Tag: Federal retirement

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Critical Ages For Federal Retirement

September 23, 2014 /by Dianna Tafazoli

There are Critical Ages that Federal Employees should be aware of. These ages represent opportunities for Federal Employees who might want to maximize their retirement benefits.

Federal Employee ~~ Age 50

• Begin age-based catch-up to defined contribution plans and individual retirement accounts (IRA). Beginning with the year you reach age 50, Federal law allows you to defer a certain dollar amount per year to a qualified defined retirement plan. The catch-up amount is $5,000, indexed in $500 increments. The age-based catch-up amount for IRA contributions is $1,000.
Federal Employee ~~ Age 55
• After separation from service, you may begin withdrawing from your TSP or another qualified plan without paying a 10 percent penalty tax.
Federal Employee ~~ Age 59.5
• You may begin withdrawing from qualified retirement plans, if retired, or from an IRA without incurring the 10 percent penalty. At 59.5 Federal employees can also take an in-service distribution – rolling their TSP account balance into an IRA with a private company and giving themselves more investment options.
Federal Employee ~~ Age 62
• You can begin receiving your Social Security benefits; however, the amount may be reduced by as much as 30 percent, depending on the date of your birth.
Federal Employee ~~ Age 63.5
• The Federal Consolidated Omnibus Budget Reconciliation Act (COBRA) law makes health insurance in most employers’ group health plans available for at least 18 months after separation; however, you bear the full cost, including the portion previously paid by your employer (plus a small administrative fee). Upon age 65 and your enrollment in Medicare Part B, Federal law requires access to Medigap health insurance at standard rates. Combining COBRA and Medigap effectively ensures access to health insurance beginning at age 63.5
Federal Employee ~~ Age 65 – 67
• Depending on your date of birth, you may begin unreduced Social Security benefits at some point during this age range. Further, you may earn any amount without reducing this benefit.
Federal Employee ~~ Age 65
• You may enroll in Medicare, if eligible, and purchase Medigap insurance at standard rates. Your Medigap open enrollment period lasts for six months starting on the first day of the month in which you are 1) at least age 65 and enrolled in Medicare Part B. During this period, an insurance company cannot deny you a Medigap policy, make you wait for coverage, or charge you more for a Medigap policy because of your health.
Federal Employee ~~ Age 70
• You may begin maximum Social Security benefits, if the starting date was delayed to this age. There is no advantage to delaying benefits past this age.
Federal Employee ~~ Age 70.5
• Required minimum distributions from qualified plans, IRAs, and deferred compensation plans begin the year after you turn 70.5.

P. S. Always Remember to Share What You Know.

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Will Spending Be The Same In Retirement?

Federal Retirement Spending Habits

For Federal Employees, spending will change in retirement. Some federal retirees will spend more and some will spend less based on their individual financial situation. It is useful to note that expenses today may not be expenses tomorrow. Therefore, some projections and forecasting is needed when looking at spending in retirement.

Expenses like transportation and food costs may go down. If you don’t choose to work or even if you work part-time, you will probably not spend as much money in transportation as you did before. Your budget for clothing may also decrease. Entertainment and social activities may go up or down. Because you are retired, your social calendar may not be as busy. But, on the other hand, because you are retired, your social calendar might be completely filled because you do have more free time.

Medical Expenses and Life Insurance in Retirement

Let’s take a look at medical expenses in retirement. Those expenses will probably go up because it seems to follow that as we get older, we require more medical attention. Conversely, taxes will probably go down because you will no longer have payroll taxes for Social Security and Medicare if you don’t have earned income after retirement. For instance, someone earning $60,000 in 2009 might have paid $4,590 for Social Security and Medicare Taxes, but will pay zero dollars in retirement if there is no earned income. The tax savings could also help to replace some of the salary we will need to cover in retirement. Savings should be aggressive prior to retirement. Your cost for life insurance, FEGLI or private compay life insurance, may also decrease – you should compare your FEGLI coverage and costs again private life insurance to make sure you are getting the best deal.

There are many ways in which our expenses and income may fluctuate in our retirement years. But knowing what we know, it is prudent to aggressively save prior to retirement and even more prudent to aggressively pay down debt prior to retirement. Carrying heavy debt into retirement is a disaster waiting to happen. Reducing your debt lowers interest and increases your net worth. If you have a very high debt: income ratio you will have to spend a lot of money just paying interest.

I know you are still thinking about your vision for retirement. What about insinuating “some magic dust” into your vision —- living debt free before you reach retirement? Imagine how much bigger and fantastic your vision could be if you had no heavy debt to carry around with you. A rule of thumb is to lay out your entire debt ranking the order in which they should be paid. You pay off debt with the highest interest first and then you put off the debt with the lowest interest last until you have paid everything off.

