The Blended Retirement System just changed how retirement works for military personnel around the world, introducing military TSP plans to the previous pension program. As of the publishing date of this article, there are over 1.7 million people serving in the military. Military service refers to all those in the US Navy, the US Army, the Air Force, the Coast Guard, and the Marine Corps.

The United States Government offers generous pensions for military service, which are adjusted for inflation by annual Cost of Living Adjustments (COLAs).

Recently, a new retirement program was introduced for those in the military. This program is called Blended Retirement System, or BRS, and is a combination of the traditional military pension and a defined contribution plan with a military TSP.

This new system took effect on January 1st, 2018. Its main aim is to ensure that military personnel have a secure future, but under this new program, military pensions are reduced by 20%. This reduction is made up for, however, by the defined contributions in the Blended Retirement System.

Those members of the military that have been in service for twelve or more years as of the 31st of December, 2017, remain on the traditional retirement plan, earning a guaranteed monthly check for life based on their salary and length of service.

Those who have served for less than 12 years have an option to choose whether they will remain in the old legacy plan or they will join the new BRS program.

Any new members joining the military are automatically enrolled in the BRS program and contribute towards retirement.

Eligibility

For one to earn a guaranteed retirement pension, one has to serve for at least 20 years. Most people, however, never stay for the 20 year period. 83% of members leave before achieving this “20 or nothing” milestone.

You start receiving benefits on the day after retirement no matter how old you are. As long as you served for 20 years, you could be 39 and still get your benefits.

Members who stick around and serve for 40 years receive a monthly pension worth 100% of their final salary.

At age 62, you also start receiving additional retirement benefits from your social security fund.

What happens in case of death?

Retired members may participate in plans that allow continued annuity to their families after death. These are the:

1.    SBP (Survivor Benefit Plan)

2.    RCSBP (Reserve Component Survivor Benefit Plan)

Military and the TSP

This plan is the part of the BFS that involves investment accounts into which you make defined contributions. There are two options where you can either make your contributions before or after tax; the traditional TSP or the Roth TSP.

Members contribute up to 5% their salary and receive matching contributions.

For new members who joined the service after 1st January 2018, these matching contributions begin after the first two years of service. Members who have been in the military before this do not experience a delay of military TSP matching contributions.

An automatic 1% is made by the government for new members two months after their enrollment. The government will contribute this 1% whether or not the member contributes anything.

Your contributions are matched dollar for dollar for the first 3% and 50 cents per dollar for the remaining 2%.

Retirement Income Tax: Quick Tips

As Tax Day is rushing up, it can be challenging to understand how to deal with retirement income tax. If you aren’t working, it may seem that you would be in the clear. However, between paying taxes on your TSP, cashing out your other investments, and any possible small jobs you may take on during your retirement years, it can pay to make sure that your taxes are as minimal as possible, primarily because of your limited funds during your retirement years.

Contribute Fully to the TSP

The most important part, of course, is participating in your company-sponsored retirement plan. For federal employees, this will be your TSP. Make sure that you are saving the maximum 5% up to retirement, as the government offers a match that means you effectively double your TSP just by saving money you will spend anyway.

Consider Some Types of Life Insurance

Whole life insurance policies can be a useful means of possibly gaining tax-free income during retirement. Often, there is the possibility, as with indexed life insurance policies, that the policy accumulates a cash benefit connected to the market that means that you could go throughout retirement without having to pay any life insurance premiums or withdraw the money and spend it freely. You can simply avoid retirement income tax as much as possible by saving it instead.

Look Into Tax Deductions for Business

Sometimes, if you supplement your retirement income with part-time self-employment, there are some business expenses and deductions you could include on your tax return. Consult with a financial professional before you make any significant decisions about your career or business, as there is a possibility that the profit you make might not be worth the investment. It is your retirement, after all- if the work you already do doesn’t appeal, consider trying a more low-investment job that could be an enjoyable source of income.

Examine Your Personal Debt

If you have auto or other personal debt, consider consolidation into a lower rate of interest. Unfortunately, rolling it into a home equity loan to deduct the interest is no longer practical since the Tax Cut and Jobs Act passed into effect. Once again, the best solution for this is to discuss your options with a financial professional to be sure that you are getting the best financial solution possible.

Pack your Bags and Move Away

Ever wonder why so many retirees move to Florida? The reason is simple; there’s no state income tax, which can eliminate a massive financial load. In some states, the income tax rates can be as high as 9.90%.

All in all, there is no one right way to retire, but at least with these strategies, retirement income tax may be a little more navigable. To learn more about your options for retirement, go to tsp-withdrawal.com and talk to a financial expert.

