evaluate the following questions:

  • Ask yourself why you need coverage: is it to protect my family’s present lifestyle after my demise or is it to defend its present and future lifestyle?
  • How eligible am I for underwriting?
  • Will waiting before getting FEGLI coverage affect your eligibility for individual coverage?
  • How long do I need to have FEGLI coverage to ensure that my family is fully covered after I am gone?
  • How much retirement savings do I have for offsettingLivingBenefits?


Caveat! Do not wait too long before evaluating FEGLI policies as premiums are bound to rise in the future. Thus, you need to collect and evaluate available options to help you make the most suitable decision for your family and you. Once you decide to stay, leave, or drop coverage, you need to consult with a federally-certified financial advisor in making your decision.

Rick Spruill

So, What Will You Do?

Rick Spruill is a Financial, Retirement, Military and Civil Service Retirement TSP Fegli and VGLI Life insurance Conversion Expert, Wealth Transfer, Nursing home, Estate, Consulting and Planning Experts and a Business Tax reduction expert…

Other articles by Rick Spruill: Everything to Know About Denied FEGLI Claims

Buddy Nidey | How Does Divorce Affect Your TSP?

Learn About Your Divorce Rights

BUDDY NIDEY- The TSP is an excellent program for retirement savings both for members of the uniformed service and federal employees. Members add to their savings through monthly salary deductions. Usually, your spouse has certain rights to your TSP given by the law; this includes those spouses that you’re legally separated from. These rights are taken so seriously that whoever denies or tries to deny their spouse these rights are prosecuted.

I know you’re probably wondering what your spouse gets after divorce. Right? Retirees or federal employees who are in the process of terminating their marriages should understand precisely how their TSP can be affected.

Retirement Benefits Court Order

The court can issue an order to divide your Thrift Saving Plan account. It must clearly specify the TSP account to which the order applies; especially for those who have two accounts. A retirement benefits court order can stem from divorce, legal separation, annulment, or property settlement agreement.

Here are some of the effects of a court on your account:

  1. It will require that your TSP account is frozen to prevent you from borrowing against it or making withdrawals. The order will be resolved after the divorce has been finalized.
  2. It may award a portion of your savings to your current spouse, former spouse, or dependants.


You can continue making contributions to your TSP even when your account is frozen. Also, if you had taken a loan against your account, you will still be expected to make monthly payments.


Dividing Your TSP


The money accumulated in a TSP account when both parties were married is a marital asset that can be divided after divorce. This is because, under family law, the account belongs to both partners regardless of who the actual “contributor’ is.

The division of the account is based on the value of the TSP account as determined on the day the account was frozen. The portion is awarded either as a percentage or a given dollar amount.Your spouse does not get a check payment. Instead, TSP will follow the court’s order and send the dictated amount to an eligible retirement plan in your spouse’s name.

Changes to Be Made

Considering that your spouse will get almost half of your contributions in the divorce, you can reduce the amount you put into your account. The forms you fill for this are the TSP­1 and TSP­U­1 for federal employees and members of the uniformed service respectively.

Most people list their spouses as their beneficiaries. After your divorce, you will most definitely need to change the beneficiary. This is very important because TSP rules are really strict and whoever is named as beneficiary (it doesn’t matter if you’re divorced or not) will get the proceeds.

Broken heart


Basically, a retirement savings account acquired between the date of marriage to the date of separation is considered marital property. This is the case even if you are the sole contributor and only your name is on the account. In the case of a divorce, your spouse is entitled to halfsies.

During your divorce, it is very important that you get an attorney that thoroughly understands the TSP rules in relation to divorce. There are available handbooks that you can read to get some knowledge as well.

Buddy Nidey, Financial Expert

About Buddy Nidey

As Certified Public Accountant and a graduate of the College of Financial Planning in Denver, Colorado, Buddy Nidey applies his strong analytical background to his work as an investment advisor representative. He enjoys coordinating clients’ investment portfolios with solid financial planning that takes income taxes, diversification and safety into consideration. Buddy Nidey works with families up to and through retirement, mapping out strategies that maximize Social Security and other sources of income to a retiree.

Retirement Funds: Three Ways You Can Be Preparing Financially

Retirement Funds: Three Ways You Can Be Preparing Financially

Approximately 43 percent of homeowners are worried their pensions will not cover the costs of their retirement, according to a study done by SunLife. At a time where we are living more active and longer lives after retirement, retirees are considering how they will finance their retirement goals when it comes to planning their retirement. With this in mind, a well thought out financial plan holds more importance than ever and proper management of your retirement funds that you have spent your career building up is essential to living a full and happy life after retiring. However, employees are still at a loss regarding what to do with their retirement funds. One third of workers are uncertain about their plans for their retirement funds with 1 in 3 of them moving their funds out of a retirement account, based on advice from a financial professional. Here are a few tips for effectively managing your money as you plan your retirement dreams.

Identify Ways To Cut Spending

One of the first and more effective ways to manage your money in retirement is to identify ways of cutting your spending. With retirement, it is expected that you will lose your employment stream of income. Therefore it is wise to consider how you will cope with, and if you can cope with your current expenses after retiring.

Some retirees consider downsizing their home, since their kids are often grown and moved out. Others also consider look at their homes and ways to reduce finance costs attached to their homes.A lower interest rate or a switch from a variable rate to fixed rate can end up saving your thousands each year in finance charges. In addition, consider more effective options for medical and ongoing healthcare. A recent study by Fidelity found that Americans over 65 spend an average of $260,000 on medical care throughout retirement. Purchasing a policy in your younger years or enrolling on to state backed healthcare plans can provide to be cost effective in the long run.

Establish Income Streams

Whether it is through investments or other post retirement income streams, establishing ways to keep earning after your employment ends is a smart option to keep financing your retirement lifestyle. Here is where you would research and compare the best uses of your cash and the returns you can get. Comparing returns from investing in stocks and saving in a retirement account along with returns from an IRA account are some of the considerations that should pop up here.

Even though you have hit the retirement age and are now entitled to pension, it does not necessarily mean the end of your professional career. Some retirees go on to set up side businesses, working part time or on their own hours. You can also look into ways to boost your pension in the few years prior to your retirement by either increasing your contributions or delaying the date.