You don’t want to pay off your mortgage unless you have a lot of disposal income because you may need the tax advantages from the mortgage payment. If I had enough money to pay off my mortgage, I would do a very careful analysis of the pros and cons before taking the next step of paying off the mortgage. Paying off a mortgage might be the right thing to do for some and not for others. Each person’s financial circumstances is uniquely different. Try living by this “mantra” – What I cannot pay for in cash, I cannot afford, mortgages aside. You will be amazed how living by this mantra will curtail spending. Decision-making strategies must always be utilized when spending your money. Sometimes credit gives us too much flight to fantasy. We all need credit, but how we handle it will be key to our retirement success.

Remember when it was assumed when one retired the mortgage would also be retired. That is not always the case now-a-day. Having to make large debt payments out of a limited retirement income can easily sour one’s financial picture in retirement. Every effort must be made to leave debt behind as you move into retirement. Having a vision and dreams for retirement has associated costs. If you pay down your debt then you will have money that is not obligated for expenses to spend the way you want. It is called your vision and dream cache. The more savvy you are at managing your finances, the better that cache will look and feel. Most retirees talk about being able to travel. That is an expense that is outside of the normal day-to-day expenses especially if the travel is extensive. So we have to be very careful in planning our trip and making sure we are comparison shopping.

P. S. Always Remember to Share What You Know.

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Retiring In Less Than One Year

Consider the following if your retirement plans are less than one year away.

Is there any way that I could be indebted to my employer?

If you have outstanding travel advances.
Overpayment of salary that has not been resolved.
Indebtedness for failure to return government property or for damage to government property.
Advanced leave.

**When and how do I waive my military retired pay?**

If you would like to waive your military retired pay to receive credit for military service in the computation of your benefit, you can write to the Retired Pay Operations Center at least 60 days before your planned retirement. Send your waiver to:

Defense Finance and Accounting Service

U.S. Military Retirement Pay

P.O. Box 7130

London, KY 40742-7130 or you can “fax” your request to (888) 469-6559

**What Is The Maximum Federal Retirement Benefit I Can Receive?**

The basic civil service retirement annuity cannot exceed 80% of your high-3 average salary, excluding your unused sick leave. The 80% limitation is typically reached when you have 41 years and 11 months of service, not including accumulated sick leave.

Law Enforcement Officer (LEOs) Retirement Annuities

Law Enforcement Officers (LEOs) may under special computation provisions receive the 80% limit with fewer years of service.

Service beyond the years which provides the maximum benefit will not be used to compute your Law Enforment Officer annuity. The retirement contributions you made during those years will be automatically refunded to you with interest at the rate of three percent per year, compounded annually. You have the option of using the refund to purchase additional annuities as if the contributions and interest are voluntary contributions.

However, if you have federal civilian employment periods when you did not contribute to either or FERS, excess contributions are automatically applied toward any deposit due for those employment periods.

How do I find out if I am eligible for Medicare coverage?

It is recommended that you contact the Social Security Administration at least three months before you reach your 65^th birthday to apply for Medicare Benefits. The Social Security Administration will have the records pertaining to your eligibility for Medicare coverage. If there is a problem locating your records either you or your employer can obtain a statement of your earnings by writing to:

General Services Administration

National Personnel Records Center

Civilian Personnel Records

111 Winnebago Street

St. Louis, Missouri 63118

Your request should include:

Your name as shown on your payroll records;
Your date of birth;
Your Social Security Number;
Your complete mailing address;
The years for which earnings are needed;
The name and location of employer for each year;
State clearly the reason for the request;
Affix your written signature; and,
Write a statement declaring that all other sources of information have been exhausted.

When should I choose my exact retirement date?

If you have not already done so, start thinking about choosing your exact retirement date. Your benefit can be estimated based on the exact date you choose. Remember OPM cannot give you the best estimate until you have actually applied for retirement.

When should I complete my application?

You should carefully read all of the information in the application package and submit the forms. You do not need to submit a resignation letter. Your completed and signed application is equivalent to a resignation. However, if you are eligible for benefits, you should not resign with the intent of retiring at some later date. If you were to expire after separation but before filing your retirement application no life insurance, no survivor benefit and no survivor health insurance coverage would be available to your survivors. All other exit procedures required by the agency should be followed and completed.

Should I check on my military service deposit?

Your human capital office will verify with your payroll office that the deposit to give you credit in your annuity for military service you performed after 1956 has been paid, or that arrangements have been made for complete payment before you leave the agency’s rolls.

Should I sign up now to receive my retirement payments by direct deposit?

If your retirement records are electronically transmitted by your employer via the Data Exchange Gateway (DEG), the account information for direct deposit will be sent automatically. If this is not the case, then you must submit with your retirement package, a request to receive payments by direct deposit. A letter can be submitted or SF 1199A with the application. SF 1199A can be obtained from your financial institution.

