federal retirement
Federal retirement is a word that describes the retiring process and all the formalities involved for the federal employees of the country.
Veterans Protest Age Ceiling on Veteran Benefit Claims
Veterans Protest Age Ceiling on Veteran Benefit Claims
The American Legion and Disabled American Veterans have taken a stance against proposals to put an age cap on compensation payments for veterans as well as several other cost control proposals. Representatives from these organization contacted lawmakers to protest these proposals. In particular, they are concerned about the danger to disabled veterans who would be unable to find work because of their disabilities.
Government Accountability Office (GAO) Disuscussions
The Government Accountability Office has considered the age ceiling during cost-control discussions. The option recently appeared in a report from the GAC that detailed inefficient practices of the Department of Veterans Affairs. The report most recently discussed federal benefits for some 318,000 retired veterans who are receiving unemployment.
The Impact of Veteran Benefit Changes
The impact of this potential federal benefits change, would affect recipients depending on their level of disability. Currently, Federal benefits for military personnel focuses on the percentage level the individual receives, which goes off the level their injury or disability. Veterans who fall under 100 percent could see compensation changes.
Injured-unemployed federal benefit recipients receive 100 percent level, even if they have lower rated disabilities, if the disability prevents them from working. Individuals who qualify for additional benefits would have to have at least one service-related disability rated at least 60 percent or two or more disabilities rated at 70 percent. Additionally, these added benefits would only apply to federal benefit employees who could not maintain work.
Right now, individuals who qualify for these fed benefits, receive up an addition $22,000 per year. An age ceiling could significantly affect older veterans who rely on this income. Around 180,000 veterans who receive the injured-unemployed fed benefits are 65 or older. Many older veterans are now filing for benefits because age and military-related disabilities have left the without means to obtain employment.
More Veterans Receiving Assistance
In 2013, more than 400 Veterans over the age of 90 received the VA unemployment benefit. The VA says that the increasing age of individuals applying for and receiving, federal benefits is largely due to increased outreach efforts to veterans with disabilities. Additionally, post-traumatic stress disorder regulations were eased in 2009, which allowed more veterans to qualify for benefits and more diseases related to exposure to Agent Orange, were added to the list of qualifying coverage.
Those vocal against an age cap on the disability benefit for veterans also argue that while most Americans have the opportunity to build a retirement fund, this isn’t always the case for veterans. Especially veterans who have suffered from service-related disabilities.
Those who support the change claim that when older veterans receive benefits, it puts too much pressure on the program. The GAO director of income security audits proposed that alongside (or in place of) an age ceiling, an intent-to-work clause be added in. This would require qualifying veterans to prove they at least tried to find employment before applying for federal benefits.
Veterans can rest easy for now. Despite the heated discussion on the hill, proposed age ceilings are only in discussion right now and anyone current receiving benefits will be grandfathered into the old rules.
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Honoring The U.S. Commitment to Veterans by Dianna Tafazoli
Highway Trust Fund-Threat to TSP Funds – By Tamila McDonald
Federal Employees should keep a close eye on a Senate Bill targeting highway funds. The bill focuses on funding an extension of the Highway Trust Fund. However, attached to the bill are proposed changes that would affect federal retirement benefits in the TSP.
The proposed changes include cuts and other changes to the TSP retirement programs. These changes to the way yields that are paid to you in various TSP funds could raise about $80 billion, which would cover around two to four years of federal funding for road and bridge projects, according to the Washington Post.
Almost half of the projected $80 billion in money raised would come from cuts to a retirement investment program. In total, the bill would divert some $30 million from the federal retirement plan. The bill has yet to pass, and many lawmakers say they do not believe the bill will pass with the retirement cuts included. Without the cuts, lawmakers will have to find a lot of money elsewhere to replace those funds.
The TSP G-Fund
The proposed changes, originally discussed during the 2016 budget, would affect the TSP G-Fund of the Thrift Savings Plan. Currently, the TSP G-Fund interest rates are based on a four-year average. This makes it a fairly reliable investment with traditionally higher returns. Proposed changes would change the interest rate formula to a three-month average, raising some $32 million over the span of 10 years.
If the bill goes into effect, it would start on January 1, 2017. Other proposals that went through congress included a plan to raise retirement contributions to 6 percent of their salaries. In 2014, new employees had to pay 4.4 percent towards their retirement fund, a 1 percent increase from the year before and a nearly 3 percent increase from 2012. Congress later dropped this proposal and replaced it with cuts. However, some legislators are continuing to push for an increase in retirement contributions.
Other Federal Retirement Proposals on the Table
Some proposals on the table include changing federal retirement benefits and federal annuity formulas to focus on the highest five-years of pay instead of the most current three years. Some reports suggest that the government has filtered some $159 billion from federal employees over the last five years to put towards deficit reduction.
Representative Don Beyer, a Democrat from Virginia, told the Federal Times “congress cannot continue to treat federal employees as a piggy bank to balance the budget.”
The Senate is scheduled to consider a decision on the highway bill that features cuts to the retirement benefits program next week. No set dates have been declared for contribution changes as of yet. To buy more time to consider alternative changes to achieve the money necessary to extend the Highway Trust Fund, the house passed a short-term extension through December. This gives Congress more time to consider retirement benefits as well as other tax issues.
If Congress opts to leave federal employee retirement benefits alone, the bill could allow for the extension of the road program via a six-year bill using money from tax reforms. Federal employees may want to keep an eye on the news to stay up to date on potential changes to their retirement interest rates.
