tsp.gov
Financial Advisors and Federal Employees
I was recently asked if my trainer of financial advisors and planners interested in the federal workforce differed from training federal workers? Without missing a beat, I said most emphatically “It certainly does.” It is more intense because financial advisors for federal employees need to know more about the Federal Retirement Systems than the federal workforce themselves.
The Federal Retirement Systems probably have some of the best benefits you will find all things being equal. It, too, is a system of immense rules and regulations that can be undeniably complex, even for someone who has spent a career absorbing all of the nooks and crannies.
The Civil Service Retirement System (CSRS) often referred to as the old retirement system was enacted in 1920. The world has changed a number of times since then and many amendments have been made to the system. One must be constantly updated on the changes so as to be an excellent source of information dissemination. I find that many financial advisors and planners I work with who wish to begin helping the federal workforce think of simply helping the workers manage their money. There is nothing wrong with that premise only that would leave the federal employee missing out on a great number of potential benefits
Federal Employees Partnering with Financial Advisors
Financial Advisors and Financial Planners (really the same thing) are important pieces of the partnership needed to guide the federal employee workforce to safe harbor so that their sails can withstand the uncertainty of storms that will surely come in their lives. To strategize such a journey requires acquiring a very sound knowledge of the Federal Retirement Systems (FERS, CSRS, FEGLI, FSAFEDS, etc.).
We are not talking about becoming Federal Retirement Specialists, but we are talking about partnerships that will equip these professionals to help manage the financial resources of a very unique group of employees. When you cast your net to work with the federal workforce in helping to plan their retirement, it needs to be cast wide because federal employees are as diverse as their many duties and responsibilities.
Although there are two retirement systems technically, there are a number of aspects that apply to special categories of employees as well, like firefighters, air traffic controllers and law enforcement officials.
Yes, my approach to conversational training with financial professionals is much more intense and absolutely focused on ensuring they know the language of the federal retirement systems and its workforce so that they can give them the tools necessary to retire in comfort and security.
If the federal workforce gets a course in the basics of the Federal Retirement Systems, then the professionals they entrust to handle their hard earned money – get the ADVANCED-ZERO TOLERANCE version with lots of hand-holding collaboration. I learn as much from Financial Advisors and Planners as they learn from me. We are all invested in making life in retirement and before a little easier to maneuver for federal workforce.
Financial Advisors who are knowledgable in federal and postal benefits need to be able to help you with your TSP account and Thrift Savings Plan fund choices, your Federal Employees Group Life Insurance (FEGLI) selection (both while employed and any potential reduction elections that you might want) and also possibly help you with your FSAFEDS and FEHB elections.
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
Financial Professional – The Right Choice for Federal Employees
Federal Employees and Choosing a Financial Professional
Retirement planning for federal and postal employees can get pretty complicated, which is why we recommend that federal employees should seek out the guidance of a qualified financial professional to help them. Many individuals do their own retirement planning; while others seek the advice and counsel of a professional to set them on a path to retiring well. Below are some tips and recommendations for choosing a financial professional to help you handle your financial future.
• Seek a financial professional who has demonstrated they are experts in the federal or postal retirement market. These professionals have fulfilled the rigorous training, testing and ethical standards required to achieve various designations.
• Find a local financial professional who knows about your Thrift Savings Plan along with the in’s and out’s of Federal Employees Group Life Insurance (FEGLI), Federal Employees Retirement System (FERS) & Civil Service Retirement System (CSRS).
• Ask for references, preferably current and past clients, before you begin any legal work.
• If you decide to use an attorney for your estate planning needs choose one that has at least 10 years of experience in estate planning. This is a very complex field with different probate and wealth laws in every state. The attorney you choose must be keenly aware of these laws and how they apply to your personal circumstances.
• Make sure that the attorney you choose is licensed to practice law in your state of legal residence.
• Check organizations and licensing boards for background information. Also check with continuing education associations focused on estate attorneys. These associations generally draw well qualified attorneys to their ranks.
• Evaluate the listening skills and communication style of any advisor or attorney you are considering. If the professional is short and impatient and does all the talking without giving you the opportunity to chat and ask questions, no matter how talented, you may want to keep searching.