Direct deposit is generally not available to persons with a permanent address outside of the United States, except for Canada. Persons with permanent addresses outside the United States may request direct deposit to a financial institution in the United States.

P. S. Always Remember to Share What You Know.

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For Federal Employees – Tips To Creating A Retirement Budget

Federal Employees and Retirement Budgets

You don’t have to follow any particular format for creating a budget except to measure income against expenses. The tips below might help you get started.

Determine a time horizon for tracking your income and expenses.
Outline all of your sources of income and then total the sources.
Outline all of your expenses, everything you spend money on. Break down your expenses into variable and fixed income so that you can really see where there is room to make adjustments if needed. Total all of your expenses. Remember “savings” are a fixed expense; therefore you must pay yourself first (PYF).
Subtract your expenses from your income. If expenses outweigh income, you have some work to do in the ‘adjustments’ arena. If income outweighs expenses, then you should consider paying yourself a little more so that your financial goals might be achieved earlier than planned. Plans are made to be flexible and this is good flexibility.
Now that you have the tools necessary to develop both a financial plan and a budget, take sometime to compare one to the other and see how they mesh and if any refurbishing needs to be done. Your spending plan should be in harmony with your financial goals. Do this often throughout your life.

P. S. Always Remember to Share What You Know.

LiteBlue and TSP RELATED ARTICLES

Federal and Postal Employees – Choosing a Financial Professional

Budgeting And Federal Employee Financial Plans

LiteBlue; Online Access to More Than Just Your USPS Earnings Statement

For Federal and Postal Employees, building a budget carries equal weight to building a financial plan.

Envision constructing a house – The financial plan is the front door to your dwelling and the budget is the back door, both are necessary if you expect to be safe and secure.

Having a sound financial plan and a budget are paramount to a successful retirement future. Having a budget allows us to direct money towards goals we establish in our financial plan. The budget acts like a navigation system, it directs our course, but only if we stick to it. Sounds familiar, a financial plan only works if you follow it and a budget is only a good navigator if you heed the directions given. A budget, like a financial plan is not etched in stone, but is meant to be flexible and SMART.

**Primary Elements of a Federal Employee Retirement Budget**

There are two primary elements to a Federal Employee retirement budget – income and expenses. Income may be derived from various sources: employment, interests from savings and investments. Expenses are summed up in our wants and needs. There must always be a very careful balancing act between income and expenses. When expenses become more than income, we run the risk of running out of money and that is exactly what we don’t want to do in retirement or at any other time for that matter. The budget helps us to rein in spending and make wise choices that will keep our income and expenses in harmony.

As we approach retirement it will become even more critical that we recognize what our spending habits are and employ definite strategies to ensure they fit into our financial plan and are guided by a sound budget.

When we spend money it is generally for expenses that are either fixed, variable or occasional. Most of us spend money and then think about saving what ever is left over. When we mentioned earlier the concept of PYF or pay yourself first, it is meant to do exactly that. Pay yourself first in the form of savings right off the top of your income. It need not be a particularly large amount, but it must be defined and consistent. Savings must be entered in the budget as a part of “fixed” expenses. If we treat “savings” as a variable or occasional expense, it is very clear that we will be met with significant challenges in meeting our financial goals in the future.

Federal Employee Retirement Budget

Creating a budget is easy enough. We need only list all income against all expenses to see where we stand. If expenses outweigh income, then we need to make some immediate adjustments. Most of us simply run out of money or find that we don’t have enough, without outlining everything in a budget so that we can actually see how we are spending our money. SMART budgets must be updated regulary throughout our lives. Remember as events change in our lives, we will very necessarily have to adjust our budget, our financial goals and the way we spend money.

There are many software programs that will allow you to monitor your budget and to stay on track by keeping your expenses and income in a spreadsheet. A budget is your spending plan about what you can do with your money. Warren Buffet knows exactly how much money is coming in, how much will be spent on bills and day-to-day expenses and how much to set aside for meeting large financial goals. People who are SMART with their money, no matter how much or how little, know where their money goes because they have a plan.

Once you build a budget you will know that you have mastered the objective of creating a budget when your budget is balanced to show that total income equals total expenses and that your budget supports each of your financial goals. It’s your money. You have worked hard for it and now you must make it work SMART for you!

P. S. Always Remember to Share What You Know,

LiteBlue Related Pages

What Is LiteBlue?

