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June 21, 2018

Public Sector Retirement News

Federal Employee Retirement and Benefits News

Category: Featured

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Linda Jensen | How to Pay Less Taxes on Your Federal Retirement Income

LINDA JENSEN- Paying tax on the federal retirement income is a necessity, but there are many ways to ensure that you pay less tax than you have been probably paying till now. If you want to learn how to pay less tax on your federal retirement income, then you must keep reading on. Here we are explaining how you can pay fewer taxes on your social security and TSP income.

The Extension on Filing Federal Retirement Income Taxes

It is a fact that most people file their federal retirement income taxes in April. However many people still prefer filing extensions and have until 16th October to file this year. Another fact is that people who have been paying income taxes may get a nasty surprise when they see the bottom line on the federal income tax return as withholding can be considerably different for retirement income as compared to employment income.

If you have ended up paying more taxes then you need to read on to know how to save taxes the next year. If you are among those people who are yet to retire, you will be glad that you read this article as you will not be paying a large amount of taxes due in the first year of retirement.

The Difference

When you are working in a federal job, you simply file a W-4, and all the vital taxes are withheld from your paycheck. You just set it and forget it. Things change when you retire.

Annuity and Taxes

Most people fill out a W-4P with retirement papers, and the taxes are withheld from the monthly payments. This withholding is usually based on the last W-4 filed when a person was still and employee. It is highly likely that the W-4 covers all the taxes that are due from CSRS or FERS annuity.

Social Security and Taxes

When you consider the social security withholding, things start to get difficult. It is very likely that 85 percent of your social security will be subject to a federal income tax at your rate for the ordinary income. However, some retirees will find that a lesser portion is considered to be taxable. Hence, the higher your income is, the higher would be the percentage of your social security benefit that is eligible for a federal income tax.

It is a fact that social security will not withhold anything from the payments for taxes until you request for the same. The main thing here is to avoid a tax surprise by paying the income tax on the social security as you go. You should ask the social security to withhold taxes from your monthly payments when you apply. In case you are applying for social security income online, you should do it by using the remarks section of the form. Alternatively, you can file a form W-4V after applying for social security.

Another useful advice to save extra tax on your federal retirement income is that you should make quarterly tax payments. These payments are due on January 15, April 15, June 15 or September 15. If you are a bit forgetful or you tend to accidentally spend the money you have set aside for tax purposes, then you should ask the social security to withhold 25 percent of your payment for paying up the federal retirement income taxes.

TSP and Taxes

If you need to know about how your federal retirement income in TSP will be taxed, you should check a booklet that is available on the website of TSP and offers a detailed table that describes the withholding on each kind of withdrawal. As per the TSP statistics, the most common withdrawal is known as substantially equal monthly payments in which withdrawal is withheld as if you were filing jointly, married and claiming three exemptions. It is usually there if the payments are likely to continue for a time span of 10 years.

A CPA expert calculated that you need to be withdrawing more than USD 1,700 per month before TSP starts the withholding process. So, you should increase the amount of withholding by completing withholding portion of TSP withdrawal form.

In case you have begun the distributions already, and you want to have more money withheld then you should file a W-4P. You should also change the withholding on form TSP-73 during the open season as this form is available on TSP website during open season. Like social security, you can also make quarterly estimated tax payments in TSP.


It is a fact that most people do not like to pay taxes and they like it even less when the taxes are levied on federal retirement income but all of us need to pay them. Many people have no idea how taxes are withheld from retirement sources of revenue like social security and TSP. So the best idea could be to make changes now and avoid a penalty in the future. Talk to a financial expert such as Linda Jensen and learn more about your options.

Linda Jensen is the principal and owner of Asset Care & Preservation Services with offices in Olympia, WA.  Linda began her career with Prudential Preferred in 1994 where she was an agency leader.  She earned the credentials of a financial planner and has been in practice as an investment and insurance professional since that time.  Linda Jensen started her own company in 1997.

The Blended Retirement System

The Blended Retirement System

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

Benefits of TSP

Eligibility for the Blended Retirement System:

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


Difference between CSRS and FERS


Retirement benefits of Blended Retirement System:

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

How does TSP work?

Action elements:

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

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


Rick Spruill | Everything to know about Denied FEGLI Claims

Everything you Need to Know About Denied FEGLI Claims

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

Benefits of TSP

What to do immediately after your FEGLI claim is denied?

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

TSP and FERS are important parts of your retirement

What is the first step after a denied claim?


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

Applying for coverage

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

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


Legal steps you can take after denied claims

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

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

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

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

Place part of your income in TSP account regularly:

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

Contribute to your TSP account as much as possible:

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

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

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

You can opt for Roth Option:

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

What Happens to your Debt when you Die?


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

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

Communal Property States

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

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

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

Home Equity Loans

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

Private Student Loans

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

Ensuring Your Heirs Benefit from Your Estate

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

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

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

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



Top 9 Tips for Planning Your Retirement

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


Tip # 1: Avoid Complacency with Your Retirement


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


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


Tip # 2: Maintain Your Dignity


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


Tip # 3: Consider Your Spouse


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


Tip #4: Plan for Healthcare


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


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


Tip # 5: Identify Your Revenue Streams


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


Tip # 6: Plug Any Financial Loopholes


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


Tip # 7: Maintain Proper Documentation


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


Tip # 8: Relax and Enjoy Your Retirement!