• Do your homework. Ask the professional if they’ve received any special training in federal employee retirement. Check their credentials, see if they have any third-party endorsements or have been published on subjects similar to your questions.
In choosing a financial professional you are selecting a partner – a person who will likely be working with you for years to come. Therefore, you want to make sure that you are hiring the most qualified financial professional you can find.
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
Is All ‘Your’ TSP Money Actually Yours?
The Rule of 72
One of the key traits federal employees need to understand is how compound interest works and the importance of making your money grow faster. The Rule of 72 is a very basic way of demonstrating the value of compound interest. Compound interest is simply interest on top of interest. This is especially important as you understand the importance of you TSP account and the growth of your money – along with the matching contributions of your employer.
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
– Albert Einstein
In simple terms – the number 72, when divided by the rate of interest your earn on your savings will equal the number of years it takes to double your money. The Rule of 72 demonstrates the value of compound interest over simple interest and how your money doubles at a faster rate.
Ex. If you earn 9% on your money it takes approximately 8 years to double your money.
or 72 / 9 (%) = 8 (years)
Putting away 40.00 and earning interest of 5% or $2.00 increases your savings to $42.00. The period of earnings will not be calculated going forward on $40.00, but on $42.00 and so on and on allowing the rate of interest to compound, thus building up your savings quicker.
There is no strategy or mechanism that should not be reviewed and analyzed that will help to strengthen the performance of your money in your retirement years and beyond.
P. S. Always Remember to Share What You Know.
For more information on your TSP account and how to maximize your retirement income click here.
Different TSP funds have different rates of expected growth – to learn more read this.
Retirement Planning: Critical Ages
It is a personal decision to decide when to retire but there are some age-based considerations that will help to guide federal and postal employees when planning and making retirement decisions. Retirement planning can never take place too far in advance.
The rule of 5 is important in the Federal Service (FEHB for instance). Generally speaking, if you have worked for at least 5 years you may be entitled to a number of benefits.
In addition, the chart below illustrates some important age-based considerations for your retirement planning.
Age 50
• Begin age-based catch-up to defined contribution plans and individual retirement accounts (IRA). Beginning with the year you reach age 50, federal law allows for the deferment of a certain dollar amount per year to a qualified defined retirement plan. The catch-up amount is $5,000, indexed in $500 increments. The age-based catch-up amount for IRA contributions is $1,000.
Age 55
• After separation from service, you may begin withdrawing from a qualified plan without paying a 10 percent penalty.
Age 59.5
• You may begin withdrawing from qualified retirement plans, if retired or from an IRA without incurring the 10 percent penalty.
Age 62
• You can begin receiving your Social Security benefits; however, the amount may be reduced by as much as 30 percent, depending on the date of your birth.
Age 63.5
• The Federal Consolidated Omnibus Budget Reconciliation Act (COBRA) law makes health insurance in most employers’ group health plans available for at least 18 months after separation; however, you bear the full cost, including the portion previously paid by your employer (plus a small administrative fee). Upon reaching age 65 and you enroll in Medicare Part B, federal law requires access to Medigap health insurance at standard rates. Combining COBRA and Medigap effectively ensures access to health insurance beginning at age 63.5.
Age 65 – 67
• Depending on your date of birth, you may begin receiving unreduced Social Security benefits without being impacted by earnings limits.
Age 65
• You may enroll in Medicare, if eligible, and by keeping your FEHB coverage, you will have sufficient coverage in retirement. Medicare pays about 80% of coverage and your FEHB will make-up for any outstanding portions for services covered. When you reach Medicare eligibility, Medicare becomes the primary in most cases, while your FEHB acts as a supplement. Note there are some services that Medicare covers and FEHB does not, the reverse is also true.
Age 70
• You may begin maximum Social Security benefits, if the starting date was delayed to this age. There is no advantage to delaying benefits past this age.
Age 70.5
• Required minimum distributions from qualified plans like your TSP, IRAs, and deferred compensation plans begin the year after you turn 70.5.