PostalEase / LiteBlue

What Postal Employees Should Do On LiteBlue Before Retirement

Changing Your LiteBlue / PostalEase Password Through ssp.USPS.gov

eRetire for Postal Employees – Retirement Applications on LiteBlue

Do You Have a Federal Retirement Individual Action Plan

For Postal Employees – LiteBlue and the TSP

Building your Federal Retirement Individual Action Plan (IAP) starts first with building your Financial Plan – the key element to your retirement future. In order to achieve our collective goal of retiring with comfort and security, we must underscore the inescapable urgency of identifying and setting goals. Without setting SMART goals we cannot develop a workable financial plan, a sensible budget or an Individual Action Plan (IAP).

Federal Employee Retirement Priorities

We all philosophically know the difference between ‘WANT’ and ‘NEED’. Prioritizing need over want is the age old challenge. There is nothing wrong with ‘wants’. As a matter of fact, wants often push us to succeeding. The challenge is being able to know the difference between want and need and utilizing that knowledge to choose options and decision-making strategies that are critical to the SMART goals we set in our lives.

The Federal Employee Financial Plan

One of the most important components of financial planning is the decision-making process. As we think about retirement, it is imperative that we make choices that maximize our capacity to accomplish SMART goals with perhaps a different level of income. Decision-making, like goal setting may need to be modified depending on changing circumstances and other factors. However, there is a process of effective decision-making used by most of us without ever consciously thinking about it. We are constantly setting goals consciously or subconsciously. We must analyze data when determining what we can afford and what we cannot. We create plans to turn thoughts into action, the implementation process. Lastly, we monitor how things are working which often calls for modifying the original plan we put in place. Are you ready to put your retirement plan in action.

P. S. Always Remember to Share What You Know.

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Six Steps to Retirement Implementation

Image Credits

The journey to federal employee retirement requires us to dig in our heels and do what we are used to doing — Getting the job done with precision and excellence. Your things to do list is your visual task of letting you know the level of readiness and needed preparation to ensure your goals are reached. We are in this place because retirement is in our not too distant horizon. If you are thinking about retirement in the next 5 years plus, we have a reasonable amount of time to put plans in place. Below is a list of 6 steps you must take within 5 Years of Retirement as part of your Short Term Retirement Planning goals. Retirement is an emotional experience as is starting a new job, getting married, having your first child. These are all major life events and there is no denying that they can be stressful. However, if we approach any one of these events, as prepared as we can be, success is in our hands.

6 Steps to Implement Now!!!!

Increase your cash reserves
Pay down your debt
Estimate how much money you need to retire
Assess and evaluate tax consequences
Diversify your investments
Educate yourself

P. S. Always Remember to Share What You Know.

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Statements to Answer and Get You Thinking

Sometime we need a little nudge, some motivation to get our engines pointed towards painting a picture of our retirement future. The following statements can assist in setting the parameters for both our plan and individual action plan.

I have a definite strategy to SAVE. ___
I have clearly written down all of my financial goals for retirement. ___
I have a spending plan for all sources of income. ___
I have a plan for reaching my goals for retirement. ___
I always review my goals before spending. ___
I have clear plans as to how I will spend any unobligated funds before I spend impulsively. ___
I have a budget that I monitor now and will continue monitoring my budget in the future. ____
I know exactly how much money I can spend on clothing monthly and yearly. ____
I know how much money I can spend for eating out and entertainment. ____
I plan ahead for times of big expenses, i.e., replacing the furnace or AC unit, purchasing a new car, major car repairs, home repairs, etc. ____
I have a plan in place for unexpected expenses. ____
When I must make a major purchase, I do comparison shopping. I test the market. ____
All of my purchases are part of my plan for reaching my retirement goals. _____
I set aside some money to spend as I please, only after paying myself first (PYF). ____
I have emergency funds set aside equal to at least six months of living expenses. ____
I have begun a sensible debt reduction plan. ____
I pay off the entire monthly balance due on my credit cards to avoid paying interest charges. ____
I know the difference wants and needs and I prioritize needs over wants. ____
I know the rate of interest I am receiving on all savings accounts. ____
I follow and monitor the rate of return on my investments. ____
I understand what my investments mean and the risk associated with them. ___
I belong to a credit union to reduce transaction costs in conducting my financial affairs. ____
I determine the amount of money I can spend on a car and secure financial for that amount before selecting a car. ____

Give yourself one point for each item you have already taken action on. Add up your score and see how far you need to go to put your plan of action in motion.

P. S. Always Remember to Share What You Know.

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Federal Employees and Financial Planning

Definition: A financial plan is a thought process based on what each person considers important and necessary in their life.

A financial plan helps to identify what we want, how to get it and how to keep it. The financial plan drives the entire process and is the determing factor as to whether you successfully reach your retirements goals. In devising a financial plan, we must make choices in order to maximize our ability to accomplish our goals with varied resources in our retirement years. We measure our values, those beliefs or ideas we consider important or desirable. Our values have a lot of influence on our goals, choices and decision-making. As we grow older our values will most likely change.

