Anybody who wants to live comfortably during retirement – that doesn’t involve working part-time – should not rely on just Social Security income. This advice comes directly from the Social Security Administration.

According to the SSA, only a minute amount of pre-retirement earnings will be replaced, and most people need about 70 percent of their pre-retirement income to be able to live well in retirement. This income includes investments, savings and Social Security benefits. Therefore, a stable retirement plan must be supplemented income that isn’t just Social Security.

What Are Some Additional Sources of Income You Should Consider?

Federal employees are rather lucky because their benefits include an array of retirement income sources. Social Security is considered a part of the income sources but only a minute amount. What are some other income sources federal employees need to consider?

Federal Employees Retirement System

The FERS offers benefits from three source – Thrift Savings Plan, general benefit plan and Social Security. Two parts of the FERS include the TSP and Social Security moves with you if you decide to transfer to another federal job before you retire.

General Benefit

With FERS, you must pay your fair share every pay period. The agency takes out a general benefit and Social Security from your paycheck, noting it as payroll deductions. The agency pays its dues as well. After retirement, you get annuity payments every month. How much you receive is dependent on how long you worked with the Federal Government, the age you decide to retire and the amount you earn.

Thrift Savings Plan

The TSP is considered a distinct contribution plan, which means the income you receive in retirement from the TSP account depends on the amount you and the agency put into it while you worked and the amount you accumulated during that time.

The TSP of FERS is something the agency sets up right away. With each pay period, the agency puts one percent of basic pay into the account. While you can contribute to the TSP account yourself, the agency will deposit a matching contribution.

How Your TSP Account Can Help You Become A Millionaire

The TSP is a somewhat significant retirement income source. Therefore, making regular contributions to it during your career while completely taking advantage of the matching part from the government could lead to considerable wealth. Of course, that means making sure the money is invested well in the first place.

A good number of federal employees earn more than $1 million from their TSP accounts – just by investing and saving wisely even when the market doesn’t do well. It’s not that hard to become a millionaire when you invest wisely in the TSP.

Federal employees can also contribute to an IRA away from the TSP, which lets them invest even more of their money and increase it in a tax-deferred or tax-free account.

Civil Service Retirement System

When it comes to Social Security under the CSRS, it’s treated in another way for federal workers.

How Viable Is Social Security?

Government reports suggest that the Social Security program is rather unstable, making it an unstable option for retirement. With that in mind, people must do their due diligence and save money on their own for retirement.

According to the 2017 Social Security Trustees report, the program’s reserves are slated to be drained in 2034. A poll shows that 80 percent of millennials are concerned they will not have any Social Security when they are ready to retire because of the financial instability facing the program today.

Will the Social Security income still be viable? And, if so, for how long will it stay that way? The SSA is trying to get people to understand that the payments they receive is not meant to replace the retirement income but supplement it. People are urged to invest and save as much as they can to enjoy their golden years.

Planning for your retirement is a daunting task for most of us, even for federal employees. Various interrelated factors may complicate this process. Nowadays, conventional retirement plans either have disappeared, or existing ones (like FERS) are becoming less adequate. On top of that, Social Security seems like it won’t last forever. Increase in the lifespans of individuals results in retirees outliving their savings or retirement plans.

Luckily, with good preparation, you can enjoy a successful retirement. With assistance from retirement planners, you can create an effective retirement plan no matter your age group. To do so, you need to understand your current financial situation to prepare for a future in retirement.

In the Twenties: Typically, we attain financial independence in our twenties. At this stage in our lives, we seldom think of planning for retirement. But nurturing the right skills is essential now and in the future. This is why it is important that you evaluate all available options regarding your retirement. Accordingly, taking life insurance is not necessary as you have no dependents. Doing so will minimize your ability to build a savings scheme. On the other hand, avoid depending on employer saving plans as they have little chance of maximizing your savings. Often, most employers have retirement plans that exceed conventional incentive programs. Those lacking a retirement plan with their employer should open up an Individual Retirement Plan (IRA) to accumulate retirement savings.

Finally, consider obtaining a credit card, a car loan, or paying off your debts on a monthly basis. Though you might hesitate to accumulate debt, lacking access to credit complicates your ability to handle and manage complex financial engagements.

