If you’re the spouse of a federal worker who has passed away, it would not be uncommon for your partner to leave you specific instructions to not touch their Thrift Savings Plan immediately, as the surviving partner would be the only one who could designate that the funds be left alone. The benefit of not touching the TSP of your deceased spouse would be that the L income fund investment itself is not very expensive, and you can keep the money accruing while naming your own children as the new beneficiaries by turning the account into what is known as a Beneficiary Participation Account, or a BPA.

The BPA itself has its own set of rules that participants must abide by. Firstly, it’s only offered to the surviving spouse, who is the one who must decide whether to participate in the program or not by leaving their partner’s funds in the TSP. Withdrawals, annuity, payments with the BPA can be accessed in the same basic way the TSP can. Beneficiaries (usually children) will then be determined by the surviving spouse. And once the surviving spouse themselves passes away, the funds will no longer be allowed to be kept in the account and will have to be withdrawn.

Another rule is about RMDs or Required Minimum Distributions. This would begin on the 1st of April on the year following your partner’s would-be 70 and a half birthday and would be determined by the age of the TSP participant. Each year after that 70 and a half birthday threshold, the survivor must take an RMD. The amount of the RMD would be determined by the life expectancy of the BPA policyholder.

The participants of the TSP BPA are not allowed to move the inheritance to an Inherited IRA; a right only granted only to the beneficiary of the original TSP.

So let’s say you continued to take your life expectancy based RMDs when you pass away, and the BPA account is settled and quite large. Your children, if responsible, will want to inherit this money in the most tax-savvy way possible. Not having the Inherited IRA available, as per the BPA rules, means that any surviving children will have to look into other means, lest they hand a sizeable chunk of your earnings right back to the government in taxes.

Your TSP BPA beneficiaries will get a direct payout as you had determined earlier, and that payout cannot be put into the Inherited IRA and will be taxed to your children as if it was normal income. But there are ways around this. If after receiving your partner’s TSP you took that money and put it into your own IRA, then when you passed on your children would be allowed to take that money and put it into an Inherited IRA. A lump sum payment from them won’t then be required upon your passing and them receiving their inheritance.

High taxes, lessens Social Security payments, decrease in pension are things that will have to be addressed should your partner pass away, but you should be able to remain financially secure with a little bit of planning in regards to your TSP and your future.

According to the C Fund, the S&P 500 dropped more than 2 percent recently, making it the worst performing week for the fund of the year thus far. This was after a slight bump, which saved a few percentage points. Otherwise, it would have dropped by as low as 4 percent.

For months, a proposed bilateral trade agreement has been discussed between China and the United States, a negotiation that had a few setbacks this week. Decreased trading and increased tariffs would be the result if a deal between the two countries is not secured soon.

This comes on the heels of a tweet by President Trump, where he said he would increase the tariffs on the $200 billion worth of imports from China to America by 25 percent. This would be up from the previous 10 percent.

This statement concerned investors, leading to market dips the world over, as worries about export tariffs against the United States, supply chain disruption, and a decrease in consumer consumption if prices on goods were to be raised. It also comes after statements by delegates from both China and the U.S. that negotiation had been going along agreeably, with several smaller deals already being put into place.

Trump’s threat to increase tariffs comes after a source claimed that officials from China had backtracked on large swaths of the already agreed upon deal.

That said, there is leverage on both sides of the negotiation, so there’s still time for things to shake out, though tariffs against American goods could have a more disastrous impact for China, as consume less American goods than the other way around. There are other policies that China has that put the United States in a better position legally, including forced transfer of intellectual property.

Adversely, China’s political system does not cater to different parties, and they can easily wait out the next election of the U.S. President before they continue to negotiate if they don’t like the Trump administration’s proposed deal. Presently, 5 percent of the United States debt is owned by China, over $1 trillion, and should talks devolve, they could stop buying said debt, leading to a greater strain on yields from the U.S. Treasury.

But all hope isn’t lost, as before this latest drop, April 2019 marked a record high for the S&P 500 and the C Fund. And the S Fund continues to drop by 25 percent, a trend which has continued since the year prior after a record high for that fund in August of 2018. While showing signs of recovery, the S Fund is still below the threshold it had in August of last year.

Other funds, like the lifecycle funds in the TSP, haven’t had quite a tumultuous journey as a few of the other stocks, as diversification of that fund leads to lower fluctuations.

The foundation of the federal employee’s retirement fund is the FERS annuity. While some federal employees can effortlessly calculate their FERS annuity, there are some four elements of FERS that many people can’t seem to wrap their fingers around.

The first element we’re going to tackle is to understand and know how your FERS annuity is calculated at different ages, especially once one gets to age 62. The formula for FERS retirement is: your high three multiplied by the number of years of service then multiplied by one percent (high 3 x number of years of service x 1%)

This formula, however, changes if you retire with 20 or more years in service and if you work until age 62. You will receive 1.1% instead of getting 1% per year you worked. On your 20 years of service that extra 0.1% will add an extra 2% to your high 3.

For the employee that is considering retirement after age 62 and near the 20 years of employment threshold or the employee considering retirement around the age of 62, the extra 0.1% can make a huge difference for them.

The second element to tackle is understanding how your survivor annuity works. If at retirement you are still married, you will have to pick one of two choices. You will either have to choose the option of a 10% reduction for a spousal benefit of 50% or a spousal benefit of 25% with a reduction of 5%. Something to be aware of if you are considering or rather planning on replacing the SA with life insurance is that, if the federal spouse dies first the nonfederal spouse will no longer be able to access FEHB, but with SA the nonfederal spouse can continue with FEHB.

The next is knowing that your COLAs will not keep up with inflation. Even as most retirees that receive a pension don’t get any kind of increase on their pension. FERS retirees do get an annual COLA. The con to COLA, however, is that with the inflation it won’t be able to keep up. This means that expenses are increasing at a higher rate way more than your income. That said, FERS employees should be aware of this and plan themselves adequately.

The last one is that you need to know how your FERS annuity relates to your investment strategy. The approach this is looking for a way that includes every different component to capture the way these things relate to and affect each other. Emotions play a huge role in any investment decision and most times leads people to make the wrong decisions at the worst possible times. Be smart and do the math. These are the four things that should be given some significant attention when planning for retirement.