When we make decisions, circumstances and events in our lives often cause us to make other decisions based on decisions we have already made. In essence, one decision can bring about the need to make additional decisions. In the economic world, those decisions are called “Satellite” decisions.

In making decisions we often have to make trade-offs. We give up something now to get something better tomorrow that will ultimately benefit us in the future. We save now so that our retirement years will be spent in comfort and security. The trade-off is defined as an “Opportunity Cost.” Planning for our retirement future requires a basic lesson in finance and economics as demonstrated by some of the terms we will use in our discussion.

There are 3 kinds of people when it comes to spending money. There are those who live from paycheck to paycheck. There are those who never have enough money and then there are those who absolutely ‘Get it.’

The people, who absolutely get it, didn’t just by some click of a pair of ruby slippers suddenly end up in OZ, a stratosphere off-limits to the rest of us; they had a financial plan and they followed the plan. They understand that goals must be Specific, Measurable, Attainable, Realistic and Time related – the Goals must be SMART.

The folks that get it also understand the ‘Reality’ of resources in that they are limited or different at best, specifically in retirement. They exercise self-control and “Restraint’. They are not impulse spenders. They also know the benefit of accepting ‘Responsibility’ in financial planning rather than taking on the consequences of not having a plan.

Equally as important, people who get it, know intimately the value of saving for a rainy day. They spend within or below their means and are not reluctant to share with others. Renowned financier and philanthropist, Warren Buffet, reputed to be one of the richest men in the world once stated on an interview with Larry King, former CNN TV personality, “I don’t need to spend a lot of money on clothes or houses or that kind of stuff, a comfortable pair of jeans and T-shirt is ok.” Eccentric he maybe, but he gets it because he has a plan that evolves as circumstances in his life change.

Building your financial plan must incorporate a high degree of flexibility because changes in your life’s circumstances are inevitable.

P. S. Always Remember to Share What You Know.

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Financial Planning – You Know More Than You Think

Many individuals shy away from talking about financial planning because they think it is too far above their heads. Not so. Families are engaged in financial planning daily. Mothers and Fathers determine what they can spend on groceries, housing, education, transportation, health care and a number of other aspects important to running our lives. The fear sets in when we are asked to formalize our plans. Here are some hints to help you get started.

Inquiring about what we want and need to know requires an examination of what you already know about financial planning and money management. We each have our own frame of reference about money, spending, saving and just a general attitude about money. We learn about money and spending habits from a number of places and people in our lives. Should we spend a lot of time thinking about money and planning, will it simply take care of itself, is it a skill that we need?
Gathering and assembling the information we need is where we utilize our investigative and discovery skills. We are able to mesh newly discovered information with information we already know; and build upon our skills to become more educated and informed about managing money into retirement; and ensuring that it lasts as long as we last.
Processing the Information takes us from theory to reality via integrating and making sense of the two previous concepts by either utilizing or implementing the information.
Studying and Determining the Right Fit is part of the individual customization of the learning concept. How you plan and manage for your retirement future is not a cookie-cutter phenomenon, but a challenge and an opportunity unique to your own circumstances, needs, values and choices. We will move reciprocally a number of times between all of the steps before moving on to “Applying what we have learned.”
Applying what we have learned is making it happen, making it real and making it work to shape your best possible Financial and Individual Action Plan for Retirement that provides milestones that are flexible, stable, consistent and doable over the long-term.

You see you have already been involved in financial planning and managing your money. The question is have you planned and managed your resources well enough to live your vision in retirement. Being challenged by questions right before your eyes can be a great motivator to call your attention to things you need to do to secure your retirement future.

P. S. Always Remember to Share What You Know.

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The Thrift Savings Plan (TSP)

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Federal Employees – Building Your Financial Plan

TSP (Thrift Savings Plan)

As a Federal Employee you may seek the advice of a Financial Planner, you need to do some homework towards building your financial plan. The Financial Plan is a key component of your overall Retirement Planning strategy, so you can retire well and live in comfort and security.

Some key items of what your Financial Plan should consist of:

– One SMART Short Term Goal (0 – 3 months)
– One SMART Intermediate Term Goal (3 months – 1 year)
– One SMART Long Term Goal (1 year plus)
– A quarterly record of how you get and use your money (you may choose to use a weekly or monthly record)
– A process of allocating your money by using the decision-making process
– Identification of at least 3 factors that might potentially impact your financial plan (factors may change from time to time)
– At least four strategies that will keep you firmly on your plan
– Process by which you can easily and clearly articulate how you will monitor and modify your plan.

Building your retirement plan in your mind is the first step to getting started, commiting it to paper (electronic or otherwise) is the first step to implementation. Your plan does not need to be anything technical, but a plan that you can work with; a plan that is not tossed outside but becomes the roadmap to securing your financial future in retirement.