There have been many changes in health care laws; therefore it is always recommended that you review your policies and plans often. You should also find a good, highly trained, financial professional to help you with your retirement plan and benefit and insurance selections.
FEHB and Postal LiteBlue Access
P. S. Always Remember to Share What You Know.
How To Retire Happy
~~HOW TO RETIRE HAPPY
The first step to making sure you are happy in retirement is to understand that YOU MATTER. Many of us subconsciously define ourselves by our jobs and job titles. When those things no longer exist, we may begin to wonder about the significance of our lives and our future. It is simply human nature to want to feel important in the lives of others. However, to really feel how important you are in the lives of others, you must first place value on your own life. You really do matter because you are you, a wonderful being who has contributed more than you know to helping to make our country thrive.
Federal and postal workers make up the largest workforce in the world and they perform some very important tasks. They help to keep the world moving. An unfortunate thing that I hear in many of the educational seminars I have performed, is that these same employees don’t think of themselves that way. Their biggest mistake is to not maintain a happy outlook at all times. It is understandable that losing the routine of work itself, the relationships we build with colleagues, the connection to an environment, an office or defined destination to go to, and just that daily schedule leaves many people wondering if they really matter.
It may take a little time to figure out just how important you are. But while you are figuring that out, we already know how important you are and that you really do matter because the work you performed has charted a path for that work to continue and make a difference in the continued growth of our nation. In a future post, we will discuss some interesting thoughts about our psychological profile. Remember YOU MATTER.
P. S. Always Remember to Share What You Know.
Good Health Is Wealth
Good Health is Wealth
In a previous post we were challenged to a Retirement Readiness Quiz. One of the questions asked, “Are you taking care of your health”. That question is one of the most important aspects of your plan to Retire Well. Obviously you should be taking advantage of your FEHB and Flexible Spending Account options, but no matter how much money you have saved and how well you are prepared, whether your eligible for Social Security, whether your eligible for the TSP or a Corporate sponsored 401(k), whether you use LiteBlue or TSP.gov, plan the enjoyment of your hard work goes out of the window if your health is not good.
Let’s talk about a very eye opening project that has been getting quite a bit of press over the last few years. Dan Buettner, co-director of the AARP/Blue Zones Vitality Project launched the Blue Zone Quests in 2005 to study and research these rare regions and to share what they can tell the rest of us about taking care of our health so that we live longer and better lives.
The term ‘Blue Zone’ is really an accident of history. Demographer, Michael Poulain, during a meeting in 2001 highlighted the region of Sardinia with a blue marker on the map. The region of Sardinia was home to an exceptionally large concentration of centenarians and thus the first Blue Zone was born.
Buettner and his team have identified other Blue Zone areas: Okinawa, Japan, Nicoya Peninsula in Costa Rica, the remote Greek Island of Ikaria, the Barbagia region of Sardinia, Italy and Loma Linda, California. You will note that only one Blue Zone has been identified in the United States. People in these regions live to reach 100 years of age at a rate significantly higher than the rest of the population. They live longer and healthier lives and suffer about one-fifth the rate of heart disease and cancer found in the general population in the United States.
We are learning more and more that genetics play a monumental role in the longevity of our lives, but life style may play an even greater role. Diet, exercise, spiritual values, and mentally stimulating activities are important factors in creating good healthy living habits. The Blue Zone centenarians seem to always be busy doing something physical. It is reported that their muscle tone is much different than the average one of us. They keep busy. We can learn pretty valuable information from the Vitality Project. They are obviously doing something the rest of us must learn to do.
It also appears they have found a way to manage stress, live long and healthy. To live long and healthy is surely a goal we would all like to reach. Good health is wealth. In order to achieve that wealth that has a greater rate of return than any financial instrument imaginable, we must have a plan for staying healthy and active. If you don’t start the engine to a car for long periods of time, when you do attempt to start the engine, it just might stall or not start at all. Reeve up your engines and let’s get started preserving our wealth. CHEERS!!! To Your Good Health.
