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Early TSP Withdrawal: What you Need to Know

new update

In a perfect world, nobody would have to withdraw from their TSP before it was time. But life isn’t perfect, and too often, we find we have no choice but to resort to early TSP withdrawal. But is this the only way? After all, if you withdraw early, you could end up with just a little over half of your money. There are several reasons for this: the possible 10% penalty for early withdrawal, the income taxes paid on the total, and a likely 20% withheld by your future employer if you go on to a new job and do not transfer your TSP funds to an IRA within 60 days.

The best solution, of course, is to talk to a financial professional. Your TSP withdrawal will be complicated to understand, but there are ways to withdraw that will minimize the penalties associated with early TSP withdrawal. Some of those are:

  1. Avoiding the early withdrawal penalty

Typically, an early withdrawal will take away 10% of your total TSP fund, but unlike an IRA, the TSP offers a workaround. This workaround has a tiny window of opportunity, but if you retire from federal service before the year you turn 50 or 55, and follow a life-expectancy withdrawal method, for either five years or until you are 59.5 (whichever is longer) you will be exempt.

  1. Check if you are a special category employee

Special Category Employees, or SCE, are exempt from the early withdrawal if you retire after you turn 50. There are several SCEs that may be eligible for this, such as a law enforcement officer, firefighter, air traffic controller, nuclear materials courier, Supreme Court or Capitol Police Officer, Customs and Border Protection Officer and DSS Special Agent with the Department of State.

  1. Try borrowing from your TSP rather than withdrawing

It is not always necessary to completely commit to withdrawing from your TSP. If you have a low credit score, the interest rate on TSP loans is usually better than going to a bank or other lender. Remember that you must still be in pay status to earn a loan since the TSP payments you make are through payroll deductions.

When withdrawing for reasons of financial hardship, there are special requirements that may apply- you must have a demonstrable need, meeting one of these four conditions:

  • Recurring negative monthly cash flow
  • Medical expenses (including household improvements needed for medical care) that you have not yet paid and that are not covered by insurance
  • Personal casualty loss(es) that you have not yet paid and that are not covered by insurance
  • Legal expenses (such as attorneys’ fees and court costs) that you have not yet paid for separation or divorce from your spouse

Source:https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/inservicewithdrawals/financialHardship.html

All in all, early TSP withdrawal is generally not a good idea. However, every case is different. Find a financial professional you trust and talk to them about your plans.

Retirement Income Tax: Five Tips to Reduce How Much You Pay

Retirement Income Tax: Quick Tips

As Tax Day is rushing up, it can be challenging to understand how to deal with retirement income tax. If you aren’t working, it may seem that you would be in the clear. However, between paying taxes on your TSP, cashing out your other investments, and any possible small jobs you may take on during your retirement years, it can pay to make sure that your taxes are as minimal as possible, primarily because of your limited funds during your retirement years.

Build yourself a good nest egg to pay for retirement income tax

Contribute Fully to the TSP

The most important part, of course, is participating in your company-sponsored retirement plan. For federal employees, this will be your TSP. Make sure that you are saving the maximum 5% up to retirement, as the government offers a match that means you effectively double your TSP just by saving money you will spend anyway.

Consider Some Types of Life Insurance

Whole life insurance policies can be a useful means of possibly gaining tax-free income during retirement. Often, there is the possibility, as with indexed life insurance policies, that the policy accumulates a cash benefit connected to the market that means that you could go throughout retirement without having to pay any life insurance premiums or withdraw the money and spend it freely. You can simply avoid retirement income tax as much as possible by saving it instead.

Look Into Tax Deductions for Business

Sometimes, if you supplement your retirement income with part-time self-employment, there are some business expenses and deductions you could include on your tax return. Consult with a financial professional before you make any significant decisions about your career or business, as there is a possibility that the profit you make might not be worth the investment. It is your retirement, after all- if the work you already do doesn’t appeal, consider trying a more low-investment job that could be an enjoyable source of income.

Examine Your Personal Debt

If you have auto or other personal debt, consider consolidation into a lower rate of interest. Unfortunately, rolling it into a home equity loan to deduct the interest is no longer practical since the Tax Cut and Jobs Act passed into effect. Once again, the best solution for this is to discuss your options with a financial professional to be sure that you are getting the best financial solution possible.

Pack your Bags and Move Away

Ever wonder why so many retirees move to Florida? The reason is simple; there’s no state income tax, which can eliminate a massive financial load. In some states, the income tax rates can be as high as 9.90%.

All in all, there is no one right way to retire, but at least with these strategies, retirement income tax may be a little more navigable. To learn more about your options for retirement, go to tsp-withdrawal.com and talk to a financial expert.

 

6 Strategies to Maximize Retirement Savings

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Notebook Finance and Retirement Savings
Do you have enough saved for retirement?

The best way to save for retirement is also fairly obvious; save while you’re young. Most young people justify their small investments by claiming that they have many years left until retirement. This route can be risky, however, since you can end up playing catch-up as you get closer to retirement. Don’t learn this the hard way, however- start as early as possible.

Apart from adding contributions from your paycheck, there are several other ways to add your retirement savings.