Federal Employee Retirement

FEGLI (Federal Employees Life Insurance)

FEHB

‘High-3’ Income

Retirement Annuity Calculations

P. S. Always Remember to Share What You Know.

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Orientation Retirement Training

Understanding The Thrift Savings Plan, By Todd Carmack

For years as a human resources professional, I have advocated for Orientation Retirement Training. The Federal Government for a number of years has taken the position of preparing workers for retirement 5 years out from their estimated retirement date. That is simply an accident waiting to happen. The time-frame does not give a workforce who has not been acculturated to prepare for retirement time to do it.

The approach is like putting a band-aid over a wound that is infected; merely covering up the problem to encounter a bigger problem down the road. We need to teach employees how to retire from the moment they are recruited and become members of the organization. The work-life cycle or the horizontal context of managing performance encompasses a comprehensive approach from recruitment to retirement. Organizations not adhering to that approach fail their employees on a number of levels.

Retirement Training for Newly Hired Federal Employees

If organizations and agencies expect to engender a workforce that is both productive and loyal to the enterprise, then organizations and agencies must take care of their most prized asset – the employees. The Architect of the Capitol is doing it – Orientation Retirement Training is a part of the welcoming platform for new employees. That is a strategy worth celebrating. Although, the Architect of the Capitol operates according to Congressional statue, there is concerted effort to adhere to many of the guidelines issued by the Office of Personnel Management.

Orientation Retirement Training can put out a number of fires. Employees have the opportunity to prepare for retirement during the entire tenure of their work career. When federal employees are financially and emotionally prepared to retire, then the push to scramble for incentives and other ways to move them off the rolls would be eliminated.

P. S. Always Remember to Share What You Know.

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Buy-Outs Are On The Rise

Mandatory Reduction of Workforce

There has been a lot of conversation around the Federal and Private sectors about strategies to reduce payroll by cutting down the number of employees on the rolls. The Federal sector has a mandate to reduce the rolls by 20% and a number of incentives have been put on the table to accomplish that goal. The Department of Defense has taken the lead in responding to the President’s mandate. The number of employees expected to sign on for retirement did not happen because too many Federal employees are ill-prepared to retire.

Federal Employee Buy-Outs and Incentives

The Post Office started out by asking individuals eligible to retire to do so. That didn’t get much leverage therefore a monetary incentive of $25,000 was offered to sweeten the pie. It got a little mileage but not enough to make the kind of dent the Federal Government is so desperately seeking. There is a new bird afloat that other organizations might be interested in if they can afford it. A few years back Continental and United Airlines merged. There were so many differences between the airlines that it has been difficult to impossible to come up with a contract to the mutual benefit of both sides. Continental had a pension plan, United did not – representing the biggest nut to crack.

If the airlines are going to merge into one entity then they must have the appearance of parity and equity. That is easier said than done. The airline could have a conversation with the Feds. Afterall, thus the birth of the Federal Employees Retirement System out of the old Civil Service Retirement System. Bring in the new and work towards phasing out the old. It is not easy, but the Office of Personnel Management (OPM) proved that it can be done.

Continental and United have set an agenda to shave 1,000 workers from both airlines. The initial push to ask eligible retirees to exercise that right without an incentive fell on deaf ears, the same response from Federal workers. The management at Continental and United have pulled out the big guns. The Airline is offering $100,000 for retirement eligible individuals to leave the rolls. As of this writing, there is a whole lot of conversation, but not enough takers.

A recent conversation with an employee of Continental said he was simply not ready to retire and that he was not interested in the $100,000 although it sounds good and is the biggest incentive the Airline has offered, he is declining for more time in the sky.

Individuals who have put in years of service are often conflicted in two ways about retirement. First, many are not financially able to retire and second, work has become the largest part of their lives. Cutting the umbilical cord from work to retirement is a process where early planning is the key remedy.

P. S. Always Remember to Share What You Know.

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Unused Sick Leave, What You Need to Know

August 14, 2014 /by Admin

Unused Sick Leave, What You Need To Know

It is not uncommon for a federal employee to accumulate a sizeable amount of unused sick leave over their career. As sick leave can only be used for

personal medical needs
family care or bereavement
care of a family member with a serious health condition
adoption-related purposes

It may not be possible for a federal employee to use all their unused sick leave prior to retirement.

Unused sick leave can’t be used to add days to make you eligible to retire. It is only added after you retire to increase your annuity amount. In order to be used in your annuity calculation, you must have a minimum of 174 hours of unused sick leave. 174 hours is the equivalent of one full month.

