tsp.gov
Annual Leave (Gap Money)
Annual Leave (Gap Money)
We have talked about saving and taking on more personal responsibility for our retirement years and a federal or postal employees unused Annual Leave can represent an important vehicle to accomplish this goal. We also spoke about saving by fully funding the Thrift Savings Plan (TSP) as one way to build up your financial resources for your retirement years. But in addition to any savings you have built up in your TSP, by the time the average federal worker retires, their annual leave accrual represents 8 hours per pay period or 16 hours per month, roughly 2 days per month. Postal workers earn slightly less in Annual Leave accrual (check LiteBlue for more information). Accumulating and saving your annual leave can make your transition from work to retirement much easier.
The Office of Personnel Management (OPM) continues to deal with the challenge of eliminating ‘interim annuity’ payments to retirees. Interim payments represent approximately 75% or slightly more of the full retirement annuity. As you put your PLAN for retirement in place, recognize that your full annuity check may not be immediately available and you may need to wait to access your TSP money too and this is where your unused annual leave may come in handy. Evaluate what your expenses will be and how much income you will need to cover those expenses. If you find that a gap exists, your annual leave check might be the GAP MONEY you need to close the divide.
Your annual leave check arrives about the same time as your final paycheck; perhaps weeks before you receive your interim annuity check. Carefully looking into all resources available to you, such as your TSP or unused Annual Leave, and managing those resources well will allow for a smooth transition to retiring well.
P. S. Always Remember to Share What You Know.
SAVE-SAVE-SAVE
Save
Remember the laundry list of things we talked about building in order to retire well in our FLEXIBLE Plan post. Now we come to the all important aspect of SAVING. We learned from our parents as children to save in the event of the unexpected. There is no avoiding the unexpected – things happen. No matter how well we plan, how careful we are – things happens.
As such when things do happen and most certainly most things that happen require financial resources to move towards a solution or remedy. We are not saying that money is the great equalizer or problem solver; we are simply saying that in most cases having some extra money might help to make the rough spots smoother.
When we speak about saving, the very notion seems to conjure up something big. Therefore, if we cannot save a lot, many of us end up not saving at all. If you look at any financial picture – any amount of money outweighs ZERO. Each individual’s retirement goals and savings capacity will be starkly different.
However, our collective goal as Americans is to retire well with financial security and comfort. After working for a greater part of our adult lives, every American’s aspiration is to live on their own agenda with a high quality of life.
Americans have long moved away from the passbook savings accounts of our parents and grandparents. However, the need to save has not lost its importance. Today, we must be more aware of the financial markets, our TSP investments and participate more passionately in building and securing our own retirement future. Saving needs to become contagious to us whether a little, a lot or somewhere in between. It is imperative that we become more financially literate and apply the economic principles of supply and demand in our everyday lives in order to meet the challenges of retirement.
Most of us rely on savings through employer-sponsored plans such as some version of the 401K plan, for our purposes, the Thrift Savings Plan (TSP). Although, new employees to the federal service are automatically enrolled in TSP, they may opt out since it is a voluntary program. However, not participating in the TSP at some level would not be one of the best choices to make. Fully maximizing your participation in the TSP on the other hand might just be one of the wisest choices you make to enhance your resources in retirement.
The TSP has a diversity of funds, including its safe Government Securities Fund (known as the G fund). The principal amount of your investment is always safe, guaranteed by the Government. The average American’s income comes from three sources in retirement – employer pension, savings and investments. Federal employees, unlike many Americans, have the luxury of all three – a life time annuity from your federal retirement plan (CSRS/FERS), savings and investment via the Thrift Savings Plan.
In order for your plan to work towards building a safe and secure retirement future so that you have the luxury to retire well, SAVINGS must be at the forefront of your plan.
P. S. Always Remember to Share What You Know
An Economically Changing World
The world is changing. As Federal and Postal employees we face more economic challenges today than the majority of the current workforce has ever witnessed. The hardships of the Great Depression, we either read about in textbooks or heard stories from parents and grandparents, but hardly a reality for baby boomers and beyond.