Most people might frown on the idea of retiring on their 70th birthday. Here we’ll take a closer look at the pros of working until the age of 70.

According to a study, working longer can potentially increase your lifespan. It also stated that putting off retirement for even just a year could reduce the risk of dying by 11% after one turns 65. This doesn’t mean that working from 9 to 5 till age 70 means living forever, but it can add on some years to your golden years.

If you want to add some money to your retirement fund then working those extra years will be a smart move. For example, if you have a 401(k) and you keep working till you are 70 you can keep making contributions up until the annual limit.

Some people might be thinking that there will be an automatic increase in the FRA once they hit it if they begin drawing their social security benefits at the age of 62 and retire. Unfortunately, this isn’t the case at all. Particularly in this low rate environment going on today, it would be wise to think of the time between 62 and 70 years as a period for investments. The real question, in this case, would be whether it is wise to take social security retirement benefit at any time earlier than when you hit 70.

Seeing as the unused leave got stacked up on to your years of service, which is good because it increases what you stand to benefit. If you are currently at the point where per pay period you are earning eight hours of annual leave you can also possibly save up the 280-hour maximum amount of annual leave you’ve earned in the last year of employment. It is also possible to carry into the last year you plan on work over 240 hours of annual leave. Pay that is worth roughly five and a half pay periods is generated by these hours.

Retirement can be a scary transition, fear of the unknown quickly settles in. After you’ve retired, you are already committed, and if you change your mind in the midst it and want to get back into the workforce, it will be hard to find another job that pays nearly as well. In a nutshell, retirement comes down to having a strong dose of self-discipline, simply knowing how to discern what you should logically do versus what you want to do emotionally.

Considering how complex retirement planning can be, it is not a surprise that people have quite a number of misconceptions about it. Below is a closer look at the three dangerous misconceptions that if believed, could land one into a serious bit of trouble.

1.  You don’t need to start saving now because retirement is so far away.

Simply put, the longer you wait to save the more difficult it could get. Most people assume that there’s no dire need to begin saving in their twenties or thirties because they have about 30 or 40 years to put funds away. Here’s a good example there are two people with a goal of saving $1 million by the time they retire at 65. Both of these individuals religiously save money in their 40(k) while enjoying an annual return of 7% on average.

The only main difference between the two is that while one waited until they were 45 before they started saving the other began at 25. The one who waited until they were 45 to start saving must put away $1,920 per month whereas the one who started at 25 would only have to put away $381 every month. The goal is not attainable for is stared saving at 41 unless they are also contributing to an IRA.

Seeing as each year the money saved up increases by 7% the more you wait to start saving the more you are reducing the number of years of your money growing. Just start saving as much as much money as you possibly can, invest in a retirement account that is tax-advantaged, and the market will do the rest for you.

2. All healthcare expenses in retirement will be covered by Medicare.

A good number of people won’t have to pay a premium for hospital insurance, but prescription drug coverage and medical insurance have premiums, co-insurances, and deductibles, which is like most policies in health insurance. In as much as the federal health program covers many health expenses that include preventive services, inpatient hospital care, lab tests, and more in all its entirety still covers very little.

If you haven’t covered medical expenses in your retirement plan and unfortunately you get a terrible illness or injury your retirement could be derailed seeing as you might have to tap down on your retirement accounts. This will leave you off balance in the final years. This can be avoided by simply understanding what is not covered by Medicare and what is. Once you understand that you can then build healthcare costs into your retirement plan.

3. In retirement, only 70% of your pre-retirement income is needed.

People are different, and hence their needs differ as well, for one person it could be true that only 70% to 80% of their pre-retirement income will be needed. However, if one plans on doing a lot of traveling or living in an expensive city, it is more likely that more than 70% of that pre-retirement will be needed.

Retirement planning isn’t easy, that said it is important that one starts as early as possible and plan appropriately. It can be too late to catch up if you wait to rectify these mistakes, so start now as your future financial security is at stake.

Early retirement may sound like a dream while working every day, year after year. For a good number of workers that dream gets actualized. According to a report, roughly 43% of workers retire earlier than they were expected to. The commonly heard reasons for people leaving their jobs earlier than expected were a shift or issues in their company such as reorganization or downsizing and health issues. Only a third of the 43% that retired early gave the reason for retiring as thinking they could afford it.

All your retirement plans can be thrown off if you are forced into early retirement. For example, if you were planning to work till the age of 67 and you are unfortunately laid off at 62 and can’t get another job, the disadvantage of this sudden change doubles. First of all, you miss out on a good five years of potential savings. Secondly, you will need more money to sustain you for the rest of your life seeing as you will be spending more time in retirement.

A few years may not seem like having to the potential of creating a worthy impact, but those few years can make a really huge difference. However, there are a few things one can do to shield themselves against these unpredictable situations.

The first one is the most difficult to do but the most obvious, saving more or as much as you can to cushion the fall in case of early retirement. Calculate how much you want to have saved by a certain age, then see how much you will need to put away to achieve that goal a few years earlier. Even if you are not forced to retire early and you plan for retirement with the notion that you will need more money with less time to save, which automatically sets you up to save more, you can simply end up retiring early because you can afford to do so.

Another thing is making the most out of social security. Use social security to your advantage if you may not be able to afford saving up more. Seeing as how much you receive on benefits depends on when you claim. To get 100% of the benefits that you are entitled to it is best that you claim once you have reached your full retirement age and depending on which year you were born it could be between the ages of 66 and 67.

If you end up retiring earlier than you had expected, all your plans could be tossed out the window. No one can predict your future, just ensure you have plans in place that will prepare you for any hurdles that may come your way.

Based on a Government Accountability Office (GAO) report, a worse financial situation may be occurring with the Postal Service Retiree Health Benefits Fund (RHB).

Due to the poor financial condition of the Postal Services, it is going through its 11th straight year of huge financial losses. The funds could be depleted by 2030 if no other payments were going to be paid into the fund, according to the GAO report.

In FY 2017, the Office of Personnel Management (OPM) started to draw funds in order to pay the Postal Services share of premiums for retiree health benefits. According to the status quo, OPM has predicted that payments in the future may continue to exceed interest earned on investments from the fund’s income.