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


Tip # 9: Give Generosity a Place


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





Americans at Risk of Bankruptcy during Retirement

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

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

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


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

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

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

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


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

Majority of Americans Ill-Prepared for Financial Disaster

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


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


How Much Does the AverageAmerican Have in a Checking Account?


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


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


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


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


Strengthening Your Financial Position


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


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


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

Dealing With Debt For A Happy Retirement

If you find yourself still struggling with loans and credit card payments now that you’re approaching retirement, you’re not alone.  With an average debt of nearly $40,000 in older households, America is still adapting to changes in life expectancy and the effect that this is having on working lives. This also means that retirement isn’t the end of life that it used to signify just a few decades ago. It’s not too late to make preparations for your retirement. Many people live long and happy lives after they stop work and it can still be a fruitful time for you if you manage your money well.

Take stock of your money

Start by assessing your finances and making the best of what you have. If you have been in real financial difficulty in the past, you might want to set aside a separate account that isn’t subject to Chexsystem. This will keep safe money that you will always be able to access for emergencies or basic living expenses, even if all your other assets are frozen. Once you have secured a safe account, make a plan for the future that avoids any further problems that could affect your credit score.

Minimize your debts

If you own a house, consider increasing mortgage payments before you retire. If that’s not possible, think about downsizing now before you stop working. At the very least, this could save you money each month and it could mean paying off your mortgage entirely, freeing up more cash for your retirement. Look at other assets too and cut back on any that you can’t afford to keep. Unless for business use, there is no tax relief on a car payment plan, so swapping to a more affordable option that you can purchase with cash makes sense.  If you must take out a loan, make sure it’s timed to end when you want to retire. Pay off credit cards with the highest interest rate first or consolidate to a card with a lower interest rate to make one easy payment every month.

Lower your expectations

You may have had great plans for your retirement and, no doubt, being in debt was not one of them. Try not to dwell on the past but learn from financial mistakes. Struggling to pay bills is the reason most Americans give for not saving more and this means that over 40% of Americans have less than $10,000 saved for when they retire. Be strict with your budget now, work as much as you can while you are able and secure what savings you do have for emergencies. Although there is insecurity about the future of social benefits, for now, they do provide a steady income. You can claim from the age of 62 but the longer you delay before taking any money the more money you will receive each month.

Taking steps to simplify and stabilize your finances, no matter what stage you are at in your life, can bring significant rewards. If you are lucky enough to live a prolonged and healthy retirement, as long as you are sensible with your money, you should still be able to relax and enjoy it without financial worry.

Don’t Just Rely On Social Security To Help You During Retirement

Anybody who wants to live comfortably during retirement – that doesn’t involve working part-time – should not rely on just Social Security income. This advice comes directly from the Social Security Administration.

According to the SSA, only a minute amount of pre-retirement earnings will be replaced, and most people need about 70 percent of their pre-retirement income to be able to live well in retirement. This income includes investments, savings and Social Security benefits. Therefore, a stable retirement plan must be supplemented income that isn’t just Social Security.

What Are Some Additional Sources of Income You Should Consider?

Federal employees are rather lucky because their benefits include an array of retirement income sources. Social Security is considered a part of the income sources but only a minute amount. What are some other income sources federal employees need to consider?

Federal Employees Retirement System

The FERS offers benefits from three source – Thrift Savings Plan, general benefit plan and Social Security. Two parts of the FERS include the TSP and Social Security moves with you if you decide to transfer to another federal job before you retire.

General Benefit

With FERS, you must pay your fair share every pay period. The agency takes out a general benefit and Social Security from your paycheck, noting it as payroll deductions. The agency pays its dues as well. After retirement, you get annuity payments every month. How much you receive is dependent on how long you worked with the Federal Government, the age you decide to retire and the amount you earn.

Thrift Savings Plan

The TSP is considered a distinct contribution plan, which means the income you receive in retirement from the TSP account depends on the amount you and the agency put into it while you worked and the amount you accumulated during that time.

The TSP of FERS is something the agency sets up right away. With each pay period, the agency puts one percent of basic pay into the account. While you can contribute to the TSP account yourself, the agency will deposit a matching contribution.

How Your TSP Account Can Help You Become A Millionaire

The TSP is a somewhat significant retirement income source. Therefore, making regular contributions to it during your career while completely taking advantage of the matching part from the government could lead to considerable wealth. Of course, that means making sure the money is invested well in the first place.

A good number of federal employees earn more than $1 million from their TSP accounts – just by investing and saving wisely even when the market doesn’t do well. It’s not that hard to become a millionaire when you invest wisely in the TSP.

Federal employees can also contribute to an IRA away from the TSP, which lets them invest even more of their money and increase it in a tax-deferred or tax-free account.

Civil Service Retirement System

When it comes to Social Security under the CSRS, it’s treated in another way for federal workers.

How Viable Is Social Security?

Government reports suggest that the Social Security program is rather unstable, making it an unstable option for retirement. With that in mind, people must do their due diligence and save money on their own for retirement.

According to the 2017 Social Security Trustees report, the program’s reserves are slated to be drained in 2034. A poll shows that 80 percent of millennials are concerned they will not have any Social Security when they are ready to retire because of the financial instability facing the program today.

Will the Social Security income still be viable? And, if so, for how long will it stay that way? The SSA is trying to get people to understand that the payments they receive is not meant to replace the retirement income but supplement it. People are urged to invest and save as much as they can to enjoy their golden years.