Permanent Life Insurance

Permanent life insurance can have a wide range of benefits beyond the death benefit; tax-free proceeds and a possibility of cash accumulation over your lifetime. Some instances of permanent life insurance include whole life insurance and indexed universal life insurance.

Take advantage of catch-up contributions

If you are 50 or older and you missed out on saving a lot early on, you can go beyond the normal limits on your IRAs and 401(k)s with the special catch-up contribution allowances. Check your specific policy or talk to your HR department about your options.

Automated Savings Contributions

It helps to automate your savings as it ensures that your retirement savings are not directed to other uses. Retirement plans such as the 401(k) plan require consistent contributions, and the best way to accumulate more assets is by having your savings on autopilot. You can decide to save up to 20% of your salary, which is an easy ‘set it and forget it’ that will be a great advantage when you retire.

Small Hedge Funds

Since 2008, most investors have stayed away from hedge funds in favor of index funds. However, this is an asset class that can still earn you some decent returns considering its consistent track record. Hedge funds are also less volatile, making them suitable for the current market conditions that can sometimes be very unpredictable.

Health Savings Account

Most people have health accounts but do not maximize them. In fact, some people do not make any contribution to their health account at all. The plan provides you with tax-free money for deductibles, copays, and Medicare premiums for those aging into Medicare. Importantly, you do not need to worry about your retirement healthcare expenses when you have a health savings account.

Purchase an Online Business

Stay abreast of the wave of the future and invest in an online business. There are nearly limitless options to choose from, and with startups like Uber and Dollar Shave Club going from nothing to dominating their fields, the initial outlay is low for a potentially amazing return.

Saving for retirement can be a challenge, and you shouldn’t do it alone. Make sure that you have a financial professional help you through your finances and make sure your retirement is safe.

Pet Life Insurance: It’s Real and You Might Want It

Black Dog and Pet Life Insurance
You’ve covered your family, but is your pet covered?

In a dog-eat-dog world, sometimes we forget what will happen to our furred friends. Over 68% of US households, in fact, own pets, and a surprising amount of those households are making financial plans regarding their pets. After all, in the same way, you want your family or beneficiaries to have a good life when you pass away, it is important to make sure that your pet will also be safe from being potentially abandoned. That’s where pet life insurance comes in.

The most famous case of estate planning for pets is the case of Leona Helmsley’s dog Trouble, the ‘Richest pet on Earth.’ Helmsley, an infamous billionaire who cut two grandsons out of her will, bequeathed a sum of two million dollars to her Maltese when she passed away in 2007. The dog passed away four years later, in 2011.

Though you may not be in the position to leave 12 million dollars behind for your dog, or cat, or goldfish for that matter, it is still sometimes a good idea to plan for your pets’ well-being. Before you purchase pet life insurance, though, you must check a few things:

  • If you have nobody to care for them. If someone is there to care for your pets, then there is no need to make special allowances for them.
  •  Make sure that you describe the pet to such a degree that it is not possible to commit fraud by replacing them with a similar animal.
  • Determine your Caretaker: make sure to determine both a trustee and a caretaker; the trustee will make sure that the money is properly used by the caretaker for your pet.
  • Provide for remaining funds: when your pet passes away, the fund may still have some remaining money. Be careful, though- stray away from making an individual the beneficiary, in case they choose to ‘accelerate’ the payout. Instead, choose a charity or cause where you will donate your money.

A recent survey indicated that 44 percent of pet owners have a financial plan to make sure their pets are covered. Some have verbal plans; others have written plans. Pet care, as a rule, is costly and complex, so make sure that you have covered every base. Find out how much it costs you on a monthly basis to feed and provide necessities to your pet, and use that as a basis to understand how much you must leave behind.

Be sure to talk to your financial advisor before you make any financial decisions regarding your pets and pet life insurance. In addition, when you draft your formal trust or will, consult your legal professional to make sure that you have covered all the necessary bases.

Do your Finances Need a Checkup?

Financial Health and You

When is the last time you went to the doctor for a checkup? You probably went at least once last year, and maybe you’ve gone sometime this year, as well. It’s important to have regular checkups; whether it’s your body, your car, or your family. Unfortunately, there is another vital check-up that most federal employees can’t remember doing: a financial checkup. Your financial health is one of the most vital parts of your life, and you should take every chance to check these nine things.

Image of a car's engine as a metaphor for financial health

1)  Are you taking full advantage of your TSP?

Federal employees can take advantage of retirement savings plans like the Thrift Savings Plan, which offers several excellent benefits, such as a match in contributions up to a certain percentage and the ability to invest in a wide variety of funds with more or less conservative growth and risk.

2)  Are you investing in the TSP appropriately?

Before you invest entirely in the TSP, make sure you fully understand the best way to invest to get the most out of your agency’s contribution matches. Be sure to talk to a TSP expert before you make any vital decision.

3)  Are you Missing Out on Better Federal Employees Health Benefit Opportunities?

Whenever you make a significant life change, you should check to see if there is anything that could change about your FEHB. Whether it’s retirement, a new child, or marriage, there is a chance that you could be getting a better rate. Be sure to take advantage of this year’sFEHB open season to learn how you could save your money.

4)  Are you ignoring the alternatives?

