Retirement planning
Retirement planning is the process of being foresighted and thinking about how to make your post-retirement life secure and financially sound.
How Much Money Do You Need In Retirement
Whether you are ten years, five years or just 1 year from retirement, you need to have a way of estimating how much money you are going to need to retire. Financial experts say we will have to replace about 70 to 80 even 90 percent of our annual salary in retirement in order to maintain the lifestyle we have become accustomed to. Decisions – decisions.
Let’s examine Four Steps that will help to estimate how much money you will need to retire comfortably. This is where tracking our weekly, monthly and yearly spending comes in. We need to always know what is coming in, what is going out and how much we can afford to spend. Planning for our comfort and security in retirement requires grit, tenacity and sheer will power to make a plan and follow it.
How Much Money You Will Need In Retirement:
- Estimate your retirement expenses, including taxes and even one-time major purchases. Make a list and revisit it often. These are not items you think about in your head, they need to be put on paper and then they become real.
If you need help determining how much you need seek out the help of a qualified Federal Retirement Expert.
- Determine how much retirement income will come from your known resources. Compare income from TSP and other savings and your Federal Annuity with estimated retirement expenses.
You could also be eligible for Social Security of a Military Pension.
- Compute the gap between how much money you need to retire and the amount you will receive from your known resources. Evaluate the gap and measure its size with financial and economic scrutiny.
- When doing a retirement analysis and assessment, factor in inflation and life expectancy. Look at your assessment from both ends of the spectrum – the best scenario and the worst.
Formula for Estimating Your Federal Retirement Income:
The majority of Americans will rely basically on two sources of consistent retirement income – Social Security and Employee Pensions. The other component should be savings and investments (Thrift Savings Plan (TSP) and outside investments like IRAs). Let’s be practical, we don’t all have that category separate and apart from vehicles provided through employment. However, it is never too late if you put your plan in place and stick to it.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
What Is Effective Retirement Decision-Making
For Federal Employees, when it comes to Retirement Planning, effective decision-making involves flexibility in thought and actions. One must be prepared to make sacrifices now to achieve something better later. We must also understand the value of trade-offs. Decisions you make today will inevitably impact future retirement decisions. All decisions made carry associated consequences that affect us, our families, and the society we live in.
We can all improve our skills in effective decision-making through consistent practice and application. But, there is no financial plan nor individual action plan (IAP), no matter how well designed or thought out that works if you don’t follow it. We must develop strategies that will motivate us to stay the course. No financial plan is set in concrete, rather plans are designed to be flexible, changeable and evolve over time as our lives evolve. We need to monitor plans and know when important changes need to be made. Updating your financial plan is critical to your plan’s success.
A financial plan will assist you in identifying, determining, and directing what you want to have and achieve in retirement. A financial plan helps to target the outcome desired, map out how to get there and how to stay on track.
Start our with a conversation with your spouse, a friend or someone you trust. Talk about what is important to you and your well-being in your retirement future. After the conversation, begin to put your plans to work by putting them in writing. Nobody can take what you have in your head if you are not there to tell the story. Prepare soon. Prepare wisely. Prepare to live in comfort and security.
P. S. Always Remember to Share What You Know.
Access your TSP.gov Account HERE
RELATED FINANCIAL PLANNING ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
Six Steps to Retirement Implementation
The journey to federal employee retirement requires us to dig in our heels and do what we are used to doing — Getting the job done with precision and excellence. Your things to do list is your visual task of letting you know the level of readiness and needed preparation to ensure your goals are reached. We are in this place because retirement is in our not too distant horizon. If you are thinking about retirement in the next 5 years plus, we have a reasonable amount of time to put plans in place. Below is a list of 6 steps you must take within 5 Years of Retirement as part of your Short Term Retirement Planning goals. Retirement is an emotional experience as is starting a new job, getting married, having your first child. These are all major life events and there is no denying that they can be stressful. However, if we approach any one of these events, as prepared as we can be, success is in our hands.