P. S. Always Remember to Share What You Know.
Federal / Postal Retirement Planning Report Card
Retirement Planning Report Card
From your Thrift Savings Plan to FEHB to FEGLI, each of us will be ‘graded’ on our Planning Report Card. Much like when we were kids in school how well prepare ourselves on these topics, will have an impact on how well we do. If you got good grades in school, your parents often rewarded you with something special, sometimes even money to show the value and significance of getting good grades. Your Retirement Planning Report Card, however, is far more important than if you got an ‘A’ in your Social Studies class. This Report Card will truly impact the rest of your life.
You have reached another milestone in our lives where once again a report card is important. The difference is if you get a good report card by planning ahead for retirement (such as using your Thrift Savings Plan fully), your reward is to live in comfort and security. Proper planning allows you to retire on your own terms and take the worry out of how you are going to survive now that your income is much lower than it was as an active employee.
Your planning report card should include estimates of your pension income which will resemble reality the closer you get to retirement. Your Retirement Planning Report Card should also include information on your TSP.gov account any Social Security Benefits you might be eligible for and even your life expectancy. If you are postal employee you will need to access your LiteBlue account and gather any forms that you would like to maintain in retirement. Look to include your total estimated monthly retirement income and your estimated monthly expenses. Do not forget to include any additional savings and IRA’s that you have along with your spouse’s savings too. Other items you think are relevant will help you paint the best picture possible of your retirement future. It is always a good idea to consider talking with a financial professional who focuses on Federal and Postal retirees (Liteblue information can be found HERE). They are tough to come by and the average ‘Advisor’ probably doesn’t know much about your benefit package, but if you can find a FERS, CSRS and FEGLI expert – you should do yourself the favor and sitting down with them to discuss your needs.
There is quite a bit of work to do to get ready for retirement, but the sooner you get started the closer you are to reaching your retirement goals.
P. S. Always Remember to Share What You Know.
Income Sources for Federal and Postal Retirees
Sources of Income for Federal and Postal Retirees
The majority of retirees will get income from a number of sources. However, the only sources they can really depend on are –certified – sources of income. What are certified sources of income? Income that you know will be there – Social Security, Employee Pension Plans and other Personal Savings and Investments, such as your TSP.gov account.
Some of us may receive income from an inheritance, equity in our home, life insurance, and Individual Retirement Accounts (IRAs). Principally income generally comes from the three primary sources named above and quite often the third one might be missing for many retirees – Savings and Investments. Even if you are currently missing the Savings portion, it is never too late if you put a savings strategy in place and stick to it.
When you are planning for your retirement, your plans should not be based on what ifs, like winning the lottery. We would all like to win the lottery, but the odds are pretty slim. Therefore, your plans for retirement must be based on certified sources of funds. As federal and postal employees, whether you are eligible for CSRS for FERS you know that your Pension and Social Security where applicable will be there. Everything else is an add-on to enhance your comfort and security in retirement.
Whatever your financial profile, the greatest way to protect it is by always making sure that your expenses are below your income. Careful planning can help you reach this position with what you have when you make adjustments to fit your circumstances.
P. S. Always Remember to Share What You Know.
Related Articles
Click HERE for information on Postal LiteBlue
Click HERE for information on your Thrift Savings Plan
Quiz for Federal and Postal Retirement
Retirement Readiness Quiz
If you took a retirement readiness quiz how ready do you think you would be? If you find that you have already completed a task, then you are a STAR. If you need to still get busy accomplishing the task, then simply make it a part of your Individual Action Plan (IAP) for implementation. This is not actually a quiz where you get graded but more of a global positioning system to help you navigate successfully to where you want to go. Beside each item indicate if it is COMPLETE OR PENDING. If the item is pending estimate a date when the item will be complete and the action you will take to make it happen.
• Have you quantified your financial objectives? In other words, have you estimated how much money you will need to live the life you desire in retirement?
• Have you set goals for retirement?
• Do you have doable strategies to achieve those goals?
• Can you itemize the strategies to achieve the goals you have set for retirement?
• Do you know where all your important records are?
• Have you informed someone you trust about your important records?
• Do you know how to reduce your FEGLI expenses and who to work with to make that happen?
• Do you know how you spend every single dollar and cent?