Now, 500,000 Postal retirees are receiving benefits and OPM is expecting the number to remain constant until 2035.

Recommendations by GAO

Different recommendations have been made by GAO to address the financial situation of the fund. All of them would need action to be taken by Congress. The details that follow show possible solutions to be made along with potential effects, which are taken rigorously from GAO’s report.

Approaches that Could Shift Costs to the Federal Government

Medicare Integration

To ensure that postal retirees participate in Medicare, different legislative proposals have been undertaken by Congress. This will increase the retiree’s participation level. Increase in participation in Medicare is going to shift primary responsibility to cover certain health care services to Medicare for retirees that enroll.

The requirement of the retirees to use Medicare will reduce the costs of U.S. Postal Service’s but raise the costs of Medicare, which is based on the analyses presented on the past legislation made by the Congressional Budget Office. The primary policy decision that can be made by Congress is to decide whether it will increase the use of Medicare by postal retirees.

Supplemental Federal Appropriations

Appropriations can be provided in case the Postal Service Retiree Health Benefits Fund (RHB Fund) is depleted, and USPS cannot fill the financial gap.

Using federal appropriations can help benefits to continue at a similar level if Congress desires to allow it to happen. Such action will, however, raise the federal budget deficit. In addition, postal retiree health benefits supplemental appropriations will be inconsistent with the functioning of USPS as an entity that is self-financing and covers its costs using the revenue it generates.

Approaches That Can Lower Benefits or Raise Costs to Postal Retirees or Employees

Tighten Eligibility/ Lower or Eliminate Retiree Health Benefits

As some companies and state government have done it, eligibility restrictions can tighten the postal retiree health benefits. This can include hiring new employees that are not eligible to get retiree health benefits or take other actions that can lower the level of benefits or to even get lid of the benefits.

To tighten eligibility will reduce the liability of USPS’s for postal retiree health benefits, and hence lower its unfunded liability. Current or future retirees will feel effects depending on the certain actions that will be taken through legislation.

Raise Postal Retiree and Employee Premium Payments

As it has been carried out, some companies and state government retirees will be required to pay a huge share of their premiums. Alternatively, employees will be needed to pay for retiree health benefits before they go for retirement.

To shift the cost to employees or retirees will lower the RHB Fund expenses. Based on the number of costs that are shifted to retirees, the approach will raise any financial challenges that will be faced by retirees.

Changing the Federal Contribution to a Fixed Subsidy

As some companies and state government have carried it out, it is possible to shift the benefits to a contribution structure that is defined and has a fixed amount subsidizing the benefit. Over time, the amount can be adjusted with any adjustments might or might not help to keep up with costs.

To use a fixed subsidy can lower the costs of RHB Funds and the needed USPS payments and raise incentives for retirees to make health care decisions that are less costly. Nonetheless, it can also result in a massive cost exposure for retirees; these costs can lead to hard decisions about health care.

Establish a Non-Federal Voluntary Employees Beneficiary Association (VEBA)

As it has been done by some companies to offer retiree health benefits separate from the employer. A VEBA that is outside the federal government can be established to offer postal retiree health benefits rather than the current federal program. VEBA determines what benefits will be offered to its members and can include retirees and employees payments made by members and how to invest the VEBA assets.

The effects of VEBA will depend upon its governance structure and its benefit levels determination, funding sources, the level of funding, types of investments, and the associated market risks. Determinants such as these ones will include the level of initial funding and its sources, including if it will come from the RHB Fund or the Treasury. This will be together with the funds that will be offered to the VEBA going ahead.

Approaches That Will Change How Benefits are Financed

Lower the Required Level of Prefunding

Legislation that has been proposed will lower the RHB Fund pre-funding target from 100 percent to 80 percent.

To reduce the needed funding level will lower the required USPS’s payments to the fund but it can increase costs for postal ratepayers in the future and raise the risk of USPS not being able to pay these costs.

Outside Investment

The legislation that has been proposed will initially require 25 percent of RHB Fund assets investments to be outside U.S. Treasury securities, with a goal to seek huge returns.

To allow for outside investments can lead to a higher rate of return on RHB Fund assets and lower the needs for long-term funding. Nevertheless, assets that are invested in non-Treasury securities will experience losses in a market downturn, and it will thus lower assets that are available for health care.

Recent Proposals to Reforming the Postal Service

The latest effort to underscore the Postal Service severity of the financial problems is the GAO report, but others have taken the notice.

Legislation Introduced

In the current Congress, Legislation was introduced to make Postal Service reforms; some of the sections were echoed in the GAO report.

Medicare was made mandatory by the Senate bill for some Postal retirees through creating within the Federal Employees Health Benefits Program (FEHB) a new Postal Service Health Benefits Program (PSHBP). OPM was responsible for implementing and administering it for all annuitants and postal employees. In addition, all Medicare-eligible postal annuitants and employees were required to enroll in the PSHBP to enroll in Medicare, which includes parts A, B, and D.

A similar approach was taken by the House bill to require Medicare-eligible Postal Service retirees and their family members to enroll in parts A and B Medicare. In addition, they stipulated that the decreasing portion of the Medicare Part B premium for current retirees to be covered by the Postal Service. This involved the retirees that transitioned into Medicare because of the legislation over a transition period of 4 years. It was to be 75% in the first year, 50% in the second year, 25% in the third year, and in the fourth year it was 0%.

In the days that are remaining for the current session of Congress, neither bill is likely going to advance.

White House Task Force

Postal Service’s financial problems have been noticed by the White House, and it has suggested that reforms are required to avoid a bailout financed by the taxpayer should the current trend goes unchanged.

This concern was echoed by President Trump during the signing of an executive order in April to direct a task force that was established to make legislative reforms and recommendations on administrative for the Postal Service.

Bottom Line

A concern that has been raised is that any Postal Service reforms can drive up the costs to mail packages. For instance, the Package Coalition was established to oppose any changes it feels are going to raise package prices. Its stated goal is to ensure preserving affordable and reliable postal package delivery services from the Postal Service.