More TSP and Federal Retirement Related Articles
Federal Employee Retirement Checklist by Gary Fouts
What Are Your TSP Options With the New Phased Retirement Program? by June Kirby
Understanding The Thrift Savings Plan (TSP), By Todd Carmack
Aiding an Aging Community – TSP Decisions
Protecting Federal Retirees and Their TSP
Many baby boomers are heading into their golden years of retirement. But often times the reality of retiring is not all it is cracked up to be. Many soon-to-be or newly retirees are dealing with the financial woes of not having a sufficient nest egg to support themselves. Due to this, Congress and the White House have turned the conversation towards the contributing factors of financial hardship for an aging generation.
Recently, Labor Secretary Tom Perez testified before the House committee on a new bill that would protect federal employees as they transition out of the workforce into retirement. Presently, many federal employees fall victim to poor advice given by their financial advisors especially as it pertains to their Thrift Savings Plan (TSP). The current standard allows financial advisors to recommend financial decisions to their clients that are more beneficial to the advisor versus the client. Federal employees are especially vulnerable to poor financial advice; often taking a financial misstep when deciding what to do with their Thrift Savings Plan accounts upon leaving the government. A recent study found that more than 75 percent of TSP account holders removed their investments from their Thrift Savings Account.
Often times, financial advisers may legally recommend that a federal employee’s roll over their TSP holdings into an Individual Retirement Account (IRA). The promise of investing the money into a mutual fund that will produce the same of similar return on investment. However, some of these accounts can cost the account holder up to 50 times more than leaving their investments in a Thrift Savings Plan. Financial planners giving this advice may profit from the higher fees and commissions.
The help protect retiring federal employees make the most of their retirement savings, the Federal Retirement Thrift Investment Board, which administers the TSP, has made it a priority to keep retirees’ money in the TSP.
As you can imagine, a number of large number of groups support successfully passing this new rule, including the NARFE and the American Federation of Government Employees. During the week of August 10th, the department will open a public comment period and hold a public hearing. In the meantime, the department will continue to operationalize the proposed rule.
In addition TSP is modifying their policy for firefighters, certain border protection agents and law enforcement officers to withdraw funds from their TSP account for any amount without penalty. The catch to this updated policy is that the employee must be separated from federal service during the year in which they turned 50 years of age. The law only specifically mentions these four categories of employees. Other FERS participants and other special-category employees do not qualify under the Act.
The TSP, Defense Bill and Federal Employee Retirement Accounts:
A light is also being shone on a huge defect in the military compensation program. 83 percent of men and women who don the uniform exit the military without any type of retirement fund or pension in place. Only, the commonly referred to “lifers” who commit themselves to serving our country for 20 plus years receive a pension for life. More than directly hurting the separating military members who aren’t receiving any type of financial aid for their service, it hurts recruitment of new military members and does not reflect the modern workforce anywhere else. It is absurd to think that our uniformed men and women don’t have any options for retirement when even entry-level retail workers are offered a 401(k) with company matches for employee contributions.
These are the findings reported in January from the Congress-ordered group, Military Compensation and Retirement Modernization Commission. The Commission has recommended that the military transitions from the current inflexible benefit plan to a blended retirement plan that includes options such as 401(k) investment opportunities for all service members. Following the Commission’s recommendation, both the House and Senate versions of the Defense authorization bill use language that readily support the suggested changes. The proposed changes would be available to over 75 percent of service members who serve two or more years.
Armed Services Committee Chairman John McCain has been quoted as saying this one of the biggest leaps forward in military compensation and is one of the most significant parts of the Defense bill. The new system would vest service members in a thrift savings plan after two years of continuous service. At two years, all service members would start with a 1 percent monthly contribution from the government, with the potential for the military to match service member’s own monthly contributions up to 5 percent of their salaries.
The Defense bill has received little public debate in Congress, mostly because members of both the House and Senate Armed Services Committees waited two years to receive the recommendations from the Military Compensation and Retirement Modernization Commission before acting. Once the Commission’s report was published, the House and Senate Armed Service Committees adopted the recommendations in their entirety. While the report did not deliver any huge surprises, it did pave the way for lawmakers to have the ironclad justification they needed to put the thrift savings plan into the Defense bill.
The new system does have one drawback, service members who have served 20 years or more will see a reduction in their pension by about 20 percent. However, future retirees, who contribute to the TSP will receive pensions up to 20% higher than they are now – according to the Commission. Current or soon-to-be retirees do not need to fear for a reduction in their pensions, all pension promises will remain intact for service members. And current service member can also opt-in to the new 401(k) system at their discretion.
The proposed changes have received a stamp of approval from many military associations, such as, Veterans of Foreign Wars, the Reserve Officers Association, the National Guard Association, the Enlisted Association of the National Guard and the Air Force Association. Now, the Defense bill will just need to overcome a few more hurdles before being fully enacted.
Other TSP Related Articles
Federal Employee Retirement Checklist by Gary Fouts
What Are Your TSP Options With the New Phased Retirement Program? by June Kirby
Understanding The Thrift Savings Plan (TSP), By Todd Carmack
Thrift Savings Plan Features – Low Administrative Fees
The Thrift Savings Plan (TSP) is far from alone in offering “index” funds to investors. Many organizations offer similar funds, but one marked difference are the “administrative expenses” that the TSP and other organizations charge.
Think of TSP administrative expenses as a fee, taken out of someone’s investment in a fund — to pay for operating the fund. The fee is a small percentage of the total investment; but even that small percentage, over time, can take a significant bite out of an investment.
The lower the administrative expenses, the smaller the bite — and the more quickly an investment can grow.
In 2014, the administrative expenses for TSP funds were just under .03%. In other words, for every $1,000 of investment, the admin expenses were about thirty cents.
So, how does that thirty cents per thousand dollars compare with the administrative expenses of other index funds? It compares quite well.