6 Steps to Implement Now!!!!
- Increase your cash reserves
- Pay down your debt
- Estimate how much money you need to retire
- Assess and evaluate tax consequences
- Diversify your investments
- Educate yourself
P. S. Always Remember to Share What You Know.
Recommended Articles
For Postal Employees – LiteBlue and the TSP
Federal Retirement Benefit Analysis
Is The Pension Survivor Benefit Best For You? by Todd Carmack
A Little-Known Opportunity Can Increase Your Retirement Income. by Mark Sprague
Federal Retirement – Is There A Magic Formula?
Magic Formula for Federal Retirement
When it comes to federal retirement and specifically retirement from federal employment, unfortunately there is no magic formula to tell you exactly how much money you will need. But there are things you can do to better prepare for addressing the challenges you will inevitably face in retirement. There are just too many variables that exist to say exactly how much money any of us will definitely need during your federal retirement.
What we can do is compare current expenses and income against estimated expenses and income and evaluate the picture to see how adjustments can be made (a Benefit Analysis is strongly recommended). Clearly income in retirement for most is less than income as an active employee. Given that dynamic, a good course of action is to begin trimming your debt and maximizing your Thrift Savings Plan (TSP) advantages while working.
Trying to right-size how much money you will need in retirement is best done by making certain that your debt is substantially lower than your income. It is not a time to start building debt when you are facing retirement, it is time to enter into a phase of debt-elimination and reduction. If you can lower your debt and possibly eliminate some debt now, you will have more retirement income to live on, making your retirement years much more comfortable and secure.
Another tip is to take advantage of ‘senior offerings’ from eating out, to hotels, to travel. Many insurance companies also offer discounted (car insurance) coverage to seniors. Fitness centers including the YMCA, YWCA, local and community recreation centers have special deals for seniors. You have earned the right to be pampered so take advantage of all senior incentives available to you. It really is the nation’s way of saying – We salute you for your service to your country. You see you thought nobody noticed that you had spent the better part of your adult life making a difference by going to work everyday and doing a job that made America just a little bit better.
Another tip that is extremely useful for any of us, but particularly retirees. The information age is both a blessing and a curse. It is a blessing because there is so much information available right at our fingertips. It is a curse because very little about us is not known through some website on the internet. You are not the only one who knows when your annuity check is deposited or your social security check and other personal data. Since we know that some people study environments for prey, we need to be aware.
Don’t carry credit cards or money in your purse or any very personal items that would break your heart if they were snatched. As a matter of course, don’t carry a purse at all during the 1st and the 15th of the month, because that is when many retirees are targeted. Never open your wallet or purse in front of strangers, even in restaurants, when you have lots of cash. Remember you are trying to increase your revenue by loweing your debt, not by having your valuable resources stolen.
I am not going to tell you where to put your money because I just said information technology is both a blessing and a curse. Put your money somewhere safe so nobody can get to it except your trusted two hands. A little inconvenience is better than a heart-break, aggravation and the danger of having your resources taken and very possibly with no way of replacing them.
Although there is no federal retirement magic formula to determine exactly how much money we will need in retirement, but there are certainly some things we can do to lower our debt, increase your TSP savings and safeguard what we have worked hard to accumulate.
P.S. Always Remember to Share What You Know
Federal Employee – Do You Really Want To Retire?
Do Federal Employees Really Want to Retire?
As a federal employee, the question ‘Do you really want to retire?‘ is a totally different question than can you retire. If you don’t really want to retire because you feel you have a lot more to give and the thought of retirement simply does not appeal to you, is not an usual phenomenon. According to the Blue Zone Report (people who live longer, healthier lives) retirement in the traditional sense might not be a good idea. Studies have certainly shown that being active is of great benefit to humans both physically and mentally, it keeps you in the game.
There are a number of opportunities available to persons who don’t want to retire. The Office of Personnel Management (OPM) is exploring the idea of Phased Retirement which will keep many in the federal workforce on their jobs for a longer period of time. Those employees who want to stay in the federal workforce may have options via proposed Phased Retirement or the option of working as Contractors.
The other side of the coin is, can you afford to retire as a federal employee. After examining your options, performing a benefit analysis and finding that the estimated money that will be coming in after you retire, just won’t cover your expenses is reason to pause and evaluate options. What to do? If you are within 3 to 5 years of retirement, it might not be a whole lot that can be done in terms of a salary increase. But you can tap into doing more through your Thrift Savings Plan (TSP). It is always a good idea to maximize participation in TSP to the greatest extent possible. Exercise all of your options to leverage your ability to secure your retirement future.