In the Thirties: this age group enjoys increased earning power with increasing advancements in their career. As a result, you should increase your retirement contributions to benefit from compounded interest rates. Also, you should open up an IRA account to leverage new employment opportunities as well as to consolidate any of your accumulated savings from previous jobs.

Employed heads of families need to make savings in preparation for their children’s college education. Putting your kids through college is a demanding undertaking that requires an effective savings plan. You can create one through the assistance of an experienced financial advisor. Besides that, it is a drain on your capacity to make adequate retirement contributions. As your stash of savings increases, consider creating a will and an estate plan for your dependents. Those who are self-employed should create a succession plan to ensure the continuity of their business after retiring.

In the Forties: with your children making decisions about their futures, you will need to create a plan for covering their educational expenses. Find out more about scholarships and grants to reduce financial strain. Given that, you should identify options that require no repayment.

Consulting with your financial advisor is a good way of ensuring that you achieve this objective. Financial advisors can help you formulate a retirement plan that keeps all your goals in sight. In this regard, you should ponder what kind of retirement you want in the future.

In the Fifties: this is the right time to think about your retirement plan deeply. Evaluate all your options regarding how you want to exit the workplace. Based on your predetermined timeline, consider stepping up your investment contributions or take advantage of provisions that let you exceed typical contribution premiums.

In the Sixties: during this period you can access your retirement savings without incurring penalties. Therefore, continue increasing your contributions as well as exploring distribution options in view of your current revenue flows, taxes, and your ability to sustain a retirement plan.

Also, you should ponder the implications of any health care needs you might have in the long term. As a result, you should aim at purchasing insurance that will offset any potential health complications in the future. Assess your income sources to determine the appropriate time to sign up for Social security. Keep it in mind that Social Security benefits decrease based on when you join.

Plus, you ought to involve your children and spouse in your wealth transfer plan. Provide insights and advice regarding how to protect your hard-earned wealth or property.

In the seventies and beyond: by this time, you are in retirement. Nonetheless, you need a plan for taking out Required Minimum Distributions (RMDs) from your investment. For this, you need to work closely with your financial advisor in matching your lifestyle to your assets. Doing so will let you relax and enjoy life while remaining focused on the most important undertakings as well as creating a fitting legacy.

Your road to retirement is long and uncertain. For this reason, you need to identify a trustworthy and dependable financial advisor to help you along the way. On top of that, it pays to include your family in any decisions you make as you craft a retirement plan.

The fiscal budget proposal for 2019 put out by the White House on February 10th had some unpleasant tidings for employees of the federal government. The Trump Administration’s suggestion of a pay freeze was one of the most worrisome. For those unfamiliar with the term, a pay freeze puts a stop to salary or wage increases for a specified period. The goal of a company, or in this case a government, implementing a freeze is to reduce costs and therefore increase profits or reduce a deficit and potentially pay off debt. Considering the United States’ typically has a massive budget deficit and is carrying massive long-term national debt it begs the question of how long the freeze will last. The problem for employees during a pay freeze is that while their pay remains stagnant, inflation does not. Combine that with the instability created by the indefinite time frame, and you have a recipe for a real headache.
The White House’s budget is of course just a proposal. The founding fathers gave Congress the “power of the purse,” meaning Congress has the final say over most budget decisions. It has been a few months since the proposal was released and concerned employees may have relaxed a little in that time. Now members of Trump’s staff are back in the news making statements in support of the pay freeze. Ironically, the reason for the budget proposal being back in the news—a May 7th open letter from Office of Personnel Management director Jeff Pon to House Speaker Paul Ryan (R-Wis.)—comes during “Public Service Recognition Week.” Since 1985 this week has been designed to honor employees who devote their careers and lives to public service.
Pon is not the only voice publicly backing the freeze recently. The director of the Office of Management and Budget, Mick Mulvaney, also wants to put a stop to minimum incremental pay increases that currently happen automatically throughout a federal employee’s career. The idea is to bring the public workforce closer to the private sector regarding the style of their compensation. “The proposal is rooted in data we had from analysis of the way we paid federal workers, and it seemed to indicate that we over-pay at the lower levels and underpay at the upper levels,” Mulvaney said in testimony before one of the House Appropriations subcommittees. The idea is that the incremental increases make it difficult to reward good employees and motivate poor performers under the current “General Schedule” pay scale, a policy enacted by the Classification Act of 1949.
A significant problem for federal employees with the proposed pay freeze is that while Trump mentioned a one billion dollar fund for 2018 to be used across all federal agencies to reward strong employees, no money was provided in the omnibus spending package enacted this past March.
Mulvaney’s testimony did receive opposition from some Democratic members of the House Appropriations Committee. Sanford Bishop (D-Ga.) said, “It seems to me that what you do when you put the freeze there and remove step increases, you remove incentives to get people to work for the federal government who are highly skilled, who have hopes of a good career that will be remunerative to them. It makes it less competitive with the private sector.”
This is the crux of the argument. Pon, Mulvaney, and the Republican government that generally supports them see the problem as being a lack of incentives for people to do a good job and improve performance in areas of need. The Democratic opposition considers the lack of guaranteed compensation as dissuading potential talent who can find more lucrative opportunities in the private sector. Another issue for current employees is that the uncertainty makes it difficult for them to plan for their futures and could have adverse effects on plans already made without anticipation of a pay freeze.

