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March 28, 2024

Federal Employee Retirement and Benefits News

Category: Articles

Articles

All the latest articles covering the information that you will be craving to devour will be available via this category. From getting to know how indebted our company is to reading about the presidential elections; from knowing about new retirement plans to finding out how security breaches can affect your life; you can browse it all!

For more articles, visit our articles’ section.

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Let’s Discuss Federal Benefits & Marriage by Mickey Elfenbein

Let’s Discuss Federal Benefits & Marriage
By Mickey Elfenbein

Mickey Elfenbein and the Armar Insurance Agency, LLC help protect the assets of individuals and small and mid-size companies using insurance products. 
Mr. Elfenbein has over 30 years of senior level experience in a variety of public and private enterprises. 

With all of the potential changes and Republican budget proposals, it’s hard to say what the future holds for federal employees and retirees. However, there are some things that are unlikely to change (such as life events like marriage) that require you to take action to avoid issues, either now or in the future.

Survivor Annuity

As a federal employee, if you were to get married, it’s required that you inform your personnel office. If you are already retired, you’ll need to inform the OPM. Between federal employees and retirees, the rules governing these annuities differ. As an employee, it is necessary you that you provide a survivor annuity for your spouse. If you completed a Standard Form 2808(CSRS) or 3102(FERS) at the time when you first got hired and chose one or more people to get any benefits if eventually, you die, you’d be required to change that designation when you get married. If you’ve retired, it’s up to you entirely to make your choice. The designation can either be changed or left just as it is.

Health benefits

When you get married, if  you are not enrolled in the Federal Employees Health Benefits (FEHB) program, you can do that now. Otherwise, if you are already enrolled, you can change your coverage. For instance, coverage can be changed from self only to self plus one.

If the reason you enrolled in self plus one is  to cover a dependent child, then you can just change it to self and family. Then again, if you already registered for self and family to cover eligible dependents, the only thing left to do would just be to add your new spouse (and any children your spouse brings to the marriage). Note: You can also change from one plan or option to another when you get married.

If you register for self and family option, just contact your health plan to let them know about the new family member. Otherwise, it will be required that an enrollment change from 31 days before marriage to 60 days after be submitted.

Life insurance

At your initial hire, if you enrolled in the Federal employees group Life Insurance program (FEGLI), you were probably required to fill out a designation of beneficiary form that asked you to state who you wanted the proceeds to go in the event of your death. You may want to change that designation when you get married. This can be done by either federal employees or retirees as long as they complete the Standard Form 2823.

If you still have questions on how marriage can affect your federal benefits, be sure to reach out to a financial professional for assistance:

Contact Mickey Elfenbein

Armar Insurance Agency
www.armarinsurance.com

www.federalcounselors.com

Phone: 612-216-3911

Email: [email protected]

More Mickey Elfenbein Articles

Article: The FEGLI Basics

Breaking Down the TSP By Jeff Spencer

Breaking Down the TSP
By Jeff Spencer

Jeff Spencer developed his passion in helping others with financial planning at a very young age while enlisted in the Air Force, stationed in England working on aircraft as a crew chief. Over the years, Jeff has continued with his passion and recognizes how money can become a powerful tool that should be used to deliver safety and protection in our lives.

Federal employees can receive a lot of perks such as job security, healthcare, a structured work schedule, federal holidays, etc. One of the least known benefits of a federal government job is the Thrift Savings Plan (or TSP).

Workings of the Thrift Savings Plan

The TSP is similar to the 401(k) that is available for civilians. Employees may or may not allocate a part of their salaries into this plan and then invest it into a mix of any of the 6 available funds (discussed below).

Even when workers do not select the kinds of funds for investment, TSP invests the money collected in a target-dated, age-suitable fund referred to as the Lifecycle Fund or ‘L’ (The fund was previously called ‘G’ but has recently been changed to L).

Workers can select between a Traditional or Roth TSP. Similar to a 401(k), contributions to the Roth TSP get taxed as income. However, they are typically not taxed during withdrawal. Contributions to Traditional TSPs are taken from taxable income, but tax needs to be paid during a withdrawal. It is possible for employees to make contributions to both Roth and traditional. However, the annual limit currently applicable would stay the same as it gets considered as one type.

People who begin working for the federal government or join the military after a civilian career have the option to roll over varied individual 401 (k) and other retirement accounts into the Thrift Savings Plan. Also, workers can roll over the contributions to the TSP into the IRA or 401(k) after they leave a federal government job.

Like the civilian retirement plan, people can take out their money when they are 59.5 years old without paying any penalties. Similarly, the minimum required distributions begin when you become 70.5 years old. Each person tends to have dissimilar RMDs and hence it is advisable to seek professional, financial help.

Many different options are available for workers if they want to withdraw the TSP money before they become 59.5 years old. You may take a loan on the amount in balance, you can apply for a financial hardship, or you may go for complete liquidation. There are many other situations offered by TSP where you can access the money before the time limit is over and you need to find if any of those options are applicable to you.

What is the method of contribution to TSP?

Military and federal workers can set up their TSP contributions through the Thrift Savings Plan website. Many employees are often given the option to go for TSP contributions during the basic training or on-boarding process.

Even in case of employees who opt out of making any contributions from their wages into the TSP, the government allocates 1 percent of their pay to the TSP for free. This does not have any impact on your overall salary.  This contribution begins the moment you become a federal employee, or after you have served for 60 days in the military.

This one percent contribution by the government to the TSP comes with a vesting period before the employee can have access to it. Employees in the federal government need to wait for 3 years before that 1 percent is theirs. In some cases, the vesting period may be 2 years as per the type of federal employment. Thus, people who do not remain a federal employee or a military personnel for a minimum of two years can lose their 1 percent, which goes back to the government.

In case of employees who do opt for contribution to the Thrift Savings Plan, then the government will contribute a part of your allocation. Due to the automatic contribution of 1 percent, workers typically get matched contribution of up to 5 percent.

For the initial 3 percent contributed by employees, the government also puts in 3 percent; for the next 2 percentage points paid in, the government pays 0.5 percent each. Workers have to allocate 5 percent of their wages to get a full match by the government. The government does not match contributions beyond 5 percent, but employees are welcome to make allocations of more than 5 percent of their pay to the TSP.

People who have served in the military may be familiar with phrases like ‘hardship pay’, ‘hazard pay’, ‘separations pay,’ etc. You can also choose to have a part of such ‘pays’ to be allocated to your Thrift Savings Plan. This contribution will not be matched by the government, but it is a great way to pump up your contributions to the TSP when you are away for training or get deployed.

Jeff Spencer Discusses the different funds in Thrift Savings Plan

  • (G-Fund) The Government Securities Investment Fund only invests in US Treasury securities. It comes with almost no risk, but low returns.
  • (F-Fund) The Fixed Income Investment Fund invests in different government and corporate bonds. The returns of the fund are dependent on interest rates. It is comparatively low-risk, but returns may not be that great.
  • (C-Fund) The Common Stock Index Investment Fund tracks the S&P 500 index. The fund is exposed to market risk and there is no guarantee of returns. But the S&P 500 index has typically done well.
  • (S-Fund) The Small Cap Stock Index Investment Fund tracks the Dow Jones US Completion Total Index. It is exposed to market risks but offers increased returns as compared to bond funds.
  • (I-Fund) The International Stock Index Investment Fund follows the MSCI EAFE Index. Since this fund deals with international investments, market risk is much broader.
  • (L-Fund) The Lifecycle Fund is made up of Income, 2020, 2030, 2040, and 2050 funds, each of which come with varied risk and portfolio structure.