An Uncertain Path To Retirement

Planning for your retirement is a daunting task for most of us, even for federal employees. Various interrelated factors may complicate this process. Nowadays, conventional retirement plans either have disappeared, or existing ones (like FERS) are becoming less adequate. On top of that, Social Security seems like it won’t last forever. Increase in the lifespans of individuals results in retirees outliving their savings or retirement plans.


Luckily, with good preparation, you can enjoy a successful retirement. With assistance from retirement planners, you can create an effective retirement plan no matter your age group. To do so, you need to understand your current financial situation to prepare for a future in retirement.


In the Twenties: Typically, we attain financial independence in our twenties. At this stage in our lives, we seldom think of planning for retirement. But nurturing the right skills is essential now and in the future. This is why it is important that you evaluate all available options regarding your retirement. Accordingly, taking life insurance is not necessary as you have no dependents. Doing so will minimize your ability to build a savings scheme. On the other hand, avoid depending on employer saving plans as they have little chance of maximizing your savings. Often, most employers have retirement plans that exceed conventional incentive programs. Those lacking a retirement plan with their employer should open up an Individual Retirement Plan (IRA) to accumulate retirement savings.


Finally, consider obtaining a credit card, a car loan, or paying off your debts on a monthly basis. Though you might hesitate to accumulate debt, lacking access to credit complicates your ability to handle and manage complex financial engagements.


In the Thirties: this age group enjoys increased earning power with increasing advancements in their career. As a result, you should increase your retirement contributions to benefit from compounded interest rates. Also, you should open up an IRA account to leverage new employment opportunities as well as to consolidate any of your accumulated savings from previous jobs.

Employed heads of families need to make savings in preparation for their children’s college education. Putting your kids through college is a demanding undertaking that requires an effective savings plan. You can create one through the assistance of an experienced financial advisor. Besides that, it is a drain on your capacity to make adequate retirement contributions. As your stash of savings increases, consider creating a will and an estate plan for your dependents. Those who are self-employed should create a succession plan to ensure the continuity of their business after retiring.


In the Forties: with your children making decisions about their futures, you will need to create a plan for covering their educational expenses. Find out more about scholarships and grants to reduce financial strain. Given that, you should identify options that require no repayment.


Consulting with your financial advisor is a good way of ensuring that you achieve this objective. Financial advisors can help you formulate a retirement plan that keeps all your goals in sight. In this regard, you should ponder what kind of retirement you want in the future.


In the Fifties: this is the right time to think about your retirement plan deeply. Evaluate all your options regarding how you want to exit the workplace. Based on your predetermined timeline, consider stepping up your investment contributions or take advantage of provisions that let you exceed typical contribution premiums.


In the Sixties: during this period you can access your retirement savings without incurring penalties. Therefore, continue increasing your contributions as well as exploring distribution options in view of your current revenue flows, taxes, and your ability to sustain a retirement plan.


Also, you should ponder the implications of any health care needs you might have in the long term. As a result, you should aim at purchasing insurance that will offset any potential health complications in the future. Assess your income sources to determine the appropriate time to sign up for Social security. Keep it in mind that Social Security benefits decrease based on when you join.


Plus, you ought to involve your children and spouse in your wealth transfer plan. Provide insights and advice regarding how to protect your hard-earned wealth or property.


In the seventies and beyond: by this time, you are in retirement. Nonetheless, you need a plan for taking out Required Minimum Distributions (RMDs) from your investment. For this, you need to work closely with your financial advisor in matching your lifestyle to your assets. Doing so will let you relax and enjoy life while remaining focused on the most important undertakings as well as creating a fitting legacy.


Your road to retirement is long and uncertain. For this reason, you need to identify a trustworthy and dependable financial advisor to help you along the way. On top of that, it pays to include your family in any decisions you make as you craft a retirement plan.


Top 5 Retirement Questions

Ideally, it is important that you create a written statement of your retirement plan. Your retirement plan should be simple rather than complex or verbose. According to surveys, having a written plan contributes to feelings of satisfaction in the long term. But why is that so? Often you will have to evaluate various interlinked factors to identify your expectations and needs. This is why the importance of developing a plan cannot be overstated. Through this plan, you get to grips with what your retirement entails. In this post are tips to help you answer the most important of retirement questions.

How Long Is Your Retirement?

To answer this question, you need to figure out how long you expect to live after retirement. Typically, a majority of people get the answer wrong. The number of years you expect to be in retirement determine the type of plan you can create. Underestimating the impact of average life expectancy can expose you to financial difficulties over the retirement years. Research more on expected life expectancy for your age group to help you overcome this challenge. Also, doing so will help you get a personalized estimate of your life expectancy.

For couples, it is important considering the question, how long do you expect to continue cohabiting? The demise of your spouse will alter your retirement dynamics such as expenses and income streams. Therefore, your retirement plan should factor these contingencies.

How Ready are You For Retirement?

Despite being a nonfinancial question, the answer determines your satisfaction level in retirement. Remember that age shouldn’t determine your retirement date. Being ready for retirement is a psychological condition. It implies that you are comfortable leaving behind your workplace responsibilities. And that you can effectively focus on other events and activities. Answering the following question will help you determine if you are ready to retire.

What do you plan to accomplish in retirement?