Recently, President Donald Trump announced that there would be drastic cuts in federal retirement benefits that would affect current and future employees attempting to retire. Among other changes, the retirement system would take a $143.5 billion cut in funding. In the U.S. Postal Service, this is slowly turning into a death knell for an already struggling enterprise.

In rural regions of the United States, there are such chronic understaffing issues that up to half of the positions in a post office in rural New York were vacant. This is not a unique problem, either; rural mail carriers across the nation are feeling the weight of intense cutbacks from the U.S. government. The number of career USPS employees decreased from around 750,000 to around 500,000 over the past 20 years.

Hiring has been a challenge, too; due to a law that requires the post office to pre-fund all retirement funds, being able to afford to hire a new employee can be a challenge. The low rate of pay (in 2010, the starting rate for part-time rural carriers was slashed from approximately $21/hour to just $15) as well as long hours —some employees report working 12-hour shifts, as well as being called in to fill in for other area post offices, even on days off.

This challenge escalates exponentially when it comes to rural post offices; the ‘retail apocalypse’ caused by megacorporations like Amazon.com has led to local malls and retail stores going out of business, meaning that online purchases increase dramatically. For rural employees, most of whom use their own vehicles to drive their routes, this has meant that they must overfill their vehicles with packages and carry them up long driveways, avoid angry animals, and travel through sometimes brutal weather conditions. On top of this, rural mail carriers are paid based on an ‘evaluated pay’ system- meaning that they are paid based on an estimate of how long their route should take, rather than how long it may actually take. When this is combined with the fact that the formula does not take into account the weight or size of the package, meaning that a sofa and a video game console would be calculated to take the same amount of time, it results in grossly underestimated pay for a strenuous, challenging job.

A large number of government employees are up in arms about the Republican’s 2019 budget proposal. The GOP has termed the legislative proposal, A Framework for Unified Conservatism. After watching a House of Representatives led by Speaker Paul Ryan (R-WI), a U.S. Senate led by majority leader Mitch McConnell (R-KY), and Donald Trump’s White House push through a 1.5 trillion dollar tax cut, with well over half going to a reduction from 35% to 21% in the corporate tax rate, federal employees are watching their retirement benefits and health benefits come up on the chopping block. Their reaction was not surprising.
The American Federation of Government Employees (AFGE) is the largest and most powerful union of federal employees. The organization’s National President J. David Cox Sr. issued a public statement in response to the proposals:

“President Trump’s war on working people knows no limits…Federal offices across the country are struggling to recruit and retain workers because federal wages and benefits are falling behind the private sector. While the proposals themselves are bad enough, so is the way the administration is trying to ram them through Congress…attached to the Department of Defense’s fiscal 2019 authorization bill.”
(The entire quote can be found online at http://chicagoeveningpost.com/2018/05/07/largest-federal-union-assails-trump-administrations-latest-attack-on-working-people/ or you can say afge.org)