Over the past several years, the reality of our finances and the turbulence of a global economy is a constant conversation at the average Federal and Postal employee’s families dinner tables. Yet, our responsibility, regardless if we are CSRS or FERS, to do what is necessary to face a retirement future with readiness, still remains. I remember parents saying, “Save for a rainy day.” The economic uncertainty of our times requires that we save for a tsunami. The cost of maintaining our standard of living is much higher today than it was for our parents.
In addition, economically, conditions have created differing and varying levels of responsibility for Federal and Postal retirees. Retirement incomes are increasingly being shared to support other family members, including adult children who are either unemployed or under-employed. Providing support to family members is what we do as Americans until they can get on their feet.
Because our plates are fuller than ever before in recent times, planning for a long life after retirement must be approached with care and a deliberate commitment to live well below our means. We can no longer economically live at our means and certainly not above our means, but below them in order to have a cushion of economic longevity. Remember, economically, the goal is to have your resources outlast you.
The technical aspects of the federal and postal employees’ retirement system from FEHB, Medicare, to FEGLI and your TSP are difficult to understand and much more difficult to master. There are such a vast number of technical pieces of the federal retirement system it seems to justify the use and consultation of both your HR office or a qualified retirement benefit expert.
Use PSRetirement.com’s easy access for more information on your TSP Account and Login information.
P. S. Always Remember to Share What You Know.
Information: Take It One Step At A Time
Do not get overwhelmed by trying to process too much information at once.
An enormous amount of information is shared on the subject of helping Federal and Postal employees retire comfortably. It is our aim to contribute and share what we know to help you retire well and to maximize your Federal and Postal benefits.
We liken the information provided to a restaurant with the finest menu imaginable. Although, you crave to try everything on the menu, the experience will be lost if you attempt to eat everything at once. Overdoing it loses its appeal.
There are so many things to understand and digest about FERS, CSRS the TSP, the Federal Retirement Systems and therefore retirement in general. So take it one step at a time, choose something from the menu and take your time digesting it so that you can savor the flavor and remember the experience.
By taking it one step at a time, you will be amazed at how much information you have digested and how better prepared you are to select exactly what fits your needs and smile your way into a retirement future you have control over. That is the key to retiring well.
P. S. Always Remember to Share What You Know.
About FEHB (Transporting your FEHB)
Can I Take My FEHB into Retirement?
Federal employees represent the largest workforce in the world. They also have some of the best benefits on the market with very competitive rates. The federal workforce is so large making it easy for the federal government, acting as representative agent, to negotiate rates that work in the best interest of the federal workforce and their families. Buying in large quantities can drive down costs making the rate for premiums paid by employees for health insurance some of the most competitive you will find.
The Federal Employees Health Benefit program (FEHB) is open to all employees who wish to participate. Employees can choose from a number of different health plans that fit their personal and family needs. As federal employees you get to take your health insurance into retirement if you have met the requirement of being enrolled in FEHB five years or from the earliest opportunity to enroll prior to retirement.
Although, as a retiree you get to enjoy the same low premium benefits in retirement, instead of paying those premiums bi-weekly, they will be deducted once per month from your Annuity. You also have the same opportunity to participate in open season just as you did while working.
It does not matter how often you change plans, as long as you meet the five year or first opportunity to enroll requirement, you can transport your FEHB into retirement.
Social Security is also a key component for eligible Federal and Postal employees
Postal employees can access their FEHB accounts HERE
How do your Medicare elections fit with your FEHB elections?
P.S. Always Remember to Share What You Know.
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.
RELATED ARTICLES
Are your parents’ Medicare elections up to date?