FEGLI is not the only life insurance provider on the market. Make sure that you are looking for better life insurance deals before you commit to FEGLI since your financial health could be at stake.

5)  Are you overestimating your H3?

Your H3, your three highest-income years before retirement, may be subject to change in the coming years if you are looking to get a raise in the years to come. Be sure that you have a reasonable understanding of how your finances will change in the future.

6)  Are you likely to miss out on creditable service time?

In calculating your retirement annuity, service time is one of the most critical aspects of how much you will earn on your investments. Be sure all your working time can accumulate service credit.

7)  Are you overestimating your Social Security benefits?

Social Security can be an intricate process to understand without the help of a professional. It’s based on a complicated formula that is subject to adjustment based on wage growth, so it is too easy to overestimate how much you will be receiving.

8)  Do you want the Survivor Benefit?

If you are married, you should make a decision now regarding how you want to handle your survivor’s benefit. Do you want a full benefit, partial benefit, or to reject the survivor annuity wholesale and put the money into alternative investments?

9)  Are your beneficiary designations up to date?

Make sure you know who your money is going to- it saves time and avoids complications when it comes to redeeming claims.

Use these 9 tips next time you talk to your financial advisor and make sure your financial health is acceptable for your future.

TSP Expands Maximum Contribution

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Did you save the maximum of $18,000 in your TSP last year? If you did, you might be interested to hear that the maximum for 2018 added $500 more to the ceiling, an excellent option for those who want to lower their taxable income. This option will create a tax-sheltered account that will grow and compound over the years until you withdraw it, at which point it will be taxed as income. However, this is not the only option- there is now the alternative of making after-tax Roth contributions. This offers no tax delay for the present, but down the road when you withdraw the money, you will not have to pay taxes on it. Note that to have this take effect, you must have contributed for at least five years as be at least fifty-nine and a half.

Some Basics of the TSP

The Thrift Savings Plan has several options, all of which have varying degrees of security and flexibility. The C fund holds large-company stocks, the S fund holds small company stocks, the F funds is made up of bonds, and the G fund invests in securities. L funds are a similar concept to target-date funds in normal 401(k) accounts; they invest in the other five, but as you get closer to your end goal they cool off to a low-risk, conservative portfolio. If your retirement is far off and you can stand some fluctuation, the C fund tracks the S&P 500. The risk of losing some of your investment is much higher than the other TSP options, but the potential returns are the highest possible.

Importantly, save at least five percent of your annual income. The government will contribute a total of 4% for your five, and if it is under the maximum, you can still participate in the added interest accumulation. If you are over 50, you may be able to contribute even more to your TSP, bringing the possible total to $24,500. That’s over twenty-four thousand dollars per year that you could be gaining interest on- not a bad quantity for a safe and sane retirement.

Four Ways to Fix your Money Mistakes

Financial mistakes can be tough to accept. It’s difficult to move past when all you can think about is your error: ‘Why did I do that?’ ‘What could I have done instead?’ However, this doesn’t help you in the long run, and in fact, if you keep dwelling on it, the likelihood of repeating your mistake becomes much higher. With these four steps, you can instead take action on your mistakes and fix your financial future.

  1. Figure Out What Led To the Mistake

The first step to fixing any problem is to acknowledge it- in this case, figure out how you made a mistake, whether it was a poor investment, you took out the wrong loan or some other error. Understand what you did wrong, and move on to the next step:

 

  1. Take Responsibility

Don’t let your frustration turn into guilt- it is easy when you make any error, to throw up your hands and retreat from the situation, but this will not allow you to grow in the future. Instead, find a way to make sure that the problem doesn’t happen again with your new understanding of why you made a mistake. For instance, let us say you are a small business owner who loses a few thousand dollars on a training program that turns out to be a scam with no refunds. You wouldn’t give up- instead, in the future, you would investigate more closely into training programs to make sure your mistake doesn’t happen again.

 

  1. Forgive Yourself

It’s not easy admitting that you have made an error, and sometimes it’s harder still to move past it. However, this is, in its way, your responsibility to yourself- one mistake can’t define you and your financial future, and to reach the goals you want, you must move past your pitfalls.

  1. Seek Help

‘A problem shared is a problem halved.’ Find a friend or family member you can trust, in whom you can confide. While trusting the opinion of a friend alone for your financial woes is never a good idea, they can provide important emotional support and a way to help you get back to where you were. For financial advice, talk to a financial professional who can give you an honest, experienced answer. If your mistake is deep-rooted, get a financial counselor to help you recover.

Lastly, after you are done with all the steps we listed above, you have to move on. Acknowledge that you made a mistake, find out what led you to make an error and most importantly, forgive yourself. From there then you can set your goals and come up with a plan to achieve those goals. Be committed and note all the progress you make regardless of how small it is. Celebrate all the little victories and believe it or not, you will not even remember that past mistake. Use it as a stepping stone to your future financial success.