The Office of Personnel Management (OPM) director Jeff Pon submitted an open letter to Speaker Ryan that proposed legislation that would align with the budget proposed by the White House for 2018. He argues the merit for the cuts is based on keeping with the retirement trends in the private sector. The proposal had four main facets: elimination of government supplementation of Federal Employees’ Retirement System (FERS) annuities “for new retirees and survivor annuitants,” lowering the pension calculation by including the five highest years instead of three highest years, an increase in the employee’s responsibility to fund their retirement benefit, and elimination of cost-of-living adjustments.
The OPM falling in step with the White House’s budget policies gives rise to the probability of the administration’s proposed pay freeze for civilian employees becoming a reality. On the other side of the aisle, Government Operations Subcommittee of the House Oversight Committee chair Gerry Connolly (D-VA) commented that “It’s the wrong thing to do and the wrong thing to do.” Back in December 2017 it was reported that Gerry Connolly was one of four Congressmen who sent a letter to House leaders urging them not cut federal employees pay and benefits. One of the largest concerns of the four Congressmen—also including Jamie Raskin (D-MD), Steny Hoyer (D-MD), and Elijah Cummings (D-MD)—is the ability of government agencies to retain and recruit talent moving forward.
In our era of extreme political polarization, this legislation is certainly no exception. Most Republicans are lining up with the President on the side of cutting into Federal Employees pay, and benefits in the name of lining up those benefits with the private sector and cutting into government spending while Democrats vocalizing their opinion are deeming the proposed cuts a betrayal of the promises made to middle-class federal employees. The two sides also do not agree on the OPM’s assertion that these cuts will, in fact, bring the retirement benefits of federal employees with working people in the private sector. Many of men and women employed by the federal government have spent the majority of their working life under the assumption that those benefits established for their retirement were not at risk of being adjusted and reduced based on a changing political landscape.
The 2018 mid-term election is just months away now. The focus of the media is largely on the Russia investigation, Michael Cohen, Stormy Daniels and the ever-flowing Twitter stream of the President. However, it is the economy and how people perceive the government is looking out for their interests that motivates how American’s vote. As the campaign season heats up expect to see more frequent mention of legislation like A Framework for a Unified Conservatism.

Health expenses are increasing with no real signs of slowing down any time soon. And for seniors, the costs can be astronomical. Of course, most employees and retirees when they turn 65, will see Medicare covering most of these expenses. It’s not a gift because they paid into the Medicare fund while they worked and had employer-matching contributions paid.

Before employees and retirees turned 65, the FEHB or Federal Employees Health Benefits program would pay up to 75 percent of the premium. What happens to the coverage when the person turns 65, and they are Medicare-eligible? Simply put, the FEHB coverage will end, and Medicare is now the primary payer. FEHB premiums will still go to the insurance companies even though Medicare is taking care of the majority of the bills.

In the yearly published “Guide to Health Plans for Federal Employees, there is information from the Medical Expenditure Panel Survey from the Health and Human Services Agency on Healthcare Research and Quality.

To use Blue Cross basic, which is a very popular FEHB option, the federal government pays yearly premiums of a little more than $17,000 to the insurance company for every couple – no matter what the age status is for either person.

Now, given that the yearly health expenses of a couple is more than 21,000, the $17,000 the government pays is not enough to cover a person 65 and older. The costs, however, are offset by the younger insureds’ costs. Don’t forget the Medicare payments for members 65 and older.

Medicare pays the majority of their bills. For instance, a $100,000 hospital bill is primarily taken care of by Medicare except for the $1,300 deductible. This amounts to 98.6 percent of the bill getting paid off. For non-hospital or doctor expenses, Medicare will pay 80 percent. Once Medicare makes payments, the costs for people 65 and older tend to decline significantly.

Age Group Average Yearly Expenses

55 and under $9,270
55 to 64 $17,700
65 and older $2,163 after payments made by Medicare

If 55 and under are over one-third, the total average is likely to be lower if the Medicare group is larger. For the 55 to 64 group to increase, it would have to increase the total overage but not near as much.

With every group being one-third, the $9,711 expenses are much less than what Blue Cross pays off the $17,233. The federal community knows that extra FEHB premiums are addressed by seniors through the Medicare dividend and is applied to the whole pool. Thus, every one attains a lower premium. The Office of Personnel Management completely supports this belief.