It is never too late to begin planning for your retirement future as a federal employee. Plan now, look at your options realistically, and take care to stack up your expenses against the estimated revenue you will receive in retirement. It is important to realize that wanting to work and needing to work are a dynamic that should be prioritized early so that working or not working is voluntary and not mandatory.
P. S. Always Remember to Share What You Know.
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Federal Retirement and Your Social Planning Calendar
We have talked about planning with a particular emphasis on federal retirement financial planning. There is another aspect of planning that is very important in keeping the engines running and making sure all the pistons are firing properly. It is called Social Planning. Many retirees see their jobs as part of their socialization calendar. They are familiar with their coworkers, they see them everyday and they eat lunch and breakfast and visit the snack bar together. That is part of building a good and cohesive team. That is also a part of the work life.
Let’s think about how to parlay those job-related social skills into building a social calendar for retirement. It is time to meet new friends and build new relationships. It is a time to try new things as your federal retirement represents the freedom phase of our lives. It represents a time where what we do and how we do it is more in our court than anybody else’s.
When we are children we need our parents’ permission to do many of the things that guide our lives. When we become parents we are often limited by the schedule of our children and a growing family. When we retire, parental permission has long been a thing of the past and the children’s lives are theirs to settle their own schedules. It feels like freedom to me. Freedom to go and come as you please. Freedom to explore the world via traveling or the safety of your local library.
Stay on top of your health so no grass will grow under your feet. Check out a dance studio and learn a new dance you previously thought was a challenge. Join a book club or start a book club to keep your brain sharp. To cast away the lonely blues, join a reliable travel group to have some safe fun.
There is a lot of great activities that are cost-sensitive to put on your calendar of social events. Enjoy the freedom with your federal retirement that you’ve worked so hard to earn. It’s your ticket to RETIRE WELL.
P. S. Always Remember to Share What You Know.
How does your TSP contribute to your ability to enjoy your social planning?
New Postal Retirement and Federal Retirement
The New Federal and Postal Retirement
Federal and Postal Retirees today face a new and fascinating world, one many prior retirees never had the opportunity to experience. Federal and postal employees are a highly experiences group of workers with untold contributions to make to the society. The opportunity for these workers to continue being a benefit to society is enormous. Many of these retirees will reenter the workforce either part-time, full-time or as contractors. Federal and Postal Retirement are not the same as they once were.
There so many challenges and opportunities awaiting the next generation of retirees. There are of course the opportunity to travel without time constraints and the worry of being a part of the leave schedule calendar. Others will return to school and pursue academic paths they never had the opportunity and time to complete. Because of the wealth of information that has been acquired through years of federal and postal service, many will be the teachers and lecturers in our colleges, universities and our elementary and high schools.
Federal Retirement Changes
It is not the retirement that your mothers, fathers and grandparents knew. They left the workforce and drifted into retirement not envisioing the many options retirees have today. Retirees are living, often times, (30) years after they leave the workforce. They have a lot of living left to do and a lot of important skills and knowledge to share with the world.
Federal and Postal employees represent the largest workforce in the world and the skills they possess range from A to Z. Any classification of employment you can think of they have it. They have the best of both worlds when it comes to education – they know it and they have done it. They are not only the house, but the brick and mortar that built the house.
When we say see you later to the next generation of federal and postal retirement seekers that is exactly what we mean. We will see you later in another endeavor still leading the way to the greatness of our nation only this time it will be on your own terms.
P. S. Always Remember to Share What You Know.
For more information on what you should do with one year before retirement click here
Postal employees can access most of their retirement and benefit information through LiteBlue
Federal and Postal retirees need to know how to best withdrawal their TSP funds
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The Military Wants To Buy You Out
Federal Employee – Do You Really Want to Retire?
Federal Retirement: Less Than One Year
Federal Retirement
1. Do I know what the best day to retire is?
2. What does my Benefit Analysis say about the best way to maximize my federal benefits?
3. When and how do I waive my military retired pay?
4. When should I complete my application?
5. Should I check on my military service deposit?
6. Should I sign up now to receive my retirement payments by direct deposit?
7. How long does it take to withdraw money from the Thrift Savings Plan (TSP) – will there be a gap between retirement and when I can access my funds if I need them?