Nevertheless, the Postal Service current financial situation cannot go on in perpetuity as it has been made clear in the GAO report, with the math been made to be impossible. It is possible that in a matter of time before changes of a particular kind have to take place.

Most articles that highlight on retirement planning emphasize on 401(k)s. However, federal employees and military service members save for their retirement using a different type of account referred to as the Thrift Savings Plan or TSP.

In one way or another, the functioning of TSPs is similar to 401(k)s. An individual makes their contribution, and your employer may decide to match the offer. The limit for annual contribution is also $18,500 and an additional catch-up of $6,000 for individuals that are 50 years or older.

Also, similar to most 401(k)s, both traditional and Roth options are offered by TSPs. Based on a traditional TSP, in retirement, you make pre-tax contributions and pay taxes on withdrawals. Those that elect the Roth option, they would contribute post-tax income, and it is not necessary to pay tax on withdrawals.

It is possible to hold at the same time a traditional and Roth TSP. The interesting monition is that matching contributions by the government can only be made into a traditional TSP.  Therefore, even if you only make contributions to a Roth TSP, you can still have both types of accounts and also enjoy other benefits of a few tax diversification.

The Way TSPs Function for Different Kinds of Employees

There can be some slight differences in your TSP account. This will depend on whether you served in the military or you are a civilian government worker:

Federal Workers

-Federal Employee’s Retirement System (FERS): FERS employees are considered as federal civilian employees that were hired on January 1, 1984, or after. FERS employees that were employed after July 31, 2010, are enrolled automatically in a traditional TSP. Unless individuals opt to change or stop the contributions, 3% of their basic pay is deducted and deposited to their account. FERS employees that were employed before August 1, 2010, they have a TSP that receives a 1% contribution from their agency, and they can decide to contribute more as well.

-Civil Service Retirement System (CSRS): This is a federal civilian employee’s retirement system to individuals that were hired prior to January 1, 1984. Your agency establishes the CSRS employees’ account after individuals make a contribution election.

Military

Since 80% of uniformed military service members do not stay in the military for the 20 years required to become eligible for a pension, the majority are walking away from the service with no funds for retirement. Enactment of the Blended Retirement System was done to change that. It allows service members to select a pension or a TSP, or have both. The appropriate option for the individual will depend on their current years of service.

Any person that is joining the military is automatically enrolled in the BRS. You will get 1% of your base pay automatically contributed to a TSP, and individuals can opt to contribute an added 4% to receive a total match of 5%. You will still receive a pension in case you complete the necessary 20 years of service, but it is going to be a reduced one.

If you have over 12 years of service, to only have pension can turn out to be a better option since the 5% match on a TSP is not going to offset the higher pension you will get to have no TSP at all.

The gray area is to military members that have 8 to 12 years of service. Deciding to stay in the old system or switch to the BRS will depend on your personal situation.

Investment Choices for Your TSP

You have a choice in five index funds or different lifecycle funds that are composed of a combination of the five index funds. While these are considered as far few investment options that the majority of employers offer in their 401(k)s, to choose between less number of options is mainly less confusing.

– G Fund: As its name states, the Government Securities Fund is invested in the government securities of the U.S. It mainly provides lower volatility, and it is possible for individuals to earn interest income without fearing to lose their principal income.

– F Fund: The Fixed Income Fund is usually invested in either the government, corporates, or mortgage-backed bonds, and it aims to match the performance of the Bloomberg Barclays Aggregate Bond Index. The fund usually offers risk that ranges from low to moderate.

– C Fund: The S&P 500 that is composed of U.S. companies ranging from medium and large matches the Common Stock Index Fund. This fund provides a moderate risk.

– S Fund: Due to investing in small and medium U.S. companies that are not in the C Fund, the Small Capitalization Stock Index Fund is slightly riskier. The fund is matched with the Dow Jones U.S. Completion Total Stock Market Index.

– I Fund: The International Stock Index Fund is able to match with the performance of the MSCI EAFE (Europe, Australasia, Far East) Index that is composed of stocks of over 20 developed countries. This fund is more volatile compared to the C Fund.

– L Funds: Similar to lifecycle funds or target date, you can choose an L Fund in regards to your retirement time horizon. This fund is going to gradually shift from being aggressive to moderate up to conservative as a person nears close to retirement. In case you have the age of your retirement in mind, you can choose a fund that targets the year that is close to when you reach that age

A huge benefit of TSP fund choices.  They share some of the lower expense ratios that are around less than 40 cents for each $1,000 you have invested. This is huge since even with a fraction of a percent rise to a fund’s expense ratio means there will be a significantly lower retirement savings in 20 or 30 years.

If you do not settle for an L Fund, it is possible to create your own combination from the other five funds. It is essential to take into consideration your investment options carefully and select the ones that are appropriate for you. The default fund allocations are not possible to match your specific goals.

Your contributions will be deposited into the L Fund you targeted towards the year you will be reaching 62, if your enrollment in a TSP was on or after September 5, 2015. If your enrollment was prior to that date, your contributions are going to be deposited into a G Fund that may not be aggressive enough in case you have a long time horizon.

Matching Contributions

An automatic contribution of 1% of base pay is given to BRS members and FERS employees to their TSP, whether they are contributing or not. From there, each individual receives a match on their additional contributions of up to 5% of their salary.

To the majority of FERS employees, the 1% automatic contribution vests after three years. For BRS and a few FERS employees, it is after two years. The match contribution usually does not have a vesting requirement.

Selecting Beneficiaries

It is important to select your TSP beneficiaries, and ensure that the list of the beneficiaries is kept updated in the event you bear children or get a divorce.

If you have in your TSP, less than $200 once you pass away, your beneficiary is going to get the money. Those with above $200, the money will remain invested, and there is setting up of a beneficiary participant account in their own name.

Where Should You Begin?

Individuals that are eligible to participate in a TSP, it is a high recommendation that they contribute at least enough amount to receive the 5% match.

They can also contribute an amount of up to $5,500 every year to a Roth IRA if they qualify. After this, they can continue to take advantage of the ability to reduce their taxable income by contributing to their TSP an annual maximum amount of $18,500.

In case you have funds available for further investment, a person can set up a separate after-tax brokerage account.