Getting an answer to this question will determine how much you will spend. Avoid over-relying on guidelines or instinct. Instead, you should create a spending estimate that suits your needs, activities, and interests. Hence, you must evaluate what standards of living you want during your retirement keeping in mind that expenses will vary annually.

Apparently, during retirement people tend to spend less as they grow older after taking care of their most important expenses. Many over 75-year-olds decrease their spending habits though this might increase due to long-term medical and healthcare needs. It is necessary, therefore, that your estimate considers the impact of inflation as living costs increase over time.

When will you be ready to retire?

Being ready for retirement requires that you have assets and income that can help you sustain an appropriate standard of living. To do so, assess your projected spending habits against your retirement revenue streams. Where necessary, make changes to align your lifestyle with your income and assets. Ensuring that you have a guaranteed revenue stream will enhance the quality of life you enjoy after retiring.

Most people have the resources necessary to cover their retirement expenses. In turn, this minimizes the amount of stress and strain you will experience once you retire. There are a few things that you can do to help you achieve a financially secure retirement. To begin with, don’t hesitate to sign up for Social Security especially if you are married. Besides that, it is important that you create an alternative source of income. You can do so through deferred income annuity or an immediate annuity. Other options include purchasing maximized medical insurance or using a mix of personal assets and insurance to help you manage long-term medical needs.

Finally, how will you invest and manage your assets?

To successfully manage your assets you need an investment strategy. Spending 7% of your retirement funds can deplete your savings fast despite contrary opinions. In contrast, financial planners recommend that you should spend approximately 4% or less. This is why establishing a spending policy is important to match your expenses with your retirement expectations.

In conclusion, retirement planning entails more than what has been discussed above. However, when planning for retirement, you should come up with answers to the above questions. Doing so will guarantee you a successful retirement.





Safeguard Your Retirement with the Right Investments

Typically, investors receive the same admonishment any time markets perform poorly: don’t abandon ship! You should take this advice with a pinch of salt. Properly, investing your resources depends on your age and financial goals.


In the light of recent market turbulence, now is the right time to think about your investments. Why is it important to do so? Stocks have had a rocky second quarter. In the past week, news about new tariffs and technology sector distresses have affected the stability of the Dow. Early last week, Empower Retirement, a company that processes over $530 billion of retirement assets, had a10% increase in the volume of calling it receives. Likewise, Fidelity Investments, with a portfolio of 15 million retirement plans also experienced the same during February. But what does that portend? It means that investors are looking for assurance that their investments are safe. This is why it is important that you evaluate the soundness of your investment decision. Use the following point to help you do so.


Assess you Asset Allocation


Consider the amount of money you have invested in your retirement plan. Make sure that you allocate 70% of funds to equity and 30% to bonds. A retirement plan with over 70% in stocks is typically considered aggressive. And a plan with less than 70% being highly susceptible to market variations.


You should determine your ideal fund distribution based on when you are going to retire. If you are about to retire, you shouldn’t take on more risk. But if you are a long way from retirement, you shouldn’t be concerned about market fluctuations. Use online tools available from your 401(k) plan provider or third-party providers to assess your retirement scheme.


Consider Target Date Funds


These are funds that let you select your investment instrument based on your retirement date. With this instrument, investment decisions are made by fund managers with gradual adjustment over time. Target date funds are safer as they rely on investment professionals for making investment decisions. As a result, this protects you from making investment decisions based on emotions.


Even so, be cautious when picking a retirement date and its associated target fund. Target date funds assume that you will retire at the age of 65. Nowadays, most investors only claim Social Security when they are 67 or 68 years of age. As a result, you might consider vintage funds as your investment vehicle as it gives you more time for claiming Social Security.  For those in a 2050 fund, they might consider moving the retirement date to 2055.


Monitor Your Investment Portfolio


Avoid combining a 401(k) and a target date fund in your portfolio as this is most risky as well as impacting your retirement plan. You can avoid this by being extremely watchful of your investment; it nonetheless limits your investment options. Maintaining this level of control on your investment requires personal supervision instead of professional supervision.


Though you can build an investment on your own, it is hazardous doing so. Why? As you will incur unnecessary fees and overlapping investment options that can burn your investment plan. If this sounds intimidating, then a target date fund is your best option.


Remain Vigilant


A common investment mistake is a failure to rebalance your portfolio. Let’s say you let a 60% stock allocation increase to 75%. In the event of a recession, your investment will most likely suffer substantially. What can you do to prevent this? Reallocate any growth from stocks into other investment instruments. Annually, rebalance your portfolio. Use your birthday or any other key anniversary to help you remember.


Portfolio rebalancing is most important if you are nearing your retirement date. But this time you should do it on a quarterly basis. Combine rebalancing, dollar averaging, or fixed interest investments to ensure you attain long-term success.


Maximizing the Sweet Spot Years of Your Retirement


As you approach your retirement, it is high time you address your tax obligations. Retirement’s sweet spot is the period between formal retirement and when you begin accessing RMDs from your 401(k) plan or your individual retirement plan. Typically, this is around the age of 70.5 years.

Since you no longer have any full-time commitments, you are now in a lower tax bracket. Subsequently, this is the right time to benefit from low tax rates. Even so, you need to ensure that your overall retirement goals are in line with your retirement goals. Caveat! You shouldn’t focus on reducing the amount of taxes you pay instead, you should concentrate on accomplishing your retirement goals. So read on to find out more about how to leverage reduced tax rates.  Here are a few suggestions you can capitalize on low tax returns.


