FERS

FERS or the Federal Employee Retirement System is the retirement system applicable to the employees that fall under the US civil service. Its inception can be dated back to January 1, 1987 when it replaced the CSRS.

Should I Withdraw From Retirement Savings To Pay Off Credit Card Debt?

January 20, 2023 /by CKD ADMIN

Your retirement savings are there to help you survive through what could be decades of reduced income. So, it usually takes much work to draw into them before you need to. Even if you have a big credit card balance and are striving to reduce it, this is still true.

Of course, there will always be exceptions to the rule. But, with interest rates rising and credit card annual percentage rates reaching new highs, the exceptions are more important than ever.

You should know the potential consequences before withdrawing money from your 401(k), IRA, or any other retirement account to settle your credit card bills. For example, suppose you withdraw funds before reaching a particular age. In that case, you could be subject to a 10% penalty and a 20% federal income tax hit.

The cutoff age for 401(k) and IRA accounts is 59^1/2. You will incur a penalty if you take money from your account before that time. The total cost of fines and taxes could be almost as much as the original credit card balance. For example, let’s say you’ve run up a credit card bill of $15,000. In this scenario, CNBC cited statistics from Fidelity to show that you would need to withdraw close to $24,000 before penalties and taxes.

When you reach the age where you can withdraw your funds penalty-free, you will still have to pay taxes on them. Suppose you reduce the amount in your retirement account. In that case, you risk losing the principal and any investment profits that may have accrued. In a bull market, your earnings percentage increases in proportion to the size of your investment account.

Since markets have been falling steadily over the previous year, that is less important presently. Therefore, consider paying off your high-interest credit card debt instead of neglecting your retirement fund.

Allan Roth, certified financial advisor and president of Colorado-based Wealth Logic, told CNBC, “certainly, the math may make it worth it.”

Saving for retirement is a good idea once you’ve paid your debt.

Paying down credit card debt doesn’t need you to tap into your 401(k) or individual retirement account (IRA). Another choice is to stop making payments altogether.

Suspending contributions to your retirement account may be better than using retirement money to pay off credit card debt. It allows you to address your debt without permanently reducing your savings. By suspending contributions, you can free up some extra cash that you can use to pay off your credit card debt.

Additionally, withdrawing funds from your retirement account is generally less risky and costly than suspending contributions to your retirement account. Withdrawing funds from a retirement account can result in taxes and penalties, significantly reducing your savings. On the other hand, suspending contributions does not result in immediate financial penalties. You can always resume contributions once you have paid off your debt.

According to Ted Rossman, senior industry analyst at CreditCards.com, “It would make sense to stop or at least cut back on your 401(k) contributions and shift those monies to debt payoff.”

Suspending contributions is an option, but it could be better because you risk missing out on the employer match during that period.

You might also borrow money from your retirement account to settle your debt. Unlike IRAs and IRA-based plans like SEP, SIMPLE IRA, and SARSEP, the IRS says 401(k), 403(b), and 457(b) programs can issue member loans.

Conclusion

It’s crucial to address credit card debt as soon as possible. However, it’s also essential to consider the long-term consequences of your actions and make decisions that will positively impact your financial future.

It would be best to consider other options instead of using retirement money to pay off credit card debt. For example, it would help if you considered creating a budget and cutting expenses. Also, you should seek additional income through a part-time job or freelance work or speak with a credit counselor or financial advisor to develop a plan to pay off the debt.

The Retirement Process: Some Changes at the Last-Minute

January 19, 2023 /by kevin wirth

In these last three weeks, it was observed that you and your agency OPM had to do something to make you a retiree from being an employee. But a question arose. What if you have doubts?

There can be several reasons for this. One, there are better times to retire than now which can ultimately affect your decisions. Second, you are worried about the allowance that would not be enough for you to carry on normally and maintain your regular lifestyle. Or you heard that your company is taking over, and you do not plan to miss it. Do you want to know something better? The best thing about it is that you can change your decision anytime. You can retract your retirement application before OPM passes a judgment and finalizes an answer. But if you have gotten an interim stipend, you might have to return it.

You may have lost your job and cannot return to it. Why did that happen? There might be reasons for that too. Either the job position has been filled by someone else or has been abolished. Both of them will influence your mind. Even if no one fills the position, and you would like to return to the place, your agency can deny your request. And they would even explain in writing if they did deny your request. If you do not want to change your mind, you can still alter the amount you chose for the annual stipend for your spouse. Since the law allows it, you will still have to provide a survivor allowance for your spouse. You can only reduce the amount if your spouse allows it in writing.

There is a very small chance that permits you to do so. You only have 30 days from the first monthly payment to less than 18 months when your annuity begins. Moreover, if your spouse agrees to have a lesser monthly stipend or no allowance at all but you want to increase it, there is another thing that can be done. You will have to make a payment to OPM, which is one time and equals the amount difference between the old and new payment. There is a certain percentage, of 24.5% if you upgrade from no survivor benefit to a full one. And 12.25% if you are making them a partial one.

You will have to write a letter to OPM and request a change in your original survivor benefit. The address is OPM, Retirement Operations Center, P.O Box 45, Boyers, PA 16017. You must write the details of the claim number and the amount of your new survivor election, including the name of your spouse. Also, add your DOB and a copy of your marriage certificate.

This gives you a more exact idea of whether you can retire.

Contact Information:
Email: [email protected]
Phone: 9143022300

Bio:
My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial [email protected] 914-302-2300

Report Cautions Federal Employees on Recruiting Friends, Family

January 18, 2023 /by mickey elfenbein

The inspector general’s office for the Department of Justice has issued a warning that might be applicable elsewhere, cautioning ATF personnel against recruiting relatives and friends for employment at the agency.

It is usual for ATF personnel to recruit from among friends and family for unique agent jobs, according to a management alert, which is often the result of information cropped up in an ongoing investigation that an IG considers worthy of quick action.

These roles are filled using the Schedule B power granted to exempted services, allowing more precise recruiting to meet an organization’s mission requirements.

However, agencies that adopt this authority still need to ensure they’re employing people based on merit and that their staff isn’t engaging in awkward practices like giving someone a leg-up or lobbying for a family member to get hired.

As stated in the study, recruiting among friends and family is inappropriate. A referred candidate must still overcome numerous obstacles to be hired at ATF, including submitting a formal application and completing a Physical Task Test, panel interview, written test, polygraph testing, and background check.

Despite this, the document acknowledged that recruitment of friends and relatives might, in some situations, give rise to concerns under the federal merit-based employment legislation or the Standards of Ethical Conduct, even if the eventual hiring decision is devoid of nepotism.

However, any ATF official’s statement endorsing or recommending the candidacy of a family member they are recruiting could constitute improper advocacy of the relative’s appointment. It is true even if the official is not the ultimate decision maker or participates in the relative’s hiring.

Though ATF does not have a written policy governing the recruitment of friends and family, it does not provide employees engaged in recruiting activities with any specific process to follow when recruiting a friend or family member, and does not provide training or guidance to employees regarding potential ethical, appearance, or merit-based hiring issues that can arise during the recruitment stage.

The Inspector General expressed concern that without such a policy, process, or guidance, ATF employees may not understand how the federal merit principles and ethical standards apply at the recruitment stage and may unwittingly run afoul of those principles and standards in performing their Schedule B recruitment duties.

Contact Information:
Email: [email protected]
Phone: 6122163911

Bio:
Mickey Elfenbein specializes in working with Federal Employees relative to their retirement benefit plans, FEGLI, TSP, Social Security and Medicare, issues and solutions. Mr. Elfenbein’s mission is to help federal employees to understand their benefits, and to maximize their financial retirements while minimizing risk. Many of the federal benefit programs in place are complicated to understand and go through numerous revisions. It is Mr. Elfenbein’s job to be an expert on the various programs and to stay on top of changes.

Mickey enjoys in providing an individualized and complimentary retirement analysis for federal employees.

He has over 30 years of senior level experience in a variety of public and private enterprises, understands the needs of federal employees, and has expertise built on many years of high-level experience.

Reemployment and Its Influence on Federal Retirement Benefits

January 18, 2023 /by todd carmack

You might have seen a time when you got into a dreadful quarrel over your health benefits plan. You wanted medical procedure coverage in the plan, and it was not there for your needs. Fortunately, there is a method that would resolve such disagreements. If you disagree with your plan’s decision, you can and should ask them to reconsider. You can follow the procedure of writing to OPM mentioned in the plan’s brochure when you choose it.

But if the plan still does not agree to the demands, you can and should write to the Office of Personnel Management (OPM) and request to take a review of the claim you have provided. Also, the information about writing an application to OPM is mentioned in the plan’s brochure.

How does OPM respond to queries?

OPM has a way of accepting requests. Therefore, write an appealing application that they would consider. Make sure you provide the necessary details. If they require no information besides what you have given, they will give their final decision in 60 days. If they need more information to confirm you or the plan, they will inform you by writing you back 14 days from the day you registered. Also, they will give you a phone number through which you can have an update regarding your claim status. If the decision is made in your favor, you do not need to worry and take a pause.