Simple Formula For Estimating Retirement Income
~~A Simple Formula for Estimating What Your Retirement Income Might Look Like
Estimate of Social Security eligibility and payments plus Estimate of your pension or annuity plus any income that you Thrift Savings Plan is able to produce equals the Estimate of Your Retirement Income
Until you actually get ready to retire and submit you retirement application this formula is a moving target because your earnings are changing, thus impacting the outcome of what your retirement income will look like. However, checking the health of your financial picture, such as looking at how your TSP account is performing and making any necessary changes is a good exercise to keep you on track to retiring well. About 5 years before you are going to retire (and certainly within 1 year and consistently thereafter) you should be working with a financial expert who is knowledgeable in Federal Benefits and TSP Fund choices and alternatives and looking for financial guidance.
This exercise will also alert you to whether you need to consider other options for your retirement future such as increasing savings or contributions to your TSP and evaluating Annuity expenses and spending habits. It can also be very useful in determining what your income and expenses represent at various stages in your work career and life. It is easier by the inch than the mile. Getting a snap shot view of your financial health early is tantamount to a successful retirement future.
P. S. Always Remember to Share What You Know
Information on your Annuity Calculations can be found here
Check out your Social Security Benefits
How can you access your TSP account
Postal employees can access their Thrift Savings Plan through LiteBlue
Where Will Your Retirement Income Come From?
~~Where Will Your Retirement Income come from?
The majority of Americans will receive income from Social Security, an Employee Pension, and Savings and Investments. Will you have all of the sources listed? If you are a federal employee chances are you will. As a federal employee you have the advantage of an Employee Pension (Annuity), FERS employees lso have Social Security under their retirement system. CSRS employees may have Social Security if they have worked outside of the federal service. Each group has the opportunity to have savings and investments through the Thrift Savings Plan.
Although retirement income may come from many other sources such as an inheritance, life insurance, or equity in your home, the majority of Americans will receive income from Social Security, a Pension or personal savings and investments.
Where will your retirment income come from when you retire is a question to ponder and give deep consideration when evaluating your financial health and readiness for retirement. If you are nearing retirement you should absolutely speak with a financial professional who is an expert in your unique benefits before you make any decisions.
P. S. Always Remember to Share What You Know.
More information on your TSP.gov account
Postal employees can access their LiteBlue information from here
Retire Well – How Long Should I Work?
Deciding how long to work to ensure you retire well.
That question is easily answered by another question – What do you want? Many employees want to work long enough to retire well and take control of their choices and options. They want to have enough money to live on. In other words, they want to retire rich. Does retiring rich mean having a million dollars in your Thrift Savings Plan? Not according to my calculations, it means very simply having enough money to take care of all your expenses with some left over to do as you will without feeling strained. It means further having the option to work or play and whatever the option, it is based on want and not need.
Any of us will gladly take the millions, but having your assets outweigh your liabilities will put you in the comfortable category and ensuring you retire well. Now, it helps to know as you are evaluating what you want, what are the maximum benefits you can receive based on your length of service.
If you are a part of the Civil Service Retirement System (CSRS) you must work 41 years and 11 months in order to receive the maximum 80% of your high-3 average salary. However, if you are a Law Enforcement Officer (LEOs) under special computation provisions you may be eligible to receive the 80% limit with fewer years of service.
Individuals under the Federal Employees Retirement System (FERS) are not subject to the CSRS limitation, but use a different computation for length of service and high-3 average salary. Understanding which limitations apply to you are key to retire well.
It is also important to know that if you work beyond the years needed to achieve the maximum benefit under CSRS, the time will not be used to compute your annuity. The contributions you make during that time will, however, be automatically refunded to you with interest at a rate of approximately 3% per year, compounded annually.
P.S. Always Remember to Share What You Know.
LINKS
You should consider your TSP.gov contributions and balances and allocation.