# 1: Embrace Roth


Convert your presentIRA or 401(k) retirement plan into a Roth IRA. Though you must pay taxes on the conversion amount, it is at a much lower rate. On the other hand, retainingyour funds in a traditional IRA or a 401(k) plan without taking out any RMDs leads to higher taxes.


Roth IRA withdrawals typically charge no taxes. Plus, no RMDs requirements apply to them. Actually, you can pass accumulated Roth IRA funds and tax-freestatus to your heirs.  Besides that, you can stretch a Roth IRA over several years to minimize the impact of taxes as well speed up switch over to a higher tax bracketanytime you want. But before initiating a conversion, you need to consider the following factors.


To begin with, ensure that you have sufficient cash resources for settling your due taxes. Beware that 2018 tax rules allow for no conversion reversals ever. This means that your assets are permanently locked in a Roth IRA. Besides, you must abstain from tapping into a Roth IRA’s assets for five years after conversion.


Offload Valuable Assets


You might have stock or assets held in a taxable account. If so, consider offloading your long-term high-value assets when your tax obligations are still minimal. Doing so lets you benefit from any appreciated gains.  Why is this so? Because any long-term gains on capital are adjusted relative to your gross income (see the table below).


Tax Rate Single Taxpayer Married Filing Jointly Head of Household
0% Below $38,600 Below $77,200 Below $51,700
15% $38,600-$425,800 $77,200-$479,00 $51,700-$452,400
20% Over $425,800 Over $479,000 Over $452,400


Selling any appreciated assets when your income is below the 0% threshold attracts tax at a rate between 15% and 20%. Also, if you are married with gross revenues of $250,000, a 3.8% tax is imposed on any other income you earn.


Leverage Employee Stock Options

Take advantage of low tax rates with employee stock options in your retirement twilight years. Doing so when your stock’s value is high and prices are low will increase your gains. Plus, use low tax years to offload most of your employee stocks.


Get Rid of Saving Bonds

Today, US saving bonds aren’t a viable means of long-term asset growth because of low interest. This is why many retirees hold on to bonds issued during high-interest rate periods. Offloading these bonds means you only pay ordinary income tax on any accumulated interest. So selling off these assets is a great financial coup.

Top 4 Tips For Evaluating Life Insurance

Life insurance replaces your income in case of an early demise. It provides protection to a spouse, children, or other dependents. Often it is challenging determining how much life insurance is sufficient for your unique needs. Here are four tips to help you overcome this challenge:


Tip #1: Forecast Your Critical Needs


You can do so by reflecting on the following questions: Are your kids currently attending college or will they do so in the future?  If you answer yes, you need to assess how much that is likely to cost as well as create a payment plan.


Tip # 2: Alternative Income Stream


Though specific circumstances vary, identifying a source of alternative income is important. Typically, families find it necessary replacing 60% of its gross revenue. For example, replacing$75,000 requires an income stream of $45,000 per year.


Tip # 3: Leverage Shortfalls


Assume that your dependents require $45,000 to replace your income. With returns pegged at 5%, your life insurance plan amounts to $900,000 after 20 years. Even so, this figure doesn’t include college or medical expenses.


Tip # 4: Evaluate Your Current Assets


Knowing your dependents needs helps in assessing your current savings plan. Let’s say their needs amount to $1 million and you presently have $350,000 in assets, you need to raise $650,000 through savings.


Maximizing the Sweet Spot Years of Your Retirement

As you approach your retirement, it is high time you address your tax obligations. Retirement’s sweet spot is the period between formal retirement and when you begin accessing RMDs from your 401(k) plan or your individual retirement plan. Typically, this is around the age of 70.5 years.

Since you no longer have any full-time commitment, you are now in a lower tax bracket. Subsequently, this is the right time to benefit from low tax rates. Even so, you need to ensure that your overall retirement goals are in line with your retirement goals. Caveat! You shouldn’t focus on reducing the amount of taxes you pay instead, you should concentrate on accomplishing your retirement goals. So read on to find out more about how to leverage reduced tax rates.  Here are a few suggestions you can capitalize on low tax returns.


# 1: Embrace Roth


Convert your present IRA or 401(k) retirement plan into a Roth IRA. Though you must pay taxes on the conversion amount, it is at a much lower rate. On the other hand, retaining your funds in a traditional IRA or a 401(k) plan without taking out any RMDs leads to higher taxes.


Roth IRA withdrawals typically charge no taxes. Plus, no RMDs requirements apply to them. Actually, you can pass accumulated Roth IRA funds and tax-free status to your heirs.  Besides that, you can stretch a Roth IRA over several years to minimize the impact of taxes as well speed up switch over to a higher tax bracket anytime you want. But before initiating a conversion, you need to consider the following factors.


To begin with, ensure that you have sufficient cash resources for settling your due taxes. Beware that 2018 tax rules allow for no conversion reversals ever. This means that your assets are permanently locked in a Roth IRA. Besides, you must abstain from tapping into a Roth IRA’s assets for five years after conversion.


Offload Valuable Assets


You might have stock or assets held in a taxable account. If so, consider offloading your long-term high-value assets when your tax obligations are still minimal. Doing so lets you benefit from any appreciated gains.  Why is this so? Because any long-term gains on capital are adjusted relative to your gross income (see the table below).