But in case your claim has been rejected, you can file for it in Federal Court. You are free to do so. Furthermore, the best way to resolve your case early is by reading what is written on the brochure very carefully. Remember that your brochure is a contract. It is similar to any other agreement you make.

How will your contract help you win the case?

When a dispute is seen, you need to stick to your contract to prove the validity of your point. Then, you will have to gather all the facts and support your argument. The better you do this, you will likely get a positive response for the reconsideration application. If this does not work as you want it to, you must go to OPM. It would be best if you had a logic that would counter the decision OPM has made for you. You could point out the mistakes or the vague language in the contract. It might allow you to get the help you want.

Remember one thing. If there is a particular medical procedure or a service that needs to be covered in the brochure and it is not covered (which is the last thing you would expect), the chance of getting a payment for it is zero. But other than that, your argument might be why it should get covered. It may be a huge help since it will add to the contract for the coming year, and many would benefit.

Contact Information:
Email: [email protected]
Phone: 6232511574

Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.

Getting A Head Start For Retirement Plan

January 17, 2023 /by jeff boettcher

Long-term planning is the most effective method to ensure a prosperous retirement. However, only some have years to prepare for their retirement.

Steps You Should Take When Your Retirement Is Near

There are numerous things to consider before retirement. We have gathered a few of the most important steps for your retirement planning to save you from panic after seeing a lengthy planning procedure. But to avoid end-moment problems, take the suggested action two months before your retirement.

1. Confirm when you’ll be eligible for retirement benefits

The first step is to determine your eligibility. You can begin collecting retirement benefits when you turn 62. However, you are eligible for all benefits once you reach full retirement age. Your benefit amount will rise if you postpone claiming your benefits from full retirement age until age 70.

2. Decide when you want to retire

It can be complicated to determine whether it is time to retire. Some people find it easy to make a decision. They know they are ready to retire from their careers and embrace their golden years. Others, though, may find it more difficult.

Do you have a strong desire to try something new?
Do you feel sluggish going to work daily but are frightened to quit a successful position you’ve worked hard to obtain?
Or do you simply not feel as happy or content as you once were?

If any of these apply to you, it may be time to retire.

3. Request an annuity estimate from your agency’s HR office

After deciding that it is time to retire from your work, request an annuity estimation. You can also check your annuity statement through OPM’s Online Retirement Service. All you need to do is sign in with your account on their website, and you can easily access your annuity statement.

4. Get information about other benefits you may be eligible for

The next stage is determining eligibility for additional benefits such as Thrift Savings Plan (TSP) payment alternatives or other entitlements such as Foreign Service, Social Security, Medicare coverage, private company pensions, and Individual Retirement Accounts (IRA). You should consider boosting your investments in the Thrift Savings Plan to provide some more muscle for your retirement income.

5. Attend a pre-retirement counseling seminar

After learning about your eligibility for various benefits, you should have a complete picture of all sources of retirement income and when they are payable. Then try to look for pre-retirement seminars around you. Attending pre-retirement workshops and courses can offer you the knowledge to assist you in becoming more confident in your retirement plan selections.

6. Review and reconfirm the benefits and their values

Check your OPF to ensure that your Designation of Beneficiary forms are accurate and validate your retirement eligibility date (as well as your ability to maintain your FEHB) FEGLI coverage into retirement) as your retirement date gets closer. Review the retirement process in person with the HR department of your company. Verify that they have recorded all the information about your health and life insurance coverage.

7. Decide a schedule and submit final papers

As your retirement date approaches, you’ll need to update those dollar figures, investigate your TSP options, and verify your retirement applicants’ date and OPF to ensure your Designation of Beneficiary forms are up to date. If you’re married, you should also consider your possibilities for death benefits.

Finally, you must set the schedule, complete the documentation, and submit it to your personnel office to ensure everything is in order. It should be done around two months before retirement in case complications develop, such as your candidacy for retirement or any other problem.

Final Words

FERS provides federal employees with many retirement alternatives. The conditions for each form of retirement and the rewards provided differ. Workers may generally begin collecting benefits when they satisfy specific standards and complete the necessary paperwork.

However, you need to be well prepared for your rainy days. Retirement means that you will no longer receive your monthly income. Your income will be the TSP funds you saved and FERS retirement benefits only. Besides, the rate at which inflation rises will be challenging to survive on a lesser income and wholly depend on your retirement funds. Therefore, you must get a head start on retirement planning long before retirement.

Contact Information:
Email: [email protected]
Phone: 8007794183

Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”

Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients â€“ I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.

A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.

Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.

Benefits of the FEHB Program and the Role of Medicare

January 17, 2023 /by george learned

Health programs have many procedures that are covered to provide help in every way. People have many concerns when they look for the federal health benefits program. To every question, there is an answer. A whole list of options is covered in this program. Here are some of them.

What types of programs are being offered by Medicare?

Medicare beneficiaries can enroll in Original Medicare or choose an option in which they will benefit from medical advantages. It depends on where you live and the covered plans under your preferred choice. You can almost ask for every medical expense. Medicare will help you pay for insurance like critical access hospitals, skilled nursing facilities, and home health care. Other than that, they allow you to pay for medical insurance, including services of doctors, ambulances, X-rays and tests, preventive maintenance, OPD and medical equipment. Moreover, you are eligible for these services if you are above the age of 60 years. Also, if you have many serious problems like disabled or chronic kidney disease, including End-stage Renal Failure, you might need to contact the Social Security Administration.

If I have FEHB coverage, will I need Medicare coverage too?

If you have coverage for hospital expenses and have not paid premiums, you can have it even if you are an employee. It might cover some of the costs that the FEHB plan does not cover. Also, if you already have the coverage, you would not need to have a Medigap policy. FEHB and Medicare will coordinate and provide the benefits you need. They offer a wide range of medical expenses, covering almost everything that needs to be done.

If I work past age 65, will my FEHB coverage remain primary?

Yes, your FEHB coverage will remain primary. It will remain the same until you retire. Moreover, if you are concerned about the payments, you can continue paying the same premiums until you switch your plan to another. If you plan to switch your plan to Medicare and they become the primary, it would be dealt with accordingly. Once Medicare becomes the primary payer, you will have to not worry about FEHB since they are lower in cost. It would be sufficient for your needs. It will be better, especially if you are enrolled in an expensive plan.

If I go to my FEHB HMO’s providers, do I have to file my claim with Medicare?

No. If there is a need, your HMO will file for you, and then they will pay the portion after Medicare has paid. Usually, you will pay the FEHB HMO copays required for the procedure. However, some HMOs let go of payment of their copays. Also, you should always check your plan’s brochure for more details and clarifications. Alternatively, your HMO will pay for the portion not covered by Medicare services.

Contact Information:
Email: [email protected]
Phone: 3037587400

Officials in Delaware Revert to the Previous Health Care Plan for State Retirees

January 12, 2023 /by mark heinrich

Delaware officials decided to maintain the present healthcare plan for state retirees through 2023, which is a significant reversal. Even when lawmakers requested a halt, the Carney administration insisted for weeks that the Medicare Advantage scheme would proceed and could not be altered.

But that changed last week when the Medicare Advantage plan’s implementation for the upcoming year was temporarily halted after a Superior Court judge supported state retirees in a lawsuit.

According to Judge Calvin Scott’s order, “during the stay, defendants shall take all the necessary and appropriate steps to ensure that the health care plan and benefits offered to state retirees before October 3, 2022, or under which they were enrolled before that date, remain in full force and effect.”

The State Employee Benefits Committee decided to renew the Special Medicfill Supplement Plan for an additional year during its meeting to comply with the decision.

This is another significant victory for the group of state pensioners who have been opposing this reform since the summer. The lawsuit claimed that the state’s implementation of the reform was opaque and did not allow pensioners to provide feedback.

One of the claimants was former state senator Karen Peterson. Judge Calvin Scott’s decision required a trial to be convened to determine the viability of the Medicare Advantage plan.

The Carney administration earlier chose to switch state pensioners to a Medicare Advantage plan to reduce the state’s increasing unfunded obligations, estimated to reach $33 billion by 2050.

The Highmark Blue Cross Blue Shield of Delaware plan was scheduled to start in January. However, this new idea scared pensioners. Many others feared they would be compelled to purchase health insurance that might delay or refuse service. In recent months, Medicare Advantage plans have come in for much criticism, notably from the federal government.

Eventually, a few congressmen spoke against the Medicare Advantage scheme, claiming that the Carney administration had misled them.

The Senate released a joint statement saying they intend to take advantage of the opportunity of the court-ordered pauses to work with State pensioners to make sure any alteration to their healthcare plan lives up to our obligations to them, protects the health and welfare program, keeps it solvent, and is clearly communicated.

A bill to increase oversight of the transition to Medicare Advantage was scheduled for a vote by lawmakers. However, that bill is no longer applicable due to the SEBC vote on Monday. After its meeting on Monday, the General Assembly declared the vote had been canceled.