For the purposes of calculating your retirement annuity, it is based on the years, months and days of total service. Partial months or any days less than 30 are dropped from your annuity calculation unless unused sick leave can be added to make a total of 30 days.

· Example: You retire with 24 years, 6 months and 24 days. The 24 days would be dropped unless you had a minimum of 35 hours of unused sick leave which equates to 6 days. This would make your total service for the purposes of calculating your annuity 24 years, 7 months.

Unused sick leave can also be used to increase a CSRS annuity above the 80% maximum. If a CSRS retiree has accumulated 2087 hours of unused sick leave this could add an additional 2% to their retirement annuity for a total of 82% of their average Hi-3 salary.

Unused sick leave has no cash value but it can be used to increase your total service for the purposes of increasing your retirement annuity.

Phased Retirement Questions – Who is Responsible?

August 12, 2014 /by Dianna Tafazoli

Who Is Responsible for Making it Work?

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During the public comments period for phased retirement there were a number of questions and comments that surfaced either from agencies, unions or individuals. It might add to our information to discuss a few of them and also use the questions and comments as a teachable moment.

Phased Retirement and the TSP

One question was about the Thrift Savings Plan (TSP). Will those employees participating in phased retirement still be able to participate in the TSP? The program is designed to allow phased retirement participants to work part-time and draw a part-time federal retirement annuity giving them perhaps the best of both worlds – work and retirement. Since the TSP administered by the Thrift Savings Investment Board is a defined contributions plan where contributions are made via payroll deduction, then if you are working and getting a paycheck, you can participate in the TSP. The individuals are not fully retired as in receiving a total annuity carrying the distinction of annuitant, where there are no payroll deductions. Therefore, these individuals still qualify to participate in the TSP.

Phased Retirement and Taxes

Another question came up about taxes and how OPM would look at taxes. The Office of Personnel Management in its role as custodian of all federal human capital is statutorily required to provide the Internal Revenue Service with such relevant information as requested. However, the Office of Personnel Management has no jurisdiction over administering the tax code, that matter falls completely within the auspices of the Internal Revenue Service. How the IRS manages phased retirement regarding the taxation of Social Security or a Federal Annuity has yet to be seen.

Phased Retirement – Overtime and Holidays

Then there was the concern about overtime and holidays for part-time employees or phased retirement participants. According to the Fair Labor Standards Act (FLSA) those persons falling within the category of non-exempt employees receive overtime when they have worked more than 8 hours per days or more than 40 hours in a work-week. The same would apply for compensatory time. Since the phased retirement participants are scheduled to work part-time then this factor should not impact them. If, however the situation arises, the same guidelines would be followed in accordance with FLSA. Certain categories of employees, particularly those designated as supervisors and managers are exempt from the requirements of FLSA.

If a part-time employee is scheduled to work on a day that falls on a holiday, then the day is also a holiday for the employee. If the employee works 4 hours per day, then 4 hours would serve as holiday pay. If the holiday falls on a nonworking day then the employee is not entitled to an in lieu of holiday.

The Office of Personnel Management is tasked with handling all human resource and human capital issues for the United States Government, all other matters fall within the respective agencies.

P. S. Always Remember to Share What You Know.

OTHER PHASED RETIREMENT RELATED ARTICLES

Explanation of Phased Retirement

Phased Retirement – Closing the Knowledge Gap

Phased Retirement – Participation

Phased Retirement – Has Its Time Come?

The Phased Retirement Annuity

FERS and CSRS – Phased Retirement

August 12, 2014 /by Dianna Tafazoli

CSRS and FERS Phased Retirement Eligibility

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Someone asked whether both CSRS and FERS employees could participate in the phased retirement program. Yes they can, all things being equal. OPM was required to publish regulations and guidelines implementing phased retirement both under the Civil Service Retirement System (CSRS) and the Federal Employees’ Retirement System (FERS). Employees who participate in phased retirement are able to retire fully after being a part of phased retirement.

Currently OPM’s regulations state that participants work half time and receive a half-time annuity. Those percentages may change in the future according to OPM as program needs shift to align with the challenges of the 21st century. One of the strongest parts of the phased retirement program is that what might be appropriate for one agency might not be appropriate for another in terms of implementation. The agencies have a rather wide-expanse from which to customize their programs within the guidelines and parameters set by OPM.

Because retirement is always a sensitive subject and one that requires much thought and planning; entering into an agreement with your agency to participate in phased retirement must be given careful consideration. Since phased retirement is a new program, a new tool, it does not negate the primary action of taking good care of yourself by educating yourself. The more you know about anything, a more informed decision you will be able to make.