Thrift Savings Plan (TSP) Examples
For example, Vanguard offers a fund that, like the TSP’s C Fund, mirrors the performance of the 500 stocks in the Standard and Poor’s S&P 500 index. However, in the Vanguard fund (Vanguard 500 Index Fund Admiral Shares) the administrative expenses were .05% compared to the .03% for the TSP product.
The Fidelity S&P 500 fund (Fidelity Spartan 500 Index Advantage) had administrative expenses of .07% as did the TIAA-CREF S&P 500 Index Institutional.
Even more striking contracts exists with the TSP’s S Fund and similar funds. The S fund has, as its objective, matching the performance of the Dow Jones U.S. Completion Total Stock Market Index — a broad index of stocks of U.S. companies that are not in the S&P 500 index. The comparable Vanguard fund (Vanguard Extended Market Index Fund Admiral Shares) has administrative expenses of .10%, more than three times higher than the expenses of the TSP’s S Fund.
Another fund that is similar to the TSP S fund is USAA Extended Market Index Fund. It’s administrative expenses were .48%, more than fifteen times higher than the TSP S Fund’s administrative expenses.
The same kinds of comparisons exist in bond funds. The TSP F Fund has as its objective matching the performance of bonds in the Barclays Capital U.S. Aggregate Bond Index. This index represents the broad U.S. bond market. One comparable bond fund is Fidelity’s Spartan U.S. Bond Index Fund – Investor Class. That fund’s administrative expenses came to .22%, more than seven times higher than the S&P’s F Fund expenses.
Advice to investors often includes the recommendation to check administrative expenses before deciding to get into or to stay in a particular fund. In such checks, the TSP Products will likely compare favorably. The favorable comparisons are likely to apply both for TSP’s individual funds (C, S and F, for example) as well as for TSP’s Life Cycle (L) funds.
However, administrative expenses are not the only consideration in choosing an investment. Perhaps the convenience of dealing with one firm over an other offsets paying higher administrative expenses on a similar index fund. Furthermore, since different funds often have very different investment objectives, the purposes of the funds (as they relate to an individual investor’s needs) is likely to be a more important consideration than the funds’ administrative expenses.
To sort out questions of where to put their investment dollars, many investors profit from the advice of a knowledge and well-trained financial advisor. Nevertheless, whether acting on their own or with an advisor, prudent investors may want to add administrative expenses to the factors they consider before making investment decisions.
— by John Zottoli. John is a retired Federal human resources specialist who takes an interest in all aspects of planning for retirement.
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Are You Thinking About a “Deferred” Retirement? by Gary Fouts
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The TSP – a Not-So-Hidden Gem
TSP Overview:
Among the many savings plans federal employees have at their disposal lies one of the most valuable pieces of the Federal Retirement system – the Thrift Savings Plan (TSP). TSP offers a tax-deferred retirement savings and investment plan. Participants who in enroll in TSP benefit from having the opportunity to save part of their income for retirement, receive matching agency contributions and shrink their current taxes.
The Thrift Saving Plan is an investment expense, which reduces returns. Participants in TSP invest in diversified markets. The financial contributions produce a return without any special effort from the investor. Employees only have to participate and to receive the market’s return.
TSP – Hidden Advantages:
In a turbulent economy, it is nice to find a financial opportunity that is economically sound and advantageous for your bank account. Employees who invest in the Thrift Savings Plan will experience very low costs associated to their account; on average, ranging from 0.029 – 0.049 percent of account assets. Comparatively, there is not another investment program that allows for employees to invest in their future for roughly 49 cents on every $100 invested.
For the investment novice, the minimal fee may not seem like a huge selling point, but it is. TSP’s low costs translate into rather high anticipated investment returns. Greater investment returns equals more money in your pocket later on. Gaining a peace of mind for your finances during your golden years.
The variance between the Thrift Savings Plan’s cost and the cost to the standard retail mutual fund is around 1 percent. Hypothetically, if an employee invested in a diversified portfolio, consisting of TSP funds they have the potential to capture over 99% of the market portfolio’s return. Putting all of these seemingly miniscule percentages in perspective, over the length of 40 years could cost a benefactor up one-third of their portfolio…..wait, seriously?
The cost of owning another investment option, such as an IRA, charges a higher fee – that goes into the pocket of the middle man. Federal employees who have invested into TSP and have accumulated a substantial balance may be swayed to move their funds into an IRA. Employees should be wary of transferring their hard-earned funds into an alternate portfolio that can boast a substantially higher percentage in expenses. To the surprise of many, in addition to fund expenses, an IRA account can charge sales commissions, service fees, advisory fees, costs and account-level administrative expenses; potentially costing an employee 2-3 percent more than the TSP’s expense; the higher-cost investment plan can greatly damper your retirement expectations. Staying cognizant and well-educated of your finances can help retirees reap the benefits of decades of hard work.
Overall, the TSP combined with the availability of the G Fund, the TSP’s negligible costs make it a premier investment and retirement plan for federal employees. Employees will reap the benefits of their Thrift Savings Plan account by investing and leaving their contributions for as long as they can.
TSP – Current News:
This month, Congress is weighing in on some dramatic changes to military retirement. Under the current plan, the military invests retirement money exclusively in U.S. Treasury bills, and guarantees that retirees will receive a specified level of benefits.
With the new changes in policy, the guaranteed benefits will be reduced and 3 percent of service members’ pay will be transferred into the federal Thrift Savings Plan (TSP) – the government will match an additional 1 percent to all contributions.
The TSP is comparative to a 401(k) investment retirement program offered by private sector employers. The Thrift Savings Plan invests money with private financial firms and does not guarantee a set amount of retirement income. According to the system’s financial statements, TSP currently invests more than 55 percent of its assets with BlackRock.