The rates under this Medicfill plan will be the same for 2023 as they are for this year. The secretary of the Delaware Department of Human Resources, Claire DeMatteis, noted that these “rates also aren’t being cut as they would have been under the Medicare Advantage plan” as the committee voted to approve them.

Additionally, she said that between 2,500 and 3,000 state pensioners would have seen a reduction in their monthly payments and that close to 500 people who couldn’t afford Medicfill enrolled in Medicare Advantage. The Medicare Advantage plan, according to activists with RISEDelaware, the grassroots group opposing it, might result in substantial unforeseen costs for seniors, especially since prior authorization would be a requirement.

Elisa Diller, a co-founder of RISE, said in a statement: “The fact that retirees were not informed of these changes to their benefits or invited to participate in developing this mandate is particularly worrisome when the evidence supports the reality that their Traditional Medicare plans will be secondary to Highmark’s decisions in matters of healthcare plan approvals and treatment options.”

More than 100 retirees virtually attended the gathering. A few minutes later, the committee faced frank and, at times, heated public comments. While appreciative that the current scheme was being continued, they criticized the state officials’ conduct and pleaded with the committee to involve pensioners in its decision-making.

The Medicare Advantage plan and the decision-making process, according to several retirees, were “screwed up,” “absurd,” and “unconscionable.”

According to retiree Lynda Hastings, the past three months have been “terrible” for retirees and the state. “Let’s avoid doing this once more,” she said. “Please include us when making these decisions.”

Contact Information:
Email: [email protected]
Phone: 9187441333

Bio:
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Markâ€™s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families. Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation. Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.

Disclosure:
Securities offered through GRF Capital Investors, Inc., 6506 South Lewis Avenue, Suite 160 Tulsa, OK 74136 Phone: 918-744-1333 Fax: 918-744-1564 Securities cleared through RBC Capital Markets, LLC. 60 South 6th St., Minneapolis, MN 55402 Member FINRA www.finra.org / SIPC www.sipc.org Broker Check http://brokercheck.finra.org/

Workers Place the Most Value on TSP, Annuities, and FEHB.

January 11, 2023 /by jeff boettcher

According to a poll of federal employees, the TSP, retirement annuities, and the FEHB health insurance program are the most highly regarded benefits. Employees generally see these benefits as satisfying their needs and offering a fair value.

The OPM recently revealed the results of the 2021 Federal Employee Benefits Survey, which were in line with earlier surveys conducted yearly.

The TSP, retirement annuities (FERS or CSRS), FEHB coverage in retirement, and FEHB generally all received ratings of important or extremely important from 96% to 95% of respondents, 93% to 95%, respectively. In addition, the response about FEHB coverage in retirement grew by one point. Otherwise, those were constant from 2019.

Dependent care flexible spending accounts, which increased from 22% in 2019, were again at the bottom, coming in at 27%. Thirty-five addition, percent of those polled claimed they were ineligible because they lacked a qualifying dependent, which keeps the overall number down. Above that was the FLTCIP long-term care insurance scheme, which received a 41% rating of importance or high importance, down one point from 2019.

In a similar vein, 93% of respondents to the TSP and 95% of respondents to the FEHB believed that the latter addressed needs to a significant or moderate level, while 87% of respondents to the TSP and 73% of respondents to the FEHB thought the latter offered a good or exceptional value (since the survey went only to active employees they were not asked whether the FERS or CSRS annuities met their needs or were a good value). They were either identical to the 2019 survey’s responses or were within one point of it.

Like previous studies, the FEHB had a moderate to substantial impact on 72% of respondents’ decisions to accept a federal position. However, it had an even more significant impact on 79% of respondents’ decisions to stay with the government. In addition, 78 and 88% of retirement annuities were available, while 71 and 81% of eligible participants in the TSP did so.

Furthermore, despite being qualified, survey results revealed a pattern as to why employees do not sign up for optional benefit plans. Among individuals who weren’t signed up for the FEHB, FEGLI, and FEDVIP dental plans, the most frequently cited excuse was coverage by comparable other insurance.

However, among those who did not participate in FLTCIP or FEDVIP vision, the most typical justification was that the participants did not think the programs were worthwhile. The most frequent excuse for not participating in dependent care accounts was ineligibility, whereas the most frequent one for flexible healthcare spending accounts was lack of interest.

The most frequent excuse given by the 2% of people who don’t contribute to the TSP is that they can’t afford to.

Breakdown of result Results of Enrollment

The 2021 FEBS included questions that, like earlier surveys, asked respondents to specify which benefits programs they were enrolled in. With modest increases (three percentage points or less) in several programs, reported enrolment remained stable between 2021 and the latest survey administration in 2019. However, the reported enrollment in the Federal Employees Dental and Vision Insurance Program (FEDVIP) Vision increased by five percentage points between enrollment results in 2019 and 2021, which was the most significant shift. Therefore, the 2021 FEBS enrollment figures are shown for all programs.

Reasons for Refusing to Join Benefit Programs

To get insight into the potential factors influencing decision-making and how they might differ between programs, participants who said they DID NOT enroll in each benefit program were asked to explain the primary reason. The survey’s overall findings were basically in line with earlier iterations.

High-uptake programs’ deterrents to participation tend to remain constant over time. For instance, the majority of workers who were not registered in the Federal Employees Health Benefits Program (FEHB) stated, “TRICARE covers me,” “I receive health insurance via someone else’s job or retirement annuity,” and “I cannot afford to make TSP contributions.”

Finding enrollment obstacles and chances to increase employee uptake can be achieved by analyzing these results for programs with lower enrollment. For example, the program is unavailable to employees who are not responsible for paying for dependent care expenses, even though DCFSA through FSAFEDS had the lowest reported enrollment in 2021 (7%).

According to the FEBS findings, 35% of people who are not already registered in DCFSA reported not enrolling because the program does not apply to them. In addition, employees’ claims that the FLTCIP and FEDVIP-Vision programs are not a good value were cited as the most frequent deterrent to enrollment. This suggests room for program enhancement and improved employee outreach.

Table 2 below lists the primary reasons for not enrolling in each benefit program.

Contact Information:
Email: [email protected]
Phone: 8007794183

How Can I Continue to Provide for My Son After I Retire?

January 9, 2023 /by mark heinrich

The responsibility of raising children can last a lifetime. Many parents still feel obligated to their children, including the need to provide for them financially, even as they get older. This still holds true even though those kids have grown up and have their own families, responsibilities, and lives.

The Cost of Care

What happens if your kids or other family members require your financial assistance after you’ve retired? A retired federal employee asked the following question.

Question: I am a widowed CSRS retiree and will turn 65 in late 2023. At that point, I’ll sign up for Medicare. My son, who is 22 years old, is a college student who wants to go on to graduate school and potentially beyond. I’m now enrolled in the Federal Employee Health Benefits program as a self-plus one.

I’m unsure what the best course of action would be to ensure that I have enough medical coverage once I turn 65 and up until my son ages out of FEHB at age 26. Any recommendations?

Reg Jones, a senior executive service founding member, responds to this question.

Reg’s Answer: When they become eligible for Medicare, most retirees continue with the FEHB plan they were enrolled in. That’s because the two together significantly lower their out-of-pocket medical expenses.

Some choose a less expensive FEHB option or plan because they believe it will cover most of their needs. Even fewer people choose to sign up for Medicare Part B because they believe the cost is not justified by the few additional advantages they will receive.

You should think about which FEHB plan or choice will best protect your kid and also protect you financially in the event of an unforeseen medical emergency since you want to ensure that he has adequate health insurance coverage. At the same time, he is still enrolled in your enrollment.

Any Open Season is appropriate for changing your choices or plans. However, you have a once-in-a-lifetime chance to change that under Qualified Life Event 2L, starting on the 30th day before becoming eligible for Medicare.

Further Breakdown of FEHB and Medicare for Kids

FEHB for Kids

Your spouse (including a legal common-law marriage) and children under 26 years old, including legally adopted children, stepchildren, and acknowledged natural (born out of wedlock) children, are family members who are eligible for coverage under a Self and Family enrollment.

They are included if your foster children reside with you as part of a typical parent-child relationship. Another qualified family member is a child aged 26 or older who cannot support themselves due to a mental or physical impairment before that age.

To evaluate whether the child is an eligible family member, the employing office will consider the child’s relationship to you as the enrollee.

Medicare Benefits for Kids

Medicare coverage is available in a few specific situations for children. According to Medicare, a “kid” or “child” is someone under 22 years old and unmarried. As long as they remain single and continue to meet the requirements, a child who has been approved for Medicare may continue to get coverage until they turn 26.

A kid must have a parent or legal guardian who, in either scenario, has either accrued at least 6 Social Security work credits in the previous three years or is currently receiving Social Security retirement benefits.
Children can be eligible for Medicare through birth, adoption, or stepparents. Stepparents must have been the child’s stepparent for at least a year to qualify.
Children can also be eligible if their grandparents or step-grandparents serve as minors’ guardians.
Only children with disabilities are eligible for children’s Medicare coverage. Even then, a child will only be qualified for coverage at certain times.

What Elements of Medicare Cover Children?