Tax Rate Single Taxpayer Married Filing Jointly Head of Household
0% Below $38,600 Below $77,200 Below $51,700
15% $38,600-$425,800 $77,200-$479,00 $51,700-$452,400
20% Over $425,800 Over $479,000 Over $452,400


SSelling any appreciated assets when your income is below the 0% threshold attracts tax at a rate between 15% and 20%. Also, if you are married with gross revenues of $250,000, a 3.8% tax is imposed on any other income you earn.


Leverage Employee Stock Options

Take advantage of low tax rates with employee stock options in your retirement twilight years. Doing so when your stock’s value is high and pricesare low will increase your gains. Plus, use low tax years to offload most of your employee stocks.


Get Rid of Saving Bonds

Today, US saving bonds aren’t a viablemeansof long-termasset growth because of low-interest. This is why many retirees hold on to bonds issued during high-interestrate periods. Offloading these bonds means you only pay ordinary income tax on any accumulated interest. So selling off these assets is agreat financialcoup.

New Contribution Limits Of The Thrift Savings Plan


Military personnel and federal employees can put hundreds of dollars more toward their retirement thanks to the rise in contribution Thrift Savings Plan limits.


The most that can be contributed to a TSP account is $18,500, which is a rise in $500 from 2017. People 50 and older may be eligible to contribute another $6,000 in catch-up contributions, which brings the amount to $24,500.


Active military members deployed in combat zones are eligible for tax-free income that adds even more to their TSP in 2018 – up to $55,000.


TSP Retirement Benefits


The TSP’s pretax contributions are similar to a 401(k) retirement savings plan in that it reduces your taxable income.  Earnings and contributions are also tax-sheltered until withdrawn, which are then taxed as typical income. If you withdrawal the money before you turn 59 1/2, you will be subjected to 10 percent withdrawal penalty as well as taxes.

After-tax Roth contributions is another TSP option, which doesn’t provide any tax breaks but the money is tax-free when you withdraw it at retirement. For earnings to be tax-free in the contribution, the contributions to the Roth must have been made for a minimum of five years, and you need to be 59 1/2.


The government retirement plan size ensures that extremely low fees are charged. In 2017, there was a 0.033 percent cost in managing the TSP. In simple terms – that’s 33 cents for every $1,000 invested. Compare this to the 401(k) plans, which has a $4.30 charge for every $1,000 that was invested.

There are six investment options for the TSP that includes the lifecycle fund series:


  • C Fund – Large company stocks
  • F Fund – Mainly bonds
  • G Fund – Government Securities
  • I Fund – International investments
  • S Fund – Small company stocks


The L Funds (or lifecycle funds) are comparable to the target date funds of traditional 401(k) accounts.  Investments are made in the other funds but become conservative as people get closer to retirement.

If you can handle positive and negative issues and retirement is some time away, you could put more money into your C Fund – such as the Standard & Poor’s 500 stock index. If you want a create and forget it method, go with the lifecycle fund with a name that is close to the year you plan on retiring.


It’s important for civilian federal employees to take advantage of the TSP match. There is already a one percent contribution from the government. Three percent of the pay contributed is matched by the government dollar-for-dollar.  Another two percent of their salary is matched50 cents on the dollar.


A Change Comes To Military Pensions


Service members who signed up for the military between 2006 and 2017 have an important pension decision they need to make before year’s end.


  • They can choose to stay with their old retirement system, which gives them a pension that’s worth half the base pay if they’re in the service for 20 years.
  • They can choose the smaller pension or 40 percent the base pay if they stay 20 years and get a government match of at least five percent in TSP accounts.


People who join the military this year are registered automatically in the blended retirement system.


This system is advantageous so to people who have no plans in staying in the military for 20 years. If you don’t know if you should make the switch, the USAA has a useful comparison tool. Visit and input military retirement system. Or, go to the Department of Defense Military Compensation website.


The TSP is a good way to be financially sound right off the bat. It doesn’t cost much to set up and easy to do. Military members are urged to contribution 10 percent of the pay into TSP accounts. However, if they can’t do this, they can make small contributions, steadily increasing them as they get a pay raise.


The TSP is an enhancement of any government pension you can get along with Social Security. The more money saved now, the more money a person will have in retirement. A TSP savings calculator will help you to know how much money you need to save to be comfortable during retirement.



Military Service Members Overlooking Key Step While Enrolling In Blended Retirement System

It appears that more military service members are choosing the blended retirement system but overlooking an important step. That’s the word coming from the Federal Retirement Thrift Investment Board.

According to the Director of the FRTIB’s Participant’s Services Tee Ramos, approximately, 20,000 people have chosen the blended retirement system (BRS) the TSP offers, and they’ll get an automatic one percent contribution from their branch of service. However, the step they’re overlooking is how much of their pay they will contribute to the plan.

BRS participant contributions are not automatic unless designated by service members to be that way.

So, when uniformed service members don’t indicate how much contribution they’ll make each pay period, they are missing out on the full potential the TSP has to offer. With the blended retirement, members automatically get one percent from their armed service, but when they decide how much of their own money to put forth toward their paychecks, they can receive up to five percent.

The TSP is turning to social media – Facebook and Twitter – posting multiple reminders regarding the opt-in process. Federal employees already in the BRS can get more information about the program in the mail.