After retiring and returning to work for the government, how your annuity gets affected depends on how you retired. Your annuity stops if you fall into one of four categories for all re-employed CSRS retirees. For FERS retirees, only the first two apply.

1. If OPM has found out that you are a disability annuitant who prior to employment was restored to earning capacity.

2. You are a disability annuitant who was not disabled for a National Guard Technician position but were awarded a disability annuity because you were medically disqualified for continued membership in the National Guard.

3. You are an annuitant who was involuntarily separated from your job (unless it was required by law based on age and length of service or for cause) and your new job is permanent in nature, (e.g., career, career-conditional or excepted).

4. You are an annuitant who receives a Presidential appointment subject to retirement deductions.

You have the same status as any other federal employee with similar service history and in an equivalent position when your annuity stops. Unless you are entitled to either a deferred or immediate annuity based on the separation, your annuity will be reinstated when you leave government again.

CSRS employees whose careers were cut short by a RIF, transfer or reorganization of function are mostly the retirees whose annuity stops on reemployment. Retirees that are considered to be people who are completing interrupted careers are the ones who have retired under lowered age and service requirements, and hence their discontinued services are seen as interrupted careers.

Most retirees on the other side though they met the age and service requirements for an immediate retirement. Their annuities will continue to be uninterrupted if they return to work for the government. On the job, the salary they receive will, however, be reduced by the amount of annuity received, with a very rare exception.

An annuitant that has been reemployed can either earn a redetermined or a supplemental annuity. The one tucked in your present annuity is a supplemental annuity. Usually, one will be entitled to a supplemental annuity as a reemployed annuitant on a full-time, continuous basis for at least one year. You will, however, have to work longer if you work part-time. Also, you will be eligible to choose a redetermined annuity that is meant to replace the one being received currently if you work for at least five years.

The Federal Employee Compatibility Act ( FEPCA) was passed by Congress in 1990. Federal workforce employees have gained familiarity with many parts of this legislation, mainly caused by pay that has been localized, which for a large number of the federal workforce is in effect. The locality pay provides salary amounts that differ according to various locations across the country instead of having equal pay for all employees without putting into consideration their geographic location. This is well known to those following employment policies.

There is a largely unknown and never used provision in FEPCA. This provision of FEPCA in the coming year may soon become well known, seeing as it was not common knowledge in the previous years. The 2020 budget proposed by the president contains a sentence that states “In the coming year, the president pay agent intends to exercise its authority to establish special occupational systems for occupations where the general schedule classification and pay system are not aligned to labor market realities.”

Ways to improve capabilities in some areas of the federal workplace is being looked into by OPM. Jeff Pon the former director at OPM, in a memo last year wrote that OPM “Is aware that individuals with the knowledge, ability, and skill to perform in science, mathematics, technology, and engineering and cybersecurity are in heavy demand could perhaps be affecting mission-critical functions. For this reason, OPM is exploring the feasibility under the applicable law of issuing direct hire authority for certain STEM and cybersecurity occupations.”

There is an unlikelihood of implementation of a good number of initiatives coming from the Trump administration. This is because Congress will not welcome change. However, some of the initiatives do not require action from Congress. For some types of positions, OPM has already taken a step and authorized direct hire authority. The authority is also responsible for creating special pay rates to have the ability to fill these positions.

A pep talk on finances could be useful for Americans right about now. Many folks are really behind on retirement planning, and a good number lack emergency savings. Without having to take extreme risks or sacrifice a whole lot, here are some helpful tips on investing, retirement planning, and saving.

Save That First Dollar – A good number of households have savings that are minimal, and one out of five of these households have zero net worth. The same way a journey of a thousand miles begins with a single step, so does financial planning. That first dollar, save it.  George Fraser, a retirement consultant, tells reluctant savers that they can start by putting away as little as one penny and increase that amount by a penny or more every year after that.

This will make the goal of having tens or hundreds of thousands of dollars not seem like such an uphill task. In 401(k) retirement plans style, the tactic works quite well where employees can gradually increase their savings by starting low. Employers have focused on automatically enrolling their employees in 401(k) plans to boost participation in recent years. They then increase the amount the workers contribute over time until the worker decides to pull out, but in most cases, they don’t.

Use Different Periodic Windfalls – consider using raises, bonuses, or special increases if you are not in a position to get any extra cash from regular paychecks. A 72-year-old retired civil engineer Willard Bradshaw said that he made a ritual of taking half of all the pay raises he got and put it into retirement accounts. Bradshaw within a few years was already contributing the maximum yearly amount as allowed by his plan. This was all achieved by him simply putting away half of all his raises diligently.

Set Up an Average Dollar-Cost Plan – if investing for the long haul is your plan. You should invest most if not everything aggressively in stocks, as the move could come with the anxiety of possible risks. A strategy in dollar-cost averaging could be more suitable and appealing. Dollar-cost averaging has different ways to go about it, such as putting a steady amount of your income into the stock market. You can as well move slowly into stocks from bond funds. The best way people can build on small success is to get started and improve your financial results.

Some matters related to the federal workforce were addressed in a recent report as examples of wasteful government spending. Among them being special retirement supplement and step increases in the general schedule. The report that is released annually by senator James Lankford, Federal Fumbles Volume 4 which highlights what he believes to be inefficiency and waste in the federal government and gives suggested solutions to each of the issues.

Lankford said that he views federal fumbles as his to-do list for the upcoming year and that his office works to address as many entries from previous fumbles volumes as possible to help by not just talking about it but actually help solve the inefficiency and waste. He also added that this year’s volume would be focusing mainly on government inefficiency as well as federal tax dollars.

Below are some of the items from the report of most relevance to federal employees.

Special Retirement Supplement

The SRS, a benefit under the Federal Employee Retirement System (FERS) has been aimed at this year’s report. SRS is an additional annuity payment paid to federal retirees who qualify till the age of 62. The report says that over the next ten years the SRS will cost the government $18.7 billion. The report says “seeing as the nation is more than $22 trillion in debt it is time to bench this supplement by eliminating it for all new hires and slowly phase the perk out. We have terrific federal employees serving all over the nation, but we also have rising federal debt that we must resolve.”