Phased retirement is certainly the new kid on the block and there are many lingering questions about what it means for employees participating on a number of fronts. What appears most important is the definition and purpose of phased retirement. It is no secret that every organization would be wise to protect, preserve and pass on institutional knowledge. That is exactly what the driving force is behind OPM’s push to create this new program or what they term a human resources tool that will protect the federal government’s institutional knowledge. Therefore, the program has little or nothing to do with anything else.

The Federal Government like many organizations realized on the back end that the passing on of institutional knowledge is a huge, irreplaceable component of any sound succession management plan. We are not going to stand in line to throw rocks at the Federal Government because I can assure you that many other organizations are guilty of a similar infraction or oversight. The difference is that the Federal Government just so happens to be the largest employer in the world. When an entity carries that distinction, operations might have to be carried out with greater efficiency. Now that OPM has implemented phased retirement which is also a work in progress, it hopefully will be a staunch reminder that the knowledge you gain in the work place, the skills you acquire in order to accomplish the duties and responsibilities of a position; be you a part of the federal, private, academic or non-profit world, do not belong to you, but to the institution. You don’t hold a patent on that information in this regard and in the end it does not make you indispensable. What it does create is a culture of costly inefficiency.

In actuality the world should have never become acquainted with the term ‘phased retirement‘ from the Federal Government particularly for the purpose for which it was created.

P. S. Always Remember to Share What You Know.

OTHER PHASED RETIREMENT RELATED ARTICLES

Explanation of Phased Retirement

Phased Retirement – Closing the Knowledge Gap

Phased Retirement – Participation

Phased Retirement – Has Its Time Come?

The Phased Retirement Annuity

Explanation of Phased Retirement

August 11, 2014 /by Dianna Tafazoli

PHASED RETIREMENT DEFINITION:

Phased Retirement is a human resources tool that allows employees to continue working on a part-time basis while receiving a part-time retirement annuity. Participants receive additional service credit towards their full retirement. Participants also begin receiving their retirement annuity payments consistent with the payments they would otherwise be entitled to prior to becoming a part of the phased retirement program. Prorated service credits will be calculated for the additional time worked during phased retirement.

PHASED RETIREMENT PARTICIPATION:

Individuals must collaborate and consult with their agency managers to determine eligibility for Phased Retirement and assigned duties and responsibilities. Years of service and the retirement system you belong in also determine eligibility and participation.

Speaking to your agency management and human resources will let you know what your options are. Completion of an application processed by OPM is necessary.

PHASED RETIREMENT BENEFITS:

Employees participating in Phased Retirement get their same benefits under the Federal Employees Health Benefits Plan (FEHB) and the Federal Employees‘ Group Life Insurance (FEGLI) program. The shared contributions from the participant and the government will remain the same. As for pay and leave, Phased Retirement participants are treated as part-time employees.

PHASED RETIREMENT TIME CONSTRAINTS:

There is no particular time limit for participating in the Phased Retirement program. The decision as to how long you will participate in the Phased Retirement program will be a decision made by you and your agency.

Persons contemplating participating in Phased Retirement should consider every aspect of the program to gain a detailed understanding. Discuss the program with your agency representative or human resources and your family so that you can make the best decision for your retirement future.

P. S. Always Remember to Share What You Know.

For Additional Phased Retirement Related Information Click HERE

The Phased Retirement Annuity

August 11, 2014 /by Dianna Tafazoli

One of the incentives offered to gain employee participation in the Phased Retirement program is the more generous annuity at full retirement. Federal annuities are calculated based on years of creditable service and the high-three average salary. Therefore, the longer you work the better things might look in the end for you.

Employees participating in the phased retirement program will have a larger federal annuity than had they retired prior to transitioning into the phased retirement program. A simple equation – additional time means a more handsome annuity. However, if the employee had continued working full-time, then the annuity would be even more generous.

Individuals participating in the phased retirement program must meet similar retirement eligibility criteria as employees fully retiring. Participants in the phased retirement program receive half pay and half their annuity. It should also be noted that the phased retirement participants continue to benefit from their Federal Employees Health Benefits Plan (FEHB) with no changes incurred due to their part-time status. The cost for FEHB remains the same as it was as a full-time employee.

NARFE (The National Active and Retired Federal Employees) are supportive of the final ruling. NARFE believes the phased retirement program will help to streamline the surge of federal employees leaving the service over the next few years. NARFE has expressed a concern about the enforcement of the mentoring portion of phased retirement via individual agencies. The whole premise of phased retirement is to pair very knowledgeable, long-tenured personnel with less seasoned employees. Therefore, if mentoring is not heralded by the agencies and the program itself – then the entire purpose of the program is forfeited. Protecting and harnessing institutional knowledge cannot possibly happen without a commitment from all concerned to understand, support and promote the idea of mentoring.

P. S. Always Remember to Share What You Know.

OTHER PHASED RETIREMENT RELATED ARTICLES

Explanation of Phased Retirement