Newly enrolled uniformed service members have been automatically enrolled in the TSP since the start of 2018 when the board officially made the BRS public. However, any service member with 12 or fewer years in the military could opt-in if they wanted to.

According to the FRTIB, it’s the 12 years or fewer service members that are not taking advantage of all the benefits the TSP has to offer. For its part, the FRTIB has created an instructional video telling them about the process to opt-in for the BRS. They have until Dec. 31, 2018, to elect which retirement option to go with – either the current retirement system or the blended retirement system.

Over 50 percent of the uniformed service members are enrolled in the TSP in some form or fashion, with 162,000 service members in the BRS.

FRTIB Customer Service Sees Some Improvement

It appears that customer service is finally improving at TSP contact centers. In times’ past, there were very long wait times. In the first week of April, Thriftline customer service representations took about 14 seconds to answer phone calls. In mid-February, that number was 761 seconds with only 5.6 percent of calls being answered within 20 seconds.

Today, the agency’s goal is 20 seconds for all calls, and 87 percent of the calls are being answered in that timeframe.

While the agency still has some work to do, it is doing everything it can do to finalize the details and ensure they are back on the right path.

In January, more than 120,000 callers were on the phone waiting on a Thriftline representative for over five minutes. The TSP’s own customer service goal is to answer 90 percent of people’s calls inside of 20 seconds.

In mid-February, the agency saw hang-ups hovering around 35 percent; in April, the percentage dropped to just one percent.

More staff members were added to the roles, and a new training pilot was launched to help the new employees. TSP contact centers are not getting as many phone calls as they did in January, February, and March, as that’s the peak season for the TSP.

The FRTIB is also creating new queue messages that it will use when customers are facing long wait times. The message will talks about the wait times, information about the TSP website and information about frequently asked questions regarding various topics such as withdrawals requests and loans.

9 Things The RSC Budget Is Tackling To Get Control Over Federal Deficit

The Republican Study Committee recently unveiled its yearly budget proposal – A Framework for Unified Conservatism – for the 2019 fiscal year. The proposal mirrors many recent Trump Administration and other legislative proposals to diminish the pay and benefits of federal employees.


The budget proposal’s primary goal is to reduce spending by over $12 million over the course of 10 years. The federal workforce makes up just a minute amount of the suggested spending reductions, but the proposal does lay out the need to decrease spending in most areas of the federal government to halt the national debt from rising even further.


When it comes to increasing debt and controlling deficits, the only surefire way to handle them is to curb the spending. And, without some type of action now, an unstoppable debt spiral is inevitable, and a debt crisis will ensure. History has shown that countries that have gone bankrupt don’t last much longer.


The budget put forth by the Republican Study Committee is its ways to bring prosperity back to the American people. However, each day that goes by makes choices even more difficult and action must be taken.


What Does The Budget Proposal Target?

Here’s a look at some of the important points of the RSC’s budget proposal as it relates to the federal workforce.


Reductions In Pay and Benefits


The goal is to reduce the yearly across-the-board modification to federal civilian employees pay. According to the budget, the rapidly increasing federal government debt is in a state of financial emergency, which calls for the need to halt the automatic pay raises the Federal Employees Pay Comparability Act of 1990 allows for.


The RSC budget notes a president can restrict the increase’s size if warranted by an existing national emergency. As the proposal lays out, the rapidly growing national debt is an existing national emergency. Former PresidentBarack Obama put forth legislation that halted pay increases from 2011 to 2013. Still, the national debt rose to more than $21 trillion, and it’s expected to hit more than $34 trillion in the next 10years.


The RSC budget suggests federal workers get a half a percentage less than the anticipated amount in the yearly increase.


To justify their proposal, the RSC committee said most Americans do not see any kind of automatic pay increase and the Congressional Budget Office said federal employees are compensated17 percent more than private industry employees.


Reasonable Bonus Limits


Another proposal set forth by the RSC budget includes enacting reasonable bonus limits that federal workers are paid. Although the suggestion was made, there was no outline of what is or is not reasonable.


The support given in this area of the proposal was due to the Federal Employee Bonus Disclosure Act enacted by South Carolina. This act deems that the reporting of all federal worker bonuses be made public, and agencies would have to make reports for Congress to review.


Reforming Pension Plan


The budget proposal also looks to reform the pension plans of federal employees, which include the following five:


  • Pension calculation is determined on five highest years rather than the current three-year highest.
  • Employee contributions shares to FERS must increase over time, aligning with the private industry.
  • The cost of living adjustment for both CSRS and FERS needs to be done away with or decreased.
  • Get rid of the Special Retirement Supplement.
  • Decrease the G Fund’s interest rate for a better reflection of the temporary T-bill rate.


The budget also proposed that all – new and current – federal workers add more money to their retirement; not just new federal workers. According to the Middle-ClassTax Relief and Job Creation Act of 2012, just newly employed federal workers were ordered to pay higher contributions, but the proposal wants to balance out the treatment to everybody in the federal workforce.

Reforming The Federal Employees Health Benefits Program (FEHB)


According to the RSC budget, 30 percent of the premiums are paid by federal workers under the FEHB program while the other 70 percent is addressed by the government. Since the ratio isn’t changed throughout coverage ratios, federal workers often get the most expensive plan, but it’s the taxpayers paying for it.