Compare Retirement Plans Against Your Means

Finally, as you approach retirement consider not only how much you have saved away but what you will be able to achieve with that money. Many of us have retirement goals of traveling or taking up certain hobbies. However, a part of proper financial planning for your retirement is considering whether those dreams are achievable with the current amount you have.

Always remember to allow for inflation and general rise in costs as you try to estimate the affordability of the future. A key consideration is your various retirement income options available, whether it be guaranteed annuity for life or receiving a lump sum amount. Be sure to check the costs attached to options since some companies may charge a percentage for early lump sum withdrawal.

Proper financial planning ahead of your retirement is  vital to living the retirement lifestyle you envisioned. Armed with the right information and proactive attitude, you can begin to make the right arrangements, specific to your situation. By doing this, you can not only protect your retirement assets but possibly increase them and avoid the looming option of a less than optimal retirement.

Michael Wood | Is your Pension Safe?

MICHAEL WOOD – More and more, the outlook for federal pensions seems to be growing bleak. With headline after headline claiming that pensions are dying and that the government has to cut personnel to maintain its promises, it is a worrying time for Federal employees who could receive a pension on retirement.

It would be reasonable to be concerned about your retirement pension- whether all of your work and loyalty will not be paid out when you can finally retire, which can be especially challenging when you realize just how complex federal pensions can get. There are ways to make the process of understanding your pension easier, and financial professionals like Michael Wood can help you reach those goals.

What is a Pension Plan?

A pension plan is a retirement plan that promises a specific amount of money every month for a federal employee. The important distinction to be made between this and another plan like a TSP or 401(k) is that those are defined contribution plans, plans that only pay as much as the employee contributes, plus any employer matching. Pension plans have a guaranteed amount payout that can be distributed in a number of ways; whether it is as a single lump sum (though this is usually not the best option- over 20% of retirees who took the lump sum depleted their  savings within five and a half years. There are also a plethora of other options when working through your pension; typically your pension is calculated using the top three years of income when you are working, but does overtime count? Is a COLA (cost-of-living) adjustment taken into account?

The important part, however, is your pension’s funding or funded ratio. Essentially, when a pension is created and maintained, the funding for your pension is represented by the funding ratio- 100% means that if you were to withdraw immediately, the funds would be 100% covered. Therefore, a good rule of thumb is that the higher the ratio, the better. Though 100% is not necessarily always a possibility, having a ratio of 80% or more is usually a good enough ratio to feel secure. To learn more about your retirement options, talk to a trusted financial professional about your financial position.


Michael Wood

Michael Wood is the principal and owner of Integrity Retirement Planning, LLC with offices located in Cambridge, Maryland. Michael began his career in Insurance and Financial Services with Bankers Life and Casualty in 1999 where he practiced insurance until 2002 at which time he started his own company.

Everything you need to know about the FEGLI calculator

FEGLI or Federal Employees Group Life Insurance program is an insurance plan that most federal employees enjoy under the supervision and subsidy of the central government. As the government will be sponsoring for your life insurance, paying 2/3rd of the cost of any coverage, you can now get huge coverage and benefits at a very cheap price. We understand that every individual has a specific circumstance and specific needs. Thus we want you to take the best decision for yourself and your family.

In order for you to do that you need to understand the different nuances of FEGLI Rates. The best way to calculate those rates is through the use of FEGLI calculator. While on the surface this might seem like a complicated process but in general it is very easy and as the well-being of your loved ones depends on this, it is important that your attention to it.

The Office of Personnel Management or the OPM offers every FEGLI or Federal Employees Group Life Insurance holder with an option to calculate the FEGLI rates. The FEGLI calculator is provided at the website of the Office of Personnel Management will enable the government representatives to calculate their FEGLI rates for Basic, Option A, Option B, and Option C. The FEGLI calculator is frequently updated as per as the change of FEGLI rates. It is a very useful tool for you to check the rates of the FEGLI life insurance regularly.

These are the instructions on how to use the FEGLI calculator:

From the drop-down list, select your age.

Type your yearly base pay.

Select the installment recurrence

If necessary, select the discretionary or optional insurance from Option A, Option B and, Option C. Also, in case of Option B and Option C, select the number of the multiples.

If you are an employer at the postal service, select “Yes” in the last box.

One of the most amazing things about the FEGLI calculator is that it does not only enable you to provide the FEGLI rates to your Basic insurance coverage or to any discretionary coverage you have. But also, it enables you to do some future arrangements. Some of the top facts acknowledged by the FEGLI calculator includes:

The Basic life insurance coverage of FEGLI that is partially paid by your employer is a deal that ought not to be left behind.

The rates for the FEGLI or Federal Employees Group Life Insurance coverage for Option B expands exponentially at ages of 50, 55, 60, 65, and 70. The FEGLI Option B is quite reasonable to until the age of 49, yet at age of 50, the government representative needs to consider an insurance policy known as Term Life from an independent agent who has deep knowledge or is an expert in the Federal Employee Group Life Insurance Program.

The Discretionary or optional coverage can be chosen according to your preferences. As a government representative, you can cancel the Option B life insurance coverage with the expanding cost and keep the Basic insurance coverage of FEGLI. The FEGLI calculator layoff these options for you such that you can easily come to a decision about the coverage of Option B that is paid by your employer.

The best way to choose the best possible deal for your family is by making sure that you understand the details of each program. Understanding of how to operate FEGLI calculator will go a long way for you to achieve that goal.

The Blended Retirement System

The Blended Retirement System

More than 1.5 million individuals are qualified to decide their future military retirement benefit. The new law which has been in effect since 1st of January, 2018 has given them this chance. Department of Defense offers obligatory training for those qualified individuals with specific kind of educational programs, ensuring everyone understands whether they are eligible to choose the Blended Retirement System. Similar to the Thrift Savings Plan or TSP introduced by the TSP government, the Department of Defense created this retirement plan for the service members. While a significant reason behind launching this new retirement system is to conserve the money of the government, this new retirement plan provides numerous benefits to the veterans. To get the maximum benefits, military officers need to assemble their reserve funds for retirement. They can either open an independent venture or turn into a temporary administration worker with a confirmation as a veteran-claimed small business.

Benefits of TSP

Eligibility for the Blended Retirement System:

TSP government will enroll FERS members if they were hired after 1984. In case of Blended System, the recently hired service members have enrolled automatically. Also, current service members who have been on the job for about 12 years and also those individuals with a paid status of less than 4320 retirement points. Likewise, any service who were enrolled by the service administration or consented to a service arrangement will have the option for the Blended Retirement System. This service is not provided by the TSP government.