• Do you know how to access the TSP.gov website
• Are you saving enough money in your Thrift Savings Plan (TSP) and is your current mix of funds right for your needs?
• Have you prepared an estimated retirement budget and devised steps to help you operate within your budget?
• Do you intend to leave a big inheritance to your children, other family members, or a charity? If so, have you set aside money or made provisions to accomplish that goal?
• Have you thought about where you will live in retirement and the cost involved?
• What would you do in the event of an unexpected and extended disability before you retire?
• Do you have an emergency fund?
• If you are a couple, are both parties completely aware of the status of the financial situation?
• If something happens to either of the parties, is each member capable of managing the family’s finances independently?
• Are you taking full and total advantage of any tax-deferred savings options offered by your employer?
• If you have dependents that rely on your income for survival, what plans have you put in place in the event of your death?
• Are you taking care of your health so that you can have a good quality of life in your retirement years?
There are many more retirement readiness questions we could pose, but I think we have sufficient fuel to allow us to take a good look at our readiness for retirement. Remember if you have not done any of the things listed, it’s ok, you need only make them a part of your individual action plan and get started activating that plan as part of your goal to Retire Well.
P. S. Always Remember to Share What You Know.
Click HERE for information on CSRS
DO YOU HAVE A SAVINGS STRATEGY?
Setting Up a Savings Strategy
It is good management of your resources to have a savings strategy, but how do you know when it is not working. If you decide based on your PLAN to save $400 per month but before month’s end, you have chipped away at $300 or more. There is something dramatically wrong with your strategy. As a matter of fact, it is not a SAVINGS strategy, but a revolving door account. You deposit in one door and spin right around and withdraw it from the other door. You really should consider your Thrift Savings Plan account as the perfect savings vehicle. The Agency match (and the 1% contribution) make your TSP.gov account a fantastic place to commit to adding money every month.
There might be a number of things happening. Perhaps, you are attempting to save more than you can afford to save. We’d all like to save in big pieces, but that might not be the fit for your circumstances. Saving small amounts consistently is much more beneficial than saving large amounts only to withdraw those amounts virtually as soon as you deposit them.
You will be amazed at how small amounts saved over a consistent period of time add up to be much more than you think. There is an old proverb that states – Each man must cut his coat according to his own size- otherwise it will either be too small or too large.
Develop a Savings Strategy that really is a strategy for saving and leverage for you to retire well.
P. S. Always Remember to Share What You Know.
Federal and Postal Retirees – YOU HAVE SO MUCH MONEY
Federal and Postal Retirees
Well you just retired a few weeks back and your final pay check has just arrived along with your annual leave check. You were smart and ran a benefit analysis long ago. You know how much you have, how much your TSP.gov account can generate and when the best time to start accessing those savings is – you’ve even done a social security analysis to determine what your and what your spouses eligibility is.
The wheels are turning in your head as to what you are going to do with all that money. You saved up your annual leave to the maximum so that you could get that big check to fill the gap until your full annuity begins to roll in. What to do? What to do? Remember your plan for retiring well. That plan with the flexibility built into it will not work if you don’t stick to it.
When we speak of things happening, the unexpected, it doesn’t always have to be something horrible that happens. It could be so good that it sort of makes you giddy until you realize you have sabotaged your plans to retire well.
Although retirement should be looked upon as a gift you well deserve because you have worked hard to earn it, you must as retirees bear in mind that the gift needs to be one that keeps on giving, like for the rest of your life.
If we have ever outlined a time to be cautious about our resources, financial and otherwise, it should be as retirees. Exercising caution might mean the difference between working because you want to and working because you have to. That’s a huge difference and one that could challenge your emotional happiness in retirement.
Whether a little or a lot, plan well with what you have worked for and protect it by always reviewing your plan, monitoring it and making adjustments as circumstances and conditions in your life change.
P. S. Always Remember to Share What You Know.
For Postal employees, Click HERE for more information on LiteBlue
Plan for Pre-Retirement Debt Reduction
Debt Reduction Plan
By now your laundry list of things to do as you prepare to Retire Well should be growing. There are a lot of things we want to take into retirement with us, but one thing we want to leave behind is HEAVY DEBT. Since most of us will be living off of an income that is decidedly less than what we earned as active employees, reducing our debt is a key laundry list item.