 

If you need assistance with your TSP, or you have additional questions, please reach out to a local financial expert for advice and assistance:

Contact Jeff Spencer

Heartland Retirement Group
HRG4Life.com

Phone: 513-903-7551

Email: [email protected]

Jeff Spencer Articles

Article: What Becomes of Your Benefits Upon Leaving and Returning to Federal Service? By Jeff Spencer

Article: Getting the Best Deal on Life Insurance by Jeff Spencer

Article: Earning Social Security Credits by Jeff Spencer

The FEGLI Basics by Mickey Elfenbein

The FEGLI Basics
By Mickey Elfenbein

Mickey Elfenbein and the Armar Insurance Agency, LLC help protect the assets of individuals and small and mid-size companies using insurance products. 
Mr. Elfenbein has over 30 years of senior level experience in a variety of public and private enterprises. 

Upon your acceptance of employment, you were most likely automatically enrolled in the Federal Employees’ Group Life Insurance (FEGLI) Basic insurance. It’s possible to decline this coverage, but it’s usually rare for many federal employees to make that choice. Apart from it being an insurance based on group rates, the government finances the entire cost for postal employees and a third of the cost for non-postal employees.

The Basic insurance amount is equivalent to the rounded up estimate of your annual basic salary to the next highest $1,000, with an additional $2,000 on top of that. For employees below the age of 45, this amount is increased without any extra cost for the employee while employees of age 35 and below have their coverage doubled. From age 36, the extra amount is gradually reduced  in equal steps within the period of 10 years until nothing is left.

Basic insurance covers accidental loss of life and dismemberment (also known as AD&D coverage). This means that if you die or suffer the loss of at least two of your body parts (For example: foot, hand, eye, etc.), your basic coverage will be paid in full, but a loss of just one body part would be just half of your basic coverage. The payment in case of one’s death is over and above the basic coverage amount. The AD&D coverage should not decline in the course of your employment, but would come to an end as soon as you retire.

Besides the original offer of the Basic coverage upon employment, you can choose to enroll if any of the following circumstances or situations arise:

-in the course of an open season

-provision of medical proof of insurability

-a life-changing event such as marriage and childbirth

To have the FEGLI Basic Coverage extended into retirement requires that you be enrolled in it as soon as the program allows you to, or for a minimum of 5 consecutive years before you are due to retire.

As soon as you retire you can continue with the full coverage value or let it decline to either 50 or 25 percent.

For the 50% option, you will have a 1% monthly reduction of your annuity until it is half the initial coverage value. If you do not want this reduction you will need to continue the payment of your premiums provided that you are alive.

For the 25% option, you will stop the payment of premiums once you’re 65 years old and your coverage will decline by 2% monthly until it is 25% of the initial coverage value.

The amount of your basic coverage cannot be increased but the options you have can allow for a reduction if you so choose.

Contact Mickey Elfenbein

Armar Insurance Agency
www.armarinsurance.com

www.federalcounselors.com

Phone: 612-216-3911

Email: [email protected]

More Mickey Elfenbein Articles

Article: Let’s Discuss Federal Benefits & Marriage

Activating Your Blended Retirement and Benefits When a Shutdown is Taking Place

Activating Your Blended Retirement and Benefits During a Shutdown

After coordinating this for years, workers part of the federal government’s 401(k)-style retirement savings plan are prepared to offer military personnel a staff contribution.

On January 1st, the blended retirement system becomes active. The program enrolls new service members automatically and provides a 12-moth opt-in period for existing military members. It also offers a staff match of 1 to 5% to the Thrift Savings Plan. In return, a smaller annuity calculation is obtained if members remain a part of the military for two complete decades, which is necessary to be eligible for pension benefits.

During a meeting of the TSP’s governing board, Tanner Nohe, a project manager, claimed that all is ready for the new system to be activated on the first of the year.

The complete IT coding is established, and it goes live at the end of 2017, according to Nohe. They have eight applications ready to go also, and all the rules will go into effect on New Year’s Day. All deliverables and communications will also be activated at the same time, which comes with 29 individual web pages.

Nohe claims that company authorities have properly assessed tests to process payroll submissions from all the armed services. Nohe is confident the roll-out will go swimmingly when the initial payroll reports arrive Feb. 1.

Lawmakers on Capitol Hill haven’t finalized how to finance the federal government, in spite of a pending Friday deadline to bypass a government shutdown. With the persistence of brinkmanship, this is what federal staff can anticipate with regards to benefits and pay, as per guidance from the 2015’s Office of Personnel Management.

Agencies must compensate staff who are necessary or not part of the shutdown. However, it won’t be until the government reopens that the paychecks will be sent out. Alternatively, furloughed personnel receive no promises that they will be paid during the shutdown duration. Granted, Congress conventionally has sent out back pay once a financing agreement was reached. Sen. Ben Cardin, D-Md., along with Rob Wittman, R-Va., and Reps. Don Beyer, D-Va., have brought legislation to the table in each Congress chamber to make sure each federal employee is compensated quickly, should a shutdown occur.

During a shutdown, agencies could give out performance bonuses. However, such payments won’t be given out until once reopening of the government has taken place.

In several states, furloughed staff qualify for unemployment pay. However, after the 2013 shutdown, most feds were obligated to give back the funds once Congress validated back pay.

Health advantages are more complex. Should a shutdown happen, staff who are furloughed will keep their health insurance coverage via the Federal Employees Health Benefits Program. Normal premiums accrue regularly and are removed from workers’ initial post-shutdown compensation. With regards to the Federal Employees’ Vision Insurance and Dental Programs, if staff are furloughed for a couple of periods consecutively, they will be billed by snail mail to keep their coverage.

When a shutdown is happening, Federal Employees Retirement System and Civil Service Retirement System retirees will keep obtaining benefits. However, existing feds enrolled in the TSP won’t get an employer match or contributions to their accounts until reopening of the government has occurred.

If the government closes, Feds are not able to substitute paid leave to replace furloughs. When a shutdown happens, any sick days or scheduled leaves are canceled.

Although the Trump administration keeps fighting in court to stop transgender people from being a part of the military, the Defense Department assisted its recruiting team on how transgender recruit processes should be handled as of January 1.

Authorities told recruiters to manage all processing as per the applicant’s gender preference. Applicants are to be addressed by their pronoun and name of preference.

Transgender people who want to join the military will be asked to validate their gender of preference with a court order, birth certificate, or a passport. Recruits who have gone through treatments for gender reassignment need to have paperwork released by their physician. The documents need to state that they have at least 18 months without necessary tracking or follow-up procedures; or functional complications or restrictions.

Over the next several days, a decision on the Trump administration’s request to ban transgender recruits is anticipated from a federal appeals court.

TSP, tax reform, plan B

TSP, Tax Reform, Plan B

Republicans claim that regardless of which variation of the tax reform becomes law, everything in our country will change for the better. They claim that there will be a surge in the economy and that there could be a severe cutback in overseas jobs, and that America can be great again.

Democrats claim that any version of the GOP tax reform plan will decimate our country. They believe that this plan will only be good for the rich while it buries the middle-class in taxes, putting us further in debt.

Since the 2016 election, there has been an influx in job hunters, unemployment rates have been lower than in the past 17 years and the U.S. stock market is up 25%. However, there have also been more electronic substitutes for human workers, like the self check out aisle in your local grocery store. Though there’s been an increase in available jobs, that’s not always good for job seekers. In addition to increases in all primary funds of the Thrift Savings Plans over the past year, many of The Treasury’s funds have also had significant increases. The international stocks fund has increased 27.9%, the securities G fund has increased 2.33%, the small-cap S fund has increased 19.8%, the bond F fund has increased 3.49% and the big-cap C fund has increased 22.8%.