Step Increases

Automatic step increases is another benefit for federal employees that is under the general schedule pay system that the report addressed. The report reads “Essentially every federal employee receives a pay increase at the end of every year when eligible. It is hard to imagine a company having 99% of its employees earning a rise. The report goes on to say that the solution to this situation is to make step increases based on merit.

Paid Administrative Leave

Another item addressed in the report that is related to federal employment is the paid administrative leave. It is defined as “an administratively authorized absence from duty without loss of pay or charge to leave” by the OPM. The report explains that this is basically paying federal employees not to work.

A GAO report which said that there were instances of some federal employees being on paid administrative leave for years while an investigation took place, was cited in the federal fumbles report. In one case it cited that an inspector general was on paid leave for two years collecting his annual salary of $186,000 while being investigated for misconduct.

Whether you love or hate him, it is safe to say that president Donald Trump has a way of stirring up emotions. One could definitely sense an uncomfortable stirring among the people seated in the crowded conference room. The question came from the president of the National Academy of Public Administration, Terry Gerton. The problem was what will be the next activities in the PMA over the next five years?  It was quite interesting how the question just dangled in the air across the room even as the contractors, assorted federal thinkers and the non-political crowd of reporters are trained to keep their personal politics in an ice box during this types of events. The 2020 election is already devolving into something unpleasant.

A former career financial guy, Dave Mader, later in the program called the decades om management work a relay race. That was a good analogy seeing as the multitude of contractors, think tankers and consultants that actually supply most of the brain power and do much of the work come from administrations of both parties. It could be that the five-year question wasn’t farfetched seeing as everyone is familiar with everyone.

Dual-hatted Weichert who is acting as chief of the Office of Personnel Management was emphatic that while people have got to be paid for work, levels of salary aren’t the main driving force of career or job satisfaction. She also promised that a major study would be launched in regards to this topic. It is partly true that people don’t work solely for money. There is no shame in being poor, but it isn’t an honor either.

Weichert is correct that job mobility, training opportunities, and recognition play a role in people’s perception of their careers and good employers worry about all those factors. Employment systems can rarely outlast large, permanent shifts in the economy, and that’s the reality. Almost no one has defined benefit pension plans on the private side. In the year an administration and Congress debate moving one bureau from one department to the other. In the private economy, there will be acquisitions, closures, realignments, transfers and mergers that sum up to ten thousand.

So, what do you plan on doing with your TSP savings after you are out of the federal government? There are several options for you; one, you can take a partial withdrawal then leave the remaining funds in your account until a later date. Two, you can take a full withdrawal to get a lump sum payment all at once, or over a period of time. Three, you can purchase an annuity that will make payment to you for the rest of your life. The TSP will carry out the purchase on your behalf.

An annuity is a benefit paid to you, on a monthly basis for the rest of your life. One is eligible to purchase a life annuity after retirement either from the uniformed service or from federal employment. The amount used to purchase life annuity should be $3,500 or higher; if you have two separate accounts (traditional and Roth TSP accounts), the $3,500 applies separately to each account.

Types of Life Annuities

You can use your entire savings or just a portion of it to buy a life annuity. When you purchase a life annuity, you are guaranteed to get monthly checks for the rest of your life as well as benefits to a survivor; after you die.

The Thrift Saving Plan offers different types of annuity options. They include:

-Single life annuity. This annuity only provides to you for the rest of your life.

-Joint life annuity. This annuity provides to you and the person that you have chosen to share your annuity during both your lifetimes. When either of you dies, the monthly payments will be made to the survivor for the rest of their life.

There are two types of survivor annuities:

1.100% survivor annuity­ the survivor gets the same annuity amount like they used to receive when both of you were still alive.

2.50% survivor annuity­ the amount that the survivor gets is half of the payment they used to receive when both of you were still alive.

Annuity Payment Options

Whether you choose a single life of joint annuity, you should also decide if you want to receive level payments or increasing payments.

-Level Payments

The annuity payment amount remains from month to month. The payment made to the survivor on a monthly basis depends on which survivor annuity you choose, and it will also remain the same for as long as the survivor lives.

-Increasing Payments

The annuity payment amount changes annually on the exact date that you made the first payment. The change depends on inflation. The payments cannot increase by more than 3%, and also, they cannot decrease

How Your Annuity Is Taxed

If you make contributions to a traditional TSP, the tax is deferred until the payments are made to you. The monthly payments will be taxed just like any other ordinary income

If you have a Roth TSP, the contributions are made after tax deductions. Therefore, your monthly payments will not be taxed.

How Your Annuity is Calculated

The monthly annuity calculator is based on the following factors:

1. The amount you use to purchase the annuity

2. Your current age and life expectancy

3. The type of annuity and payment option that you select

4. The interest rate index

The TSP monthly annuity calculator is available on the TSP website. Depending on the date you enter, the calculator will tell you the monthly payment amount.

A federal pension means you’ll have a fixed income for years to come. While this may provide some stability, it also means you might have to start budgeting differently.

Having to spend your retirement worrying about money is no fun. You’ve worked hard and earned a break, and you should be allowed to enjoy it. So the place where you opt to live is a key factor in your future security.

There are things to consider, of course: tax structure, housing costs, entertainment, socializing, public transit, and senior support resources, to name a few. And so, here is a list of some of the best places for a senior to retire with your federal pension.

Florida

One of the most popular retirement spots is Florida, and with good reason: it’s warm, it’s a nice place for your relatives to visit, and there are other tax-related reasons too. Currently, there is no state income tax in Florida, nor do they impose taxes on Social Security payments.

While city living has it’s benefits, the cost of living there can be expensive, so retirees looking to live in suburban and rural areas can have their dollar stretched much further. That could be the reason why 23 percent of Florida’s population is made up of senior citizens. But with such a large older population, there are plenty of communities and resources for retirees of every income level.

Georgia

If Florida isn’t your bag, you only need to head north one state. Georgia is another good location for retirees. A retirement income exception is available to all people over the age of 62, in addition to plenty of city-issued tax breaks too.

For people looking to have an active social life and community, Atlanta is rich with culture, and plenty of interesting places to eat. And beyond the metropolis itself, there are lots of rural parts of Georgia too that have their share of woods and small-town charm.