8. Do I know how my FERS or CSRS annuity elections will impact my spouses eligibility for FEHB?
It is very important to examine and collect all the necessary information you will need to make good decisions about your retirement future. The more you know and the earlier you know it, the better time you will have preparing for your retirement future.
P. S. Always Remember to Share What You Know.
Federal Retirement – Additional Questions You Need To Ask
Federal Retirement: Addition Information
As a federal employee, In addition to carefully evaluating some of PSRetirement.com’s check lists of things to do as you get closer to federal retirement, here are some additional questions to ponder that may help you get ready to RETIRE WELL.
1. Are there other records I should check?
2. What records are needed for my health benefits?
3. What can I do if I am eligible to continue my FEHB coverage but my retirement payment will not cover the cost of my premium?
4. How do I make a payment to receive federal retirement credit for my military service after 1956?
5. Will I still get federal retirement credit if I worked for a time when retirement deductions were not withheld from my pay?
6. Will I still get federal retirement credit if I received a refund of the retirement deduction that were withheld from my pay?
7. How do I make a payment to get credit for service?
8. How do I know if I can retire on the date I choose?
9. How do I plan to provide benefits to my survivors after my death – will my FEGLI benefits be enough?
10. What is the Minimum Retirement Age (MRA) plus 10, annuity under the Federal Employees Retirement System (FERS)?
11. What happens if I postpone the Minimum Retirement Age (MRA) plus 10, annuity?
12. What are voluntary contributions?
13. How will I receive credit for my voluntary contributions?
14. What annuity estimates do I need?
15. Will I receive a cost-of-living adjustment (COLA)?
16. Will I get paid for my unused annual leave?
17. How will workers compensation affect my civil service annuity?
P. S. Always Remember to Share What You Know.
Retirement Planning – One Year Out
If you are conducting your retirement planning in ONE year think about concentrating on a few things that might help to keep you on track and make certain you don’t miss out on anything.
• Confirm when you will be eligible to receive your full retirement benefit.
CSRS Eligibility
• Have a benefit analysis run on your federal retirement – This is a MUST.
• Decide when you want to retire – make sure you are considering your best days to retire.
• Tell your manager about your proposed retirement date. It would be professional protocol to give sufficient notice to allow for planning for someone to take your place.
• Get information about other benefits to which you may also be eligible, such as TSP withdrawal options and any other entitlements based on employment such as Social Security, pensions from private industry and Individual Retirement Accounts (IRAs).
• Document all military service time.
• If you find that there is a conflict about time or missing documentation, contact your human resources officer immediately.
• Check your FEGLI – specifically any Optional coverages and make sure you have compared your FEGLI against the costs of individual policies – the savings can be fantastic.
• Document and keep a record of periods worked intermittently or when actually employed.
• Make an appointment with your human resources officer to review your personnel folder to make certain all your records are complete and accurate. Also make sure all service is verified and your insurance coverage is documented.
• Make sure that the beginning and ending dates for each period of employment is properly documented for benefit computation.
• Ensure effective dates for each promotion or within-grade increase is also properly documented during the period that will be used to compute the high-3 average salary.
• Make certain the dates of pay changes or earnings and the pay rate during employment periods when retirement deductions were not withheld from your salary are properly documented.
• Capture the tour-of-duty during any part-time employment. Also document any hours worked beyond the official tour of duty as actual hours worked.
P. S. Always Remember to Share What You Know.
For more information on what to do one-year before retirement click here
A retirement cost analysis is an important subject and should be considered.
Federal Employee – What Size Is Your Coat?
When you (a federal employee) get dressed in the morning for work, do you choose clothing from your own closet or do you saunter into the neighbor’s house and find an outfit from their closet? That is what is meant by – Cut Your Coat According to Your Own Size.
Setting your goals, putting a plan in place and formulating your budget must all be based on your individual and unique circumstances. You must measure your coat (your resources) to fit your budget (your expenses) in good times, so that in bad times, it will still fit.