Difference between CSRS and FERS


Retirement benefits of Blended Retirement System:

  • Whether you have contributed to your Thrift Savings Plan or not, you will still receive a 1 percent of the base pay in the TSP account.
  • The Department of Defense co-ordinates your TSP commitments by increasing at 5 percent of your base pay.
  • You will receive a continuation pay which is not provided by the TSP government. It is a one-time payment if you are in the service for 12 years, and in return for your duty to serve an extra four years in service. In March 2018, the current individuals of the service received 2.5 times their month to month essential pay as of the day they started the service of their twelfth year of service.
  • The Reserve and the Guard service member will receive half of their current salary.
  • Those who will be retiring soon can obtain either half or quarter of their future retirement pay by means of lump sum amount at their retirement. Retirement paychecks would come back to their full sum after they reach the age 67.

How does TSP work?

Action elements:

Just like the Monthly Annuity calculator provided by the TSP government, the Department of Defense provides the BRS calculator where one can assess the retirement benefits. Before the service members make a final decision, they take an obligatory training session which is available in the learning management system of the service. Joint Knowledge Online and also via Military OneSource. The air service members, sailors, and soldiers can choose the Blended Retirement System through MyPay. Along with that, the Marines can choose the retirement system via Marine Online.

When it comes to Retirement plans, this is one of the best financial systems for the retired service members with unbelievable benefits for their future endeavors. The Department of Defense has created a personal savings system for the service members.


Rick Spruill | Everything to know about Denied FEGLI Claims

Everything you Need to Know About Denied FEGLI Claims

RICK SPRUILL – The FEGLI or Federal Employees Group Life Insurance program provides a living advantage to the government representatives and retirees who are critically ill with a medical diagnosis of under nine months in expectancy of life. On the off chance that you happen to be in this deplorable circumstance, you should realize that there are distinctive standards on how you can assert FEGLI living advantages, contingent upon whether you are as yet a government representative or annuitant as of now in retirement. First off, you should realize that the Living Benefit is equivalent to your FEGLI Basic protection cover. Current government representatives can pick between taking a full or fractional living advantage in numerous of $1,000.

Benefits of TSP

What to do immediately after your FEGLI claim is denied?

At the point, when a FEGLI claim is denied, you ought to counsel with an accomplished FEGLI lawyer to comprehend the explanation for the denial. Since the laws representing FEGLI claims are exceptionally unpredictable, it is important to get guidance from a life insurance lawyer gaining practical experience in the field of FEGLI laws. There are numerous reasons for a denied FEGLI claim, and in the most cases, they are identified with the inability to conform to strict FEGLI regulations. Some of these reasons include Invalid Beneficiary Designation, Problems with Eligibility, No Beneficiary Designation on Record, No coverage at the time of the death of the government representative, Incomplete documents to support a claim, Beneficiary disputes, Non-payment of the premiums and much more.

TSP and FERS are important parts of your retirement

What is the first step after a denied claim?


At first, you need to know that how much FEGLI life insurance you have. To see that you can use the FEGLI calculator. The FEGLI calculator enables you to assess the future changes regarding coverage and premium both as a current government representative and also in your retirement years. You can regulate the nominal value of the different sequence of FEGLI coverage. Along with that, you can calculate the premiums for the different coverage of FEGLI, and perceive how selecting various FEGLI options can change the amount of the life insurance along with the premiums.

Applying for coverage

When you apply for coverage, as government representatives you are required to finish a Designation of Beneficiary form, distinguishing a person as the recipient of the extra security continues payable upon their passing under the FEGLI policy. The protection is substantial as long as premiums are paid and the guaranteed stays in the class of qualified members. Hence if the FEGLI claim is refused, the past classification of the recipient is naturally crossed out after the coverage ends within thirty-one days.

If the government representative is unable to enforce a new Designation of Beneficiary form, then the FEGLI rates will be allocated by the FEGLI request of priority as stated in the policy. This is due to the past recipient classification under the policy that had been ended which is no more substantial. For instance, if a government representative was insured when he was married, then at the time of his death, the FEGLI insurance will be provided to the widow. In case of divorce, the FEGLI insurance will carry over to the children.


Legal steps you can take after denied claims

The FEGLI claims are administered by FEGLIA or Federal Employees Group Life Insurance Act. The FEGLIA is an intricate system and keeping in mind on how it influences your FEGLI claim, you ought to talk with a FEGLI expert. Many FEGLI legal counselors handle various cases on denied FEGLI claims. Most of the top FEGLI legal counselors are most experienced and profoundly regarded as highly proficient experts in managing the indictment of cases against insurance agencies.

Daryl Shankland | Executive Orders Add a Level of Doubt

Daryl Shankland

DARYL SHANKLAND – Recently, President Trump signed three executive orders designed to change the dynamics of federal employment significantly. These orders aim to reduce the firing time and process of any federal employee, removing “underperforming” workers far more efficiently. Along with that, these orders also reduce much of the influence unions have had on policies, ensuring that they can’t protect workers’ right as much anymore. Primarily these were all done to cut down on the lengthy legislative process and cost of firing an inefficient employee, but these will also make employees more in danger of being let go.

One of the things that changes the paradigm hugely is the 30-day timeline of the Employee Performance Improvement Plan (PIP). Although this comes as a saving grace for supervisors as they can hold these workers more accountable, for employees, this means their chances of getting fired are significantly higher now. It is also far harder for any fired employee to move to another agency. While any federal employee knowingly or unknowingly automatically enrolls for FEGLI, primary insurance is dependent upon the annual pay of any employee. Now that employees are more likely to be fired than suspended their whole life insurance plans can blow up. You, as a federal employee, need to make sure that you choose the most convenient option for yourself to cover for a better future. At the same time, you need to get serious about your retirement options as well, since you are more likely to be sent into early retirement.

The executive orders limit the power of unions as a bargaining tool for the rights of employees. Employees of the collective bargaining unit generally have two ways to appeal a significant disciplinary action. They can go through the administrative process or follow the union grievance process. Typically, a grievance can be filed with their union by any bargaining unit employee. From there on, the employees usually receive an arbitration hearing resulting in the issuance of a decision by the arbitrator. But now with the executive orders in place, employees in a collective bargaining unit won’t be able to take any termination cases to an arbitrator for any decisions reducing the power of employees of a bargaining unit significantly.