Women and Saving for Retirement | Frank Endris

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Article by Frank Endris

When it comes to the workplace, women will typically spend much less time over the course of their life working as compared to men, and as such, their retirement savings tend to also be lower than men. The downside, however, is in statistics: women live longer than men. This trend is unfortunate for women- most of them will struggle financially after their retirement. However, women can still improve their retirement savings by seeking the right advice and being strategic about their earnings. Here are some useful ideas for women who are concerned about their financial future:

 

  1. Be Realistic about Social Security Benefits

 

A recent survey indicated that most women only depend on Social Security as a source of retirement income. This dependency is a dangerous trend- a lot of women are not aware of the details of Social Security coverage, and as such tend to struggle financially when they cannot support themselves. Also, over 74% of women are exposed to lower lifetime income when they collect benefits earlier than expected.

 

  1. Do not underestimate your Retirement Needs

 

The other misconception that women have about retirement is that they will remain healthy. However, your lifestyle can be affected negatively by the high cost of healthcare during retirement. You may not have your desired lifestyle as a result of the healthcare expenses that are associated with old age, and that is why there is a need for women to save for their future healthcare needs. This means that there is a need for women to increase their retirement savings, because after all, the older you get, the harder it is to remain healthy.

 

  1. Being Strategic about your earning Power

 

Women need to improve their skills on a regular basis to boost their earning power. Most women plan to work beyond 65 years and also take a lot of breaks in their careers, and that is why their skills must remain fresh. Women can work on a contract basis when they have the right skills hence the need to expand their professional abilities by taking extra classes. Keeping your marketable skills honed, and even learning new skills that will specifically be useful as a contract employee, such as basic web design or copy editing, can ensure that your earning power stays updated and reliable.

 

  1. Consider working with a Retirement Advisor

 

Working with a financial advisor who can see the big picture can help women make the right decisions when it comes to retirement savings. Women have a lot of things going on in their lives and working with a professional can give them a sense of direction. Frank Endris can help you find your financial way and effectively plan for a safe and secure retirement.

Federal Employee Bonuses: Is Transparency Important?

The current state of affairs in Federal employment may be changing soon. President Trump has proposed that changing the system of salaries to a capped total and awarding bonuses based on merit. Many see this as a reasonable proposal, but there is one flaw: While the public can see the salaries most Federal employees are paid, they cannot see bonuses. This is a problem that is compounded by previous precedents set by Federal employers.

 

In 2016, the government gave 1 million bonuses for performance. This amounts to $1.1 billion, all of which is paid by taxpayers. The challenge that arises is that all this money was kept out of the public eye, due to a lack of governmental transparency that makes it very difficult to glean any information.

Just a couple of months ago, a Treasury Department supervisor revealed $ 1.7 million in bonuses that were given to 2,000 IRS employees. These same employees had delinquencies, access to tax return details which was not authorized and even were accused of sexual misconduct.

 

The federal government currently gives five different types of bonuses. They include;

 

  1. Performance bonus

 

  1. Incentive bonus

 

  1. Recruitment bonus

 

  1. Relocation bonus

 

  1. Retention bonus

 

Every bonus is supposed to be subject to the Freedom of Information Act disclosure laws, but in the budgetary year 2016, the Office of Personnel Management revealed only 330,000 bonuses which amount to $351 million.

 

After auditing, the big, small departments and the independent agencies interfere with the system for their benefits.  Most of the government unions which are not transparent claim that the performance awards are a percentage of every employee’s annual salary and it varies depending on the performance rating. They claim if there were a reveal of the percentage used, the taxpayers would know the employee’s ratings.

 

However, is that a problem with the taxpayer? It should be the management’s problem. Knowing the employee ratings cannot be compared to a taxpayer’s right to know how the money they pay is being used. After all, we already know that the federal bureaucrats offer themselves performance ratings which then increase the bonus and pay levels. An audit done in 2013 showed that 99% of federal workers get successful job performance ratings, which is of course, a near impossibility.

 

In cessation, a majority of federal workers recognize their performance correctly. This is why most of them are persuaded to fund these performance bonuses which are over a million. This equals to $1.2 billion. However, the taxpayers cannot put into measurement whatever it is they cannot see. These bonuses could be deserved, could be not. Nevertheless, it is the taxpayer’s money being used, so they should be explained to everything. This will help them to decide on how to hold the officials they elected accountable.

Investment: A Beginner’s Guide | Frank Endris

investing doesn't have to be hard.Article by Frank Endris

If you’re under the age of 30 or have children under the age of 30, chances are investing is still a strange, confusing idea. Especially confusing is what would seem to be the most basic step- how does one even start investing? However, maybe now is the perfect time to start- the younger, in fact, the better.  The best time to start investing is when you are still young since most young people have minimal expenses and almost no debt.

 

Young people enjoy work-subsidies to commute, parents’ health insurance, and cheap rent, usually leaving them with a good amount of money for investment.  The internet has many suggestions on some of the investment opportunities that young people can pursue, but one must be very careful when selecting an investment opportunity. For instance, you can go for certain stocks that seem good, but without proper market analysis you could end up losing all of your money.

 

The Good News

 

You no longer need to worry about investment! Most available retirement plans, such as a 401(k) or, for federal and postal employees, the TSP, are perfect investment opportunities for young people. It is important to point out that you only need to contribute 5% of your salary to a retirement plan and enjoy all the benefits that come with this critical invest portfolio. The best time to save for your retirement years is the early years of your adult life. You may not see the benefits of investing in a retirement plan shortly but the long-term benefits associated with this type of investment are not worth missing.