The Thrift Savings Plan will still offer enrollees to waive investing in actively managed funds and enroll into the lower-risk U.S. Treasury bill option – but will still guide all participants within the system to diversify their portfolio for greater return. Theoretically, if the new plan is enacted, approximately $91 billion in service members’ compensation would be transferred into the TSP over the next 25 years. Supposing military participants invest in a similar manner as other enrollees, such as federal employee, the financial shift could end up channeling up to $50 billion to BlackRock during that time period.
In addition to the shift of funds, service members may say goodbye to no additional fees to Wall Street money managers and hello to annual fees for their pension plans. If the Obama administration’s changes are approved, new service members in the TSP will pay investment management fees to either the Thrift Savings Plan or BlackRock.
Recently, on June 4, the Senate unanimously passed the legislation allowing federal law enforcement officers and firefighters will be able to access retirement funds earlier without penalty. The amendment will allow federal law enforcement officers, firefighters and specific border protection and customs officers to withdraw funds from their Thrift Savings Plan after the age of 50 without a tax penalty.
Currently, federal law enforcement officers are eligible to retire after 20 years of credible service and at the age 50 – many are required to retire by age 57. Usually the earliest possible withdrawal date without penalty is 59.5 years old. Meaning that there is a long lag between an employee retiring and being able to have access to their hard-earned retirement fund.
Other TSP Related Articles
What Are Your TSP Options With the New Phased Retirement Program? by June Kirby
Understanding The Thrift Savings Plan, By Todd Carmack
Are You Thinking About a “Deferred” Retirement? by Gary Fouts
Bill to Safeguard Federal Retirement Funding Introduced in US Senate
Bill to Safeguard Federal Retirement Funding Introduced in US Senate
Federal employees and retirees worried about how their retirement fund caretakers are handling their saved funds and pensions may soon be able to sleep better.
A bill (Representative Payee Fraud Prevention Act of 2015 – S. 1576), has been introduced in the U.S. Senate that makes federal retirement benefit fraud and misuse a felony.
Specifically, the legislation gives U.S. attorneys the statutory authority to prosecute retiree representatives who misuse funds from the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS).
The bipartisan bill was introduced by Senators James Lankford (R-OK) and Heidi Heitkamp (D-ND). Lankford is the chairman of the Homeland Security and Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management. Senator Heitkamp is a ranking member of this subcommittee, whose jurisdiction includes the federal workforce and federal employee issues.
If passed, this bill would provide federal retirement funds the same protection Social Security and VA payees get for their funding pools.
This ensures that federal retirees who need a financial representative to help manage their payments have the same protections. In short, you will not end up losing your pensions and retirement benefits to embezzlers and the kind of rampant speculation that cost so many people their homes and life savings during the real estate and Wall Street crash.
With a possible felony conviction for misuse and embezzlement of federal retirement funds, most money managers and financial caregivers will take great care and reduce risks to ensure that their clients’ retirement benefits and savings stay safe and sound.
Sen. Lankford said in a statement that “Many government workers devote their lives to public service – we must fight the embezzlement of their benefits to ensure a more reliable retirement for them and their families.”
Sen. Heitkamp said that “Just as so many other Americans do, federal workers rely on their savings and pensions which they worked hard for to retire with dignity… By taking this commonsense step, we can provide needed protections for these individuals and families and make sure they are treated with the respect and care they deserve.”
Other TSP Related Articles
Are You Thinking About a “Deferred” Retirement? by Gary Fouts
What Are Your TSP Options With the New Phased Retirement Program? by June Kirby
Largest Federal Employee Union Files Lawsuit Against OPM
Largest Federal Employee Union AFGE Files Class Action Lawsuit Against OPM
The American Federation of Government Employees (AFGE) has filed a lawsuit against the Office of Personnel Management to hold the agency and other defendants accountable for the devastating cyberattacks.
The cyberattacks against OPM compromised the personal and security files of some 18 million or so current federal employees and retirees.
The federal class action lawsuit, filed in the U.S. District Court for the District of Columbia, has the AFGE and two individuals, Robert Crawford and Adam Dale, as lead plaintiffs. The class members and plaintiffs include current, former, and prospective employees and contractors of the U.S. government.
The lawsuit seeks injunctive relief, and actual and statutory damages. Other than OPM, the other named co-defendants are OPM Director Katherine Archuleta, OPM Chief Information Officer Donna Seymour, and KeyPoint Government Solutions.
Injunctive relief in this case means the OPM needs to beef up its data security. A statement issued by AFGE National President J. David Cox Sr. and others says that “Even after this historic security breach, OPM has continued to use poor data security practices and inferior private-sector strategies to solve its security woes.”
They are also seeking more information about the data breach. “Despite putting government employees and their loved ones at significant personal and financial risk, OPM has failed to reveal the full scope of who was specifically impacted by the data breach and the extent of the information taken.”
The statement adds that AGFE is working with its federal employee and retiree members to ascertain the breadth of the breach and obtain feedback on OPM’s response.
OPM Director Katherine Archuleta says in a blog post on the OPM website that “I want to personally apologize for the inconvenience, but know that we take very seriously the responsibility OPM holds in securing Federal employee data. Improving OPM’s IT security posture is the utmost priority as we work to recruit, engage, and honor America’s talented and hardworking Federal workforce.”
The class action lawsuit is no doubt rather an unprecedented and extreme step by the largest federal employee union that represents 670,000 federal employees and DC government employees. But AFGE feels that since OPM is unwilling to provide adequate assistance, they have to take this step to gather more information and hold the agency accountable.
It’s a sad commentary on OPM’s operational processes, since their inability to secure data created the problem, and now they’re digging an even deeper hole because of their inability to provide enough data to the affected federal employees.