Moving forward with these orders also suggests prioritization of employees by the length of their service time, meaning the newer ones are more likely to be let go during a Reduction in Forces (RIF). This can have a profound impact on your FERS Annuity, because as your likelihood of getting fired rises at the early stages of your career, you need to be able to choose the right option to ensure the betterment of yourself and your family. A lot of federal employees have been scratching their heads over retirement plans after president Trump signed these three orders. We suggest talk to your family members, friends, and financial advisor such as Daryl Shankland and find out which would be the best plan for you.

Now employees will be able to spend much less time for union works as it is deemed as “tax-payer funded union time,” also aiming to charge unions for rents, space, and federal buildings. A group of administration of labor relations will develop “government-wide approaches to bargaining issues.” Agency officials have already been instructed to work on renegotiation recommendations of contracts that are “not subject to disclosure” to any of these existing union representatives. All these mean that participation of employees within these unions is likely to decrease more also the unions’ ability to bargain for things like health, safety benefits of workers will be limited as all of those will be renegotiated. While there are retirement programs like FEHB which ensures the health of the employee and their families, the best sort of bargains can’t be obtained without the help of a collective bargaining unit and there are chances of lesser funding from the government on these.

Executive orders issued by President Trump enhances the probability of an employee getting fired while lessening the bargaining rights of the worker to a large extent. All the more reasons you need to make sure your insurance is in place to help you out and have a retirement plan ready to act on!

Daryl Shankland has been guiding clients in their investment decisions since 1980, encompassing both good times and bad. Her broadcasting background has helped her communicate complex, quickly changing information to clients in a manner that they can understand.

Contact Daryl Shankland to find out more about your retirement options.

Michael Wood | 2017 TSP Modernization Act Comes with Surprising Benefits

MICHAEL WOOD – The TSP can be one of the best ways for you to save money and get the maximum out of your retirement plans because it allows you to get the highest possible returns by investing as early as possible.

Michael Wood

Last November’s TSP Modernization Act of 2017 gives more flexibility to federal employees regarding investing and withdrawing money from their savings. Before the Modernization Act, employees could only withdraw money in two lump sums, once at 59 1/2 and secondly at the end of their service, when they would have to take the whole amount at once. After the Modernization Act, the rules changed so that an employee can make a post-separation withdrawal as early as at 30 days interval. In case of service age based withdrawals, that can be made up to 4 times a year.

The law also provides participants with much greater flexibility when it comes to changing the frequency and amount of monthly installment payments. Before the Act, a federal employee could only receive payments on a monthly basis from their account. An open season between October and December was the only time to make any possible changes to the number of payments. Now, a participant can choose to receive payments on a monthly, quarterly or annual basis. They can now change the amount and frequency of the payments whenever they want with having the power to stop or restart installment payments.

These changes in laws ensure better flexibility and control over your TSP, providing you can get the absolute most out of your plans. Also, these flexibilities offer that you get to use the savings whenever you need and also save based on how much you can spare. With these conveniences in place, designing your TSP and making sure you choose the right plans for yourself makes absolute sense.

With other reports suggesting that there is a chance, federal employees’ retirement plans can be cut to as much as $143.5 billion, which will directly affect current and future retirees. Along with that, there is a proposed pay freeze that can potentially happen next year after the hiring freeze for a while. Trump Administration is looking to make a complete overhaul in the public service sector, but all the details have not been outlined thoroughly. There are discussions on how to make the process of hiring younger workers far more accessible than what it is currently.

These proposed cuts can end up taking a significant toll on your retirement savings as there will be much fewer government subsidies on each sector of retirement plans. This means even for the same investments you’re likely to get a considerably lower return can end up hurting your long-term plans. The proposed pay freeze can harm your expected incomes over the year, and if you are hoping for some increment and thus planning to pay your installments, your plans might get disrupted with the pay freeze in action.

While planning your TSP, it’s better to make sure how much you can put away in installments along with how frequently you can do it. Also, you need to work out exactly how much saving you’d want at the end of your service and plan accordingly. TSP provides you with the best opportunity to secure the best possible future for you and your family. With these laws in place, you will get to reap the benefits even more.

Michael Wood is the principal and owner of Integrity Retirement Planning, LLC with offices located in Cambridge, Maryland. Michael began his career in Insurance and Financial Services with Bankers Life and Casualty in 1999 where he practiced insurance until 2002 at which time he started his own company. If you have questions, contact Michael Wood with questions about how you could save on your TSP.

Linda Jensen | How to make the most out of your TSP Plan

LINDA JENSEN – The Thrift Savings Plan, or TSP, is a retirement fund plan for the Federal employees. Individuals from uniformed services such as the Ready Reserve can also avail this plan. The Thrift savings plan was created in the year of 1986 by the Congress in the Federal Employees’ Retirement System Act. The savings plan offers similar kinds of reserve funds and tax reductions that numerous private enterprises provide their workers under the 401(k) plans. The retirement wages received from TSP account will rely upon the total income you put into your account throughout working years and the income amassed over that time. This plan has become the No.1 financial plan in the United States of America. More than 60 percent of the working men and women earn about $70,000 or more from the TSP plan. Individual retirement accounts, and another kind of savings to be their primary source of income when they retire.

Let’s have a look at some brilliant tips that will help you to make the most of the TSP plan and how to withdraw from your TSP- though remember, help from a financial professional like Linda Jensen’s company Asset Care & Preservation Services.

Place part of your income in TSP account regularly:

Based on your job and your assets, you need to periodically put a part of your income in the TSP account. The TSP government corresponds to the contributions made by the employee to an absolute limit. Numerous representatives pick TSP as an essential way they lay aside the cash every month for retirement. Unlike the TSP government, it is rare for the corporate businesses to provide retirement plans. In this way, you should enjoy the prevalence provided by the TSP government.

Contribute to your TSP account as much as possible:

After choosing TSP as your primary financial plan after retirement, it’s imperative that you contribute as much as possible. The aggregate sum you can contribute within 12 months is constrained by the Internal Revenue Service. Regulation of the TSP government dictates that the total amount is expanded marginally over the sum set for the earlier year. There are additionally age-based arrangements which you can benefit from. You can also discuss with the Office of Personnel Management about the total limit you can go.