Different elements of Medicare can cover kids, depending on how they qualify. Any component of Medicare, except Medigap, is open to enrollment for children who meet the criteria for Medicare and who have a disability.

Only Medicare beneficiaries who are 65 years or older can purchase Medigap policies from most Medigap carriers. Some businesses, though, will market to beneficiaries who are younger. In fact, some states mandate that all Medicare participants, regardless of age, have access to Medigap coverage.

Contact Information:
Email: [email protected]
Phone: 9187441333

7 Life Events That Can Lower Your Medicare Premiums

January 8, 2023 /by joe carreno

Retirees may find that healthcare costs consume a sizable portion of their income. According to Medicare.gov, enrollees aged 65 and up should expect to pay a monthly Part B premium of at least $165 in 2023. In addition, you’ll need to pay 20% of service costs and the $226 deductible yearly.

Although Medicare Part A may be free for many individuals, starting in 2023, you will also have a $1,600 deductible for any hospital stays.

The Part D monthly rates vary, but if you don’t enroll when you’re qualified, you risk paying a 12% annual penalty, even after you’ve chosen a plan.

Additionally, Medicare Part B rates may be substantially higher for those whose annual income exceeds the thresholds established by the government. In 2003, Medicare started charging a fee called the income-related monthly adjustment amount (IRMAA). Medicare adopted this approach to keep costs down.

According to AARP, 7% of Medicare beneficiaries may be required to make these extra payments.

Techniques for Calculating the IRMAA

You’ll need to disclose your MAGI on your tax returns to determine your IRMAA. This is because Medicare premiums are determined not by your current income but by your MAGI from the previous two years, according to the Social Security Administration (SSA). AARP estimates that, depending on your income, you could pay an extra $66 to $396 per year for Medicare Part B and an additional $78 per month for Medicare Part D.

There are, however, seven situations where you can legally dispute the allegations. Appealing to higher premiums helps you better manage your funds if you are nearing retirement and expecting one of these situations.

The Loss of a Loved One

After losing a spouse, the couple’s joint income often drops drastically, making them candidates for premium reductions. A death certificate or other official document proving the decedent’s death is required, as is an updated income projection.

Marriage

Many tax incentives have higher thresholds for married couples filing jointly. For example, suppose one spouse’s income exceeds the $97,000 cap, and that person demanded higher premiums in the prior year. In that case, a married couple whose combined annual income is less than or equal to $194,000 may no longer be subject to IRMAA.

Separation or Dissolution

Similar to how your premiums may go down when a divorce or annulment lowers your income. You’ll need to provide evidence of the adjustment and a rough estimate of your new revenue.

Whether or if One is Employed

Medicare premiums may be lowered if you’re no longer working as many hours or earning as much money as you were before retirement (or after age 65). You must provide proof, such as a pay stub, corporate minutes, a declaration from your employer, or other acceptable evidence. The following year’s tax returns should likewise reflect the adjustment.

Business sales

If you sell your firm and no longer have any income associated with it, you may not be subject to IRMAA. However, you can provide evidence of a business sale or transfer by presenting a transaction record, a declaration from the firm owner, or the corporate minutes.

Reduced Earnings Due to Circumstances Beyond Your Command

Suppose you are retired and rely on rental income from the property. In that case, you may not be liable for IRMAA penalties if such income is lost due to circumstances beyond your control. For instance, you should notify the Social Security Administration immediately if you lose income from rental properties, farmland, crops, animals, or company cars because of a fire, flood, or theft.

Loss of Specific Types of Pension Income

Suppose your pension income decreases or disappears after you retire. In that case, you may be exempt from paying the increased Medicare premiums that would otherwise apply. However, the loss of income must be the direct result of the failure or termination of the plan or the annuity’s natural expiration.

Examine Your Annual Income and Medicare Expenses

Remember that the Social Security Administration will examine your tax returns yearly for evidence of IRMAA penalties. The amount you pay each year for Medicare is subject to change based on your income from sources like capital gains, the sale of property, and company profits or losses.

Before making any significant financial decision, it is wise to consult a financial counselor.

Contact Information:
Email: [email protected]
Phone: 8139269909

Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available. Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.

The Benefits and Drawbacks of Investing in Stocks vs. Real Estate

January 6, 2023 /by aaron steele

The closer you are to retirement, the less risk you should accept with investing money. Where do you draw the line since investing is a tried-and-true method of ensuring that you can unwind, travel, and enjoy your well-earned retirement years sometime in your life?

There are several strategies to increase your money by investment. The best approach, however, is to start investing early and keep doing a bit each month. Over time, your initial investment will increase so you will eventually be able to live solely off the interest that a sizable primary amount generates.

Stock market investing through an employer-sponsored 401(k) is the most common investment option. You can invest in stocks independently, which allows you to access the money whenever you choose, unlike retirement accounts, where you must be at a particular age to make penalty-free withdrawals.

Another way many investors increase their money is through real estate investment. Since there are no limitations on how you can use whatever profit you make, using this strategy might enable you to retire earlier.

This article examines the advantages and disadvantages of stock and real estate investing.

Pros of Real Estate

Real estate is the expert-recommended safe investment approach. You use a generally safe technique when you “purchase and hold” rental property. Value variations in real Estate don’t frequently occur. Instead, it has grown gradually through time.

Individuals require a place to live in any economy, including those in a boom, slump, or depression. There will always be a demand for cheap rental accommodation, even though market rents may fluctuate.

Cash Flow Now and Passive Income

Real estate investing allows you to be as involved or passive as you want to be. You might produce a higher monthly income flow by autonomously maintaining your properties and performing repairs. You can also engage a property management business to take care of everything for you while preserving property ownership if you still have a demanding day job or don’t want to deal with it.

If you have positive cash flow, your tenants are ultimately responsible for paying all your expenses, including your monthly mortgage. This indicates that you are accumulating equity without having to make any monthly financial contributions of your own.

Leverage

You can earn interest on loans taken out in the form of mortgages by investing in real estate. You get to receive the full return from monthly rent or property appreciation, even if you don’t have to invest the entire home’s value on your own.

Expense Reductions

It’s true what they say about real estate investments helping you with tax deductions. You’ll be able to write off costs like transportation, owner-paid utilities for your properties, and a share of any payments for services connected to your business, such as your cell phone or internet service.

You can also depreciate your property on top of that. Depreciation allows you to spread out the cost of your asset over its useful life, lowering your taxable revenue.

The fact that profit from rental properties is taxed as ordinary income rather than being subject to self-employment tax, which would otherwise be a whopping 15% on top of your regular income tax rate, is perhaps one of the biggest tax benefits of real estate investing. This is because rental property profit is not subject to self-employment tax, unlike other entrepreneurial businesses.

Inflation Protection

One of the most beneficial advantages of real estate investing in the present markets is that properties rarely feel the effects of inflation. Real estate investments typically increase in value alongside inflation rather than decline. In fact, over the past three decades, property values have remained stable, along with inflation.

As a real estate investor, your expenses will align with your income and property value. If you are a landlord, you can change how much you charge for rent to preserve or even increase your income flow in response to inflation.

Numerous Investment Possibilities

One feature of real estate that many people find particularly enticing is its flexibility. Purchasing a single-family home, a piece of land, or leasing commercial real estate are all examples of real estate investments. The best real estate investment for you depends on your lifestyle, financial goals, and capabilities. You’ll get to decide what properties and assets you buy as a real estate investor and how you make money.

Cons of Real Estate

Time and Effort

Even while you might be able to hire someone else to handle your real estate investment, you’ll still have to invest time and effort in finding the right property, paying for any necessary upkeep, and establishing the workflow. You’ll also need to put in some action during the tax season.

Real Estate Isn’t a Liquid Asset

When your money is invested in real estate, it might be challenging to access. If you’re in a rush to sell, you might sell for less, but you’ll still have to wait 30-60 days to get your money.

Poor Market Circumstances

Long-term trends show that real estate values rise, but there are sometimes downturns. This can surprise you if you aren’t considering long-term investing and don’t have much equity built up. It occurred during the 2008 housing market collapse. Many investors were “underwater,” which meant that the value of the homes they owned had fallen below the amount of the mortgage they still owed.

They had to choose between selling the home immediately and paying the bank back for the mortgage out of their own pocket or being obliged to keep it even if it wasn’t making a profit.

The Price of Selling a Home

While moving money in and out of the stock market is simple and low-cost, selling real estate may be particularly challenging. A seller’s closing charges range from 5% to 6% of the ultimate selling price. That amounts to $5,000 to $6,000 on a $100,000 investment property.

Consider working with a discount agency if you’re selling to avoid paying commissions. Also, bear in mind that by using a 1031 exchange, you might be able to evade paying capital gains tax on your sold investment property.

Pros of Stocks Investing

Stock Grows in Value Over Time

Historically, the value of stocks has risen with time. The S&P 500 has an average yearly ROI of 9% to 10%. Equities gain value in the long run, even though it doesn’t happen yearly.

Own a Piece of a Company without Putting in Any Work

When you own stocks, you effectively own a share of a business but are not responsible for its financial success. You only need to give the company access to your investment funds; if the business succeeds, you will get a return on it. A stock is the most passive investment vehicle available.