The current state of affairs in Federal employment may be changing soon. President Trump has proposed that changing the system of salaries to a capped total and awarding bonuses based on merit. Many see this as a reasonable proposal, but there is one flaw: While the public can see the salaries most Federal employees are paid, they cannot see bonuses. This is a problem that is compounded by previous precedents set by Federal employers.

In 2016, the government gave 1 million bonuses for performance. This amounts to $1.1 billion, all of which is paid by taxpayers. The challenge that arises is that all this money was kept out of the public eye, due to a lack of governmental transparency that makes it very difficult to glean any information.

Just a couple of months ago, a Treasury Department supervisor revealed $ 1.7 million in bonuses that were given to 2,000 IRS employees. These same employees had delinquencies, access to tax return details which was not authorized and even were accused of sexual misconduct.

The federal government currently gives five different types of bonuses. They include;

1. Performance bonus

2. Incentive bonus

3. Recruitment bonus

4. Relocation bonus

5. Retention bonus

Every bonus is supposed to be subject to the Freedom of Information Act disclosure laws, but in the budgetary year 2016, the Office of Personnel Management revealed only 330,000 bonuses which amount to $351 million.

After auditing, the big, small departments and the independent agencies interfere with the system for their benefits.  Most of the government unions which are not transparent claim that the performance awards are a percentage of every employee’s annual salary and it varies depending on the performance rating. They claim if there were a reveal of the percentage used, the taxpayers would know the employee’s ratings.

However, is that a problem with the taxpayer? It should be the management’s problem. Knowing the employee ratings cannot be compared to a taxpayer’s right to know how the money they pay is being used. After all, we already know that the federal bureaucrats offer themselves performance ratings which then increase the bonus and pay levels. An audit done in 2013 showed that 99% of federal workers get successful job performance ratings, which is of course, a near impossibility.

In cessation, a majority of federal workers recognize their performance correctly. This is why most of them are persuaded to fund these performance bonuses which are over a million. This equals to $1.2 billion. However, the taxpayers cannot put into measurement whatever it is they cannot see. These bonuses could be deserved, could be not. Nevertheless, it is the taxpayer’s money being used, so they should be explained to everything. This will help them to decide on how to hold the officials they elected accountable.

Federal benefits can be affected in a significant way by major events in life such as the birth of a child or marriage. In fact, instances of divorce can lead to a lot of complications when it comes to claiming federal benefits. The following are some useful tips for divorced or separated federal employees.

FEHB Benefits for Separated Federal Employees

Your spouse will still be eligible for coverage if you are in the process of annulling your marriage or when you are not legally separated. It is important to remember that this only happens when your FEHB enrollment includes the self and family option or the self-plus-one option.

Former Spouse Benefits after Divorce

The FEHB coverage for a former spouse ends when the divorce process has been finalized. In fact, it ends the same day at midnight.  In this case, even a court order cannot stop this law from being implemented. However, the spouse equity act allows your former spouse to continue funding the coverage in his or her private capacity after your divorce has been finalized. A former spouse can convert to an individual policy or choose temporary continuation.

Your FEHB Benefits

After your marriage has been annulled, the FEHB plan has the self and family option that allows you to replace your spouse with other eligible family members. However, you can change your FEHB plan to the self-plus-one option in instances where there is only one family member that is eligible for coverage.

Also, one can change to the self-only option when there is no other eligible person for coverage under your plan. You must complete the Standard Form 2809 to make any changes when it comes to coverage.

 FEGLI Designation of Beneficiary

Federal employees designate a beneficiary when they sign up for the Federal Employees’ Group Life Insurance. The designated person receives the FEGLI proceeds when you die, and most married people designate their spouses.

However, a married person that ends up getting a divorce can change the beneficiary. The fact that you are no longer married means that you have to make the necessary changes by completing a Standard Form 2823 that is available at www.opm.gov/forms.

Survivor Annuity

At the end of a divorce process, one is no longer required to provide a survivor annuity. However, they must report divorce or annulment to their respective federal agency for this to happen. Retired federal workers must inform OPM when they get a divorce.

Life insurance companies have a new, unconventional sales strategy: selling life insurance policies on children.

The fact that most life insurance companies are asking parents to purchase life insurance for their children can seem to be incongruous, almost like buying your three-year-old a car with the idea that it will be cheaper when they are older. The idea seems absurd, but life insurance companies have recently strongly favored these sales strategies.

The most interesting thing is that insurance companies do not directly say that they are urging parents to purchase life insurance for children. Instead, the companies have coined some enticing phrases, such as “college plans,” “grow up plans,” or “get started plans.” Such pitching terms end up confusing parents and grandparents to fall into their trap, playing on their emotions to get an easy sell.

Realistically, children do not need life insurance and these companies are only interested in making easy profits. They just want to take advantage of the fact that parents and grandparents love their children and can fall for any plan that appears to benefit their kids. There is no problem with selling life insurance to adults as it is a wonderful retirement plan but extending the same to children amount to conmanship.