Unlike our parents and grandparents, our mortgage obligations may not be retired when we retire. Therefore, taking that debt into retirement may be unavoidable. The good news is that you might be able to trim the cost of your mortgage. One way of doing that might be to downsize, since the nest might be empty and the space you once needed while raising your family may no longer be needed. There are also other choices and options concerning your mortgage liabilities that you may want to research and examine to see if they fit your lifestyle and budget. Some of those options will be discussed in subsequent posts.
As for now there are many steps we can take to reduce our debt. First step, identify and categorize your debt as small, medium or large in terms of the balance owed. Second, we are going to evaluate the interest owed on all debts. Third, we should analyze how long we have been carrying the debt. The fourth step is to assess what percentage of your debt is comprised of NEED and what percentage is comprised of WANT.
Once you have taken the suggested steps, then begin to pay down little, small, nagging debts no matter the interest rate. After you have taken care of that, begin to pay down the debt that has the highest interest rate first because the more interest you have to pay out, the more of your hard earned money you are handing off to someone else. Then follow through by paying the remaining debts with lower interest rates. The key to making your debt reduction plan work is once you begin to pay down the debt take care not to accumulate additional debt. Dividing your debts into things you purchased because you needed them versus things you wanted, will help you avoid impulse spending.
Regardless of whether you are eligible for CSRS or FERS, part of your Retirement Plan should be to make sure you have as little debt as possible (and hopefully one at all) as you enter retirement. Think about establishing a debt reduction plan at least five years before you retire so that you can get a handle on how to use your restructured income to enjoy some of the things you wanted to do that were otherwise restricted by your commitment and obligation to work.
P. S. Always Remember to Share What You Know.
Click HERE for information on TSP.gov
Click HERE for information on LiteBlue
Click HERE for information on Retirement Planning
Retirement Planning – What Motivates You?
Retirement Planning
No matter how well we design a plan, how effective our financial planning is and how proactively-centered our individual action plan, if we don’t follow it, the entire exercise is futile. The decisions we make to actualize our retirement desires require flexibility both in thought and action.
In order to really live out our dreams in retirement, we must be prepared to make sacrifices during our work career to achieve those dreams later. It is also critical to understand the importance of trade-offs when prioritizing retirement planning and needs. What you trade-off today to either have or have more of in the future (such as putting money away in your TSP.gov account) could greatly impact the success of your retirement planning.
The decisions we make today carry consequences that not only affect us, but our families as well. We have the responsibility to develop strategies that will help us stay the course to secure a financially and emotionally stable retirement.
What motivates you to work hard to achieve the goals you set for retirement? Is it about you? Is it about your family? Is it gaining the ability to call the shots in your own life? Is it having enough money to take care of your needs as well as your wants?
Whatever your motivation to stay the course, remain vigilant and purpose driven – DO IT. Retiring well is your reward for working hard and putting in the time to reach the coveted status of retirement eligibility.
P. S. Always Remember to Share What You Know.
Plan Building: How Do I Get Started?
~~HOW DO I GET STARTED WITH A PLAN?
By now you are probably asking – How do I get started setting goals that are SMART and putting a plan into action? You get started by first simply writing down what you desire your retirement picture to reflect. Write down your goals, evaluate and analyze them so they fit your circumstances and values.
Create a strategy that is doable with short, intermediate and long-term goals with time horizons that are based in reality. Make certain that the plan you create can be put into action without causing undue stress on your emotional and financial well-being. Lastly, make room to monitor and track the movement of your plan, leaving time and space to modify the plan as circumstances and conditions change in your life both for you and your family.
A plan that starts out SMART ends with giving you in retirement the lifestyle you desire and deserve.
P. S. Always Remember to Share What You Know.
Plan Building for Retirement
Building an Action Plan
Remember we discussed what separated people who get it about money from the rest of us – they have a plan and they stick to it. Building your individual action plan starts with building your Financial Plan for retiring well.