 

You can achieve your long-term financial goals if you are not a patient person.  There are a lot of compound interest benefits during the early years of retirement saving that young people should take advantage of to have financial security in the future.  This is a straightforward plan with fewer complications.

 

It is a good idea for young people to start investing in their retirement as early as possible before they can get entangled with other types of investment. Having a strong financial foundation includes; putting aside at least 10% of your salary towards long-term investment like a retirement fund, building good credit, and creating an emergency fund.

 

Investing in stocks and bonds may have some short-term benefits as you may end up spending the money shortly. Also, there is a possibility of negative returns when you have invested in stocks and bonds and forced to sell some of your shares at a loss. Therefore, the only way to avoid debts and live a comfortable life during retirement is by saving for your retirement.

White House Intends to Revive CSRs with Conservative Policies

A new proposal by White House will see a significant reduction in premium payments after several changes have been made to the current healthcare policies. However, critics of the new proposal argue that after implementation, the proposal will lead to an increase in costs.  The Congress was asked in a memo to; allow the expansion of access to health savings accounts, increase premiums for older Americans, and at the same time adopt the use of short-term plans for long-term purposes.

 

The Trump Administration argued there is a need for the middle-class to be provided with some relief because the administration understands the recent efforts by Congress to pop exchanges.  Federal CSR payments were terminated last fall by the Trump administration, and that is why the new proposal came as a surprise to many stakeholders.  The decision to end CSR payments was informed by the lawsuit that had been filed against the Obama Administration by House Republicans claiming that the Congress did not approach the payments. As a result, the payments were considered to be unconstitutional.

 

After receiving the CSRs payments, insurance companies are expected to ensure there are lower out-of-pocket costs such as deductibles, coinsurance, and copayments. The policy affects individuals that constitute close to 250% of the poverty level at the federal level. Similar changes had been suggested by proposed rule where there was a need to expand access to short-term plans. The Affordable Care Act rules do not affect the coverage option.  In this case, lifetime limits and annual limits form part of the ten essential health benefits.

 

Currently, older customers pay three times more than younger people regarding insurance premiums but the new proposal suggests that they should pay five times more than the young policyholders.  The main objective of this proposal is to ensure that the individual marketplace attracts more young people.

 

Apart from that, the White House insists that there is a need to life-protect all federal dollars through proper design of the legislative package that will be passed by Congress. The proposal was slammed by Andy Slavitt, who is a former acting CMS Administrator.

 

On his Twitter account, Slavitt claimed that the new proposal would raise costs for raise cost for low-income earners such as women, people with illnesses, and seniors. Until 2018, the ACA marketplace had over 12 million people that had signed up for coverage.  As a result, there is an expected increase in premiums without CSRs.

In The Military? Here’s How your Taxes are Different

new update

If you’re a member of the military, taxes may be a slightly different endeavor for you than any other federal employee. There are several tax-related benefits to being in the military that may come as a surprise- did you know that if your expenses for purchasing a uniform are over 2% of your adjusted gross income, you can deduct those expenses when you file your taxes?

If you were in combat or a hazardous duty area while you served, there is no need to report the earnings you gained during that time. Of course, social security and Medicare will still be taken off of that income, and depending on your state, you may have to pay local taxes.

If you are not in the country to file your taxes come April 15th, you don’t have to worry. An automatic two-month extension will be applied to your filing deadline so there is no need to panic if you can’t make it back in time. If you are stationed in a combat zone, there is even more leeway- the IRS will grant 180 days’ extension either from the time you get back from combat, or when you are released from the hospital for injuries sustained in the combat zone. Also, if you are married and filing jointly, these extensions will also apply to your spouse, leaving breathing room for both of you, even if your spouse is not in the military.

You also have the opportunity to get free tax help- most military bases will offer professional support with your taxes, which, in light of the over $200 most Americans will pay to file their taxes this year, is a massive help. Finally, a TSP plan can be an excellent way to set aside pre-tax income to grow tax-deferred, up to $18,000 a year for adults under 50 years old. Remember too, when you are planning on retiring with a TSP annuity, you may be missing out on opportunities to generate more retirement income with other alternatives. TSP-withdrawal.com can put you in touch with professionals who can help you as you approach retirement, guiding you through the often very complicated process of withdrawing from your TSP to maximize your retirement income to the standard you are hoping to achieve.

Remember, no decision should be made without consulting a financial professional. The opportunity to save money could be readily achievable with the right help and guidance.

Are Your Savings Right for Retirement?

Mand and woman discuss retirement with their financial consultant

What are you doing to save for retirement? It’s probably not enough.

There are a variety of reasons you probably aren’t saving enough, but are they good enough to excuse causing yourself more hassle and pain down the road? According to a 2018 retirement savings survey, about 42% of Americans will retire without sufficient savings- not even $10,000. Women also lag behind men in retirement by as much as 5%, but it is still an improvement over past years- in 2016 63 percent of women had less than $10,000 saved, with a large section having saved nothing at all.