The Thrift Savings Plan will provide anywhere from 35%-50% of money that most of federal workers under the FERS retirement plan will spend in retirement. The TSP is necessary for FERS employees and a blessing for CSRS employees. This means that the cost of future purchases will continue increasing, although the shares you currently possess are worth more than usual. However, this won’t last forever. After a while, the shares you own can decrease in worth and be available for purchase by others.

Experts estimate the the market needs to be adjusted by 20-30%. This last occurred between 2007 and 2009, during what was known as The Great Recession, several hundred thousand retirees transferred their money from I, S and C funds into the G fund, which they believed was the safer option. However, this didn’t work out entirely as planned. Many of the retirees and feds who made the switch bought at high prices, sold at low ones, stayed out of stocks, but then missed the recovery period. They continued buying shares at cheap prices for many years.

The bottom line is, borrowing money to lower tax rates, rather than stopping other tax breaks to do so, can be detrimental. Robert J. Samelson of The Washington Post warns in his latest article that if we’re headed towards an economic boom, history has shown that the economy’s natural response is a large bust. Make sure that, no matter your strategy, you have a plan B.

FEGLI-Eligibility After Retirement by Steve Holmes

FEGLI-Eligibility After Retirement By Steve Holmes

Steve Holmes’ work includes facilitating the acquisition of Revocable Living Trusts and funding a customized trust for each client by focusing on maximizing income, deferring taxes, and preserving capital.  seeks to provide customers the best possible return with safe financial products that provide peace of mind for their retirement. Safety and no-to-low risk is his mantra.

If you’re looking to keep your FEGLI life insurance coverage as you go into retirement then you will have to have been enrolled for at least the five years before you retire. If you don’t meet that requirement, you cannot continue coverage. If you do not want to continue your FEGLI insurance coverage into retirement, or you’re not eligible to, then you are required to either drop the coverage on your own or switch to an individual policy.

FEGLI Coverage After Retirement:

  • For FEGLI basic coverage, you have two choices; either to leave coverage at the current level or (starting at age 65) you can choose to let it decrease to 25 percent or 50 percent of its current level. The premiums will vary based on these choices.
  • For the first option (Option A), premiums are to be paid until reaching age 65. After that, the premium stops, but 2% of the insurance will drop per month until it reaches 25% (or $2,500).
  • For the second option (Option B), you can choose to either continue paying a premium even after the age of 65 to keep the coverage in effect or stop paying premiums and allow the insurance value to be reduced by 2% every month till it reaches 25 percent.
  • For the third option (Option C), you can choose to continue coverage unreduced. After the age of 65, you can keep the coverage in effect or you can stop paying premiums and allow the insurance value to be reduced by 2% every month for 50 months, then the coverage ends after that period.

Except for those that are reemployed by the government, life insurance may not increase, even though it may be canceled or reduced. If you are interested in researching your options, or have more questions on your FEGLI coverage, please be sure to reach out to a financial professional for advice and assistance.

Steve Holmes
Steve Holmes

Contact Steve Holmes

Phone: 

Office: 865-769-3773

Cell: 865-951-9438

 Email: [email protected]

 

 

More Steve Holmes Articles:

Article: Roth IRA vs. Roth TSP: Which One Should Federal Employees Consider Investing In by Steve Holmes

TSP Advantages and Disadvantages by Wayne Sutton

TSP Loan Advantages and Disadvantages
By Wayne Sutton

The Thrift Savings Plan is one of the principal means by which workers under the Federal Employees Retirement System save for post-retirement. This system operates in a similar way to the 401(k) provided via private investment firms and employers. Federal workers also employ avenues like pension and social security to prepare for retirement.

Federal employees are expected to keep their money in the system until retirement because the Thrift Savings Plan was created to help them earn an investment income for retirement life.

The only exception is perhaps the United States Office of Personnel Management, which permits federal employees to withdraw their savings before they retire in line with provisions of the plan. The Personnel Management Office (OPM) runs the Thrift Savings Plan.

Workers can withdraw their savings from the Thrift Savings Plan via a loan.

There are two forms of Loans for the TSP:

  • Loans for buying or erecting a primary residence
  • Loans for general purpose

Although there are pros and cons of getting a Thrift Savings Plan Loan, the negatives may be significantly higher than the benefits. The disadvantages are so much that OPM encourages federal workers to only borrow from the Thrift Savings Plan after trying out all other loan options.

Pros and Cons of the TSP Loan

Advantages

The Interest Rate is Low: A Thrift Savings Plan loan has an interest rate similar to that of the return on the G Fund, which is one of the options backed up by government securities, provided for investment in the Thrift Savings Plan. These funds (G Fund and others under the Thrift Savings Plan) are employed to provide the investment mixes for target-date monies offered to those who are part of the plan. Typically, the rate of return of the G Fund is lower than 2.0%.

A Broad Range of Permitted Loan Amounts: As long as you have saved up to that amount in your account, you are free to borrow between $1000 and $50,000. You can choose to use a loan calculator to determine the size of your loan payment.

Payroll Deductions are Used for Repayment: Regarding processing, it is easy to repay Thrift Savings loans as they are made via payroll deductions.

Opportunity for Anytime Additional Payment: There is a loan repayment coupon on the website of the plan for any participant who intends to make further payment. With this ticket, you can be sure that your payment reflects on your loan. You also have the chance to pay off the loan early if you can clear off the new principle in your loan’s early years. Alternatively, you can break your payments down into smaller amounts via re-amortization.

Disadvantages 

Compulsory Processing Fee: Every loan has an attached $50 processing fee at the point of application. Typically, a deduction is made from the amount you get as a loan.

Forfeiting Earnings: This is perhaps the biggest disadvantage of receiving a loan from the TSP because you are technically withdrawing from your future in the name of borrowing from the plan. You are more or less saying goodbye to the investment growth which would have accrued on your account. To make it worse, you are also obliged to repay the amount with interest.

Maximum of 90-day Grace Period after Leaving Federal Service: If you retire from federal civil service when you still have a balance to settle with the Thrift Savings Loan Plan, you are obliged to pay it back in 90 days. Failure to do so would lead to the stated, outstanding amount being tagged as income via a report to the Internal Revenue Service.

Short-term Loans: The time attached to the loans is usually short in a relative sense. There is a maximum period of 5 years allowed for general purpose loans to be repaid. As for residential loans, they have to be settled within 15 years.

It is recommended for you to reach out to a financial advisor for advice before making any decisions regarding your TSP.

Contact Wayne Sutton

WAYNE SUTTON
Financial Advisor
CA Lic # 0805035

Office: 707-257-0408 office
Cell: 707-337-0489 cell
Email: [email protected]

Address:
2015 Redwood Road, Suite 6
Napa, CA 94558

More Wayne Sutton Articles:

Is the FEGLI the Best Choice for You? By Wayne Sutton

Why it’s Wise to Front-Load Your TSP Before Leaving A Job by Don Fletcher

Why it’s Wise to Front-Load Your TSP Before Leaving A Job

By Don Fletcher

Don Fletcher helps Federal Employees protect their retirement money by assisting them in putting together their Personal Retirement Plan. Wealth preservation and financial security, when looking at retirement planning, is key for Don and his clients.

With agency downsizes and buyouts possible, federal employees close to retirement, or thinking about a change, may be wondering what to do with their TSP. If you plan to leave before the year’s end, you may want to consider front-loading your Thrift Savings Plan (TSP).

For 2017, employees can contribute up to $18,000 to their TSP. If an employee is 50 years of age or older, they can contribute another $6,000. If you are retiring mid-year, you can speed up the TSP contributions to hit the maximum before you decide to leave.

For example, if you plan on leaving around the 20th pay-period, you will have contributed nearly $14,000 to the TSP.  This is $693 per pay period, which is how much you need to max out by the last pay-period (26th).