Easy Diversification

You are allowed to own as many stocks as you like. This makes it simple to diversify businesses and industries. No matter how hazardous your portfolio is, it can be diversified. To diversify your real estate holdings similarly to the stock market, you must own the entire property unless you invest through real estate investment trusts (REITs).

Liquidity

Stocks are incredibly liquid when compared to real estate. In truth, most trading systems let you transfer money with a single click to your bank account. This can be very useful if you want to spend money immediately. However, it’s not if you anticipate needing access to it in the future.

Cons of Stocks Investing

Economic Recessions Can Lead to Major Losses

Even though stocks often gain in value in the long term, your supplies could lose a significant amount of value in a matter of hours during times of economic downturn. And even though your initial reaction could be to panic and withdraw the balance of your funds, it’s best to maintain your composure and distance from your investment at such times. Your assets will often increase again after the market has corrected itself.

Stock Prices Frequently Fluctuate

Stock prices, in contrast to real estate, fluctuate constantly. A gently declining real estate market may be possible, but equities can be a little trickier. Additionally, they might rise quickly again, so it’s not always a smart idea to withdraw your money in a hurry.

Quite Risky

Long-term investment can enable you to accumulate money, but turning a significant return on equities can be challenging. You can purchase riskier equities in the hopes that they will succeed.

But keep in mind that you have no control over the company and, as such, cannot influence its course. Stocks are dangerous by nature since you cannot control your profit or loss.

Time-consuming

You must closely monitor the market if you want to play the short-term game to decide when to invest and withdraw money. But if you’re betting on the long run, you’ll need to be content with watching the market evolve without being able to influence it.

Don’t get into any form of investment blindly; instead, make sure you do your research before putting your money anywhere.

Contact Information:
Email: [email protected]
Phone: 3604642979

Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.

Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.

Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.

Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.

Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.

With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

Disclosure:
Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.

Confidential Notice and Disclosure: Electronic mail sent over the internet is not secure and could be intercepted by a third party. For your protection, avoid sending confidential identifying information, such as account and social security numbers. Further, do not send time-sensitive, action-oriented messages, such as transaction orders, fund transfer instructions, or check stop payments, as it is our policy not to accept such items electronically. All e-mail sent to or from this address will be received or otherwise recorded by the sender’s corporate e-mail system and is subject to archival, monitoring or review by, and/or disclosure to, someone other than the recipient as permitted and required by the Securities and Exchange Commission. Please contact your advisor if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. Additionally, if you change your address or fail to receive account statements from your account custodian, please contact our office at [email protected] or 800-779-4183.

The Risk of Inefficient TSP Contributions

January 3, 2023 /by jeff boettcher

How much is sufficient? What role does greed play while making future investments? What risks should you take or avoid to achieve your financial objective? How much is too much?

These are easy to answer. How much is sufficient depends on who is asking, who is being asked, and what the topic is.

Is it your retirement fund, your kids, your closet full of suits, or your stash of potato chips? The target is constantly shifting. When it comes to having enough money to retire, it depends on your age and financial situation, which might change over time. It most likely will.

Aiming for a million-dollar nest egg would be feasible at age 25. But by age 50 or 60, that might have changed. Possibly experienced one or two severe recessions or saw astronomical inflation. Right now, they say, there is no one getting any younger. However, the world and the economy are constantly changing–from the price of gas and infant formula to the possibility of an escalating war in Europe.

Abraham Grungold, a recently departed federal employee, shared his opinion on these issues. Abraham recently left the government after a long career and many years as a TSP investor. He amassed a million-plus dollar fortune. He stated the following through cautious and consistent investing.

How much is sufficient for TSP?

Over 100,000 TSP millionaires are among the nearly four million federal employees participating in the Thrift Savings Plan (TSP). So how much TSP money is required to fund a comfortable retirement? What is the minimum required income for a comfortable retirement?

It depends on various variables that vary depending on each person’s financial and personal demands. Federal and state taxes may differ from the figures in the two scenarios below.

Single Individual: Let’s say you have a 30,000 annuity, a 20,000 SSA benefit, and 500,000 in your TSP after 30 years of federal employment at age 62. You can withdraw 4% of that amount yearly for the next 25 years, or 20,000, from your TSP. Your annual total decreases to roughly 55,000 from 70,000 after taxes. Will your lifestyle be satisfied by this level of income?

Married couple: Let’s use the example of a couple who are both 62 years old and have a federal employee as one spouse. Additionally, they have $1 million in retirement savings, including their TSP.

Spouse #1 has a $30,000 annuity, whereas Spouse #2 has a $20,000 Social Security benefit. Over 25 years, they will withdraw 4%, or $40,000, of their $1,000,000 investment. Their total income, which is $110,000 annually, is reduced to about $85,000 annually after taxes.

Will this income support your lifestyle?

Before retirement, federal employees must maximize their contributions, invest aggressively, and think about a plan for unforeseen life occurrences to obtain the desired amount of retirement income. Several federal workers have said that $2 million will be plenty for their retirement. But is it sufficient?

There are unforeseen twists and turns in life. Listed below are a few unforeseen circumstances that may arise upon retirement:

1. Inflation and the overall increase in prices.

2. A mortgage for a vacation or second house.

3. Prescription drugs and medical needs.

4. College expenses for the grandchildren.

5. Nursing or long-term care facility.

It is highly recommended that anyone close to retirement develop a thorough income plan before committing to a specific retirement date. That can give retirees peace of mind and may even result in an earlier retirement date for individuals who had believed they had more time left.

You should adopt a cautious attitude and keep extremely strict tabs on your spending in retirement. Even if they are making withdrawals, TSP participants still need to invest somewhat actively to prepare for these unforeseeable catastrophes and keep growing their TSP.

“As a financial advisor, I frequently receive inquiries from federal employees about their retirement plans, TSP accounts, and non-TSP assets.” “I advise them to have a backup plan in place for retirement to handle any unforeseen circumstances.” Abraham says, “The answer to these retirement questions is to save as much as you can in your TSP.”

Contact Information:
Email: [email protected]
Phone: 8007794183

Why Psychology is Important in Financial Planning

January 2, 2023 /by aaron steele

The psychology of financial planning is not to transform financial planners into therapists but to help professionals improve their listening and communication abilities and benefit clients.

Why Psychology Matters

Financial professionals focus on their clients’ psychology to better understand the biases, actions, and perspectives that influence client decision-making and financial security.

By being more alert, advisers and planners can develop stronger relationships with their clients, ultimately leading to happier and wealthy clients. Hence, the importance of psychology in finance should be generally considered.

Financial planning isn’t only about crunching numbers and making projections. Financial planning identifies and responds to attitudes, behaviors, and situations that impact financial decision-making, the client-planner relationship, and the client’s economic well-being. At the same time, behavioral finance, which has been around for decades, involves client communication, counseling, learning concepts, and applying tools.

Working with emotional clients requires skills advisors hone over years and decades of practice. Advisors must learn their clients’ money beliefs by exploring how money was defined for them growing up and seeing if their views align with those of their spouses.

Advisors must also learn empathy, as there are emotional issues when clients see their money drop in value.

Role(s) of financial planners in Clients’ Future Goals

Working with a financial planner with a financial psychology background can only benefit clients in the long run. A well-designed financial plan can guide customers’ spending, saving, and investing decisions.

However, there are definite connections between clients’ personalities and spending choices. In other words, a client’s financial thinking might influence their choices even when a strategy is in place.

The most efficient way to build a long-lasting and fruitful connection with a client is for financial planners to:

Comprehend their personality.
Be well-versed in communication, counseling, and crisis management strategies.
Be able to foresee potential financial conflicts.

Working with a financial advisor who can guide customers away from behavioral problems guarantees they reach their long-term financial objectives.

Practical Use of Psychology

Retirement planning must address each client’s hopes and concerns for the future. Ultimately, how these hopes and concerns get addressed will drive the cost of retirement.

Retirement Planning

A planner needs to explore the thinking behind the goal of a retiree. He should begin by asking the person to elaborate on their vision for retirement.

The planner should inquire about the couple’s shared vision and whether the person is married or partnered. How will they prepare for a shift from earning to spending? Where will they choose to live, and why?

Our minds can play tricks on us when it comes to money. We spend more using a credit card because we feel less pain than if we were to hand over cash. Sale prices cause us to make too many purely discretionary purchases. We focus too much on the short term and miss the bigger picture.

These lapses can lead to anxiety, cash flow issues, and a lack of progress in achieving goals. A planner should be able to identify and talk about the unsound beliefs that can drive a person to make poor financial decisions.

Investment Planning

In times of market volatility, a planner may need to calm the nerves of panicked investors by helping them keep their eye on the long term. Be ready to take phone calls from clients whose financial troubles have led them to extreme anxiety, a sense of helplessness, or worse.

After addressing these emotions, you will only consider the individual’s financial concerns. They want to work on things they have some control over, including their finances.

Psychology and Financial Planning Crisis

Although most financial planning client cases do not reach crisis level, the planner must be ready for such a potentiality. All planners need coaching on helping people cope with the more common day-to-day stress of finances.