Postal Employees – LiteBlue.usps.gov
Tips to Getting Your House in Order to Retire Well – Annual Leave
— Annual Leave
There are so many things potential retirees must consider when looking forward to the next adventure in life – retiring well. Although many people will not consider their accrued Annual Leave a prime subject when discussing retirement, your Annual leave needs to be considered both for you peace of mind and the ability to recharge your batteries away from work, but also for the potential retirement benefits for leave that is not used. Obviously, you should be taking advantage of your TSP account and making sure that you are prepared to maximimize any CSRS and FERS benefits you might be eligible for. But you also need to recognize that you have worked for a long time, most of us since high school. Once we entered the work world there was no turning back because we had to make a living. Having a job and taking on the responsibilities of life afforded us membership into the world of bona fide ADULTS.
There might have been times during your work career where accumulating annual leave meant taking a vacation or using your leave at your leisure. But when we start planning the next phase of our lives – retiring well – part of the process is making sure you are maximizing every benefit available to you. That includes viewing Annual Leave as money that will help sustain you as you transition from the work world into retirement.
You may wish to refresh your knowledge about Interim Payments and how it can be used to bridge the gap from retirement to full Annuity payments, because your lump sum annual leave payment is another piece of the puzzle we need to collect in order to make it complete. Preserving your annual leave when you are contemplating retirement is a way of building a cushion to cover your financial responsibilities until you receive your full annuity payment. The Lump Sum Payment you receive as a result of your annual leave accrual will create comfort and security; thus the importance for preserving as much annual leave as possible as you prepare to move into retirement.
The maximum annual leave carryover for most employees is 30 days or 240 hours. It is a good course to visit your human resources office or with a knowledgeable financial professional and discuss the importance of understanding the beginning and ending of the leave year versus the calendar year. Retiring before the end of the leave year impacts your annual leave accrual. Find out what you need to know in order to maximize every benefit that is available to you.
P. S. Always Remember to Share What You Know.
LINKS
For more information on your Interim Payments and retirement income sources
Your TSP (Thrift Savings Plan) structure and investment options
How can your accued Annual Leave be used as a retirement tool
Tips to Getting Your House in Order to Retire Well – Interim Payments
Interim Payments
The term Interim Payments is a term Federal and Postal employees should become thoroughly familiar with. Although the Office of Personnel Management (OPM) works diligently to get annuity checks to retirees in a timely manner, good planning dictates that we should be prepared for the unexpected or the glitches that often occur during the normal course of conducting business
Interim Payments represent approximately 75 to 80 percent of what you will receive in your full annuity check. Don’t despair, all deficits will be recovered when you begin to receive your full annuity check.
It is important when you are submitting your Retirement Application papers for both CSRS and FERS retirement and for all Federal and Postal Benefits and that you are certain to check and recheck your retirement application to make sure you have crossed all your T’s and dotted all of your I’s. Overlooking pertinent information will cause a delay in the processing of your application. I always recommend that potential retirees do a –dry run- or test drive of the application package to become familiar with its contents and requirements before submitting the actual package. You may even want to solicit the help of a financial professional to ensure that you have the ability to maximize your Federal and Postal retirement benefits. Potential retirees need to know what their responsibilities are towards enhancing a seamless process to retirement. Retirement packages are on-line and information about your TSP can be found at PSRetirement’s TSP portal which will give you valuable information as you begin getting our house in order to retire well.
P. S. Always Remember to Share What You Know.
For more information visit and to access your retirement accounts visit;
LINKS
For information on how to log into your TSP.gov account
More information on Interim Payments
Complete CSRS information for Federal and Postal Employees
Explanation of Federal Employee Retirement System Benefits (FERS)
Emotional and Psychological Readiness
~~Item #2 – Emotional and Psychological Readiness
Psychological Readiness is an underrated part of adjusting to retirement. There is no denying the importance of those concrete items such as maximizing the benefits of the Thrift Savings Plan (TSP) and understanding how all of your Federal Benefits work in retirement. But in order to chart a workable course for retiring well one must be emotionally and psychologically ready to embrace change, accept new beginnings, expand horizons and brace for the sometimes unexpected.