Say you decide to leave two months before your actual date of leaving (which is four pay periods before your date). If you boosted the bi-weekly contribution, you would hit $18,000 for the 20th pay-period. In order to attain $6,000 per year in catch-up contributions, you would need to put in $576 per pay period to attain the max out by that time.

This is a total of $1,611 for each pay period, which is impossible for federal employees who want to leave the government. However, you could boost your payments to 15 percent of your salary and have a bigger TSP amount upon leaving (or retiring).

It’s wise to add money to your Thrift Savings Plan, and you should avoid spending it whenever possible to ensure it’s still there when you retire. If you leave, you can either leave it there, or you can roll the money into another employer’s defined contribution plan or an IRA.

If you have any questions on your TSP or need some advice, please be sure to consult a financial professional.

Federal & Social Security Disability Benefits: How They Influence Each Other by Garrett Jellison

Federal & Social Security Disability Benefits: How They Influence Each Other

by Garrett Jellison

Garrett Jellison of Jellison Agency recently celebrated the tenth anniversary of the business in 2017 and he aims to help every client meet their goals in protecting their family, their home, and their lifestyles. Here he discusses the topic of federal and social security disability benefits and how they affect each other. 

Though nobody wants to imagine becoming disabled at any point in time, it is essential to have an understanding of the disability coverage under the Civil Service Retirement program, as well as the Social Security program. It is imperative to know more about the mechanisms of the system, especially those persons under the CSRS and FERS systems.

There is an integration of the civil service and the Social Security disability programs at a certain level. It simply implies that the disabled persons may not have access to full benefits under more than one platform and should work assiduously to preserve their rights under each system. Workers registered under the FERS and CSRS-Offset (a branch of the CSRS system which also covers the Social Security which is not available in the CSRS plan) must submit their application for federal retirement disability to Social Security, so they are assured that their benefits are duly organized and in good custody.

Moreover, workers may be qualified for a disability annuity if they sustain that injury while working as a federal career officer. The CSRS/CSRS-Offset have made provisions for this, and these disabled employees must have completed at least five years of federal civilian service. Under the guidelines of FERS, they are expected to have worked for 18 months. While these employees are covered by any of these plans, CSRS/CSRS-Offset or FERS, they must have been confirmed disabled for “useful and efficient service” in their current position and any other open position at that same grade or pay level in which they are eligible to hold.

The term “Useful and efficient service” denotes satisfactory performance of the critical or essential elements of the position, or the capacity to perform at the desired level, as well as the ability to maintain gratifying attendance and conduct.

In another case, for a service to be rendered not “useful or efficient,” there must have been a level of performance or attendance which if it is permitted to linger; it would lead to a rejection of a within-grade increase, downgrading or any counteractive action.

The rules under social security are more complex and sterner. Qualification for benefits from OPM does not automatically make you entitled to social security benefits. There are certain conditions you must satisfy before you can be qualified for Social Security benefits and they include having a physical or mental impairment that is capable of preventing you from engaging in strenuous work activities for one year. Another condition is the presence of an ailment in your body that could lead to your death.

It is important for you to file for disability benefits as soon as possible in the event that you become disabled. To do so,  you can visit the social security office or call directly, but be sure to give them much all of the requested information so they can process your request.

Contact Garrett Jellison

Jellison Agency

Phone (972)469-0816

Email [email protected]

Other Garrett Jellison Articles:

Article: TSP INVESTING: A prospect worth exploring by Garrett Jellison 

Smart TSP Investors Could Have $1M in Plan At Retirement – By Timothy Walker

Smart TSP Investors Could Have $1M At Retirement

By Timothy Walker

Timothy Walker works with federal employees and helps them maximize their retirement benefits.

When it comes to the Thrift Savings Plan (TSP)  there’s no other plan that can match its greatness. After all, it’s got the lowest administrative fees, which allows people to put additional cash into their (TSP).

Timothy Walker
Timothy Walker

The majority of employees who qualify for the FERS retirement system get a 5% match from the government.  This means most employees get tax-deferred free money. Only a limited number of employers offer their employees 401(k) plans, and even less have matching worker contributions at the 5% level. With a steady investment in the TSP – going with S and stock-indexed C funds – most federal and postal workers living within modest means can become wealthy from their TSP. They invested when they first could, stayed with their investing plan even during the Great Recession and have around or more than $1 million now.

Vanguard founder and financial pro, John Bogle said he wishes he could invest in the TSP. People who run it are watched very carefully. There is a multitude of federal regulatory agencies that watch it. Employees, Congress members, along with their staff are in the TSP as well.

There are many resources out there about The Thrift Savings Plan. Be diligent and ask questions. There are professionals out there that do understand many of the factors about the plan, like myself. Whether you have questions about investing in the plan or you’re ready to think about retirement and need guidance, I’m here to help!

Feel free to contact me directly at [email protected]

 

 

Other Tim Walker Articles

Article: Complete Guide to FEGLI for Federal Employees By Timothy Walker

 

About Timothy Walker:

Tim Walker is the founder and president of Fortress Financial as well as an author and financial professional whose sole focus is helping senior Americans solve problems and seize opportunities regarding their retirement finances and estate planning wishes.

You can reach Timothy Walker by email or phone

Office: (208) 233-1685

Cell: (208) 317-4803

[email protected]

Obtaining the Best Federal Employee Life Insurance by Carol Singer

Obtaining the Best Federal Employee Life Insurance by Carol Singer

Carol Singer discusses the importance of finding the best life insurance (Hint: it isn’t always FEGLI)

With so many different options on the market nowadays, life insurance can be a confusing topic (to say the least), especially for Federal Employees. As you may know, Federal Employees Group Life Insurance (FEGLI) only requires public sector workers to pay two-thirds of coverage while those in the private sector are required to pay 100%. Furthermore, private life insurance rates will depend on one’s health, which is different to FEGLI coverage where everybody within the same age bracket pays the same amount.

 

With this in mind, those who are healthy may feel as though the insurance is costly because they are paying the same amount as those who are not quite so healthy. In addition to this, FEGLI Option B and FEGLI Basic will both increase in line with adjustment to your salary no matter how healthy you may be; Option B covers you for between one and five times your yearly salary.

 

As you may know, Option B and Option C are also available, and these protect your partner and children. If you get married/divorced or if you gain/lose a family member, the two can be adjusted accordingly without having to prove insurability. With FEGLI Option C in particular, this is helpful for those who cannot get private life insurance; for example, those who have a health condition or are slightly older than private companies allow. This being said, coverage will never rise above $25,000 which can be quite limiting.

 

What Should You Do? – If we use all of the information above, the best step to take moving forward is to re-evaluate your life insurance options in five-year periods. Why? Because in this time, your insurance needs may have changed somewhat due to a big life event. If your children have completed college, you will not require the same levels of insurance now than you did back before college. Furthermore, you may have paid the mortgage, and this will allow you to reduce the coverage again. If you get married or divorced, regular assessment gives you an opportunity to adhere to your needs for the next period of your life even if it is a simple change in beneficiary.

 

Regardless of your hobbies, FEGLI will always keep you covered, but it becomes incredibly expensive as you age.  Once you reach a certain age, it is almost always advisable to begin reviewing the cost of your FEGLI against private market comparisons.  You’ll likely find that, as long as you are reasonably healthy, you can receive some very attractive benefits from an Indexed Universal Life (IUL) insurance policy or lock in much lower costs by using a fixed Term Insurance policy (for, say 20 or maybe 30 years) vs. continuing with FEGLI into retirement.