So what are the reasons for all of this poor financial planning? There are a few excuses, but the primary one is that you don’t make enough money to be able to afford to set some aside. However, one consideration is that when your money is saved in a tax-deferred account, like the cash value of an indexed life insurance policy or IRA, you are not paying income tax on that segment of your income, which can have the exciting result of reducing your paycheck by less than what you contribute to the fund. It may sound odd, but when you think about it, it makes sense- after all, if your income were, say, 10,000 dollars a year, and you contributed 1,00 of those dollars to the fund a month, assuming a 25% tax rate, your final paycheck would only be reduced by $75, but your account would grow by $100. Attach this to a good market with reasonable growth, and you would be in a vastly more comfortable position with, all things considered, a negligible charge per month.

However, if you are drowning in debt, whether it is a mortgage, credit card bill, or another loan, it should always be an essential priority to pay off these loans. But at the same time, there is no more significant loan than the one you’re paying to your future self- after all, if your debts are all paid but you have nothing to live on, your retirement will be a disappointment, and you will have nothing to fall back on in the case of a medical, family or another financial emergency.

Of course, everyone’s case is different, and not everyone can make these sometimes difficult decisions without the help of an expert. Talk to a retirement professional today and make sure that you know what you need to do to ensure you are financially ready for retirement.

Study Finds Telecommuting Makes Job Satisfaction Take Off

Work-life balance is very important to Federal employeesDo you telecommute or telework? It may make your job satisfaction skyrocket.

In a new federal employee study by the Office of Personnel Management, participation in teleworking or other agency-run wellness programs perform heavily more favorably on performance reviews than those who do not. More than 72% of employees talking about the program said that the program not only made their performance better, it also vastly improved their morale and intent to stay with their current agency, no small feat in an atmosphere with cripplingly low federal employee confidence and security in their jobs in light of recent government shutdowns.

Nevertheless, there is still hope. The study indicated that the reaction to the increased work-life balance offered by telecommuting was overwhelmingly positive, with nearly 80% of all employees saying that they were happier with their more flexible schedule. The reaction to other wellness programs was more lukewarm- only 38% said that they were happy with health and wellness programs.

Less than half of all federal employees think that their managers approve of the use of work-life programs, and in many cases, they aren’t wrong. For instance, the Department of Agriculture changed its telework policy, requiring its employees to be physically present four days a week. Considering the results of the study, it would seem that the Department of Agriculture would want to instead increase options for federal employees to work from a distance. However, for the most part it seems that federal employees would be highly interested in, and remain invested in, a program that would allow increased flexibility in their working hours.

Ultimately, the idea of a work-life balance is a distinctly Millennial concept, and with a changing work culture and a significant Millennial disinterest in public sector work, there is a sort of ‘change or die’ impetus to make these changes. Over decades, the public sector has been stagnant, using outdated technology and work methods, and younger generations are taking note. It isn’t just a question of Millennials, either, as even to the relatively technically up-to-date Generation X represents the largest percentage of federal workers today. Without updating the essential processes that this country runs on, there is no chance that it will be sustainable.

Federal employees are quickly moving towards the generational change that implies a movement towards more modern demographics, and a massive leap forward in making that happen would be to implement these key work-life programs. It remains to be seen where this can go, but for now it will be something to keep an eye on in the future.

Divorce for Federal Employees: What to Do

Federal benefits can be affected in a significant way by major events in life such as the birth of a child or marriage. In fact, instances of divorce can lead to a lot of complications when it comes to claiming federal benefits. The following are some useful tips for divorced or separated federal employees.

 

FEHB Benefits for Separated Federal Employees

 

Your spouse will still be eligible for coverage if you are in the process of annulling your marriage or when you are not legally separated. It is important to remember that this only happens when your FEHB enrollment includes the self and family option or the self-plus-one option.

 

Former Spouse Benefits after Divorce

 

The FEHB coverage for a former spouse ends when the divorce process has been finalized. In fact, it ends the same day at midnight.  In this case, even a court order cannot stop this law from being implemented. However, the spouse equity act allows your former spouse to continue funding the coverage in his or her private capacity after your divorce has been finalized. A former spouse can convert to an individual policy or choose temporary continuation.

 

Your FEHB Benefits

 

After your marriage has been annulled, the FEHB plan has the self and family option that allows you to replace your spouse with other eligible family members. However, you can change your FEHB plan to the self-plus-one option in instances where there is only one family member that is eligible for coverage.

 

Also, one can change to the self-only option when there is no other eligible person for coverage under your plan. You must complete the Standard Form 2809 to make any changes when it comes to coverage.

 

 FEGLI Designation of Beneficiary

 

Federal employees designate a beneficiary when they sign up for the Federal Employees’ Group Life Insurance. The designated person receives the FEGLI proceeds when you die, and most married people designate their spouses.

 

However, a married person that ends up getting a divorce can change the beneficiary. The fact that you are no longer married means that you have to make the necessary changes by completing a Standard Form 2823 that is available at www.opm.gov/forms.

 

Survivor Annuity

 

At the end of a divorce process, one is no longer required to provide a survivor annuity. However, they must report divorce or annulment to their respective federal agency for this to happen. Retired federal workers must inform OPM when they get a divorce.