So that you achieve your goal of retiring well, you must embrace the urgency of identifying and setting goals that give you the flexibility to make adjustments as circumstances in your life change. That means making certain that your goals are SMART in order to have a workable financial plan, a budget that fits you and makes sense – all implemented via your individual Action Plan.
Making certain that your Action Plan gets you to where you want to be in retirement, it is important to distinguish between WANT and NEED. We can intellectually differentiate between WANT and NEED, but living on less money in retirement is a reality that compels us to prioritize NEED over WANT.
Are NEEDS and WANTS the same for everybody? The answer is NO.
However, all things being equal, we all have the same basic NEEDS and WANTS. Although, NEEDS determine what is absolutely necessary for human survival, WANTS often drive us to succeed. The challenge is knowing the difference, amassing and utilizing the requisite knowledge to choose options and make decisions that will lead to the goal of retiring well.
Your individual Action Plan will only serve your purpose if you put it into ACTION.
P. S. Always Remember to Share What You Know.
For information on saving with TSP.GOV
How to maximize federal benefits with a benefit analysis
RELATED ARTICLES
What Is Your Financial “Type?”
Your Financial Type
When it comes to money, what kind of financial person are you? Experts say that there are generally three kinds of people when it comes to money. There are those who live paycheck to paycheck. There are those who simply never have enough money, those that put the minimum away in their TSP and finally those who absolutely get it.
Those who get it just didn’t suddenly wake up one morning in Oz, a realm off limits to the rest of us; they had a financial plan and they followed it. Remember the equation below. Put it in a heavy traffic area of your home so that you can see it and let it be a constant reminder of your desire to retire in comfort and security.
Your plan is an achievable and trackable, weekly or monthly financial goal. Set the Goal – pay down your debts (those with the highest interest rates first), put money aside for a rainy day and then save for retirement (every little bit helps).
Having a Plan + Following the Plan = Retiring Well.
We are off to a good financial start!!
P. S. Always Remember to Share What You Know.
Retirement Plan for Federal and Postal Employees
Your Federal and Postal Retirement Plan – Will It Work
How do you know if your retirement plan is a good one and if it will work? Think about the strategies below:
• Your overarching goals for retirement are outlined (stay flexible).
• You have clearly written down all of your financial goals for retirement
• Are you maximizing the benefits of your TSP.gov account
• You have a spending and retirement plan for all of your income sources.
• You always review your goals before spending to avoid impulse spending.
• You have included the development of a budget that you monitor now and will continue monitoring into retirement.
• Your retirement plan includes a very close estimate of how much you can spend on clothing, entertainment, eating out and vacations.
• You plan ahead for major expenses and purchases so you don’t have to rob your savings.
• You have an emergency fund to cover unexpected expenses (3-6 months or more). You decide what fits your circumstances.
• You do comparison shopping always (ie. Search for “FEGLI comparisons” on the internet).
• Set aside some money to spend as you please, only after you have paid yourself first.
Your retirement future is important business, but you should still have some fun as you set your priorities to retire well.
P. S. Always Remember to Share What You Know.
The Chief Executive Officer (You, the CEO)
You, the CEO
Organizations have many layers of responsibility. However, the organization’s failures or successes rest in the hands of the Chief Executive Officer, the CEO. The BUCK stops with YOU, because you are the CEO of the Business of Your Life.
You have to take charge by prioritizing the steps necessary to ensure the success of the Business of Your Life as you move into retirement. CEOs inquire about what they need to know in order to ensure long-term viability of the organization’s resources. As the CEO (YOU) of the Business of Your Life, it is time for you to establish an open and frequent line of communication with your Human Resources Office.
Make sure that your service computation date is correct as well as your FEHB and FEGLI elections verifying at least 5 years of participation. Meeting the five year requirement enables you to take your FEHB and FEGLI into retirement.
Consider letting the last two years prior to your planned retirement year, be a period of investigation and examination of your work history profile to avoid surprises as you draw closer to your targeted retirement year. Give yourself time to process the information you have gathered to determine the level of utilization and implementation.