 

As long as you have the coverage for at least five years before retiring, you may maintain FEGLI Option B even after retiring. By having this in place, your partner can replace your income with this amount if you were to pass away before them. If we say you have five times your salary ($64,000 x 5 = $320,000) of coverage for option B, the cost would be just under $140 per month. After turning 60, this doubles and then increases yet again every five years until you reach 80, and this is important to consider.  This is why we highly recommend that you consider comparing your FEGLI policy against cheaper alternatives.

Facts About FEGLI

  • FEGLI becomes very expensive as you age.
  • Unfortunately, there is no way to take out a loan against your FEGLI policy.
  • Since it is a group life insurance policy, there’s no way to build a cash value.
  • In every circumstance (except the beneficiary causing your death), the beneficiary will receive the death benefit if you pass away.
  • There are no refund options for FEGLI if you choose to cancel.
  • With the living benefit in tow, you can receive early payments if you happen to come down with a serious illness.
  • For no extra cost, accidental death and dismemberment is included within the insurance itself.
Carol Singer
Carol Singer

Contact Carol Singer:

Phone: 505.310.1474

Email: [email protected]

 

Other Carol Singer Articles

The Correct Way of Saving for Retirement by Carol Singer

Is FEGLI Right For You, Right Now? By Carol Singer

Five Key Steps Towards Federal Retirement and Financial Security by Carol Singer

Why TSP Is The Way To Go by David Chan

Why TSP Is The Way To Go

By David Chan

Thrift Savings Plan aka TSP,  is similar to a 401(k) but one that the government provides to all the federal employees. The TSP plan is a perfect fit for people who want to save but don’t like the hassle other ordinary savings plans possess.  Let’s take a look at why exactly it is what you might be in need of:

 The Quick Breakdown

Diversification:

TSP has a diverse choice of funds. Through it, you can get your hands on government bonds, various indexes and even the S&P 500.

Low Fees:

Many of the funds have a low cost attributed to them and have become a great choice over many other funds in the marketplace. However, there’s also room for alternative options.

Roth option for IRA:

In 2012, the Roth feature was added for TSP accounts.  Roth TSPs are a great option when considering your entire investment strategy. There are options for tax-free withdrawals and after tax investments. Of course, always consult with a professional first before you take any withdrawals.

Summary

The TSP is a great retirement vehicle. It is one of the most popular investment programs you have available as a federal employee. Of course, don’t discount the help and advice of a professional you can trust.  Whether it is to ask questions about your investment options or if you are now preparing to retire, a planning professional who knows and understands your options are vital.

David Chan
David Chan

Contact David Chan:

Phone: (510) 440-7110

Email: [email protected]

 

More David Chan Articles:

Article: Finding the Balance with TSP Contributions with David Chan

Article: How to Utilize the Soaring TSP by David Chan

Article: Utilizing Your Thrift Savings Plan: 7 Tips by David Chan

 

Leaving and Rejoining Federal Service by Jay Hunt

Leaving and Rejoining Federal Service: Benefits Retained and Benefits Lost

by Jay Hunt

Jay Hunt of Stratico Retirement and Insurance Solutions is in the business of helping people, and here he discusses how benefits may be affected upon taking leave from the Federal Service.

Recently, we received an excellent question regarding what happens to all benefits when rejoining federal service. Primarily, they wanted to know what would happen if they ever returned and we realized this is something that needed to be covered, so that is what we plan to do today!

Over the years, thousands of federal service workers have gone back after leaving so this is not uncommon. In fact, it is relatively common for all of us in the world to go back to at least one job in our career. Whether we thought the move away would be good for our career or just our bank balance, it is easy enough to return when you realize the truth.

In answering the question, you will have the option to enroll into most of the federal benefits or continue from where you left off, and this includes federal health insurance (FEHB), federal employee life insurance (FEGLI), and likely more. With FEHB, it will be classified as ‘continuous’ for the five-year requirement before then carrying it over towards your future retirement.

FEGLI for Federal Employees Returning to Service

With FEGLI, you will not have an opportunity to change coverage if you rejoin federal service within 180 days of leaving; you will just go straight back onto the same coverage you had before you left. If you left over 180 days ago, you have the option of rejoining the same coverage, or you can start from fresh with a brand new policy.

Furthermore, your annual leave will be calculated using your overall length of service (regardless of breaks) and any sick days taken previously will also carry over. If you withdrew from your TSP before resigning, this cannot be replaced although you will be able to carry on with the same plan and contribute in the coming months and years. If you managed to roll the TSP into a different account, there would also be options to roll this account into the TSP; this includes any qualified gains.

Returning to Federal Service and Retirement Coverage 

When it comes to retirement coverage, this will ultimately depend on the time you spent away from federal service and what system you were on before your resignation. For example, you can return to FERS if this was your plan beforehand. If at resignation, you had fewer than five years of creditable civilian service, 4.4% of your salary will go towards the FERS system (this is not affected by whatever you were paying before leaving). As a side note, the percentage payable can increase by 0.5 points if your new position is covered by the law enforcement or firefighter special provisions. If you managed to obtain creditable civilian service time of over five years, your rate of contribution to FERS would remain the same.

With CSRS, you will find the rules to be different because most people are eligible to retire with CSRS; however, there are a few who are not yet eligible due to age. If you were not eligible to retire when you resigned, the following would be true;

  • You would be covered by Social Security if your break was larger than one whole year. Unfortunately, your opportunity for the standard CSRS has now gone, but you can choose between FERS and CSRS Offset.
  • If your break was less one year, you could choose FERS coverage when you return to your role.
  • At the time of leaving, you could have also been CSRS Offset, and you will be offered FERS on your return. However, all of your CSRS Offset years will be counted as FERS service for your retirement.

No matter what retirement system you follow or followed before your resignation, you will not have a problem depositing any money you withdrew before leaving. If you need any other advice, be sure to talk to a finance professional or someone who can help in federal service. If you want to retire with confidence, these decisions could be important so take your time!

Jay Hunt
Jay Hunt of Stratico Investments

Contact Jay Hunt

Stratico Retirement & Insurance Solutions

[email protected]

(816) 260-6737

Other Jay Hunt Articles:

Article:FAQ Regarding New TSP Investment Options by Jay Hunt

Article: Let the Thrift Savings Plan (TSP) Help You Retire Well

OPM Continues To Review Hiring Process

OPM Continues To Review Hiring Process

 

There is a total of 164 authorities, available to agencies that can be used to hire new employees to the federal government. Not many of the hiring appointments go on to help the agency managers in identifying talent that would ideally meet their minimum qualification standards. Of course, the ideal selection of new diverse and vigilant applicants is out of the question. The Office of Personnel Management or OPM along with Congress have also acknowledged the fact that there are no quick fixes to the problems related to business, policy, and technology in the federal recruiting process.

OPM
OPM PUSHES FOR INCREASED TARGETED RECRUITMENT:
OPM has suggested in this regard: Agencies should change their overall approach rather than just hoping that posting the jobs to USAJobs.gov will end up bringing out the most talented candidates for them. The agencies should instead target and reach out to pools of talent consistently.
The “post, wait and pray” tactic used by the agencies while posting on the USA jobs website is not very commendable. The President of Avue Technologies, Linda Brooks said to the Governmental Affairs, and Senate Homeland Security Committee this past week,
“You should always be recruiting; you should never stop. In the National Park Service, let’s just say I need 2,000 air conditioning mechanics. You should have one posting. You should always be taking applications.”
OPM is currently trying to make incremental and periodic updates to the job portal. The first step towards an improved portal came back in last year, and the agency has planned to continue bringing out improvements.

Is FEGLI Right For You, Right Now? By Carol Singer

Is FEGLI Right For You, Right Now?