Focusing on the psychology of financial planning as a financial planner or advisor should drive how and why you crunch the numbers in a personal financial plan.

When choosing a financial planner, get a trusted, reliable personality with a voice of proficiency. Then you’ll achieve a super financial goal with lifetime happiness.

Contact Information:
Email: [email protected]
Phone: 3604642979

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

House Members Demand Retirement System Improvements from OPM

December 29, 2022 /by mickey elfenbein

Twelve House Republicans have asked OPM about the time it takes for federal retirees to start collecting their full benefits, claiming that their constituents have raised concerns about situations where the wait was as long as 13 months.

The letter written by Rep. Andy Biggs, R-Ariz., concentrates on the opinions of CBP officers, but the fundamental problem affects retirements from all government departments and has existed for a while. According to a recent OPM report, the average processing time after obtaining the data from the employing agency is 89 days, which is greater than the objective of 60 days and the average processing time for cases lasting longer than 60 days is 121 days.

Retirees receive a partial benefit while their applications are being processed by OPM, often averaging around 80% of the anticipated final benefit amount, with a catch-up payment following the adjudication’s conclusion. The interim payout, however, is often just around half of the benefit, and in certain situations, it is only a tenth, according to the letter.

Our offices have tried to help constituents facing these difficulties, but OPM has been silent. For example, the OPM congressional portal does not provide congressional staff with any information regarding the progress of submitted cases. In addition, the letter stated that attempts to contact OPM congressional liaisons via phone and email were unsuccessful.

The letter requested that processing timelines be detailed, including any variations by agency and degree of supervision, and that information regarding the amount of on-site work performed by OPM retirement processing staff be provided.

Contact Information:
Email: [email protected]
Phone: 6122163911

Mickey enjoys in providing an individualized and complimentary retirement analysis for federal employees.

WOMEN ARE TAKING THE LEAD WITH THEIR FINANCES (AND RETIREMENT)

December 27, 2022 /by marvin dutton

Women today are breaking ground by handling everything from paying the bills and investing to planning their retirement. Women are increasingly taking charge of budgeting at home. In the post-pandemic era, people want more control over their finances, including how they pay bills, save for the future, and invest their earnings.

Do you know that women now outnumber men in college graduation rates and the workforce? A majority take the lead in managing their money and financial portfolios. This newfound economic autonomy is the clearest indicator that women are rejecting the idea that money matters should be left up to men. Therefore now the following ideas are true.

The Stakes are Higher for Women

If women don’t take charge, they stand to lose more than males. Females have a five-year life expectancy advantage over males, although they are paid less. Therefore, they must save enough money to endure during their potentially decades-long retirements, some of which will be spent in relative isolation.

For decades, many women have been discouraged from pursuing high-paying finance jobs or investing independently due to a lack of financial education. Now women are becoming more financially secure because:

Women take charge of business because women live longer than men.
They are financially literate and self-reliant, feel safer, and have more faith in their abilities, money, and investments.
Female investors typically outperform their male counterparts.
Women are receptive to financial guidance, which is essential for financial planning.

Why Are They Able to do This?

Women are reclaiming control over their financial situations and concentrating on enhancing the quality of their professional lives. Only 60% of the women surveyed agreed that their workplaces were making strides toward equality for women in the workplace.

However, there is some good news: women are taking charge of their professional lives. Though, a higher percentage of them are unhappy with their pay and want to leave their current jobs and find better ones. And that’s great news for us because the job market is hotter than it’s been in years.

Characters of Women in Our Dispensation

Becoming financially self-reliant takes bravery, determination, and a hunger for knowledge. Managing the household budget can be difficult, but adding investing and retirement savings can be overwhelming.

That’s why educating yourself and getting help when you’re stuck is crucial. Financial independence is more attainable for women who are not afraid to ask for help and listen to professionals’ advice. Building a plan that works for both the short and long term requires using a reliable financial expert.

Bottom Line

It takes careful planning to ensure women have enough money to last for twenty, thirty, or more years after we retire, and that money should come from secure, long-term sources.

To all the ladies, it’s time to take chargeÃ¢â‚¬â€and find a financial professional who looks out for your interests. Anyone who looks down on women in this dispensation does so at their financial peril.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

3 Social Security Changes That May Impact Millions Of Americans Who Aren’t Yet Retired In 2023

December 27, 2022 /by jeff boettcher

Social Security checks are currently sent to over 48 million seniors each month. But many more people will follow in their footsteps over the coming years.

Therefore, it is advisable for those who are still in the workforce to pay attention to significant changes to the federal program. The following three Social Security changes will affect millions of Americans who will retire in 2023.

1. A higher taxable income threshold

The Federal Insurance Contributions Act (FICA) limits payroll taxes to people who make up to $147,000 per year. In 2023, this maximum taxed income will rise to $160,200, which is the biggest annual increase in Social Security history.

How many Americans will be affected by this increase?

According to the U.S. Census Bureau, 19.6% of American households made $150,000 or more in 2021. That represents more than 25.7 million homes.

This statistic includes an undetermined number of households with two incomes. However, according to the 2020 census, single heads of households made up about 35% of all households. The increased maximum taxable income would affect at least 9 million Americans the following year, according to this assessment.

2. Early claimants’ earnings test

Some people who receive Social Security benefits are still working. Benefits may be withheld from anyone who applies for benefits before reaching full retirement age.

Every $2 earned over $19,560 will result in a $1 benefit deduction from the federal government in 2022. Every $3 earned over $51,960 will result in a $1 benefit deduction from the government. These two ceilings will rise in 2023. The lower amount will be increased to $21,240, while the higher sum will now be $56,250.

The number of Americans this move will impact has yet to be discovered with certainty. However, a survey earlier this year by the Nationwide Retirement Institute revealed that 42% of respondents intended to apply for Social Security payments before reaching full retirement age while continuing to work.

But keep in mind that persons aged 26 and over were included in this study. It might not entirely reflect the number of people who filed for Social Security early and kept working in 2023.

3. Increased advantages

The 8.7% cost-of-living adjustment (COLA) that retirees will benefit from next year won’t be given to Americans who still need to reach retirement age. However, this rise will still be beneficial to people who are a few years away from retirement.

The average Social Security retirement payment will rise in 2023 thanks to the historic COLA. The maximum advantage will follow. As a result, the base Social Security benefit that the millions of Americans who have not yet retired can expect will also be higher.

You can be in line for much higher benefit amounts depending on how soon your retirement occurs. All but three years had seen an increase in the monthly amount since 1975, when Social Security started instituting an automatic yearly COLA.

Of course, inflation is not the only reason for these rises. In reality, the purchasing power of Social Security retirement benefits is decreasing in real terms. The purchasing power could, in some ways, decline even with regular COLAs.

The largest adjustments are still to come

The biggest changes to Social Security are still to come, even though these three key changes will affect Americans who still need to retire. Social Security will run out of money by the year 2035. This will result in a roughly 24% loss in benefits if nothing is done.

It’s a safe bet that Washington officials will strengthen the program to maintain benefits. However, the modifications they make to do this will have an undetermined impact on millions of Americans.

Contact Information:
Email: [email protected]
Phone: 8007794183

Honoring the Contribution of Veterans to the Workforce

December 21, 2022 /by george learned

Omari Faulkner, President and Chief Executive Officer of the strategic communications firm Blue Fire Fed in Washington, D.C., has urged employers to establish workplaces that embrace military personnel as they adjust to civilian life. He made the assertion on October 24 during the SHRM Inclusion 2022 conference in San Diego.

Faulkner, who offers thought leadership to Fortune 500 firms, small enterprises, universities, and nonprofit groups, is a current public relations officer for the U.S. Navy Reserve. He works to ensure that active military personnel, military dependents, and veterans are fully integrated into society. He said, â€œWe have a highly talented group of people in our military community, which I like to refer to as ‘the military family.’ They truly are great.â€

He listed the following as members of the military family: active-duty service members, including those in the National Guard and reservists; military partners, family members, and dependents.

“All of these people are members of our military family. They all view things from various cultural perspectives,â€ he added.

DOD Commitment to DE&I

According to Faulkner, the Department of Defense (DOD) has long been at the forefront of diversity, equity, and inclusion (DE&I) efforts:

During World War II, the racial makeup of the military started to mirror that of the American populace. Then-President Harry Truman issued an executive order in 1948 with the goal of desegregating the military.

The Office of Diversity Management and Equal Opportunity, which aims to develop a more diverse workforce, was then formed by the DOD in 1994.

According to Faulkner, there are now 17% more Hispanic soldiers in the active Army than there were in 1985. Roughly 31% of members who are on active duty are from racial minorities, and women make up 17% of the active-duty workforce.

Faulkner claims that businesses might get inspiration from the DOD as it relates to DE&I. He declared that “the American military is a microcosm of American society. In my capacity as a public affairs officer, I have spoken with sailors who have served five tours of duty as well as sailors who were born after 9/11. It is such a variegated energy.”