When looking at the $17,233 premium for self +1 against the basic Blue Cross $9,711 average net costs, it’s clear to see this isn’t going on. It appears the premium is much less. When the self +1 level began, there was some concern. However, it looks like the issue is the result of not applying the Medicare dividend to the premium decrease.

The Thrift Board revealed that new managers for its F and I Funds would be chosen. In November 2017, the Board sent out a “Request for Proposals” for a new F Fund manager, and it hopes a decision on that Fund would be announced soon.

The Board has yet to issue an RFP for the I Fund manager but intends to later in the year. The I Fund manager will need to deal with the index change the I Fund watches. Right now, the I Fund watches the MSCI EAFE index, which looks at the economies of developed countries only – think the FarEast and Europe.

Not too long ago, the Thrift Board voted to change the index guidance for the I Fund, using the MSCI All World index. This index will look at everywhere but the U.S. It’s believed the change will occur early in 2019.

L Fund changes are also being looked at. The Board is going to do its yearly review of the five L funds – to determine their allocation. This exercise tends to lead a change in the assets of one or more of the funds. For instance, a variation in the L income Fund several years back led to a one percent shift between three stock funds; the F and G Funds were unaffected.

The L Fund’s most significant change is still scheduled for implementation in 2020 when it goes from a 10-year interval to a five-year one. The Board opted to make the change because the majority of private sector target dates are based on a five-year interval. This lets individuals target their money better.

The new Blended Retirement System is currently executed for uniformed services. The Board reminded members that a TSP account was needed to be eligible for the BRS. Service members who have a TSP account can opt in the BRS program to have government matching contributions allocated to the account. Those without a TSP account and want the BRS one must set up a TSP account.

The TSP Modernization Act will bring some significant changes to the TSP, which the Board plans to implement before the two-year deadline approaches the legislation imposed.

Data compiled by Bloomberg reveals that according to the Standard & Poor’s 500 index, there has been a massive drop in stock prices. The US stock markets valuation has experienced a 10% drop in the last couple of days. This translates to a loss of $2.6 trillion for the economy.
This has been the worst April for the United States stock market since 89 years back when we had the Great Depression which was brought about by the devastating crash of 1929.
The stock market is shaky, and this goes beyond last week’s sell-off. Worse is yet to come, and we need to be prepared for a global market crash. The massive level of volatility for the stock market is shown in the Dow Jones Industrial Average (DJIA) and the S&P 500.
Despite showing stable long-term trends, stock exchanges can gain or lose large values within short periods. At times sudden shifts occur, and even experts are caught unawares.
It’s important to learn and understand stock market fluctuations. Have a keen eye for features in the macroeconomic environment that might trigger swings. This will keep you ahead of the game in all your trading activities.
Stock valuations are so unpredictable and change on a daily basis. This volatility can be caused by a variety of reasons which include:
i. Current political state and government interventions.
ii. Bank Interest Rates.
iii. Actual demand for the shares.
iv. The financial health of the company.
v. The resignation of well-known directors.
vi. Miscellaneous problems such as company strikes.
Tech industry billionaires have been the worst hit in the recent stock market plunge. These peoples’ net worth is directly tied to their companies’ stock prices and a dip in the market results in a proportional loss.
Mark Zuckerberg, for example, has seen his fortunes shrink by more than $10 billion. Within two days in which there was a data scandal surrounding his company, the Facebook founder and CEO lost $9 billion.
Another tech company that is also having a decline in its profit margins includes Apple. The company recently released the iPhone X, which did not get as great a reception into the market as had been anticipated. This has already affected its stock prices.
Just recently, Donald Trump criticized Amazon and said the online retailer is taking advantage of small retailers.
Another factor that has played a major role in the fluctuations being experienced is the introduction of cryptocurrency. Last fall, Bitcoin prices shot up as buyers went on an investment spree for not wanting to miss out on such a great opportunity.
Today Bitcoin has fallen to below $7,000.
Aggressive buying, as well as reduced buying interest, are some attributes that made the prices to fall. Panic buying is almost always never a smart choice.
According to Dow Theory, the distribution phase is usually the warning phase for an upcoming downtrend. Here, you find big sellers after sensing trouble, selling their stock to other buyers.