Or why choose? A popular new retirement spot it Canton, outside of Atlanta, meaning you get the excitement of the big city, with the naturalistic and relaxing environment of a small town, while having tons of senior living communities for all levels of independence.

Wyoming

In addition to being one of the cheapest cost of living states, Wyoming is also full of natural beauty, and towns like Jackson Hole are great for things like going fishing and game hunting. Cities like Casper and Larmine are affordable, and some of the least expensive places to live in the state, and when you add in the fact that there is no pension or Social Security tax, no state income tax, and other tax exemptions offered only to retirees. Generally, it has lower taxes than most other places.

Alaska

A surprisingly good but not often thought of retirement destination is Alaska. Although it may get a little chilly in the winter, the summer months the state is quite warm. There is no sales tax or income tax. And Anchorage is full of communities geared for retirees, with plenty of things do. Plus Alaska can’t be beat when it comes to natural beauty.

Hawaii

While Hawaii is certainly not the cheapest of these destinations, if you have the means, the quality of life in Hawaii is unparalleled. And any retirees looking to invest in real estate, renting out a property in Hawaii can be quite lucrative. If you use services through the VA, Hawaii has many military bases, so that would be readily available. And, like all the other states mentioned so far, Hawaii does not tax pensions.

Nevada

We all know Las Vegas. While the cost of living may be high there, the trade-off is almost limitless options for entertainment. Casinos feature shows and fancy restaurants, in addition to gambling.

No Social Security tax and no income tax means more money in your pocket. And if you don’t want to live in Vegas, check out nearby Gardnerville, know for its large retiree population, low taxes, and high-class medical facilities.

South Dakota

Not the most glamorous of destinations, South Dakota, does have its perks. Low sales tax, low property tax, no income tax, and no Social Security tax, in addition to a low cost of living rate, and South Dakota will help keep your expenses down. Even in places like Mobridge, a beautiful retiree-filled town along a lake that has good school and low crime.

Regardless of where you end up, it’s important to weigh all your options and see what kind of places cater, specifically to seniors, and how.

A recently proposed plan would utilize Twitter, Facebook, and other social media sites to search for posts and updates that might bring into question the validity of a user’s disability claims. According to Robert A. Crowe, at St. Louis lawyer who has worked with Social Security applicants previously, there is a chance that the administration may be “snooping on your Facebook and Twitter account.”

User should be wary about the types of photos and updates they post. He quipped, “You don’t want anything on there that shows you out playing Frisbee.”

Over 10 million people in America collect Social Security disability benefits. The goal here is to find people who may not have a rightful claim to this money. As of the last budget proposal, social media is rarely used in cases, only when a particular case has been flagged for further investigation.

Monitoring social media is not unprecedented, and other agencies have used it to track the movement of immigrants and non-residents before. The Department of Homeland Security plans to screen visa applicants through their Facebook accounts, looking for anything irregular they could use to deny entrance into the country. In 2018, a Freedom of Information request was filed on behalf of the ACLU who was trying to figure out how Customs Enforcement and the DHS were using these sites to collect and disseminate user data.

Of course, people abuse the Social Security benefits system occasionally, but even then, on the whole, there are fewer people relying on disability insurance than there has in prior years, with (according to the New York Times) applications for new claimants down a whopping 29 percent from the year before.

Previously, any person denied benefits due to fraud would be afforded an in-person case in court. It’s been reported that the Social Security Administration is looking to change that, a move that could be said to violate the right to due process of the claimant.

Widely considered one of the best-run government agencies, the Social Security system’s cost of operation is barely a blip on the federal budget, as more money is often being paid into it than is being paid out. Still, many sitting Republicans are still eager to trim the fat where they can.

Traditionally, the role of Congress in Social Security is to determine how much of the surplus is used to run the program itself. Congress does not determine how the actual Social Security payouts are allocated. Beginning in 2010, when Republicans took control of the House, the budget for operating costs of the department has shrunk, as have the allowances within the program.

The slope could be slippery. And if social media monitoring becomes a part of tracking disability benefits, then that means they could use Facebook and the like to track the rest of us too for all sorts of reasons. And private companies could soon follow suit, which would create greater disparities in power.

One of the main problems with all this is that social media isn’t always the greatest indicator of the actual reality of a person’s life. People tend to curate their content, painting a picture of who they want to be instead of who they, in fact, might be, and are filled with misinformation.

In the end, the only surefire way to track abusers to the system would be through better-trained investigators.

Whether you’re a partner, a spouse, a grown-up child or sibling, in the event of your untimely death, the first thing they should do is get in touch with whoever it was that had been paying you and inform them of your passing. Once they’re made aware, they will have professionals to take care of the details from there.

But what does it mean when we say paying party?

Well, if you’re were currently employed when you died, then it would be them. The human resources department, or at the very least your immediate manager, should be who your beneficiary gets in contact with. You should make sure the people in your immediate circle has an email or phone number or some other easy way to get in contact with your job.

Once retired though, your beneficiary should get in touch with the OPM Retirement Services, as they would be your paying party then. Again, your survivor should know the phone number and email of these offices, and make sure they also have your full name and Social Security Number readily available.

Now there are several benefits that your survivors can take advantage of after your passing. They are:

1. Life insurance. Either the specific life insurance pertaining to your particular agency, or the standard Federal Employees Group Life Insurance plan.

2. Thrift Savings Plan. Whatever you can collect from the TSP is at the discretion of the current TSP, and can be contingent on whether you had initiated a withdrawal or not before you died.

3. Retirement benefits like CSRS and FERS, which might encompass the monthly benefits your beneficiary would receive or even a possible lump payment of any outstanding contributions you had made.

4. Final paycheck. If you died while still employed, your unpaid salary and paid leave time should be given to your beneficiary.

After alerting the appropriate parties, to receive these or any benefits, filing claim forms would be the next step. You can receive these from the deceased’s human resources department. The OPM or the employer will figure out who the proper beneficiary is for all life insurance benefits and any unpaid monies from working. The Standard Order of Precedence is usually how federal benefits are determined.

OPM and human resources workers will be able to help your survivors when working on and putting in any claims forms, or at the very least they’ll be able to give you guidance on your next steps. They will change as needed the status of your federal health insurance and give your contact information to the TSP and Social Security offices.