By: Carol Singer

When it comes to the FEGLI, there are some common questions that arise time and time again but perhaps none quite as much as ‘is it the right time in my career/life for FEGLI?’. In truth, there’s no definitive ‘yes/no’ advice we can provide here, but we can suggest three considerations to help make your decision that little bit easier.

 

  • Firstly, do you believe that you are healthy enough to qualify for individual coverage? When thinking about this factor, you should consider your habits, age, health, lifestyle, etc.

 

  • Secondly, what’s your timeframe in the coming years? Normally, federal employees will get priced out of FEGLI coverage as they age and as FEGLI Rates rise dramatically, so what stage of your career have you reached?

 

  • Thirdly, what are you trying to protect with a potential policy?

 

The Federal Employee Group Life Insurance, shortened to FEGLI, is advantageous for many federal employees since coverage can be obtained without the worry of medical underwriting. If you’re still early in your career, it’s also quite easy to get a competitive death benefit. However, it isn’t all roses with FEGLI coverage because the premiums steadily increase over time and everybody pays the same rate (the flip side of having no individualism with underwriting).  This means that healthy FEGLI participants will be charged the same higher rates and unhealthy participants.  So if you are healthy enough to get individual coverage you should seriously consider less expensive FEGLI alternatives.

 

Potential Benefits of Private Life Insurance vs. FEGLI

If you were to assess the private life insurance market, there are also pros and cons because coverage is more flexible with various riders and underwriting…but the medical underwriting may force you to pay higher premiums if you are unhealthy.

 

Surviving a Health Scare – If you were suddenly struck down with a heart attack, cancer, or even a stroke, your ability to obtain life insurance would be difficult and the expenses would go sky-high. Therefore, ‘living benefits’ – benefits you can access while still alive – can be an excellent way to replace your income and stay afloat in the short-term. With private insurance, an Accelerated Living Benefit rider could allow you a certain percentage of your benefit early. On the other hand, the FEGLI offers you nothing which leaves you scrambling around with your TSP for much-needed funds.

 

Considering you have been working hard to contribute to your TSP year-after-year, to think it could all disappear in a matter of months on medical bills and replacing your income is quite worrying. Just because of a health problem, you lose your nest egg, and this is before we even mention taxes and a penalty for withdrawing from your TSP early.

 

With life insurance, the question for many years was ‘what if I were to pass away?’ However, this is quickly being replaced with ‘what if I live after a health issue?’. Nowadays, technology within the medical industry is growing rapidly, but the cost of medical care is increasing even faster which is putting families into debt every single day.

 

Do I Need FEGLI?

With any type of insurance you purchase, whether it’s life, travel, homeowners, or health, the idea is to protect something of value just in case something were to happen or go wrong. Ultimately, this is why life insurance is a personal choice and different for every individual in the world. Normally, you can decide with your family the main concerns and how you want to protect them.

 

If insurance was free to everyone, there’s no doubt we’d be taking policies against cardboard box injuries, asteroids, and everything in between. Perhaps even more efficient, if we could see into the future, we would know exactly what insurance was required (or we could prevent the problem from happening in the first place). Unfortunately, neither of these options are available because insurance costs money and we haven’t developed time machines. Therefore, the answer to the all-important question of life insurance should be answered by looking for flexible coverage at an affordable price.

 

Within the industry, insurance will typically be limited in the amount of triggers they have, so finding an inclusive policy such as this is easier said than done. If you were to ask a federal retiree whether they managed to purchase cancer insurance after forking out for the FEGLI, FEHB, and FLTCIP, you wouldn’t get much of a response. Even if they were lucky enough to buy cancer insurance, then what happens if they have a heart attack; nothing because the wrong trigger was set and money has been wasted.

 

Rather than buying insurance policies with a single trigger, it will always be more efficient to find coverage with many different benefit triggers.

 

FEGLI Candidates – With all of this information in mind, who does the FEGLI suit? First and foremost, Death Only Insurance will be the cheapest option for those aged under 45 years. If you are already past this age, the five-year increases have already started, and the Basic Extra Benefit has ended. Therefore, private insurance starts to become more competitive (this is helped by the addition of living benefits).

 

After this, FEGLI may still be an option if you have a health condition since there is no medical underwriting. If the issue is serious, private insurance companies will take this into account and raise all premiums.

 

With the FEGLI still around today, this alone shows that it has a place in the industry and it helps thousands of people. This being said, it is very generic in that everybody pays the same regardless of his or her health, smoking habits, and every other factor that normally plays a role. In the same breath, the price increases will apply to everyone regardless of the same factors.

 

Key Questions – Before we go, we want to provide you with some key questions you need to ask before making a decision;

 

  • Will underwriting be a problem if I go for personalized coverage privately?
  • Can I pass the underwriting in a few years’ time if I were to wait?
  • What exactly do I need to protect? – For most, the death benefit will replace income, pay for a funeral, and ensure their families can continue their current lifestyle while adjusting to your passing.
  • Will my need for insurance be removed in the next decade or two? – For example, will you finish paying a mortgage or will your children leave education?
  • Have I got cash reserves to act as living benefits?

 

All things considered, the best thing for you to do right now is to assess your position. The longer you wait, the more FEGLI becomes unattractive, and you are forced into private insurance which can be damaging if you have a health issue. If you need help with this decision, be sure to discuss your position with a finance expert for unique advice!

Carol Singer
Carol Singer

Contact Carol:

Phone: 505.310.1474

Email: [email protected]

 

Other Carol Singer Articles

Obtaining the Best Federal Employee Life Insurance by Carol Singer

The Correct Way of Saving for Retirement by Carol Singer

Finding the Balance with TSP Contributions with David Chan

Finding the Balance with TSP Contributions
By David Chan

When you work for the federal government, there are all sorts of advantages you can enjoy and receiving a matching TSP contributions is only one of them. The Thrift Savings Plan (TSP) allows a certain amount of money to be paid your way after choosing to retire. However, there are still thousands who don’t choose to contribute into their TSP because of one main reason; it is not mandatory. With FERS, Social Security and the FERS Annuity are an automatic part of the federal employee’s retirement package, whereas the TSP option is something federal employees can opt out of.

With your FERS annuity, nobody can avoid the 0.8% payment from your salary just as he or she can’t prevent the 6.2% charge for Social Security. Regardless of how close or far away you are from retirement, these two outgoings will remain for years to come yet there isn’t such a demand on you to pay into your TSP…but should you be contributing anyway?

If we use an example, let’s say a female employee works for a federal agency for 30 years with a salary starting at $60,000. Each year, she experiences a 1% increase in salary for the entirety of her career. For the first ten years of her career, she chooses not to pay into the TSP. For the next twenty, she changes this to 5% of her earnings (which is then matched by the government). If we use the TSP Calculator available through TSP.gov, this comes to over $250,000 at retirement. Considering no contributions were made during the first ten years, this is quite impressive.

On the other hand, her friend and colleague contributes 5% from the very first day and continues on this path for thirty years; with the same salary. Pl ugging the different numbers into the same calculator, it comes to just short of $460,000. As you can see, this is a huge difference, and it increases to over $900,000 with a simple change in contribution from 5% to 15%.

From this, we hope you see that the best retirement is always made in the early years. If you start investing now, no matter how far away your retirement may seem, you will have earned a fantastic nest egg by the time the magical date comes. Feel free to check out the TSP Calculator online where you can play around with different contribution percentages to see what you need to save to reach your goal by retirement!