 

 

Life Insurance: Kid-Tested, Mother-Approved?

Life insurance companies have a new, unconventional sales strategy: selling life insurance policies on children.

The fact that most life insurance companies are asking parents to purchase life insurance for their children can seem to be incongruous, almost like buying your three-year-old a car with the idea that it will be cheaper when they are older. The idea seems absurd, but life insurance companies have recently strongly favored these sales strategies.

 

The most interesting thing is that insurance companies do not directly say that they are urging parents to purchase life insurance for children. Instead, the companies have coined some enticing phrases, such as “college plans,” “grow up plans,” or “get started plans.” Such pitching terms end up confusing parents and grandparents to fall into their trap, playing on their emotions to get an easy sell.

 

Realistically, children do not need life insurance and these companies are only interested in making easy profits. They just want to take advantage of the fact that parents and grandparents love their children and can fall for any plan that appears to benefit their kids. There is no problem with selling life insurance to adults as it is a wonderful retirement plan but extending the same to children amount to conmanship.

 

Life Insurance should retain its Original Purpose.

 

Life insurance companies should stick to the plan’s original purpose, as it is an excellent long-term financial plan. Purchasing a life insurance plan ensures that your family or dependents are fully protected from economic loss when you die. It is true that a person’s young family benefits from life insurance as it gives them the much-needed financial security.

 

On the other hand, a family is less likely to suffer any considerable economic loss after an unfortunate death of a child. The death of a child leads to an emotional loss, but the issue of financial loss, which is the main incentive behind the purchase of life insurance, is tough to justify.

 

Life insurance companies understand that they cannot sell life insurance for children by focusing on economic benefits, which is why the pitch is a more indirect approach to take advantage of the parent of children. The fact remains that these  “grow up plans” are nothing but life insurance for people who do not need, or even really want, coverage.

 

According to life insurance companies, there is a possibility that some children may not qualify for life insurance when they become adults, and it is a good idea to take advantage of the cheap rates. However, the fact is that until middle age, life insurance will remain relatively cheap in the vast majority of cases.

Retirement Savings Mistakes that can Cost you Greatly

Saving for retirement is an uphill task for most people, but knowingly or unknowingly, you can make this already challenging task a costly mistake. This article will highlight some of the common errors that can cost you your retirement savings, and show you the best way to stretch a dollar to its limits.

 

It is advisable to pay special attention to retirement savings plan to guarantee yourself some financial security during retirement. Having worked hard for many years, your golden or retirement years should be as enjoyable as possible, but if not handled with caution and good planning, this period can turn to out to be a nightmare. It is possible to control most retirement planning mistakes if you are just willing to listen to some advice.

 

To begin with, it is always advisable to use a retirement calculator when planning for your retirement. If you have not been using a calculator, it is time for you to reconsider your strategy. A retirement calculator helps you set your retirement on the right path by assisting you to estimate or predict benefits or possible earnings.

 

To use a retirement calculator, you only need to input your expected time of retirement and what you make to predict your financial position during retirement. Take a step in the right direction by establishing a foundation of good sense and understanding of your potential financial position. It is always important to know your position as time goes by to avoid surprises when you eventually stop work.

 

Secondly, look out for your employer’s 401k match and take full advantage. In fact, when looking for free money, you can find it through your employer’s 401k match- they will sometimes match up to 5 or 6% of your contributions.

 

Thirdly, most people lose a lot of money in what referred to as “record keeping” fees, and it is time you also gave the issue serious consideration. Some retirement plans refer to the fees as “account maintenance” fees, and you will just continue losing your savings if you do not make the necessary changes.

 

According to industry experts, a 1.5% account maintenance fee is reasonable, but some companies charge up to 4% of your savings. This is complete exploitation as it is a significant amount of money. You should look out for a retirement plan that has acceptable “record-keeping” fees to reclaim your savings.

 

Finally, it is essential to monitor your account on a regular basis to reset your goals or know your current position. Taking years before checking your account is a huge mistake.

Finding The Right Financial Advisor for You

Finding a financial advisor that’s right for you is just like finding any other professional, like a tailor or a barber. Of course, if you pick the wrong barber, you wear a hat for a few weeks. Pick the wrong financial advisor, and the situation becomes dire.

Most people find it hard to openly talk about their financial needs, which is why it is crucial to identify a financial advisor you can fully trust. For your interactions with your financial advisor to be productive, you must feel absolutely comfortable. The right financial advisor should be able to match your specific financial needs regarding experience and knowledge. The following are some useful tips on how to find the right financial advisor;

 

Get Recommendations

 

You can get useful recommendations from co-workers, friends, or family when looking for a financial advisor. You can find out about the professional they trust with their financial needs and ask them why they believe the professional. Other useful sources of recommendation include;

  • Brokerage firms
  • Online customer reviews
  • Internet listings
  • Your bank
  • Your attorney or tax planner

 

Interview the Candidates

 

You can only find an investment professional that is right for you by talking to several candidates. You should ask relevant questions and also be ready to respond to their questions. A prospective financial advisor may ask you about your;

  • Level of investment risk
  • Long-term healthcare plans
  • Retirement plans
  • Insurance needs
  • Financial goals
  • Current investments

 

 

You should remember to ask for references from their colleagues such as insurance agents, attorney or accountants. Also, you should request for a contract showing the amount you are expected to pay as well as the services provided by the financial advisor.