Once you have made your inquiries, gathered and assembled critical information, processed the information to determine the right fit for your retirement vision, you can then begin applying what you have learned from your research and investigation.
Determining the right fit for your retirement vision is highly customized. Your retirement future is not a cookie-cutter phenomenon, but a challenge and an opportunity unique to your circumstances, needs, values and choices – The Business of Your Life. Applying what you have learned means making it happen, making it real and making it work. It’s up to you to make it happen – the BUCK stops with YOU- the CEO.
P. S. Always Remember to Share What You Know.
Financial Plan for the Federal and Postal Employee
Like all Federal and Postal Employees we must all consider the importance of our Financial Plan as we prepare to live in retirement – on our own terms. Whether you are part of the CSRS system or FERS you should know the importance of having an overall financial PLAN and how vital it is for a successful retirement future. Part of THE PLAN should include a financial piece – your financial plan.
What is a financial plan? It is a thought process of what is important to you and what is required for your life in order to make your dreams a reality. A financial plan assists us in identifying what we want, how to get it and how to keep it. Sometimes it is as simple as identifying the small changes that you can make today which will have large impacts in the future? Devising a financial plan means making choices, sometimes difficult ones, in order to reach your retirement goals.
The process of building your financial plan has much to do with your value system. Our value system is often shaped by our parents. As we mature our value system may change. The values we have today, we probably did not have them when we were younger. One reason being, our responsibilities and obligations have changed.
Often when we make one decision, it simply causes us to make another decision. Constructing a financial plan and making decisions also involve trade-offs.
For instance: Would you like to maintain a Life Insurance policy on yourself or your spouse so you can protect your family? The trade-off is the cost of the insurance for the benefit of that protection. Then if you make the decision to protect your family in this manner, what is the best way (most cost effective way) of managing this expense? Should you stay with FEGLI or find a different policy? Is there a ‘best and cheapest’ policy for your needs?
Another decision you will need to work through is with regard to your TSP Account. The decisions you will need to make consists of the amount and manner you take income from your savings. Additional TSP consideration include rolling your funds into an IRA or and whether or not you should hire a professional to help you with your investments
You may have to give up something today in order to gain something tomorrow that might ultimately be of far greater benefit in the future. We save now and we plan now so that our retirement years can be spent in comfort and security.
The most educated Federal and Postal employees and retirees will likely be working with a Financial Professional to help them with these decisions. That is to say – the federal employees who choose to enjoy more of their free time and worry less in retirement will likely want someone else to manage the day-to-day minutiea of their investments and retirement plan. We may know a lot about our own circumstances and may even know a lot about the economy or the markets – but I suggest that you find a financial expert in your benefits to ensure that you are looking at all of the possible savings and advantages that you have as a result of your employment.
P. S. Always Remember to Share What You Know.
Federal and Postal Employee – Retirement Goal Setting
Retirement Goals
The importance of constructing a PLAN for moving into retirement with comfort and security cannot be overstated. You should have a laundry list of goals as you ready yourself to retire well. Constructing a plan, managing your TSP account, making sure you’ve run a Benefit Analysis BEFORE retirement is also incredibly impactful on the whether or not you will reach your retirement goals.
Goals are all very individual and personal. They are also meant to guide us in making your plan real and making it work. Even though they are highly individual and personal, there are core criteria common to setting goals.
Goals must be achievable; they should also have a time horizon. If you set a goal, then you should also entertain a time by which the goal can be realized.
Goals should be flexible. There is nothing wrong with having to move the goal post either closer or farther away.
Goals should be defined with the ability to track or evaluate progress.
Essentially, GOALS shoudl be; SPECIFIC, MEASURABLE, ATTAINABLE, REALISTIC and TIME RELATED.
Often when we think about life and living, putting something down on paper escapes us. We think about setting goals at work and linking time horizons to those goals. On the other hand, we fall significantly short when it comes to setting goals for our lives.
For the average worker – WORK – is business. In order to place the same importance on our lives, it might be advantageous to think of facing the challenges and opportunities of retirement as the BUSINESS OF OUR LIVES.
P. S. Always Remember to Share What You Know