David Chan
David Chan

Contact David Chan:

Phone: (510)440-7110

Email: [email protected]

 

More David Chan Articles:

Article: Why TSP Is The Way To Go by David Chan

Article: How to Utilize the Soaring TSP by David Chan

Article: Utilizing Your Thrift Savings Plan: 7 Tips by David Chan

FAQ Regarding New TSP Investment Options by Jay Hunt

 

FAQ Regarding New TSP Investment Options

by Jay Hunt

Jay Hunt of Stratico Retirement and Insurance Solutions is in the business of helping people, and here he discusses the various investment options offered along with your TSP

If you’re a federal worker, you are likely looking for answers regarding the new TSP Investment options.  There have been many questions making their way to the surface in recent weeks with regards to TSP investment, TSP withdrawal options, and many other factors. However, there is one that seems to be dominating; ‘when will these investment choices be available for the TSP?’. Therefore, it’s time to provide a full answer so keep reading if you need to know!

If you were unaware, TSP stands for Thrifts Savings Plan, and it is primarily a program for all federal employees styled much like a 401(k). In total, there are five different funds reflecting the different bond and stock markets. In 2019, tracking international stocks (one of the five) will expand so it includes Canada and many other emerging markets and this is perhaps the biggest change in the recent announcement.

TSP Lifecycle Funds

Furthermore, another change will be will include TSP lifecycle fund changes with withdrawal dates released as 2020, 2030, 2040, and 2050. Ultimately, these funds combine basic fund investments with different ratios and, as time passes, they become more conservative. When 2020 arrives, the TSP will start to offer five-year increments with funds (ending in 2065) as all funds with the date merged with current income funds.

Elsewhere, the TSP is also looking to add flexibility to investing through what they’re calling the TSP Investment Window. Rather than being restricted by investments, they want to allow all account holders to invest in actively managed mutual funds as well as various other funds rather than just those they offer already.

Finally, Congress has recently received potential bills to add more options when it comes to withdrawing. In particular, they should help those aged 59 1/2 and above (as long as they’re still employed).

There we have it, the expected changes in the coming years and when they will make an appearance. According to all involved, these changes will bring the TSP into the 21st century and level with other retirement savings programs currently available in the market.

Jay Hunt
Jay Hunt of Stratico Investments

Contact Jay Hunt

Stratico Retirement and Insurance Solutions

[email protected]

(816)-260-6737

Other Jay Hunt Articles:

Article: Leaving and Rejoining Federal Service: Benefits Retained and Benefits Lost by Jay Hunt

Article: Let the Thrift Savings Plan (TSP) Help You Retire Well by Jay Hunt

How to Utilize the Soaring TSP by David Chan

How to Utilize the Soaring TSP

By: David Chan

As we start to get comfortable with the summer of 2017, we reach a landmark; eight years of current market expansion within the US. Compared to the global financial crisis we all experienced in the years before this, it’s perhaps surprising that we’re all enjoying the third-longest period of expansion in nearly 250 years; if it lasts until 2019, it will surpass the only two standing above it.

Furthermore, unemployment is now back to the numbers we saw before the recession which is good news once again. If we break it down in a little more detail, the amount of US citizens employed currently stands at 60%; this is three percentage points fewer than in 2007, but it shows definite signs of improvement. However, we all know that the employment rate doesn’t always tell the whole story.

In other news, the stock market within the US is also performing very well. All adjusted so we can compare throughout history, the price to earnings ratio on the S&P 500 is actually at its second-highest point since the second world war; the only time this was higher was during the ‘dot com bubble’. With all of this taken into account, the US is in a sound financial position, but we should never take anything for granted.

According to Warren Buffet, we should always be fearful when others are greedy and vice versa. Therefore, we want to provide you with some good housekeeping tips so you can utilize the good times while being mindful of what could happen in the years to come.

Calculate Your Debt/Income Ratio

Firstly, we highly recommend calculating your debt to income ratio. In terms of the US, we currently sit at around 80% with debt to GDP, and this is well below the 95% seen during the recession. However, it wasn’t always this high as it only went above 40% for the very first time as we entered the 1960s. Compared to other countries around the world, we can be found somewhere in the top half; although others are enduring worse, there are certainly many doing better.

In the most recent proposed budget from the White House, all federal employees will end up paying more into the system if it goes through because they plan to remove the cost of living adjustments with the FERS system. Although this hasn’t been set in stone just yet, federal employee compensation is likely to be hit the hardest.

Considering we’re in a bull market, now is the best time for you to improve your debt to income ratio. If you can lower this somewhat now, you’ll be in a great position if another recession were to strike in the near future. Therefore, you can start with an audit of all your finances to see whether you can pay off any short-term loans while the money is available.

Of course, we aren’t saying you should clear every single source of debt you have because some will be keeping your credit rating afloat. By having a variety of different debts in your history, it shows you are responsible and can pay what you owe (assuming you’re paying all bills on time and in full).

Diversify Your TSP

Next, we want to prevent you from falling into the trap many beginner investors tend to make. As soon as the market is enjoying good times, they decide to invest before then selling as the decline comes.  An alternative to the all-or-none approach may be to consider TSP L Funds. If you’re unaware of what these are, they stay balanced to keep your portfolio diversified. When the market falls, stocks are bought, and bonds are sold and vice versa.

When you choose this option, you’ll have an opportunity to select your retirement age, but you don’t need to pick the one that matches your retirement. Although it hasn’t been confirmed, many believe the long-term funds to be too conservative so assess your goals and think about your current situation. If you like to have money in equities, now is a good time to invest in L Funds because equities account for over 80% of the fund; this is within the 2050 L Fund (the most aggressive fund).

If you already invest in L Funds or want to look elsewhere, we also recommend checking the rest of your portfolio balance. If your C, S, and I Funds have all improved, they will all be holding a higher balance so you might need to reassess and spread the risk a little more. For example, you might need to realign with your target by investing some into the TSP G Fund or consider options outside of the TSP if you’re older than 59 1/2.

Despite billions of dollars in investment, there has (and never will be) a guide showing the ‘best’ way to diversify so the main thing to consider is your goals. Depending on when you retire and how much longer you have left in employment, you might choose to spread your money differently to someone who has just started their career. As an impartial service and one that would never choose one technique over another, we’re only saying that chasing markets never seems to end well. If you want to see real progress, you should set up with your goals in mind and then rely on the cyclical nature of the market to help.  It is also recommended that you always consult with your chosen investment professional prior to making any investment decisions.

Boost the Emergency Fund

If we’re to listen to the Congressional Budget Office, the debt ceiling is likely to be hit by the federal government in October 2017. If Congress cannot come to an overall agreement, there could be potential furloughs or various other measures, so you need to be prepared for some form of change at the very least.

Often, we don’t need a cash reserve in the good times but, as we’ve said many times, you can’t just think about what’s happening right now. If you don’t prepare cash reserves when you don’t need it, it won’t be there when you do need it. In life, it’s important always to have some form of liquidity, and you can build this when all is well with the financial world. If you have any high-interest debt or multiple sources of debt, it’s now time to pay this off or consolidate it all into one, so you only need to pay one lot of interest.

If we’re predicting correctly, your next question is ‘how much do I need?’. Unfortunately, there is no definitive answer we can provide here, but you should always consider your own circumstances including your children, mortgage, sources of liquidity, job security, etc. Furthermore, you could also ask yourself how long you would survive if you were suddenly forced to take some time from work. If your money ran out in less than one week, we would suggest this probably isn’t enough. If you have between 3-6 months plus enough to cover unexpected costs, this is a much stronger position.

Summary

For now, we can all enjoy the good financial times in the U.S., but we should never be naive enough to think they will last forever. Therefore, now is the perfect time to get your finances in line, so you aren’t left worrying when times do change. As well as doing this yourself, please feel free to share this information with your friends and colleagues so they can do the same!