More OPM Data Breach Related Articles
Cyber ID Theft…How Are You Protecting Yourself? by Gary Fouts
OPM Cyberattack Update – 21.5 Million Social Security Numbers Compromised
Are Hackers Smarter Than The Government’s IT Developers – By Dianna Tafazoli
Honoring the U.S. Commitment to Veterans by Dianna Tafazoli
Honoring the U.S. Commitment to Veterans
The Office of Personnel Management (OPM) announced an increase in Veteran hiring in FY 2014. The President’s Council on Veteran Employment has been pushing with great effort to move the Veteran hiring initiative since President Obama established the Council more than five years ago. Data shows that there has been a consistent increase each year in the percentage of veterans hired into the Federal civilian service. FY 2014 showed a record increase of 33.2 percent surpassing the 31 percent reported in FY 2013.
Remarkably the Executive Branch showed an increase in hiring Veterans which coincided with an overall increase in new employees hired in the Federal service. Katherine Archuleta, Director of the Office of Personnel Management also serves as the Vice-Chair of the President’s Council on Veteran Employment. Katherine Archuleta asserts her confidence in the Council moving in the right direction to the achieve the President’s goal to increase veteran hiring in the Federal civilian service.
Katherine Archuleta is joined on the Council by 24 Cabinet level agencies and other independent agencies. Secretaries of Labor and Veterans Affairs, Thomas Perez and Robert McDonald respectively also serve as co-Chairs of the Council. To ensure Women veterans are represented in the hiring initiative, Director Archuleta has called on Catherine Emerson, Chief Human Capital Officer for the Department of Homeland Security, to lead the effort.
The Council is also pushing forward an addendum to the Veterans Recruitment and Employment Strategic Plan FY-2014-2017, a government-wide initiative, to include women veterans and diversity goals to expand the current goals of Leadership, Commitment, Employment, marketing and the Information Gateway.
Veterans are some of the most highly qualified leaders in the nation with exceptional skills and a superior acumen to work in teams and build teams. Hiring qualified Veterans in the Federal civilian workforce is America’s commitment to honoring the brave men and women who put their lives on the line everyday to keep America safe and secure.
Dianna Tafazoli
P. S. Always Remember to Share What You Know.
Best Places for Retirees to Live
Bankrate rolled out the top-ten list of the best places to retire in 2015. They seem to change every year. Virginia landed the spot as the 5th best place for retirees to live. States like Florida, Utah, and Arizona are still rated very high for retirees. Retirees don’t all want the same thing. Quiet sedate living might fit some seniors while others want a very active life. Some retirees still like being in the mix of what is going on from politics to the social scene.
It does appear however that all retirees are looking to save money. They want to economize and make very wise use of their resources. Retirees want to pay lower taxes and save on housing and other expenses like transportation. Retirees want safe surroundings where they can enjoy social activities and all that retirement has to offer. According to Bankrate, they want plenty of sunshine, low humidity, good weather, great health care systems, low tax rates and low crime.
Out of the 50 states, ten states top the list for many of the amenities retirees want. The winners on the best place to retire list are Nebraska, Arizona, South Dakota, Montana, Iowa, Virginia, Idaho, Utah, Wyoming and Colorado. The number one ranked state as the best place for retirees to stake their claim is Wyoming. For those retirees who already call Wyoming home, you have made a wise choice. As for the rest, you might want to take a trip to Wyoming to see what the state filled with national parks such as the famed Yellowstone National Park – has to offer.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
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Is Retirement On Your Christmas List?
Many Federal Employees See the End fo the Year as a Good Time To Retire
Are you planning to retire at the end of the year, starting 2015 as a retiree instead of an active Federal employee? You might hear a number of rules and reasons when you should retire. However, the day you retire is a very personal decision hopefully based on planning and sharing with your family and close friends. Everybody’s circumstances are different and should not be compared to anyone else’s.
Many people start planning for retirement 20 or more years prior while others allow retirement to creep up on them. Whether you fit into the first group, the second or none, when you retire is a decision that is yours and yours alone. Nobody knows better what your circumstances are and how you are equipped to deal with them. You do, however, want to get the greatest value possible out of your benefits when you retire.
You want to make sure you are retiring at a time where you have gotten the maximum benefit from your annual and sick leave. For both the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) sick leave adds value to your retirement so you want to save as much as possible. Only months and years are used when calculating your years of service, days are dropped off. If you need to work a while longer so that your days can be turned into months or perhaps years, hold on a while longer if you can to reap the benefits.
By the same token, save up as much annual leave as allowed because you will need it if you have to wait to receive your annuity. Your annual leave lump sum payment generally gets to you fairly quickly and can often serve as a gap filler while waiting on your annuity check. Even when you receive your annuity check, it might be an interim check which is not equivalent to your full retirement annuity. Although your lump sum annual leave check is generally taxed at the 20 percent rate, it will still be a life saver if you need extra money and your budget is tight.
It might be a good idea to delay costly vacations when preparing to retire and save your leave to enhance the way you are able to live in retirement. On the other hand, you might have a completely different perspective on how you should handle your leave and your retirement years. Whatever decision you make, be certain you have done your homework, put some plans in place so that your retirement is comfortable and secure.
P. S. Always Remember to Share What You Know.
Federal Retirement Related Articles
Important 2014 TSP Dates for Federal Employees
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Utility Companies Are Spreading Cheer
Federal Employees Should Protect Themselves This Holiday Season
Utility companies are warning seniors and others about the increase in scammers this time of the year. Some of our previous posts have addressed this lurking evil, but to have the utility companies spread cheer by asking customers to be wary of scammers is a very good thing amidst all of the turmoil in our country.
Dominion Power Company sent out emails to its customers explaining that they do not contact customers by phone, email, text or in person asking for confidential information and/or threatening disconnection in exchange for immediate payment in cash, pre-paid cards, or through PayPal.