Do not take out money from TSP account earlier than you need to:

While the TSP account holders can withdraw cash from the account under specific situations, it is wise not to do so in for the betterment of the future after your retirement. You can take it out as a loan, yet the TSP government requests the account holders to debilitate every other option before taking out from their TSP account. Taking money from your TSP account is taking a considerable loss for your future since you give up on the accrual or interest.

You can opt for Roth Option:

You can choose the Roth option which was created on May 7, 2012, and permits the account holders of Thrift Savings Plan to contribute cash to their records after the taxes have been paid. Conventional commitments are made before charges. People may contribute under both the Roth and other traditional choices. Before you choose the Roth option, it is imperative to understand the basics of the Roth plan. If you think that the rate of taxes will increase after your retirement, then the Roth plan is perfect for you. It is wise to ask a financial professional such as Linda Jensen before you make a final decision.

Checking your Credit Score: Tips and Free Methods


A plethora of finance sites, apps, and services are available that for use in finding out one’s own credit score from the three major bureaus each year. But giving away the last four digits of your Social Security has its own security implications. Fortunately, reputable places exist that issue reports of credit scores.

Beware though that receiving free scores and reports means you will certainly be receiving tons of promotional emails or ads from various credit cards or financial products vendors.

Ways to View your Credit Score?

A type of free score that you can view is the VantageScore. It differs from your normal FICO score, a score with most vendors but it’s fairly similar. Capital one CreditWise is an example of the Transunion VantageScore 3.0 which is offered to everybody. With the Credit Karma app, you can retrieve your VantageScore from Transunion and Equifax. So does NerdWallet’s app. However, in some places, you can use Discover to obtain your FICO score at Credit Scorecard’s site. Note that your FICO scores are updated every 30 days and you can even download your reports whenever you like for comparison purposes.

American Express, Bank of America, Barclaycard US, Chase, and Citi are among other institutions that offer free scores to clients.

Credit Report

You are required to file a request to obtain full annual reports from It’s noteworthy that some of these apps and sites do offer comprehensive reports as well. Often, these reports help you to judge your financial standing. Credit Karma provides detailed reports regarding the collections you have and the opportunity to dispute any deviations directly. In addition to that, you have the ability to clarify any reports at Bankrate, CreditWise, and Credit Sesame with Experian offering unofficial free reports that automatically update every 30 days. Nonetheless, these reports aren’t comprehensive as your national credit reports but are still useful now and then.

Finally, Chase CreditJourney, Credit Karma, and Capital One also provide free monitoring services. With certainty, you should invest in an actual monitoring service or consider freezing your accounts. However, these options will send you emails if you change the email account that appears on your report.

Pay attention to the fact that most of these apps and sites aren’t entirely accurate. This is why you need to pay attention to the range that your score falls in to get a fairly general idea of where you stand with creditors. To increase your credit score rating, visit this site.

Questions and Answers: Federal Benefits

Q: Let’s assume that an employee enters into federal service at an old age. How dependable are federal benefits as a source income during one’s retirement?

A: Before considering the number of benefits you will receive from the federal government, first we need to look at your accumulated benefits since you joined federal service. Assuming that you are enrolled in a federal retirement program, you are fortunate enough to receive a pension. Your odds are that you currently make contributions to a 401(k) plan. Certainly you also contribute to Social security, and consequently, you are entitled to Social Security benefits upon reaching the age of 62. Ideally, you should make contributions throughout your federal career instead of at the end of it. To illustrate, we assume that you receive a salary of $100,000 by the time you retire and that you are qualified for TSP elective deferral limits but unable to make catch-up contributions.

FERS Pension

By the age of 62, you will have ten years of service which entitles you to a FERS pension before the deduction of $10,000 annually at the rate of $833 per month. Your accumulated ten years of service also qualify you to high amounts of Social Security.

Thrift Savings Plan

Assuming that you have a base salary of $90,000, a contribution rate of 18% and a pay increase of 1% each year, an annual rate of 5%, you will have accumulated $275,000 at the end of ten years. A 4% withdrawal rate is equal to an income of $916 per month after adjustments for inflation.


Provided that you are FEHB covered in the first years of your retirement; you can continue enjoying FEHB coverage as well as making contributions to the government. However, it is difficult ascertaining the amount of these benefits that nonfederal employees do not possess.

Some of these calculations are of a simple nature. Nonetheless, the benefit you will earn over ten years of federal service will probably help improve the quality of life that you will enjoy once you retire.

Bottom Line

Understanding, the reality behind the benefits you receive can help you make sound decisions. For example, this understanding can help you maximize the longevity of your benefits as well as improve you know when to start making contributions. However, if you are uncertain about the benefits you will receive, you need to take time and research information related to federal employee benefits.

What Happens to your Debt when you Die?


Upon an individual’s death, they leave substantial amounts of debt. Sometimes, your debt obligation may end upon your death. Beware though that if you didn’t plan accordingly, creditors may wipe out your accumulated investments, assets, or savings. As a result, your dependents are left with nothing. What’s even worse they might be held accountable for your debt. However, this depends on factors such as where you live, the debt amount owed, its type, and your estate’s value at the time of your death.

Typically, all debts you owe are levied against your estate. If you have sufficient assets to pay off the debt, your estate executor has the responsibility of paying off this debt. Doing so may involve the selling of any personal properties or family heirlooms that bear your name. On the other hand, it becomes tricky to pay off any debts you have if your estate doesn’t have enough. Debts that are secured like home and auto loans fall in the precinct of your inheritors. Conversely, any unsecured debts owed by you such as student loans and credit card balances will be paid by your estate. Most likely, you inheritors won’t be held liable for any outstanding debts or balances. Here are a few exceptions to this rule.

Communal Property States

Thanks to community property laws in these nine states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin all debts accumulated by married couples equally belong to both parties. As a result, creditors can collect any debts you owe from your spouse.

However, creditors are forbidden from collecting any debts you incurred before getting married. Likewise, they can’t do so on the property you acquire together but keep separate. For instance, they can’t go after any autos that you finance even when such a car was purchased after your marriage. Given that, it’s important filing requisite paperwork so as not to saddle your spouse with debt.

Similarly, this rule applies if you have cosigned a credit card for a relative or friend. Any authorized user of that credit card won’t be held responsible for any debt. However, they must surrender the card immediately after your demise, to avoid identity theft charges.