Misconceptions about Veterans

According to Faulkner, veterans offer organizations several positive traits, including the capacity to adapt, the ability to maintain composure under pressure, and significant training background.

Kenneth Mayes, a 26-year Army veteran who now manages employer relations for Syracuse University’s D’Aniello Institute of Veterans and Military Families, says the value veterans offer to the workforce is widely misunderstood and has resulted in various barriers to veteran employment.

According to research from Duke University, veterans are widely believed to excel in their capacity to fulfill specific jobs, like planning and carrying out operations. However, corporations pass over experienced candidates because of an erroneous belief that they are less competent at occupations that require emotional intelligence and creativity.

Additionally, due to the constant movement that is a standard part of being in a military family, organizations have made the incorrect assumptions that all veterans have post-traumatic stress disorder, that they are rude and uncaring, and that military spouses lack education. These myths have long been disproved as untrue, according to Faulkner.

The Benefits of ERGs

According to Faulkner, many veterans are thrilled about their achievements, but some keep their military service a secret from their coworkers out of concern about these preconceptions. Veteran employees might develop a sense of community by joining employee resource groups (ERGs). ERGs also permit their coworkers to inquire politely about what it’s like to be a service member or veteran.

“ERGs can help veterans better understand their new organizations, which helps them adjust to civilian life. Those are outstanding initiatives every firm needs to have,” said Faulkner.

He also urged businesses to:

Invest in training initiatives that can assist veterans moving out of the military to understand their new careers.
Create and commit to a veteran recruitment and retention strategy.
Develop a benefits package that will appeal to veterans, such as giving them additional paid time off and paying them well.

Our main goal, according to Faulkner, “should be to understand this group better and elevate them. We should advocate for hiring veterans every day.â€

Contact Information:
Email: [email protected]
Phone: 3037587400

Investors in TSP Stock Funds Get a Treat in the October Returns

December 15, 2022 /by marvin dutton

Government retirement savers could partially compensate for last month’s losses thanks to an impressive October for the stock market, which included the best month for the Dow Jones Industrial Average since 1976.

October’s strong stock market performance was much-needed after a disastrous September in which all Thrift Savings Plan funds lost money except for the infamously conservative G Fund, which invests in government securities. The S&P 500 posted an 8% gain for the month, the NASDAQ rose 3.9%, and the Dow increased by 14%.

This is good news after a late October report from the TSP board revealed that the average account balance for Thrift Savings Plan investors was down roughly $30,000 year-to-date through September. That helped all three of the stock-based funds in the federal government’s 401(k)-like Thrift Savings Plan (TSP) post significant gains in October.

The TSP’s small firm stock S Fund took the lead with a gain of 8.59% in October. Following that, the large firm stock C Fund saw a gain of 8.1%, and the international stock I Fund saw a gain of 5.98%. Despite the improvements in October, these funds still have losses of 23.83%, 17.7%, and 22.9%, respectively; over the past 12 months, they have lost 27%, 14%, and 22.74%, respectively.

The TSP’s bond-based fixed income F Fund fell by 1.26% in October, for a loss of 15.38% for the entire year. The G Fund, the only TSP fund to have made money so far in 2022, increased by 0.34% for the month, bringing its gain for the year to a meager 2.29%.

2055, 2060, and 2065 funds of the TSP’s target-date fund-like lifecycle funds saw the most gains in October, each rising by 7.36%.

	YTD Return at end of September	YTD Return at end of October
G Fund	1.94%	2.29%
C Fund	-23.87%	-17.70%
S Fund	-29.85%	-23.83%
I Fund	-27.25%	-22.90%
F Fund	-14.30%	-15.38%

All of the core Thrift Savings Plan funds are still significantly down for the year, except for the F Fund, which kept losing in October, but the losses are less after accounting for the gains for each fund in October.

Below is a summary of TSP’s performance for the year, the last 12 months, and through October 31, 2022.

Fund	October 2022	Year-to-Date	12-Month Return
G Fund	0.34%	2.29%	2.55%
F Fund	-1.26%	-15.38%	-15.40%
C Fund	8.10%	-17.70%	-14.61%
S Fund	8.59%	-23.83%	-27.24%
I Fund	5.98%	-22.90%	-22.74%
L Income	1.98%	-4.13%	-3.61%
L 2025	3.07%	-8.48%	-7.75%
L 2030	4.52%	-12.45%	-11.62%
L 2035	4.91%	-13.89%	-13.02%
L 2040	5.32%	-15.22%	-14.33%
L 2045	5.66%	-16.42%	-15.53%
L 2050	6.02%	-17.50%	-16.59%
L 2055	7.36%	-20.14%	-19.13%
L 2060	7.36%	-20.15%	-19.14%
L 2065	7.36%	-20.16%	-19.16%

Source: TSPDataCenter.com

Contact Information:
Email: [email protected]
Phone: 2129517376

What Advisers Need to Know When discussing Medicare

December 14, 2022 /by todd carmack

According to Steve Vernon, president of Rest-of-Life Communications, the best strategy advisers can use to encourage their clients to consider their Medicare alternatives more carefully begins with a candid discussion about how their healthcare requirements may change as they age.

Vernon said that you must emphasize the significance of these choices to the clients and encourage them to give it some thought.

Vernon observes that many retirees struggle to create a plan that best suits their needs. He suggests a three-phase structure, claiming advisors are in an excellent position to help by first interacting with and teaching clients about the benefits of obtaining their ideal Medicare plan.

The next phase should be to create a step-by-step manual to analyze the possibilities. Vernon’s final role was to “enable” people, as he put it, by helping them in putting decisions into practice and removing any obstacles or misunderstandings.

He said advisors frequently only concentrate on assisting their clients through phase two, omitting the significance of the first and third phases.

Even when someone is motivated and engaged, barriers might hinder them from acting because they are sometimes merely psychological. “The client frequently has an objection in their head, like, “Oh, that won’t work for me,” or something like, “My sister said HSAs are no good.”

Kevin Smith, a senior vice president at Wealthspire Advisors, said another difficulty many people encounter is accepting that no one solution will be effective for everyone.

Smith urged the need for rigorous and individualized study, saying, “It’s going to be very, very client-specific based on what their healthcare condition looks like, what drugs they’re already taking, and what doctors they employ.”

Given the intricacies and complexities to sort through, careful preparation starts with putting your plans in place before you turn 65. Seniors automatically enroll in Medicare Parts A and Part B on the month they hit age 65 if they are already receiving Social Security benefits.

A first enrollment period starts on the first of the month, three months before turning 65, and concludes on the last day of the month, three months after their 65th birthday, if they are not automatically registered.

A person may be penalized if they don’t sign up for Medicare when they first become eligible during the Initial Enrollment Period unless they meet the requirements for an exception. If you then have to pay for Part A, you’ll be required to pay an extra 10% of your monthly premium for twice as many complete years as you were eligible for Part A but did not receive coverage.

Your Part B premiums will go up by 10% for every 12-month period during which you are qualified yet uninsured. And the penalty is indefinite as long as you maintain Part B coverage. (Part D is subject to fines as well.)

Smith advised financial advisers to start discussing this with their customers far before their 65th birthday by gathering specific information about their clients’ needs as “it compounds itself over time.” He also recommends some introspection for advisors. For example, he advised that they consider collaborating with a Medicare expert if they lack the knowledge necessary to analyze the best results.

According to Smith, traditional Medicare consists of Part A, which is often supplemented with a Medigap plan, as well as an additional Part D plan that would provide coverage for prescription medications.

The other choice is the Medicare Advantage Plan (formerly known as Part C), which functions more like an HMO or PPO with a network of partaking health providers, often covering everything from medical care to prescription drugs and dental and vision requirements.

Here, Smith said, “It’s essential to engage with the client and to get an accurate listing of which physicians, medicines, and pharmacies they currently use.” “You may really end up with considerably higher out-of-pocket expenditures if you just change one or two of those items or if certain plans don’t cover one or two of those things.”

Additionally, he added, it’s crucial to reevaluate this option every year to ensure it still meets the person’s needs today.

Smith advised against treating this as a simple set-it-and-forget-it situation. Because things change, it’s something you should keep an eye on and maintain reviewing annually.

Vernon advises highlighting the distinctions between employer-based health insurance programs and Medicare. In his experience, many people have misconceptions regarding Medicare even though they believe they are knowledgeable about it.

These can include people who assume that Medicare functions similarly to their employer’s health insurance plan but are later shocked to realize that vision and dental care, as well as some chiropractic and acupuncture treatments, are not covered. In comparison to employer-sponsored insurance, Medicare often has higher deductibles and copayments.

Or, he added, more fundamentally, some people believe Medicare is cost-free. Others fail to consider how flexible traditional Medicare is in allowing beneficiaries to choose any doctor who accepts Medicare coverage.

Traditional Medicare and Medicare supplements can let you choose your physicians. Still, Vernon pointed out that because you have to self-refer, it only demands more understanding on your part.

Another potential danger Vernon warned about is unexpected problems arising when people switch between the two options. Working within a network makes Medicare Advantage potentially easier, he added.