President Trump was true to his word when he told the nation he intended to enter into a trade war with China. Whether or not he was telling the truth when he said it would be “easy to win,” has yet to be seen. No matter what the outcome might be, at this stage our current back-and-forth naming of new tariffs with the Asian economic giant certainly has sensible investors worried. Working for the federal government is no protection here. The Thrift Savings Plan (TSP) portion of the Federal Employees’ Retirement System (FERS) is that which the employee has the most control over and can often make the difference between a comfortable retirement and a stressful one.

The reason for this is that unlike the FERS Annuity and Social Security, the TSP allows employees to determine their own level of contribution and choose from a set of funds that can vary in performance. Market volatility caused by the looming trade war caused the majority of TSP funds to fall in March even though the first direct measures taken against China did not take place until March 22^nd when the first $50 billion worth of goods to receive tariffs was announced. That day saw the Dow Jones Industrial Average drop 724 points, a figure that represents the fifth-largest single day drop in the Dow’s history.

While this was the first major move by the White House directly targeted at China, they had been hinting at it from they began imposing tariffs earlier this year. In January a 30% tax on imported solar panels was implemented. The idea was to make U.S. solar panel manufacturers more competitive, but many experts doubted its effectiveness while cautioning that the move could cause huge job losses for solar installers, salespeople, and others working in the industry outside of manufacturing. The U.S. did not single out China at the time, but the majority of solar cell imports do come from Chine. At the beginning of March, a 25% tariff on imported steel and 10% tariff on aluminum was announced. However, shortly after it was announced that many North American, European, and other countries would be excluded from the tariff. China did not make that list.

There is no doubt that investors have been feeling the pressure. In regards to the TSP, post separation withdrawals and retirement applications have both been increasing since the beginning of the year. The Office of Personnel Management has reported huge backlogs in their ability to process claims.

Many powerful, and sometimes surprising, players have entered the arena to try and dissuade Trump from pursuing trade wars. Apple CEO Tim Cook was in Washington, D.C. on Wednesday where he had a closed-door meeting with the President. Speculation suggested that Cook would try and steer Trump away from further escalation of the trade barriers being put in place in the way of tariffs between the U.S. and China. Chinese trade is vital to Apple both for selling their products and meeting the huge demands of their supply chain. Cook’s private meeting with the President followed his participation in talks between Trump and French President Emmanuel Macron.

Macron’s visit was closely followed by another visit from a European Union head of state, German Chancellor Angela Merkel on Thursday. She was there for much the same reason as Macron, in hopes of tempering down the first signs of a trade war between the U.S. and the E.U.

With so many different interests at play on a global level, it must be expected that investors are jittery and markets are seeing increased volatility. The suggestion most frequently proffered to federal employees worried about their TSP is to diversify in a number of the different funds.

Financial markets recently took a massive swing into volatility, with the Dow Jones average fluctuating by hundreds of points in a single day- last Tuesday, the blue-chip benchmark plummeted 1.7%, making it the longest streak of losing sessions since March 2017. Many of those who rely on the market for their retirement funds, especially those close to retirement, are naturally worried about this downturn and what it may mean for those who do not have a lot of time to make up any losses they may incur due to the unpredictable movements of the market.

In this context, it can be hard to remain calm. More than 45 million Americans are over 65, which is typically when the main weight of living expenses tends to shift from active income to savings. In the currently tumultuous financial environment, between Federal Reserve interest rates rising, mounting global uncertainty, and trade wars looming on the horizon, it is important to stay calm and not follow the moods of the market. If you panic and sell based on relatively standard fluctuations, you could lose a large portion of your potential savings.

Money manager John Dorfman believes that markets will remain choppy, possibly even trending downwards, but he maintains faith in the underlying U.S. economy.

Tom McClellan, a market timer, says that the market could remain bearish for as long as four months, bottoming out sometime in August. He points specifically to the continued poor performance of high-yield corporate bonds and high performance in the customer discretionary market as compared to the consumer necessity market. This could spell bad news for those who are only months away from retirement, but historically bear markets are followed by a surging bull market, so there may not be much need to worry if you have a decent amount of time to recover from potential downturns. If you do not, however, shifting funds to gold and silver are typical responses to this situation.

In times like these, it is best to speak with a financial professional, and if you are looking to withdraw your TSP, there are several ways to do it while minimizing financial risk.