Dominion even offered ways to protect seniors and other customers against scams:
If you are approached by someone in person claiming to be from Dominion, or the power company, always ask for a company-issued picture I.D. Better still, don’t even answer your door. Call the power company and ask if a representative has been sent out to your home. If not, a follow-up call should also be made to the police.
If someone calls you pretending to be a power company representative and you feel pressured to provide payment or personal information, capture the phone number and hang up.
You can also verify your account information including bill amount, by signing in to your online account. Dominion also warns that scams are not limited to impersonating a utility company. Dominion is the power company in the area where I live, but this is a warning no matter who your power company happens to be.
It is wise to take extra precaution during the holiday season and not a bad idea to do it all year.
P. S. Always Remember to Share What You Know
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NEWSLETTER WEEKLY – CHANGES IN WASHINGTON
There are many changes taking place in the nation’s capital. One very significant change is the exit of Defense Secretary, Chuck Hagel. Hagel announced his resignation from DOD, many said the resignation was forced. The President is expected to nominate Ashton B. Carter as the next Secretary of Defense. Carter served as the Pentagon’s second-in-command from 2011 to 2013. Carter also served as Deputy Secretary of Defense under Secretaries Hagel and Panetta.
Prior to Carter’s service as Deputy Secretary, he was the under secretary of defense acquisition, technology and logistics. Carter was known as the Pentagon’s chief arms purchaser. Carter has since left the Pentagon and is a member of the President’s Management Council on Labor Relations. Carter has a long history with DOD. During the Clinton administration, he served as Assistant Secretary of Defense for International Security Policy.
Carter also has an academic leaning. He was a member of the faculty at the Harvard University Kennedy School of Government. Mr. Carter will certainly not have a learning curve it seems. It appears he knows his way around the massive structure. As to whether he will infuse new blood into the Pentagon remains to be seen.
Mr. Carter ‘s career progression would speak very positively to his preparation to lead DOD. Taking a break from DOD is probably the most impressive of all his credentials. Often standing outside of the house for a moment can bring forth fresh ideas as to how much the house is in need of repair both inside and out.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
What To Do With My Accumulated Wealth
This is the story of a Federal retiree
This is the story of a Federal retiree who also served in the military and had a pretty lucky hand at playing the stock market. In other words, he has amassed a fairly sizable fortune. He has one surviving heir, his son. Lately he has begun to worry about what to do with his wealth since he is approaching 90. He is in good health and I don’t think he will be making that final journey anytime soon. He comes from a family of very long livers – 100 plus.
I listen to him more than I shell out advice. I really believe that it is nonsense to wait until death to share your resources with the people you intend to have it. Chances are many of the people could use a hand-up right now to make life a little easier. He is smart enough to make certain he has enough to see him through. After all, this is a gentleman who came of age during the Depression and some of the most cruel conditions surviving both in the military and the federal service. Yet, he became a very wealthy man and from what it seems he will never have to worry about his financial well-being.
He has been gathering the names of all of his surviving nieces and nephews around the country so that he can name them in his will and not have to leave everything to his son; particularly, since they don’t communicate that much. I believe all-in-all that the son is a fairly decent human being. The only thing I know that the son has done is not visiting his father enough. That might be because he and the father don’t see eye to eye on a number of political and social issues. Well that might be true for the lot of us.
If I felt so compelled to advise him this is what I would say. Sit down with your attorney and your financial advisor and propose drawing up a document to give your only child – your son what you intend for him to have now. Discuss all of the tax consequences and all the other nuances – and give him the second gift of a lifestyle. His first gift was truly his parents – he had great parents and has a great father. His mother passed on some years ago and she knew her son would be just fine. In other words, the son received the kind of love growing up that will always sustain him even if he does not see eye-to-eye with his father on some things. I would also give the nieces and nephews what I intended for them to have. They have families and children in college or headed off to college. A few dead presidents here and there could lighten the load.
If he intends to give some to charities, then he can hold off on that. Instead of worrying about what to do with the accumulated wealth into old age, take care of that now so that you can see your loved ones enjoying the fruits of your labor. I would get such enjoyment out of watching the smiles and the surprises on faces when they learned they could pay off a student loan debt, cover a grandchild’s tuition, help to pay down a mortgage and just a host of other things that can be a heavy burden on families.
We do things the way we have gotten used to doing them. Nobody said we couldn’t do some things differently. They might make more sense and they might help a lot more people sooner.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
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Understanding The Thrift Savings Plan, By Todd Carmack
Should You Purchase an Annuity?
A question came across my desk – A FERS employee asked me whether or not they should buy an annuity as they reach their FERS retirement age? Anytime I get a question like that other than saying find a Registered Investment Advisor (RIA), is why would you purchase the annuity and for what purpose. Many of us do too many things without knowing the WHY. We do know that working everyday and preparing for today and not enough. It is necessary to work today and plan for today and tomorrow, often making sacrifices today so that there will be a bright future tomorrow.
In a country as wealthy as the United States, albeit disproportionately distributed, too many people are retiring without being ready. They are neither emotionally nor financially ready to retire. Whose fault is it that they are not ready? Well to position one’s self for such an argument is useless. The entire populace would be better served if we determined why we are not ready to retire and look for ways to remedy the deficit and fix it. A financially and emotionally healthy retirement population is an impetus for growth in the national economy.
An annuity by its very name indicates that there will be the presence of some dollar amount for a life time. Every retiree desires guaranteed lifetime income. Many of the financial instruments on the market are somewhat difficult to understand and require the services and expertise of trained individuals familiar with those products.
I believe that anything worth your money is worth you evaluating why and what you need it for. What kind of benefit do you expect to derive from you purchase or investment? First things first. Should you purchase an annuity? You should read as much as possible about annuities so when you decide for or against the purchase you will have enough intelligence about the subject to feel comfortable with the decision you make. Never put yourself in the position of having someone else do your thinking for you as long as you can do it for yourself.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
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When Is Advice Too Much Advice?
