Feds are better prepared for retirement than most thanks to their pensions

How are your retirement savings coming along? There are several ways to gauge success in retirement planning, and you’re performing better than 74% of employees in one of them. What is that way, you ask? A defined benefit pension, such as FERS, is one option. The Bureau of Labor Statistics (BLS) reports that 26% of civilian workers have a pension. Only 16% of private-sector workers have a pension, compared to more than 3/4 of state and local government workers.

In retirement, your FERS pension will be a valuable source of income. In terms of current value, someone with a FERS pension of $30,000 per year would need to save around $1,500,000 to obtain that income level. Your FERS pension includes a modified Cost-of-Living Adjustment (COLA) and is guaranteed for the rest of your life. You’ll never run out of FERS money, and you won’t lose much ground due to inflation. In reality, in years when inflation is less than 2%, you won’t lose anything; in years when inflation is 3% or more, your pension rise will come behind inflation by 1%. The latest FERS COLA was 4.9%, based on a 5.9% rise in the Consumer Price Index (CPI). However, unless you are a special category employee/retiree, you won’t begin earning the COLA until you’re 62.

However, until you have around $1,500,000 in your TSP, you won’t be able to depend on a $30,000 annual income from your TSP. It’s possible that if your assets do well, you’ll be able to draw $30,000 every year, but this isn’t guaranteed. Check your TSP balance and compare it to the figures below, which represent the median net worth of families by age:

• Under the age of 35: $13,900;

• Age 35-44: $91,300;

• Age 45-54: $168,600

• Age 55-64: $212,500;

• Age 65-74: $266,400

• Over the age of 75: $254,800

Remember that “net worth” covers more than simply retirement savings, so if you have saved more than the sums listed above, you’re doing better than more than half of your age group.

So far, we’re probably happy with ourselves and our position concerning our age group, not to mention that we have our FERS pension. I believe our situation has something to do with our net worth as well. The following are the median net worth numbers for several types of families:

• Every family $122,700

• Households worth $255,000

• College graduates worth $308,200

• The top 10% $1,589,300

The chances of a nice retirement for government employees are good. Examine your situation to evaluate if it is advantageous to you.

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

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

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

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

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

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

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

That’s making a difference.

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