Home Equity Loans

Similar to all secured debts, home equity loans are the responsibility of your estate, your cosigner, or your inheritor. But there is a difference between regular mortgages and home equity loans if a borrower dies: creditors have the option of demanding for full settlement of a debt upon your death. Otherwise, they can repossess your home. However, it’s perfectly acceptable for your inheritor to make an agreement for the paying debts in installments, though this depends on the lending policy or creditworthiness.

Private Student Loans

All federal student loans you owe are forgiven upon your death. Nonetheless, companies that give student loans may not do so. Moreover, this debt typically falls on your estate. For instance, companies like Sallie Mae and Wells Fargo forgive debts after your death, so consider taking a private student loan from them.

Ensuring Your Heirs Benefit from Your Estate

Here are a few precautions to take to minimize the amount of debt you leave to your heirs.

To begin with, quantify the amount of debt you hold. Try reducing the amount of debt you accumulate too minimize the amount paid by your estate. Already in debt? Create a plan to pay it off while you are still alive. Accordingly, you should prioritize debts that a cosigner or spouse will probably be left with.

Second, review or create a will. Doing so prevents the state from stepping in and creating one for you. In case this happens, there are hefty legal and administrative fees which have to be paid before an estate is divided. By writing your own will, you protect your heirs from paying off these fees.

And finally, make retirement investments and obtain life insurance. As long as you have an appointed beneficiary to survive you, creditors can’t touch any of your retirement plans like 402(k) or IRAs. Only the federal government can do so. Any debts you owe the federal government is subject to taxation or penalties. But if you don’t hold any government debt, all your savings will pass to your heirs. What’s more, all creditors including the federal government can’t access any life insurance policies you own. Remember that your heirs can use these funds to settle any debts that you owe.



The Most Neglected Retirement Expense: Long-Term Care

Effectively retiring from your career involves various expenses. As a retiree, you will need to make certain adjustments in your lifestyle to cope successfully. According to data from the Society of Actuaries, a majority of Americans are ill-prepared to deal with these changes. Typically, 85-year-olds depend on family members and home aides for long-term care and support. Currently, a large percentage of retirees in need of long-term care depend on expensive nursing homes or assisted living facilities.


For those without a family, it is extremely important that they have a retirement plan in place. Today, 32% of 85-year-olds receive assistance from family members on matters like transportation, household chores, and meals. Besides, hiring an aide is an expensive undertaking for most seniors. Having a retirement plan ensures that you can continue enjoying a reasonable standard of living once you retire. Accordingly, your plan should factor in your long-term healthcare needs throughout your retirement. Otherwise, your retirement might prove more stressful than expected.


Probably, You Will Need Long-TermCare…


You might think that you don’t need long-term care, but this is far from the reality. A recent study suggests that 70% of over 65-year-olds will require long-term care at some point in their lives. What’s more, 69% of them need care for a period of three or more years.  Medicare limitations mean that you can’t enjoy its benefits.  For instance, Medicare covers only 22 days of your stay in a nursing home. Arguably, this is inadequate if you are looking for a stay of three years or more.


And It Requires Money Too


Tentatively, how much does an extended stay in a nursing home or assisted living facility cost? Possibly more than you project. According to the Genworth Financials 2017 Cost of Care Survey on average assisted living facilities charge$3,750 to $45, 000 annually. On the other hand, nursing homes charge an average of $235 per day equivalent to$85,775 per year. And that’s for a semi-private room. So if you need an own room, you’ll have to pay $267 per day or $97,455 for a year.


Although a stay in a nursing home or assisted living facility might not be necessary. Nonetheless, you might need help to function independently. Also, if you don’t have a family to live with, you may need to hire an aide. Presently, non-medical home aides charge $21 per hour equal to $11,000 per year.

But what does this imply for you? That you need to create a savings plan during the time you are employed. Doing so is essential for catering to all your retirement needs. Starting early is the key to guaranteeing a successful retirement future.


Even so, there is a bright side! Perhaps, you could increase your contribution amounts through the remaining years of your employment. For instance, try stashing an additional $250 per month above your present premiums for the next 20 years of employment. This equates to $123,000 at an interest of 7%, an increase in the amounts of funds in your retirement fund. With these funds, you can comfortably cover a three-year stay in an assisted living facility.


Also, you could get long-term health care insurance as a second option. Obtaining a policy while you are still young increases your approval chances as well as earning you health based discounts. Remember that having healthcare insurance can help you offset the costs of long-term care when you are significantly older. And lastly, consult your family early in your life about the type of assistance you’ll expect when you’re older. Why is doing so important? As it will help you avoid uncertainties in aces your kids relocate abroad or join the workforce. To top that, knowing where, when and from whom to expect assistance safeguards you against potential disappointment along the way.

Impact of Retirement Benefits Possibly Reduced

OPM’s proposed legislation cuts of federal retirement plans for former and current Federal employees that includes plans to eliminate Federal Employees’ Retirement System supplements who retire at the age of 62 before Social Security starts. The legislation revises a retiree’s FERS Annuity payments from highest salary of three years to highest salary of five years. Usually, the highest salary on the pay scale for 36 consecutive months is the last three years of service or could be earlier depending on the individual. An increase of FERS Annuity calculation to 60 months will slightly reduce the FERS pension. This reduction affects the retiree’s consumption expenditure that might create the need to withdraw funds from Thrift Saving Plan (TSP) to make up the change. Even though this legislation adversely affects many employees’ retirement plans, the argument in favor of the proposed legislation has been that $143.5 billion is saved from taxpayer’s money and the proposed bill is more at par with private sector’s retirement benefits, though notably, those benefits are continually experiencing a downward shift.

The employee deduction rate for the Federal Employee Retirement System (FERS) has been increased with a rate of one percentage point until they reach 7.25 percentage point of the pay scale.  This stance has a mild to negligible impact on civil service retirement plans (CSRS), but employees might have to contribute substantially more than they previously did. However, TSP Funds is affected as employees have less take-home money and decrease their TSP contributions. In the process, employees may lose their FERS TSP match due to lower TSP contribution.

Eliminating Cost of Living Adjustments (FERS COLA) impacts many retirement plans. Over time inflationary pressures erode investment savings and retirement savings; an absence of Cost of Living Adjustment undermines the standard of living for any individual. Long-term payment for the retirees will be significantly lower compared to the rapid increase in the cost of living as pay would be frozen since the beginning of the plan. But the short-term effect on FERS fees would be insignificant. Retirees’ are required to properly do their financial planning since the risk of excess expenditure against insufficient savings is higher after the proposed legislative changes.