The Holiday Season brings about too much of most everything for many of us. Too much food to eat, too many gifts to buy and just simply too many things to do. In the arena of too much is also too much advice. Senior citizens are beginning to get too many phone calls to keep up. There is a caller on the other end talking about updating your medical coverage. Are you satisfied with your Medicare coverage or do you want to try something else? What about life insurance, do you have enough to bury yourself? Is your money invested in the right place and what about purchasing an annuity so that you will have money for the rest of your life?
Imagine, you are a senior citizen living alone with no close relatives nearby you can count on and you are hit with all of these questions by someone on the other end of your phone who sounds legitimate. They start pouring all of this information in your ear at at rate you can barely keep up with. The next thing you know they are saying how much they can do for you with just a little money down and that you have nothing to lose, but everything to gain. They ask for your credit card number and the scam begins.
First, seniors are targets for scammers. You cannot emphasize this dynamic enough during the Holiday season. If someone calls you on the phone, most of us have caller ID, if you don’t recognize the number or the name let it ring. After so many rings, they will eventually hang up because they are about production, the numbers moving on to the next unsuspecting victim. More importantly, if someone knocks on your door you are neither expecting and have not invited to your home, don’t respond to the knock or the door bell. They should not know whether you are home or not. If it is really someone who knows you and wants to visit with you, they will call you on the phone before coming to your door. If they do come and you don’t respond to the knock, they will even call out your name.
Not answering your door and phone is within your control. There are many things we cannot control – like the frigid weather- that seems to be coming our way, but we can control who we communicate with. No matter how nice they seem and how sweet and sincere they sound on the phone, let them take their charms somewhere else. You can never be safe enough as a senior or a Federal retiree. Scammers think Federal retirees have some healthy purse strings and they want to become their best friends.
Stay safe for the Holiday and don’t be caught off-guard by people (men and women) who have built their careers on taking advantage of other people.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
Additional Articles by Dianna Tafazoli
Katherine Archuleta Is Working Against the Clock
Women and Retirement
The greatest cause of homelessness in America for women is divorce. Although women are making higher salaries, their salaries are still not equal to their male counterparts. When women are faced with divorce their resources often take on a different dynamic. Because women often start out with fewer resources, they end up with fewer resources. Family courts and guardians ad litem are becoming more and more anti-woman in divorce and child custody cases. A number of female Federal employees are re-evaluating their retirement plans because of having to pay child support to their ex-spouses because the spouse has custodial custody of the children.
Virginia appears to be a state that is not friendly towards women in child-custody cases according to a coalition of Federally-employed women involved in custody cases in the state. Even before a hearing takes place, if the father takes the children out of the home and refuses to return the children to the mother, the unspoken and unwritten law in the state allows the father to keep the children. It was alleged by one member of the coalition that in open court an attorney told his client – the father – that it was ok that he kidnapped the children. Mothers are fighting for their children who were taken from their homes by the father of the children and never returned. The law did not order the children returned to the home, but did stipulate that a Federally employed mother had to pay child support to an ex-spouse who kidnapped her children in the state.
Women are a growing segment of the homeless population followed by women and children. The predicament female federal employees find themselves in is apparent. The number of older women working in retail is increasing everyday. Sadly these are not women who are just past retirement age but well beyond. These women are not working because they want to but because they have to. There may be cases where children might be better off with their fathers but due process should be the rule of law when making decisions about children’s lives. It is very unfortunate that Virginia has not earned a reputation for being fair where women are concerned atleast by a number of women involved in court battles in the State of Virginia.
The average woman all over the United States will have less to live on in retirement than men of equal pay status for one simple fact – men are paid more than women for the same job. It is time women receive equal pay. The Lilly Ledbetter Act supposedly evened the playing field, but women have a long way to go to achieve equal justice and equal pay in the U.S.A.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
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Thrift Savings Plan (TSP) Withdrawal Options
Postal LiteBlue and Open Season
Postal Service employees should visit LiteBlue to download their FEHB (health benefits) guides for this year’s open season. Open season is the annual period when employees can make changes to their health coverage or choose a new plan – this year Open Season begins on November 10th.
Postal Employee guides have been mailed to employees in the past, however, the USPS has determined that making the guides available online through LiteBlue employees will find it easier to evaluate their choices as well as reduce the cost of delivery.
Postal Employees can find the following guides on LiteBlue:
RI70-2 – The 2015 Guide to Benefits for Career United States Postal Service Employees.
RI 70-8PS – The 2015 Guide to Benefits for Certain Temporary (Non-career) United States Postal Service Employees.
FEDVIP BK-1 – The 2015 Guide to the Federal Employees Dental and Vision Insurance Program.
NCEHP BK1 – The 2015 Guide to USPS Non-career Employee Health Benefits Plan.
LiteBlue also makes available additional Federal Employees Health Benefits (FEHB) and Federal Employees Dental and Vision Insurance Program (FEDVIP) information. Postal Employees can find checklists, fact sheets, FAQs and a health plan comparison tools all through LiteBlue.
If you are unable to log into LiteBlue you can also request paper copies of these guides by calling the Human Resources Shared Services Center at 877-477-3273 (press option 5) or TTY 866-260-7507.
LiteBlue Articles and Related Content
What Postal employees should do on LiteBlue Before Retirement
LiteBlue; Online Access to More Than Just Your USPS Earnings Statement
Other LiteBlue Related Pages
– What Is LiteBlue?