Medicare Advantage permits people to switch providers during the open enrollment, giving them a great deal of freedom. They can also switch between regular Medicare and Medicare Advantage if their circumstances change. But occasionally, someone can be barred from Medicare supplement insurance.

It can be confusing because many people are unaware that the Affordable Care Act eliminated preexisting condition exclusions, with the exception of Medicare supplement plans, Vernon said. “People don’t realize that Medicare supplement plans in certain states can have preexisting condition exclusions.”

You can purchase a Medicare supplement plan without being concerned about a preexisting ailment when you first become eligible. Vernon refers to it as a “trap for the unaware.”

The choice of which Medicare option to choose is assessed and reviewed annually, after which the choice of how to pay for medical care is strategic.

Health Savings Accounts (HSAs) can help with monthly costs and can be used to pay for all qualified medical bills, including premiums and copays, but ideally, they should be set aside for longer-term medical needs.

When you’re young and contributing to an HSA, “We encourage paying for out-of-pocket expenses outside of the HSA wherever possible because that allows more money inside the HSA to grow over time,” Smith says.

After matching 401(k) contributions are reached, Vernon believes that HSAs are the best retirement savings vehicle because they offer federal income tax breaks on contributions, allow earnings to grow tax-free, and provides tax-free distributions, provided those distributions are utilized for qualified expenses.

According to Vernon, the consultant should ask the client to max out their HSA if they are under 65 years old because doing so is tax avoidance rather than tax deferral.

He also urges advisors to assist their customers in setting aside HSA balances for long-term care. Vernon says it’s bad for individuals to say, “That’s quite far away; I’ll have time to figure it out by then,” when transitioning into retirement.

When advisers ask their customers, “Did any of your parents or close family friends need long-term care?” “They can help their clients focus on the long term. What exactly caused them the pain and the disruption? Let’s discuss strategies now that we have your attention.”

HSAs can still be considered a long-term investment, even for people in their 60s. But if those resources are insufficient, Vernon added, many people may have home equity that they can use as a last resort by selling their property or taking out a reverse mortgage.

He also suggested purchasing a qualified longevity annuity contract (QLAC) as an additional resource. Advisors can encourage younger clients to plan ahead and think about simplifying, downsizing, or moving to a more convenient place.

Vernon advised me not to wait until it was too late. You can understand why one likes to deal with things as soon as possible rather than when they become huge and hairy.

Contact Information:
Email: [email protected]
Phone: 6232511574

Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.

Early retirement could cost me more than a million dollars, but I will still do it.

December 14, 2022 /by aaron steele

I wonder if you believe it’s realistic to retire at age 50 or even at age 40.

Do you think that’s crazy?

If that’s the case, you’re undoubtedly used to the regular retirement stuff on government employee news websites.

Many publications argue over minute details like whether you may retire at your minimum retirement age (MRA) or if you need to wait until you’re 62 years old.

But what if all of those publications about federal retirement specifics miss the topic entirely?

In the following sections, I’ll help you zoom out and ask the critical questions about retirement that you should be asking yourself.

The FIRE Campaign

In the past five years, if you’ve spent time online, you’ve probably run into many articles about “the FIRE movement.” No, it has nothing to do with arsonists. FIRE is an abbreviation that stands for financial independence and early retirement. People in the FIRE movement save a considerable amount of their wages early in their careers to reach a “crossover point” where their savings can last the rest of their lives.

Furthermore, there are numerous sensationalized tales on internet news sites. I’ve met many folks with FIREd who are ordinary, everyday people like you and me.

It’s Either Your Money or Your Life

The latest version of Vicki Robin’s “Your Money or Your Life” sparked my interest in the FIRE movement a few years ago. The novel begins with a dramatic scenario. You’d hand over your cash if that happened to you.

In reality, we confront the same question every day as we sacrifice (part of) our lives for money. Work not only takes hours away from our loved ones and interests, but the modern workplace is also a breeding ground for cardiovascular disease and metabolic diseases.

Is it worth sacrificing our health, happiness, and relationships for a paycheck?

“Your Money or Your Life” gives you tools to help you figure out how much of your life energy you wasted on things like your car, house, or the newest iPhone. If you’re like me, you might want less stuff once you start looking at goods in terms of the amount of your life you’ve given up for them.

Finally, the book will assist you in determining the point at which your assets will pay your expenses.

The crossover point is approximately 25 times your annual expenses without too much detail. So, if you spend $50,000 yearly, you could live perpetually on $1.25 million.

Are Federal Employees Allowed to Retire Early?

The arithmetic underpinning of early retirement is not particular to any profession or income level. However, some twists make it difficult for federal employees to retire before their MRA.

Once I got the itch to retire early, I began searching the internet for services for federal employees who wished to retire early. Unfortunately, I didn’t discover many solutions to essential questions. I was consequently left to decipher the meaning of early retirement for government employees by sifting through the OPM (Office of Personnel Management) legalese.

I discovered that there is good news and bad news. Early retirees from the government are always better off than their private sector counterparts. Deferred retirement benefits are available to them (based on your years of service, somewhere between 57 and 62). The bad news is that they are wasting taxpayer dollars by leaving the government before their time was up.

How much money, you may wonder?

I estimate that if I leave even one day before my MRA, I will forfeit over a million dollars in retirement benefits.

The Million-dollar Workday

How can one day’s work be worth a million dollars? Especially in the federal government, where highly trained employees are consistently underpaid?

When I did the math, I discovered that reaching the point where you’re eligible for full, immediate retirement (30 years of service + MRA) entitles you to a slew of retirement benefits.

Keeping your FEHB coverage and paying only your share of the premium ($406,000 based on my projections) for the rest of your life.

Get the full FERS annuity ($440,000 more than my lower annuity) ($202,000.)

If you could choose between retiring at the age of 56 and 364 days or working until the age of 57 for an extra million dollars, you’d choose the latter.

But in almost every early retirement scenario you test, you’ll find that leaving a day before your MRA means you’ll lose out on benefits worth more than seven figures.

Who Would Throw Away a Million Dollars?

At this point, a typical FEDweek story would persuade you to fight your MRA to ensure you obtain that extra million in retirement benefits.

But I’m here to tell you that leaving money on the table is perfectly acceptable.

In some ways, we’re all asking the same question as the mugged man. Every day when we go to work, we must choose between our money and our lives and prioritize our dollars before our health.

While it is unpleasant to consider, we do not live forever. This graph indicates that between the ages of 35 and 80, we lose almost half of our fitness, and all but the fittest people lose the capacity to perform simple mobility exercises.

Imagine you’re 40 years old and dream of retiring to Rome and taking a stroll up the Spanish Steps when you’ve saved “enough to be truly safe.” In that case, you might discover that you worked all those extra years to be too feeble to walk up steps.

Working an extra decade for an extra million dollars in retirement has drawbacks. As humans, we’re good at entering dollar amounts into compound interest calculators but terrible at estimating how much of our lives we’re giving up for that money.

How Can You Find out More Information on the FIRE Movement?

I just wanted to give you a flavor of what FIRE is and why federal employees should consider it in this post (even at a potentially large opportunity cost).

There is a slew of critical technical issues to address about early retirement.

How will I obtain health insurance?

How can I determine my annual spending in the most efficient manner?

How will I know if I have exhausted my retirement savings?
How much of a safety margin should I include in my retirement plans?

Fortunately, many excellent books, blogs, and podcasts may help you answer these questions and create your retirement plan.

Contact Information:
Email: [email protected]
Phone: 3604642979

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

Tag: FERS

FERS

Should I Withdraw From Retirement Savings To Pay Off Credit Card Debt?

The Retirement Process: Some Changes at the Last-Minute

Report Cautions Federal Employees on Recruiting Friends, Family

Reemployment and Its Influence on Federal Retirement Benefits

Getting A Head Start For Retirement Plan

Benefits of the FEHB Program and the Role of Medicare

What types of programs are being offered by Medicare?

If I have FEHB coverage, will I need Medicare coverage too?

If I work past age 65, will my FEHB coverage remain primary?

If I go to my FEHB HMO’s providers, do I have to file my claim with Medicare?

Officials in Delaware Revert to the Previous Health Care Plan for State Retirees

Workers Place the Most Value on TSP, Annuities, and FEHB.

How Can I Continue to Provide for My Son After I Retire?

7 Life Events That Can Lower Your Medicare Premiums

The Benefits and Drawbacks of Investing in Stocks vs. Real Estate

Pros of Real Estate

Pros of Stocks Investing

The Risk of Inefficient TSP Contributions

Why Psychology is Important in Financial Planning

Why Psychology Matters

House Members Demand Retirement System Improvements from OPM

WOMEN ARE TAKING THE LEAD WITH THEIR FINANCES (AND RETIREMENT)

3 Social Security Changes That May Impact Millions Of Americans Who Aren’t Yet Retired In 2023

Honoring the Contribution of Veterans to the Workforce

Investors in TSP Stock Funds Get a Treat in the October Returns

What Advisers Need to Know When discussing Medicare

Early retirement could cost me more than a million dollars, but I will still do it.

TSP & Retirement

Insurance