When it comes to federal retirement it is imperative to always be careful with spending and saving in economically difficult times. If you are careful in economically difficult times, you must be even more so in economically good times. Putting away more when times are good prepares you for staying on course when times become difficult and challenging. Such as maximizing your TSP contributions when you can – taking full advantage of any employer match, so when times get hard, you have already built up a good habit and can either live with the continued savings or reduce your savings a bit but maintain the tax-deferred investments you have squirreled away.
You are the only you that you will get in this life. Let your circumstances be the pattern by which your measurements are taken not someone else’s. You don’t know how or why your neighbors have two brand new cars and and a Recreational Vehicle. As a matter of fact, you shouldn’t care why they have those things. They did not involve you in the process to acquire those things and you should not involve yourself in the process to match their acquisitions.
Try on your coat often for a test drive to make sure it still fits. Have a federal retirement ‘benefit analysis’ performed as you get closer to retirement to ensure that your calculations are correct and that you have a good handle on your federal retirement income and benefits. The closer you get to retirement, let your fitting regiment become a routine part of your plans to retire well.
P.S. Always Remember to Share What You Know.
Retirement Planning: How Federal Employees Set Financial Goals
Retirement Planning and How Federal Employees Set Goals
I had the opportunity to do a retirement planning seminar for a group of federal employees who asked a very important question. How do we set goals when we can’t predict what is going to happen in the next few minutes much less how our Thrift Savings Plan will perform over the next decade?
The question absolutely speaks to the anxiety individuals feel when facing retirement or any kind of transition that might potentially change their lives from what is most familiar. Setting goals is not about predicting the future, but rather about anticipating the future.
We may not know exactly when we will retire, but we do know that we have the desire to retire. We can’t predict when we will die, but we know most definitely that we will. We don’t know when we will be burdened with an illness or face some other unforeseen challenge, but we will. Such things are a part of living.
Goal setting is not as difficult or consuming as all of that, it is the basis of the planning process, be it financial, educational, or otherwise. Many of us think of goal setting as a task, something that must have defined steps and approached as an assignment. Goal setting is unique and individual. The beginning of formulating your own individual goals is to get a clear understanding of the difference between wants and needs. There are some needs that are declared standard or common to the population.
There may also be needs that are uniquely individual. However we define and set our goals it is important to prioritize what is most important over those things that can wait. For most of us resources are limited and spreading the resources over the needs that are a priority requires making careful and sound decisions – do we take that vacation to Hawaii this year or do we contribute a few extra dollars to our TSP funds, for instance.
As retirement gets closer and closer, setting goals, prioritizing, distinguishing between wants and needs will influence your decisions and help you to understand effective decision-making now and in the future. Getting these planning tools under your belt will help you RETIRE WELL.
P. S. Always Remember to Share What You Know.
Retirement Planning – Thinking Forward
Thinking Forward with Retirement Planning
Federal and Postal employees have extensive benefits that they have to navigate during their work career and heading into retirement and therefore their retirement plan. There are a number of benefits that are applicable to employees and their families. Many of those benefits may seem complex to the employee and the family members. It is recommended that employees visit their benefits often and discuss them with their family members in order to gain a better understanding.
It happens too often that employees who have very sound benefits fail to discuss those benefits with family members and what action to take in the event that the employee passes away or becomes impaired to the point of not being able to negotiate for him or herself. Postal employees, for instance, are learning to navigate the LiteBlue page and enjoying all the benefits of LiteBlue and what it has to offer, when it is possible and when necessary, family members should be able to take the tour with the employee.
The benefits offered to an employee during their work career also benefit family members. By the same token, during retirement, family members also need to be aware of the benefits and how they work in retirement in order to be able to take care of important business when the time calls for it.
P. S. Always Remember to Share What You Know.
Estate Planning Definitions
Estate Planning Definitions:
These are some common definitions which may arise when you are finalizing your estate planning.
• Will (Last Will and Testament) – A legal document that defines who will manage your estate; an instruction to a court of law.
• Letter of Instruction – It is an informal document that speaks to the financial and personal matters that must be attended to after one’s death.
• Advance Directive – Documents that include health care guidelines, living wills, medical and health care powers of attorney and other personal directives.