There are things we need to know and do so that we chart a feasible course to retiring well. Whether you’re eligible for CSRS or eligible for FERS often concrete items that we can touch, sort of put our hands on prioritize the list of things we need to know and do in order to retire well.
Below is a list of things we can do to get ready psychologically and emotionally to retire well and ensure the resources we need to live the life we deserve outlast us.
• Define who you are, absent of your job’s title and work environment
• Outline your gifts and skills and how you can use them to improve the world around you
• Think about what you’ve always wanted to do but were restricted due to the time constraints of your job
• Do a 15 minute self-evaluation of where you are, where you’ve been and where you’d like to be 3-5 years post-retirement
• Write down 5 of the most intriguing places in the world where you’d like to live, one just might be in your own back yard
• Think about what you are going to do on the first morning of your retirement
We spend more waking hours on our jobs and with our work families than we do in our homes with our own families. Psychological readiness ensures you’ll be ready to tackle all the issues a new retiree faces. Retiring well means getting ready to face new challenges and opportunities, meeting new people, going to new places and understanding a new and better you. These are critical tools needed to get you emotionally and psychologically ready to live a life on your own agenda. Getting ready now means success when you enter your next adventure – retiring well!
P.S. Always remember to share what you know.
LINKS
For complete information on FERS benefits
Let the Thrift Savings Plan (TSP) Help You Retire Well by Jay Hunt
Let the Thrift Savings Plan (TSP) Help You Retire Well
by Jay Hunt
Jay Hunt of Stratico Retirement and Insurance Solutions is in the business of helping people, and here he discusses the benefits of the TSP, and what it has to offer.
Each year many public sector employees face one of the most significant challenges of their work career – what they should and need to do with regards to their TSP account and TSP Fund Selection? Will you be ready for the next adventure in your life? Will your savings match your income needs? Will you have the tools needed to turn challenges into opportunities that will outlast you and allow you to maintain the lifestyle you have grown accustomed to?
In this article and several other articles, we will publish in the ‘Retire Well’ series we will share the ten most important things you need to know and do to ensure a successful, comfortable transition into your next adventure – retirement.
Item #1- Let the Thrift Savings Plan help you Retire Well:
The Federal Government offers two retirement systems – Civil Service Retirement System (CSRS) for those individuals employed before January 1, 1984 and did not convert to FERS, and the Federal Employees Retirement System (FERS) for those individuals hired on or after January 1, 1984.
For FERS employees, TSP is one of the three legs of the stool that make up their retirement system in addition to the Basic Benefit Plan and Social Security. If an employee fails to participate fully in the Thrift Savings Plan, it is like losing one of the legs of the stool causing an imbalance. As a matter of fact, the TSP is potentially the largest component of the FERS enhanced by the employee’s contributions and the matching agency contributions. Maximum participation from the Agency Employer is a huge benefit that should be given strong consideration to ensure that you will see the benefits of your hard work by capitalizing on all available resources to retire well.
Although under CSRS employees do no reap the benefit of the agency automatic l% matching contribution for TSP, participation in the TSP is allowed. Having the opportunity to defer tax obligations on one’s income is an advantage that should not be overlooked; thereby, being one of the primary reasons why CSRS employees should consider maximizing participation in the TSP.
In essence by deferring the taxes due on earnings, a greater savings over a period of time with the added advantage of earning interest is realized. For both CSRS and FERS employees participating in the TSP is a formula for saving towards your retirement future and generating a plan that will increase your opportunity to retire well and cement the lifestyle you have worked hard to achieve.
The Thrift Savings Plan contribution limits for catch-up contributions for those ages 50 and older change from year to year and federal employees should always keep themselves aware of the most recent year TSP Contribution Limits. P. S. Always remember to share what you know.
Contact Jay Hunt
Stratico Retirement and Insurance Solutions
(816)-260-6737
More From Jay Hunt
Article: FAQ Regarding New TSP Investment Options by Jay Hunt
Article: Leaving and Rejoining Federal Service: Benefits Retained and Benefits Lost by Jay Hunt