David Chan
David Chan

Contact David Chan:

Phone: (510)440-7110

Email: [email protected]

 

More David Chan Articles:

Article: Why TSP Is The Way To Go by David Chan

Article: Finding the Balance with TSP Contributions with David Chan

Article: Utilizing Your Thrift Savings Plan: 7 Tips by David Chan

Federal Employee Annuities – FERS by Dave Baker

FEDERAL EMPLOYEE ANNUITIES – FERS

by Dave Baker

David Baker has more than two decades of experience, and as the founder of Retirement Income and Benefits Solutions, is dedicated to helping clients achieve a higher level of confidence in their financial plan. Here Dave Baker will cover the topic of Federal Employee Annuities and the benefits of the FERS.

Congress created thе Fеdеrаl Emрlоуееѕ Rеtіrеmеnt Sуѕtеm (FERS) іn 1986, аnd іt bесаmе effective on Jаnuаrу 1, 1987. Since thаt tіmе, nеw Fеdеrаl сіvіlіаn еmрlоуееѕ who hаvе rеtіrеmеnt соvеrаgе аrе соvеrеd bу FERS.

FERS іѕ a rеtіrеmеnt plan thаt рrоvіdеѕ bеnеfіtѕ frоm thrее dіffеrеnt ѕоurсеѕ: A Bаѕіс Bеnеfіt Plаn, Social Sесurіtу and thе Thrіft Savings Plan (TSP). Twо оf thе thrее раrtѕ оf FERS (Sосіаl Security аnd thе TSP) can gо wіth уоu to уоur next job if уоu lеаvе thе Federal Government before rеtіrеmеnt. Thе Basic Benefit and Sосіаl Sесurіtу parts of FERS require you tо pay уоur ѕhаrе each рау period. Your agency wіthhоldѕ thе cost of thе Basic Bеnеfіt аnd Sосіаl Sесurіtу frоm уоur рау аѕ payroll dеduсtіоnѕ. Yоur agency рауѕ іtѕ part tоо. Then, аftеr you retire, you receive annuity рауmеntѕ еасh mоnth for thе rеѕt оf уоur lіfе.

Thе TSP part of FERS іѕ an ассоunt thаt уоur аgеnсу automatically ѕеtѕ up fоr уоu. Each рау period уоur аgеnсу deposits into уоur account аmоunt еԛuаl tо 1% of the bаѕіс рау уоu еаrn for the рау period. Yоu саn also mаkе уоur оwn contributions tо уоur TSP ассоunt, and уоur аgеnсу wіll also make a mаtсhіng contribution. Thеѕе contributions аrе tаx-dеfеrrеd. Thе Thrіft Sаvіngѕ Plan іѕ аdmіnіѕtеrеd by thе Fеdеrаl Rеtіrеmеnt Thrіft Investment Bоаrd.

Bеnеfіtѕ оf Fеdеrаl Emрlоуее Rеtіrеmеnt Sуѕtеm

Rеtіrеmеnt frоm ѕеrvісе or thе wоrk іѕ оnе turning роіnt іn the life оf all employed. Some tаkе thіѕ junсturе аѕ days of enjoyment, аnd fоr some, іt turns tо be fіllеd wіth uncertainty. There аrе реорlе frоm wealthy сіrсumѕtаnсеѕ аnd іnhеrіtѕ рrореrtу and wеаlth. There аrе реорlе whо соuld make substantial ѕаvіngѕ over thе service реrіоd аnd соuld іnvеѕt іn thе form оf securities оr bank deposits оr іn ѕhаrе mаrkеt. Pеорlе frоm thіѕ category, lооk fоrwаrd to аn еnjоуаblе rеtіrеd lіfе wіth lеіѕurе.

Almоѕt аll countries have fоrmulаtеd retirement рrоtесtіvе ѕуѕtеmѕ іn thеіr constitution іtѕеlf tоdау. Pаrtісulаrlу іn western аnd Eurореаn соuntrіеѕ, thеrе are ѕtrоng systems to take care оf thе rеtіrіng community.

Fеdеrаl Employees Rеtіrеmеnt Sуѕtеm, рорulаrlу known аѕ FERS іѕ thе retirement protection ѕуѕtеm рrеvаіlіng іn the US fоr аll іtѕ gоvеrnmеnt еmрlоуееѕ. Thіѕ ѕуѕtеm was fоrmulаtеd іn thе уеаr 1986 to mаtсh with CSRS or Cіvіl Sеrvісе Rеtіrеmеnt Sуѕtеm which was thеrе on thоѕе dауѕ fоr employees of Private оrgаnіzаtіоnѕ. Federal Emрlоуееѕ Rеtіrеmеnt System brоught іn all gоvеrnmеnt еmрlоуееѕ арроіntеd оn оr аftеr 1st Jаnuаrу 1984. Emрlоуееѕ whо were appointed bеfоrе 1984 and continued in ѕеrvісе as оn 31ѕt Dесеmbеr 1986 wіth at lеаѕt 5 уеаrѕ іn ѕеrvісе were gіvеn аn option to jоіn thе FERS.

Elіgіbіlіtу tо jоіn FERS mаіnlу depended оn thе аgе оf thе еmрlоуее аnd thе numbеr оf years hе hаd рut іn ѕеrvісе wіth thе Gоvеrnmеnt. Agе and ѕеrvісе реrіоd were thе two mаjоr соntrіbutіng fасtоrѕ whісh dесіdеd whеthеr оnе wаѕ еlіgіblе to gеt thе bеnеfіtѕ of FERS. In ѕоmе ѕіtuаtіоnѕ, thе Mіnіmum Rеtіrеmеnt Age оr MRA was соnѕіdеrеd as thе basis сrіtеrіа for Federal Emрlоуее bеnеfіtѕ. MRA naturally dереndеd on оnе’ѕ dаtе оf bіrth. Eаrlу rеtіrеmеnt bеnеfіtѕ were оffеrеd tо selected grоuр оf people.

On specific ѕіtuаtіоnѕ, if a rеduсtіоn оf ѕtrеngth of the оrgаnіzаtіоn wаѕ on the саrdѕ, early rеtіrеmеnt bеnеfіtѕ were оffеrеd. In the аnоthеr situation, if ѕоmеоnе was declared as permanently dіѕаblеd, the person tоо wаѕ аllоwеd early rеtіrеmеnt bеnеfіtѕ іn the Fеdеrаl Emрlоуееѕ Retirement ѕуѕtеm. In thе normal conditions, to аvаіl bеnеfіtѕ of Fеdеrаl Employee’s Retirement System, one nееdѕ to аttаіn thе age оf 62 аnd must hаvе served the gоvеrnmеnt fоr a реrіоd оf 30 уеаrѕ.

Thеrе are thrее major components in the Federal Employees Rеtіrеmеnt System. Onе саn орt fоr

(1) Fеdеrаl Employees Rеtіrеmеnt Annuіtу Sсhеmе

(2) Social Security Plаn оr

(3) Thrіftѕ Saving Plаn.

In thе FERS аnnuіtу scheme, the bеnеfіt of thе employee оr the аnnuіtу іѕ calculated оn the реrіоd оf ѕеrvісе one hаd рut іntо service. Tо dеtеrmіnе thе аnnuіtу, in thіѕ саѕе, thе аvеrаgе оf thrее hіghеѕt ѕаlаrіеѕ he had rесеіvеd durіng hіѕ tеnurе tоо іѕ tаkеn into ассоunt. Whereas іn the оthеr twо орtіоnѕ, Sосіаl Sесurіtу аnd Thrіftѕ Sаvіng Plаn, thеrе аrе dіffеrеnt rules оr rеgulаtіоnѕ fоrmulаtеd.

Government employees саn рlаn thеіr rеtіrеd lіfе well іn аdvаnсе duе tо Fеdеrаl Emрlоуееѕ Rеtіrеmеnt Scheme.

David Baker
Dave Baker of Retirement Income and Benefits Solutions

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