Federal Employee Health Benefits (FEHB) can be categorized by a wide range of health insurance services for the federal employees, a significant portion of which is borne by the government and a relatively smaller proportion by the employees themselves. Federal Employee Health Benefits (FEHB) share of the cost is unaffected by the OPM’s proposed legislation, but in case of certain unmet performance criteria, the share of cost for FEHB may slightly increase for the Federal employees.

Although the OPM proposed legislative changes mostly negatively impact federal employees, they still may be able to turn it around through enough retirement plan knowledge, planning framework and an action strategy devised in terms with the planning framework. There are 7 FERS benefit at the disposal of the federal employees who should get a sound grip on how these benefits work and utilize the benefits offered by the government to maximize their retirement outcome.

As a federal employee, you need to ensure that you take all these modifications into consideration and still make the most out of your retirement plans, providing a secure future for you and your family.



Top 9 Tips for Planning Your Retirement

Between 2006 and 2016, there was a 33% rise in Americans aged over 65 to 49.2 million. What’s more, it is expected that by 2060 this figure will double. For this reason, it is imperative that you prepare accordingly as sooner or later you will be a part of this group.


Tip # 1: Avoid Complacency with Your Retirement


Typically, people plan for most life engagements than for retirement. Once you retire, you’ll have more freedom than you’re accustomed to. Plus, you will need to make significant lifestyle changes to cope with life after retirement. This is why you need to create a financial plan for you during when you are no longer working.


Remember that it’s not what you have that determines the quality of your retirement instead it’s what you know. Ideally, you should strive to align your spending habits with your retirement goals. In addition to that, you need to consider the impact of unforeseen expenses. Sometimes these may include buying a new car, renting a new home among others. Hence, having substantial liquidity will help you avoid selling your assets in a losing market.


Tip # 2: Maintain Your Dignity


Throughout your retirement, it’s essential that you maintain your dignity. But how can you do that? Before deciding on when to start your Social security, evaluate how this decision will impact your family as well as how long you will depend on Social Security.


Tip # 3: Consider Your Spouse


It is vital that you think about your family. For instance, women over 65years of age expect to live 20.6 years while men live another 18 years. Also, 45% of women aged 75 years and over live alone. To make matters worse, these women are inexperienced in financial management. Given that, these women can participate in financial management together with their spouses as well as with assistance from financial planners. Doing so helps women manage their financial future when necessary.


Tip #4: Plan for Healthcare


As you grow older, your healthcare needs can increase. In 2017, there was a 33% increase in the number of adults aged 85 that require personal health assistance. This figure is twice more than that of adults in the 75 to 84 age group as well as six times higher than the 3% level of adults in the 65 to 74 age bracket.


Hence, you should consider demographic trends impacting on your long-term and short-term healthcare costs and needs as well. Though a majority of individuals understand what healthy living entails, only a few live accordingly. Similarly, two significant risks retirees deal with are health and financial issues. An absence of any of these elements can adversely impact the quality of your life.  For this reason, ensure that you have a plan to help you meet any long-term care needs you might have. You can do so via personal savings or insurance.


Tip # 5: Identify Your Revenue Streams


Though most Americans prefer working part-time after they retire, only 20% of 65-year-olds do. It is crucial, then, that you have an ongoing investment plan and assets for when you no longer draw a paycheck.


Tip # 6: Plug Any Financial Loopholes


Periodically, you should evaluate your budget and investments to help you identify and plug any leaks. Identify ways to save some extra money month. For instance, leveraging available workplace retirement schemes to minimize your retirement expenses. Keeping an eye on your investment costs will also help you save more.


Tip # 7: Maintain Proper Documentation


Ensure that your beneficiary details are accurate for all your workplace retirement, IRA, or Roth accounts. Additionally, you should update your will, power of attorney, and any advanced medical directives. In turn, you will benefit from having peace of mind.


Tip # 8: Relax and Enjoy Your Retirement!


Remember that old age gives you the opportunity to enjoy your twilight years. So passionately engage in enjoyable activities to make your retirement worthwhile. By having these three factors sorted – enjoyment, health, and finances – you can make this time fruitful.


Tip # 9: Give Generosity a Place


During your retirement, you could do well creating endearing family videos. Additionally, you could participate in charitable activities as a means of displaying your love and generosity for others.





Americans at Risk of Bankruptcy during Retirement

Typically, bankruptcy is a considerable risk for retirees though recent saving trends portend a rosy picture. Data indicates that the number of retirees with less than $10,000 is declining. It fell from 55% to 42%according to a GoBankingRates survey. Besides, the survey indicated that half of retiring Americans have $10,000 in savings. Nowadays, it is estimated that one needs approximately$275,000 for healthcare expenses upon retiring. Having only $10,000 in savings doesn’t inspire confidence and security, though it’s a start.

This situation is especially bothersome for older individuals. According to the Bureau of Labor Statistics, adults aged over 65 spend $46,000 annually. This means that $10,000 isn’t sufficient. Below is a breakdown of these numbers:

Ages $0 <$10k $10k-$49,999 $50k-$99,999 $100k-$199,999 $200k-$299,999 $300k
18-34 18.18% 39.16% 6.69% 11.59% 8.69% 6.69% 8.99%
35-54 12.46% 24.43% 7.38% 15.35% 12.76% 10.67% 16.95%
55+ 10.56% 5.98% 10.86% 14.64% 14.64% 12.35% 23.41%


GoBankingRates methodology queried adult financial product consumers in the US to find out what the average American’s saves for retirement. Study participants were categorized into three group’s baby boomers, millennials, and Gen X with each category having 1,000 respondents. During the study, participants were instructed to provide tentative estimates of their retirement savings.

23% of adults aged 55 and above had savings totaling $300,000 through a significant proportion had less. Approximately a third of the respondents have less than $10,000 saved necessitating changes in behaviors to prioritize retirement savings. Those getting ready to retire can contribute a maximum of $18,500 to a 401(k), 403(b), a 457 plans, and Thrift SavingsPlan during 2018. On the other hand, individuals aged 50 and over can add $6,000 as catch up contributions each year to a 401(k) plan. Traditional IRAs and Roth plans are $5,500 per year as well as catchup contribution of $1,000 for individualsaged50 years and above. But why are most people not saving for retirement? Most don’t earn enough, struggle to pay bills, or use their money for emergencies and others think they don’t need retirement savings.