 

Look out for their Credentials

 

It takes a lot of time and effort to get professional licenses despite the fact that it does not guarantee competence. However, you should always check look out for the basic professional designations and certifications when selecting a financial advisor. The most notable professional designations of a financial advisor include;

  • CIMA, Certified Investment Management Analyst
  • CFP, Certified Financial Planner
  • ChFC, Chartered Financial Consultant
  • CFA, Chartered Financial Analyst
  • CLU, Charted Life Underwriter
  • CPA, Certified Public Accountant

 

Ask about their Preferred form of Compensation

 

Forms of compensation vary from one professional to another, and that is why it is important to ask how they are compensated. The most notable forms of compensation include; payment on a commission basis, charging a fee for based on time spent with a client, or fee plus commission.  Also, it is advisable to build a relationship with your advisor for more positive engagements.

Kaine against Trump’s Attempts to make the Dismissal of Federal Employees Easier

Senator Tim Kaine has slammed Trump for his plan to empower federal agency heads through Congress to dismiss federal employees. According to Kane, president Trump was afraid of being forced to be accountable by federal employees that may just be doing their jobs.

 

While addressing federal workers during the annual legislative and grassroots mobilization conference organized by the American Federation of Government Employee’s (AFGE), Kane argued that Trump is a power hungry president that should not be given powers to fire federal employees at will.

 

On January 30, Trump called for the extension of firing powers to all federal agencies and praised the VA Accountability Act. The Act gives firing power to the head of the Department of Veterans Affairs to dismiss employees that are perceived to go against the set guidelines.

 

Trump claimed that federal employees that undermine public trust should be removed from federal service while good workers should be rewarded by the relevant Cabinet secretary. Currently, Cabinet Secretaries and federal agency heads do not have such powers, and Trump was calling on the Congress to empower them.

 

Kaine said that Trump’s remarks did not in any way surprise him and that the objective of Trump’s current campaign is to come up with a way of punishing political disloyalty in federal service. He claimed that the president has already sacked the deputy attorney general and an FBI Director for perceived political disloyalty.

 

According to Kaine, Trump has in the recent past threatened to stop a special investigation, and this is a clear sign of his intentions.  In fact, Kaine claims that he wants to force people to be loyal to him instead of being loyal to the constitution.

 

The Congress has already received a Republican proposal on the issue, but Kaine and a good number of other Senators are opposed to the new plan. In fact, the proposal can only pass the Senate with 60 votes, and Kaine is happy that this is an uphill task. Currently, Republicans have a slim majority of 51 members and any opposition from Democrats will make it difficult to pass the bill.

 

An attempt to extend the VA Accountability Act to other agencies is a continuation of Trump administration’s attack on Civil Service. Other attacks have been the two government shutdowns and the hiring freeze. J. David Cox, the current AFGE President, observes that there has been a rise in the leach class whose intention is to suck the life from federal service.

 

New Social Media Rules Forbid Federal Employees from Making Political Posts

Federal employees that want to keep their jobs have to stay away from making political posts while at work. According to the new guidelines under the Hatch Act, federal employees have to avoid making political statements on social media platforms while on the clock.

 

The Act has clear guidelines on what federal employees are not supposed to post on social media. There are certain types of political activities that have been prohibited under the Hatch Act, and this means that all federal government employees are always under close watch.

 

Who does the New Act apply to?

 

The new guidelines apply to employees in all federal agencies including heads of various federal agencies, members of federal agencies, ambassadors, National Park rangers, and NASA workers.  However, the new guidelines do not apply to the legislative branches of government, the president, and the vice president. Federal employees are expected to stay within the law in their political engagements on social media.

 

Shares, Likes, and Retweets are Illegal

 

It is important to point out that the law is not limited to posting. The law extends to liking, sharing, or retweeting your favorite political posts or pictures on Instagram, Facebook, and Twitter. Moreover, federal employees are forbidden from engaging in the mentioned social media activities in both private and professional lives.

 

However, the employees can donate to political causes and campaigns at a personal level but are not allowed to convince or implore other people to donate to political campaigns and causes. This applies when one is on the clock.

 

On the Clock vs.  Off

 

A federal employee’s public life should be separated from activities like supporting political parties and candidates. The Hatch Act Social Media Quick Guide stipulates all the instances when an employee is allowed to engage in political activities. According to the new guidelines, an employee that is away from work can post about their support for a particular party or candidate.

 

Also, they can even share with their friends or followers about their involvement in fundraising events for their favorite candidates or parties. However, the employees are prohibited from such activities while on the clock or at work. Law enforcement agencies and the intelligence department are completely forbidden from such activities while on or off the clock.

 

Warnings to Members of the Trump Administration

 

Members of Trump’s administrations like the United States ambassador to the United Nations and the White House Director of Social Media have in the recent past received warnings from the Office of Special Counsel for violating the new guidelines. Apart from warnings, other punishments that one can receive include; a civil penalty of less than $1000, letter of reprimand, suspension, debarment from federal service, or removal from federal service.