Lastly, copies of your death certificate will need to be provided to your beneficiary. 5 to 10 copies should be enough. Many of these offices will need copies of that death certificate and having them on hand should streamline the process.

By the end of 2018, only 25 percent of army soldiers eligible opted into the military’s new Blended Retirement System, the lowest of all the armed services, with the opposite end being the Marine Corp, who opted in at 60 percent.

The Blended Retirement System is closer to the standard 401(k) than the 20-year retirement benefit program the military offered prior.

When addressing Congress as to why this might be, Sergeant Major Dan Dailey told Sen. Thom Tillis, the chair of the Armed Services subcommittee on personnel that the overwhelming majority of soldiers said: “I plan to stay 20 years, and I feel as if the traditional retirement system will benefit me better in the future.”

More than half the servicemembers in a recent Army Times poll reported that they planned to serve at least 20 years. Only those with less than 12 years in the service are eligible for the Blended Retirement System, about 800,000 soldiers. This, according to the Dailey is part of the issue, citing that a lot of soldiers are already too advanced in their careers to “capitalize on the full investment of their blended retirement contributions.”

The Thrift Savings Plan, on the other hand, is the traditional retirement plan, with the Department of Defense putting in an automatic 1 percent contribution of a soldier’s pay into it. The soldier can then choose to increase their contribution if they like, and the Defense Department will match up to 4 percent over the course of 26 years. Leaving before 20 years, with this plan, would give all the money saved before then back to the enlistee, which they can then invest in an IRA or other retirement plan, or whatever they choose. If the enlistee stays over the 20-year mark, they get to keep that money and get a monthly benefit in addition to it.

The dealbreaker, for most soldiers, is the speed at which they can access their funds, according to Dailey. Most soldiers are on the younger side, younger than 24, and it could be several decades before they can get to their money without incurring penalties if they retire on the 20-year plan. With the traditional plan, the parameters of their benefits are more clearly defined.

“I think that the soldiers who come in now understand the value of investment,” said Dailey.

The FERS, or Federal Employee Retirement System, might be reaching a breaking point in 2019. FERS is responsible for 95 percent of currently working federal employees, while the majority of the retirees are covered under the CSRS or Civil Service Retirement System.

The difference in 2019 as opposed to the past two years is that the House of Representatives is now a majority Democrat, a change that might change the previous assaults on the system from the legislative branch.

FERS covers postal employees, NASA engineers, CIA workers, park rangers, and other federal workers. Many House Republicans who had advocated for cuts to his fund have not been reelected, or are reduced to minority status. Incoming Republicans who had been recently elected have mostly been ambivalent in regards to any proposed cuts, with some going so far as to advocate for pay raises for federal employees.

One of the largest expenditures of the United States government is retirement payments, so an overhaul in the FERS is something that both sides of aisle usually agree on. It’s just the method of these changes that is up for debate. Some of the items discussed are paid vacation time, and sick leave, which can be accrued and then applied as a monetary credit after retirement, the 5 percent match that the government does on 401Ks, and pay raises every one to three years due to longevity.

A reduction in cost of living adjustments for currently retired citizens, with those particular benefits eliminated entirely for anyone retiring in the future, is one of the proposed changes the FERS in the current White House plan. Ideally, CSRS recipients get the same cost of living adjustment as those who receive Social Security, each one set to evenly match any rise in the inflation rate from the year before. Already people under FERS they get a lower COLA than those with Social Security, at a rate of one percent less. The Republican budget plan before Congress would mean that all COLAs would be eliminated. There’d be no adjustments. And, over time, inflation would lower the value of pensions that are frozen.

Another part of the proposal is an adjustment in how inflation is measured in regards to COLAs. Currently, this is based on the Consumer Price Index-W, where it figures out the costs of workers in urban areas across the nation. Previously, a Chained CPI was what most politicians endorsed, but that too lowered cost of living adjustments and resulted in a reduction of buying power for retired peoples.

Led by Rep. John Garamendi from California, House Democrats are now pushing back with something called the Fair COLA for Seniors Act. If passed into law, it would mean COLAs would be determined by the CPI-E, which is an index that takes into account the usually higher medical costs of retirees and people over the age of 62, thus providing a more accurate picture of actual inflation, and would result in higher COLAs for future retired peoples.

The administration has a lot to deal with, budget-wise, this year, and a divided Congress means that the current retirement package might not be under a major assault with the new proposal, but either way, with a great balance between Democrats and Republicans in the House, things are going to change at some point for retirees and workers.

A new summary of the Thrift Savings Plan appeared on their website in March of 2019. These are valid until the middle of September, but on that date, a new set of changes will be coming through because that will mark the start of the TSP Modernization Act. Here are some of the changes to expect when that happens, compared to what they are now:

Before September 14th, 2019

1.  For people who are 59 and a half years old, you are allowed one age-based withdrawal, which will, in turn, exclude them from taking a partial withdrawal once retired.

2. If the age-based withdrawal was forgone, then the employee is allowed a partial withdrawal after retirement. If this is taken, they are allotted only one more withdrawal, for the amount in full.

3. There is an option to take your money in monthly increments but cannot take any more unless it is a “cash out” situation and the fund is withdrawn in full. Once a year, the employee is offered the option of changing their monthly amount. No partial withdrawals are allowed if the retiree is taking monthly payments.

4. If the retiree’s TSP is comprised of Roth and traditional balances, any withdrawal must be taken equally between the two.

After September 15th, 2019

1.  For people who are 59 and a half years old, you are now allowed four age-based withdrawals. This will no longer exclude them from taking a partial withdrawal once retired.

2. It is now irrelevant if the age-based withdrawal was forgone or not, the employee is allowed as many partial withdrawals after retirement as they want, the only limitation being they must wait 30 days between transactions. If this is taken, they are allotted only one more withdrawal, for the amount in full.

3. There is an option to take your money in monthly increments, but you can also take it quarterly or yearly. The option to change that amount can be taken at any time, as can they be stopped or started. On top of this, you can still take partial withdrawals if desired.

4. If the retiree’s TSP is comprised of Roth and traditional balances, the option to choose with fund the money is removed from is now available.