• Power of Attorney – A document that delegates the power to legally take care of financial affairs if one becomes disabled or incapacitated.
• Intestate – Dying without having a will.
• Probate – The process of having an attorney present your Will before a court.
• Estate Planning – A way by which legally effective arrangements are set up to meet specific wishes if something happens to you or your loved ones.
• Durable Power of Attorney (Health Care) – The appointment of a designee to make decisions regarding one’s health care treatment if you are unable to provide informed consent.
• Living Will – An advance directive giving physicians and hospitals your instruction regarding the cessation or provision of health care treatment should you suffer permanent incapacity or an irreversible coma.
• Estate – Consists of all the property a person owns or controls.
• Living Trust – Instrument that allows for holding legal title to and providing a mechanism to manage your property and carry out the instructions you want in the Trust. Instrument continues in force during one’s lifetime even in the event of incapacity and after death.
• Testamentary – Instrument created after death.
• Grantor or Trustor – One who establishes the Trust.
• Trustee – Individual named by the Trust as the controller of the Trust’s assets.
• Beneficiaries – Heirs
Educating ourselves on the varied aspects of retirement challenges and opportunities including planning for the business of the end of our lives is what we need to retire well and enjoy living in our next new adventure.
P. S. Always Remember to Share What You Know.
More information on Retirement Planning can be found HERE
Information on Financial Planning can be viewed HERE
Are Federal Employees Prepared To Retire?
Are Federal Employees Prepared to Retire?
Although federal employees continue to retire, it is increasingly evident that they are not prepared to retire. The culprit is not only an economic one, but a lack of understanding of how their benefits really work.
How can the largest workforce in the world who performs some of the most critical work in the nation, sustain themselves in retirement if they are not equipped to fully maximize their benefits.
It is increasingly alarming to learn just how many federal employees do not understand how their benefits will work in retirement – From how to maximize the benefits in their Thrift Savings Plan (TSP) to whether or not to carry their FEHB into retirement, the lack of knowledge suggests the need for much more access to training or trained professionals to help in the education of these employees. Many do not understand the basic concepts and structure of the retirement system they are a part of. Many FERS employees erroneously determine their Thrift Savings Plan to be their total retirement. They are unaware that the Thrift Savings Plan is but one component of the FERS 3 tier retirement system.
Knowing that a great deal of federal employees have a lack of understanding about the basic principles of a retirement system so important to how they will live out their lives in retirement, is a frightening thought. It is, however, not a position of last resort. It is simply a call-to-action as government agencies are asked to make deeper budget cuts; training and staff development are often sacrificed to the detriment of the federal workforce.
Federal employees may be left with some knowledge gaps in fully understanding their retirement systems, but those gaps can be filled by rethinking how we educate the federal workforce about their retirement benefits. What to do? Although it seems an enormous problem for federal employees, the problem is easily cured by providing on-going training on retirement as a part of orientation, on-boarding and beyond.
Acquainting a workforce 3 to 5 years prior to retirement as to how their benefits will work in retirement accomplishes far less than what could be achieved if the engagement were started at the beginning of the employee’s career as opposed to the end.
P. S. Always Remember to Share What You Know.
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Retirement Planning: No Balance Due
Retirement Planning
Since I have been teaching and conducting retirement seminars people ask me all kinds of questions. Now that it is tax season – my friends, colleagues, and church members ring my phone constantly and bombard me with emails about retirement planning.
First, without hesitation, a good strategy is to find a financial advisor and/or tax professional to help with retirement planning. I also suggest some good ways to find a financial advisor and/or tax professional that suit their needs. I strongly emphasize that it is important to find a financial partner who is qualified, understands the federal retirement system and someone they can trust.
This past week-end after giving the above suggestions, one of my dearest friends continued the conversation by stating – “Do you think it is a good idea to carry no balance on my credit cards?” I replied – “You mean that you pay the balance off each month.” The answer was –“No, I don’t carry a balance, period.”
My friends are so resourceful; they always give me something to write about. Just when I think I have just about run out of topics, like magic here they come with loads of stuff for me to write about. Having a credit card with no balance does not demonstrate to the lender your pattern of spending or your ability to handle credit. Having no balance on your credit card does not necessarily improve your credit score.