– What Postal Employees Should Do On LiteBlue Before Retirement
– eRetire for Postal Employees – Retirement Applications on LiteBlue
– Use LiteBlue to Manage your FEHB
– You can use LiteBlue and PostalEase to manage your Allotments
– Requesting Duplicate Postal Employee W-2 Forms Using LiteBlue
Click here to be directed to LiteBlue.
Is There an Advantage to Phased Retirement for Retirees
Well, first and foremost you cannot be a retiree and participate in Phased Retirement. There are a number of rules in order to participate in Phased Retirement. First, the agency must grant the request for a worker to take part in the program. Only those individuals eligible for regular voluntary retirement can participate in the program having the requisite age and service requirements. The age and length of service requirements differ between CSRS and FERS.
Because of the way the defined benefits programs (pension plans) are designed for CSRS and FERS employees, the salary amount would differ between the two for a Phased Retirement calculation as it does under ordinary circumstances. Individuals contemplating participating in Phased Retirement must do their homework and be just as diligent as they would be if they were retiring under traditional protocol.
It is always wise counsel to put the numbers on paper so they become real as individuals calculate the pros and cons of participating in Phased Retirement or simply retiring with the knowledge that their annuity will look decidedly different than their biweekly paycheck. However, adding on additional time for FERS employees who have already reached their FERS retirement age will not have the same impact as it would with CSRS employees. The same kind of analysis is needed here that is apparent when persons eligible for Social Security benefits decide if it is good to take the benefit now or wait until later.
You are the best advisor – you the Federal employee – because you know more about your finances and your issues than anyone else. There are private affairs you perhaps do not feel comfortable sharing maybe not even with a financial advisor. However, workers and their spouses, partners or family members should have an evaluation session that involves what you have and or likely to have weighed against your expenses. Although some expenses will decrease in retirement, others will increase, particularly medical expenses and no matter how you slice the pie, your annuity will not be as much as your biweekly paycheck.
There are a lucky few who will have enough savings and investments to ride it out and enjoy a secure and safe retirement. For the rest of us it is merely a wish list.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
Recommended Articles
Federal Phased Retirement Program now available, by Kevin O’Leary
Married Fed’s with Fed Spouses Have More SSB Options, by Kevin O’Leary
Taking Early FERS Retirement Could Cost You Your SRS Benefit, by Kevin O’Leary
Does The Federal Government Know What You Need?
The Office of Personnel Management (OPM) conducts a survey to check the pulse of the workforce in terms of the Government’s performance, but does the Government know what its workers really need. Is the Government engaging the employees and creating the kind of environment that makes workers want to stay in the Federal service?
Recently data was collected from a number of workers across agencies and jurisdictions to determine whether they felt the Government cared about their needs as employees. The information is being collected for an impending book examining the value the Federal Government places on its employees. Many HR professionals believe that people simply work to get a paycheck and not because they have a passion for what they do. If that is the case, how is passion for work developed? Is it innate or developed?
Another question came up while doing research for the book. Will retirement still exist in the workforce 50 years going forward? A number of individuals in the Human Resources field believe the new generation of workers will not stay on any one job long enough to retire; certainly not in the sense we have come to know. Working for an organization for 30 years will seem like something out of the dark ages 50 years from now. How will organizations structure pension and retirement plans? There will have to be a complete overhaul of rules, regulations and policies specifically in the public sector. The overhaul will be massive and the 5 year rule relevant to so many aspects of the Federal service might be more applicable than imagined.
Five years on the job might become the standard. After working five years on a job, you might be qualified to receive some kind of pension. I think what might be innovative is instead of a particular company carrying a pension plan, it might be that the country will be engaged in a universal pension plan that allows individuals who have worked 20-30 years total in a U.S.. based job where taxes and other employment deductions were made will be eligible for a pension. The employers as well as the employees will pay into a universal plan that does not obligate the worker to spend a life-time on one job.
This is certainly not to minimize the importance and value of longevity but rather to say that the world is changing rapidly and we cannot and should not expect retirement 50 years going forward to look like what it looks like now. Circumstances, people and demands are changing constantly and our world is moving in a completely new direction. It is mind-boggling for me to think about what is going to happen to all the massive building used for housing government agencies in the future. They certainly will not be housing employees because they will be working from home or centralized locations close to home.
Our roads and highways will last much longer without having to expend millions of dollars on road repairs due to day-to-day traffic. People will be less frustrated because they will not have to travel so far to get to their jobs. The flexible schedules will allow them to raise families and get to know each other and not pass like ships in the night. Parents will be able to drop their kids at school and pick them up – the old fashion door-to-door nurturing that will hopefully eliminate children from being snatched by strangers as they walk to school alone and defenseless.
Road-rage will have a slow death. The heavy weight of over-stressed bosses and employees in the workplace will be eliminated while productivity and creativity will increase because workers will be happier. Now with all of this futuristic thinking, I don’t believe the Federal Government as a whole or individual agencies have really ever asked Federal workers about their needs. Although telework exists currently in the Federal service, many supervisors take drastic measures to prevent employees from taking advantage of teleworking. Remember, I said I didn’t know what would happen to all those massive buildings used to house government agencies. How about using them to house homeless people, not like some huge open arena, but to create private, supervised low cost units that belong to people who need a place to stay.
There is a wonderful model that could be used called Hyacinth’s Place located in the nation’s capital. It is a transitional housing program for women who have a mental health diagnosis and are making tremendous strides to reclaim their lives as productive citizens. The structure contains a number of “efficiency” type apartments. Each woman has a key to her unit with a unit number where she receives mail to her home inside of this supervised, monitored structure. The structure and the approach to re-introducing these women to a life where they see value in themselves is esteem-building. Hyacinth’s Place is transitional because these women are healed to move on so that another might reap similar benefits. Bet you never knew an old dusty Government building had so much potential to strengthen humanity.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
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