Question: Why is it that you don’t have retirement savings?

Ages I don’t make enough Don’t need retirement money Paying debt My job has no plan Struggling to pay bills (rent, car, mortgage) Money used in emergency
25-34 31.9% 10.34% 11.21% 12.93% 24.14% 9.48%
35-44 42.48% 14.16% 4.42% 11.5% 20.35% 7.08%
45-54 39.78% 13.44% 3.76% 8.06% 25.81% 9.14%
55-64 43.07% 7.66% 4.01% 8.03% 27.37% 9.85%
65+ 39.68% 9.13% 7.014% 8.33% 23.81% 11.9%


Today, the financial health of retirees is an issue of greater concern for the well-being of the nations. The decline in company pensions places the responsibility of creating a retirement plan squarely on the individual’s shoulders. Plus, social security is no longer a sure bet. It was created to help Americans who lack a means of financial support. With many people today signed ontoo the program, it is projected that Social Security will collapse by the early2030s.

Majority of Americans Ill-Prepared for Financial Disaster

In the event of an emergency, 40% of Americans will need to sell something off or take out a loan to raise $400. A 2017 survey of 12,000 people by the Federal Reserve indicates that retirement is far from rosy for most Americans. Why is that so? It is because 40% of working adults believe they’ll have enough when retired with 25% having no pension or retirement savings. Plus, one out of four adults can’t access medical treatment due to a lack of funding. Evidently, this situation is a cause for concern as the importance of having sufficient funds to depend on when things go wrong can’t be overstated.


Nonetheless, the situation isn’t hopeless. Approximately ¾ of retired Americans indicate satisfaction with the life they’re living. This figure is 10 points higher than the 2013 figure of 50% adults without $400 in emergency savings. But putting more funds into a savings account on payday can help turn this trend around. An aside: individuals hooked on opioids have a less favorable assessment of the economy among other factors.


How Much Does the AverageAmerican Have in a Checking Account?


Despite the above being true nonetheless, those in debt may have some funds stashed away somewhere. According to a 2014 Moebs Services report, on average Americans have a total of $4,436 stashed in banks. This figure represents saving account averages though it is a significant increase over 2012 figures. What’s more surprising is that this figure is higher than in 2007 before the Great Recession.


In 2007, Americans on average had $788 in checking accounts. What is responsible for this transformation? Today, individuals prefer having cash in hand to meet immediate expenses rather in investments or savings accounts. In turn, this doesn’t make people anymore richer than they are even though the economy is doing much better.


How Much Does the Average American have in a Savings Account?


Although average Americans have cash in checking accounts, the picture isn’t so when it comes to other investments or savings. Much hullabaloo has been going on about America’s retirement crisis as lots of Americans are heading into retirement without savings or investments. To top that, many more don’t make enough to cover living expenses making it hard for this group to even save. In 2015, a GOBankingRates survey highlighted the seriousness of the situation. Data from the survey indicates that 62% of Americans have less than $1,000 in savings. And 21% lack a savings account. Many other studies the same sentiments. For instance, a report by the FederalReserve found out that 31% of 4,000 respondents have no credible pension or savings. This figure includes19% of people between the ages of 55 to 64 with 25% having no clue as to how they will foot their retirement expenses.


Strengthening Your Financial Position


Perhaps, you are reading this and wondering where you belong. You should be aware that various factors can impact how much liquidity you accumulate. So, avoid comparing yourself to your family, friends, colleagues, or neighbors. But now is the time to evaluate your own personal ground.


To begin with, you need to develop a personal financial budget. Doing so entails that you consider your income while carefully analyzing your monthly expenses. In case your expenses outstrip your revenue, you need to make adjustments in your lifestyle to save more. Typically, this is easier to say than do. But if you can minimize your expenses, you will have flexibility.


Keep it in mind that your goal is to start saving. Many strategies are available to help you achieve this goal. One most important requirement is building an emergency stash. Basically, this is a savings account that holds the liquidity you need to cover expenses for several months. Before you realize you will have substantial savings giving much-needed peace of mind.

Number of 401(k) Millionaires Increases in 2018

Apparently, very few people are saving for their retirement. However, the number of new 401(k) millionaires is increasing at a fast rate. Though the 401(k) club is small, the number of employees with over $1 million rose to 157,000 in quarter 1 of 2018. This increase equates to 45% as compared to last year. But joining the millionaire status takes some time. A majority if 401(k) millionaires have been saving for the past 30 years.

Most of these 401(k) millionaires reaped massive benefits from the recent market performance. This was achieved after employees applied recommendations regarding how to maximize their savings. Among the recommendations are making sufficient contributions matching their company profiles, not cashing savings when switching jobs, and investing their savings. Nowadays, 76% of 401(k) millionaire funds reside in equity mutual funds.

Presently, employees can contribute $185,000 annually to401(k) and Thrift Savings Plans (TSP). A special provision lets those aged over 50 contribute anadditional$6,000 to an employer-sponsored retirement plan. By the end of the first quarter, the number of funds in IRAs and workplace savings rose by 9% to $299,600 from $275,700 in 2017. On the other hand, average balances in 401(k) plan dropped by 1% to $102,900 in Q4 of 2017. Nonetheless, average balances over several years remained by 8%. Additionally, analysis established that:

  • In the past 10 years, workers 401(k) savings balances equaled$290,000 as compared to $250,500 in 2017.
  • Employees who have saved for 15 years had an average balance of $379,600 as compared to 2017’s balance of $330,200.

Plus, the number of TSP millionaires increased too. New data indicates that this figure rests at 23,962 from 3,272 in January of 2016. In turn, these millionaires are characterized by two factors: long-term investments and investments in stock indexed C and S funds. Over time, they continue accumulating more C and S funds even during market recessions. Plus, some workers leverage the 5% matching advantaged from stock agencies.

Evaluating collected data, millennials should be investing more to help them acquire the millionaire’s club status. Accumulating $1 million in savings often require that one starts saving early during their career. Why is that so? Because of restrictions imposed on the number of funds one can save in a whole year in 401(k) combined with sharp downturns of a bearish market, for instance, the 2008 to 2009 meltdown. So saving early on means more money. Even so, a million dollars in savings doesn’t give most people a sense of security.