A way to alleviate that problem is to modify the premium support system where the government offers a standard federal contribution toward health insurance and employees would pay the rest. According to the proposal, the option lets employees buy plans with the right amount of coverage that will fit their present needs.


The suggestion was made that the government decrease the amount it pays on premiums to align more with the private section but gave no percentage specifics other than the much less than 70 percent it currently pays out.


Make Firing Federal Employees Much Easier


The RSC proposal wants to include more legislation on a current one affecting the employees of the Department of Veterans Affairs. They want to include legislation that helps the VA secretary to suspend, demote or remove any VA employee not performing well in their job. This would cause federal employees to labeled “at-will employees” rather than the Congressional Staff they are right now.


This idea was initially brought to light by Indiana Republican Congressman Todd Rokita. The bill would let agency heads suspend or fire without any notice or right to appeal federal workers. The firing could be done for good reason, bad reason or no reason at all.


Use Recently Enacted Holman Rule


The budget proposal also suggests Congress use the modernized Holman Rule to get rid of any redundant executive branch positions. What does the budget actually say about the Holman Rule?


The rule lets amendments be added to House appropriations bills in an effort to decrease how much money the bill covers, limit the number of federal workers and decrease federal workers’ salary.


When used appropriately, the rule is a powerful ally for House of Representatives conservatives working with the Trump White House to restructure the federal government, allowing it to become more liable to the American people.


Federal agencies and the president must work together with the House to find redundant executive branch position and ensure House appropriations bills include the provisions of the Holman Rule to weed out positions that are not necessary to the running of the federal government.


Decrease The Federal Workforce Size


According to the budget, it is necessary to reduce the federal workforce size, limit new hires to one employee for every three that are fired, resigned or retired. The president is given the discretion to modify the federal employment when a national emergency arises.


Federal Unions and Union Due Collections


The RSC budget would also prohibit the power federal employee unions had and recommended that automatic union dues deductions be abolished. The budget states that the federal government is a dues collector for federal workers in a union when it the dues are taken out of the employee’s paycheck and then sent to the union. The RSC budget proposes that a federal worker who wants to be a part of the union should pay the union directly and not from the taxpayers.


Get Rid Of Official Time


Information from the RSC budget says that in 2012, taxpayers paid more than $157 million to federal workers for not doing their jobs. These workers, it found, were using official time to do other things. Getting rid of the official time would ensure the federal government workforce would be more efficient and effective.

The legislation also targets official time by reducing future annuity payments of federal employees that use most of that time working with the union.


White House Stands Behind 2019 Pay Freeze

The fiscal budget proposal for 2019 put out by the White House on February 10th had some unpleasant tidings for employees of the federal government. The Trump Administration’s suggestion of a pay freeze was one of the most worrisome. For those unfamiliar with the term, a pay freeze puts a stop to salary or wage increases for a specified period. The goal of a company, or in this case a government, implementing a freeze is to reduce costs and therefore increase profits or reduce a deficit and potentially pay off debt. Considering the United States’ typically has a massive budget deficit and is carrying massive long-term national debt it begs the question of how long the freeze will last. The problem for employees during a pay freeze is that while their pay remains stagnant, inflation does not. Combine that with the instability created by the indefinite time frame, and you have a recipe for a real headache.
The White House’s budget is of course just a proposal. The founding fathers gave Congress the “power of the purse,” meaning Congress has the final say over most budget decisions. It has been a few months since the proposal was released and concerned employees may have relaxed a little in that time. Now members of Trump’s staff are back in the news making statements in support of the pay freeze. Ironically, the reason for the budget proposal being back in the news—a May 7th open letter from Office of Personnel Management director Jeff Pon to House Speaker Paul Ryan (R-Wis.)—comes during “Public Service Recognition Week.” Since 1985 this week has been designed to honor employees who devote their careers and lives to public service.
Pon is not the only voice publicly backing the freeze recently. The director of the Office of Management and Budget, Mick Mulvaney, also wants to put a stop to minimum incremental pay increases that currently happen automatically throughout a federal employee’s career. The idea is to bring the public workforce closer to the private sector regarding the style of their compensation. “The proposal is rooted in data we had from analysis of the way we paid federal workers, and it seemed to indicate that we over-pay at the lower levels and underpay at the upper levels,” Mulvaney said in testimony before one of the House Appropriations subcommittees. The idea is that the incremental increases make it difficult to reward good employees and motivate poor performers under the current “General Schedule” pay scale, a policy enacted by the Classification Act of 1949.
A significant problem for federal employees with the proposed pay freeze is that while Trump mentioned a one billion dollar fund for 2018 to be used across all federal agencies to reward strong employees, no money was provided in the omnibus spending package enacted this past March.
Mulvaney’s testimony did receive opposition from some Democratic members of the House Appropriations Committee. Sanford Bishop (D-Ga.) said, “It seems to me that what you do when you put the freeze there and remove step increases, you remove incentives to get people to work for the federal government who are highly skilled, who have hopes of a good career that will be remunerative to them. It makes it less competitive with the private sector.”
This is the crux of the argument. Pon, Mulvaney, and the Republican government that generally supports them see the problem as being a lack of incentives for people to do a good job and improve performance in areas of need. The Democratic opposition considers the lack of guaranteed compensation as dissuading potential talent who can find more lucrative opportunities in the private sector. Another issue for current employees is that the uncertainty makes it difficult for them to plan for their futures and could have adverse effects on plans already made without anticipation of a pay freeze.