It is like buying a car that is supposed to get excellent gas mileage. If you buy the car and park it in your garage, how can you validate how much gas mileage it actually gets? Obtaining credit means using credit wisely and responsibly. That being said, in order for my friend to improve her credit score, it is far better for her to carry a small balance on her credit card and pay it off at the end of each month, rather than having no balance at all.
A simple math equation for you to illustrate how it might work.
You put $10,000 money in your Thrift Savings Plan – it grows at 8%.
You have an equal balance on your Credit Cards – it costs you 12.99%
$10,000 growing at 8% = 800/year in growth
$10,000 on a credit card at 12.99% = costs you $1,299/year
So, $1299 – $800 = $499 every year that you gave to the credit card companies. Not a good way to maximize your retirement income.
Lenders need to see how you handle credit. Without some activity on your account, it is hard to measure or assess your ability to handle credit. This by no means suggests that you should go out and run up your credit cards. Quite the contrary, spend wisely, purchasing what you can pay off at the end of the month to keep activity going on in your account. Many credit card companies will ask you to return the card if you don’t use it after a period of time.
The tax season can also be a good time to do some financial Spring cleaning to make sure your financial health is in order and your retirement planning is up to date.
P. S. Always Remember to Share What You Know.
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Baby Boomer – The Reality of ‘Now’
Baby Boomer: The Reality of ‘Now’
The baby boomer generation will be the first generation of retirees who will enter into retirement while their parents are still living. That is a reality because Americans are living longer. This means that in addition to baby boomers planning their own retirement future, they must also help and sometimes manage their aging parents’ retirement too. There are many questions that come to mind, but the main question about retirement is – “Will I have enough money?”
Many times family members neglect to communicate those things that will help to lighten the load on one family member or a few. Being a caretaker whether directly or indirectly is a challenge and that challenge can be exacerbated by the fact that aging parent also need care and attention. But that challenge can be made easier by building a strong support system of family, friends and the many resources now available to seniors living in retirement.
As a baby boomer, it is a good idea to begin looking into resources and options for your parents as well as yourself before it becomes a must. Taking the initiate to be proactive will save you a lot of time, money and stress.
If you are a baby boomer living in a community where the reality of taking care of a parent is imminent, it might be wise to start or join a community focus group that will look into the best options possible for your situation – where to live, how to live, how to manage the unexpected and how to enjoy retirement in difficult situations.
Having support is one of the strongest links to riding out a storm.
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Are your parents’ Medicare elections up to date?
Retirement Planning – Now or Later?
Retirement Planning
The most important step a Federal or Postal employee can take toward a successful retirement is recognizing how and when to begin the retirement planning process. As a FERS or CSRS eligible employee the earlier you begin educating yourself and gathering as much information as possible about how your benefits will work in retirement the better off you will be. Due to the complexity of the FERS and CSRS programs Federal and Postal employees may wish to speak with a financial expert who has a clear understanding of the FERS, CSRS, FEGLI and your TSP.gov account.
When is the ‘Right Time’ to start planning for retirement?
As the adage goes – The best time to plant a shade tree was 40 years ago. The second best time is right now.
Although our early years are not typically spent planning for retirement, they should be. Retirement planning is a very important component of the work-life cycle. The earlier we start building your nest egg (such as making contributions to your TSP.gov account), the longer it will be able to grow for you. Not only will your work and your savings begin to add up, but the compound growth that can take place over time means that your money is working for you. Reviewing your TSP.gov account regularly and making sure that your the investments and the ‘allocation’ you have matches your desired retirement plan is a must.
The first day of your first full-time adult job is when you should start your retirement planning. Don’t just take that myriad of papers handed to you by Human Resources and stuff them in your desk drawer. Read them, ask questions and learn what you can do right away. And absolutely, make contributions to your TSP.gov account.
Although it is never too late to start preparing to retire well, the earlier we start the greater our options and opportunities to design the kind of life we want to live in retirement. Your TSP.gov account and other investments are important when you are younger but they grow even more important as you get closer to retirement. This is when a financial professional can help you ensure that your retirement goals and income needs will be met.
P. S. Always Remember to Share What You Know.
Will your income will be enough in retirement?
Are your TSP funds getting you to where you need to be?