Life Insurance should retain its Original Purpose.

Life insurance companies should stick to the plan’s original purpose, as it is an excellent long-term financial plan. Purchasing a life insurance plan ensures that your family or dependents are fully protected from economic loss when you die. It is true that a person’s young family benefits from life insurance as it gives them the much-needed financial security.

On the other hand, a family is less likely to suffer any considerable economic loss after an unfortunate death of a child. The death of a child leads to an emotional loss, but the issue of financial loss, which is the main incentive behind the purchase of life insurance, is tough to justify.

Life insurance companies understand that they cannot sell life insurance for children by focusing on economic benefits, which is why the pitch is a more indirect approach to take advantage of the parent of children. The fact remains that these  “grow up plans” are nothing but life insurance for people who do not need, or even really want, coverage.

According to life insurance companies, there is a possibility that some children may not qualify for life insurance when they become adults, and it is a good idea to take advantage of the cheap rates. However, the fact is that until middle age, life insurance will remain relatively cheap in the vast majority of cases.

Saving for retirement is an uphill task for most people, but knowingly or unknowingly, you can make this already challenging task a costly mistake. This article will highlight some of the common errors that can cost you your retirement savings, and show you the best way to stretch a dollar to its limits.

It is advisable to pay special attention to retirement savings plan to guarantee yourself some financial security during retirement. Having worked hard for many years, your golden or retirement years should be as enjoyable as possible, but if not handled with caution and good planning, this period can turn to out to be a nightmare. It is possible to control most retirement planning mistakes if you are just willing to listen to some advice.

To begin with, it is always advisable to use a retirement calculator when planning for your retirement. If you have not been using a calculator, it is time for you to reconsider your strategy. A retirement calculator helps you set your retirement on the right path by assisting you to estimate or predict benefits or possible earnings.

To use a retirement calculator, you only need to input your expected time of retirement and what you make to predict your financial position during retirement. Take a step in the right direction by establishing a foundation of good sense and understanding of your potential financial position. It is always important to know your position as time goes by to avoid surprises when you eventually stop work.

Secondly, look out for your employer’s 401k match and take full advantage. In fact, when looking for free money, you can find it through your employer’s 401k match- they will sometimes match up to 5 or 6% of your contributions.

Thirdly, most people lose a lot of money in what referred to as “record keeping” fees, and it is time you also gave the issue serious consideration. Some retirement plans refer to the fees as “account maintenance” fees, and you will just continue losing your savings if you do not make the necessary changes.

According to industry experts, a 1.5% account maintenance fee is reasonable, but some companies charge up to 4% of your savings. This is complete exploitation as it is a significant amount of money. You should look out for a retirement plan that has acceptable “record-keeping” fees to reclaim your savings.

Finally, it is essential to monitor your account on a regular basis to reset your goals or know your current position. Taking years before checking your account is a huge mistake.

Finding a financial advisor that’s right for you is just like finding any other professional, like a tailor or a barber. Of course, if you pick the wrong barber, you wear a hat for a few weeks. Pick the wrong financial advisor, and the situation becomes dire.

Most people find it hard to openly talk about their financial needs, which is why it is crucial to identify a financial advisor you can fully trust. For your interactions with your financial advisor to be productive, you must feel absolutely comfortable. The right financial advisor should be able to match your specific financial needs regarding experience and knowledge. The following are some useful tips on how to find the right financial advisor;

Get Recommendations

You can get useful recommendations from co-workers, friends, or family when looking for a financial advisor. You can find out about the professional they trust with their financial needs and ask them why they believe the professional. Other useful sources of recommendation include;

• Brokerage firms
• Online customer reviews
• Internet listings
• Your bank
• Your attorney or tax planner

Interview the Candidates

You can only find an investment professional that is right for you by talking to several candidates. You should ask relevant questions and also be ready to respond to their questions. A prospective financial advisor may ask you about your;

• Level of investment risk
• Long-term healthcare plans
• Retirement plans
• Insurance needs
• Financial goals
• Current investments

You should remember to ask for references from their colleagues such as insurance agents, attorney or accountants. Also, you should request for a contract showing the amount you are expected to pay as well as the services provided by the financial advisor.

Look out for their Credentials

It takes a lot of time and effort to get professional licenses despite the fact that it does not guarantee competence. However, you should always check look out for the basic professional designations and certifications when selecting a financial advisor. The most notable professional designations of a financial advisor include;

• CIMA, Certified Investment Management Analyst
• CFP, Certified Financial Planner
• ChFC, Chartered Financial Consultant
• CFA, Chartered Financial Analyst
• CLU, Charted Life Underwriter
• CPA, Certified Public Accountant

Ask about their Preferred form of Compensation

Forms of compensation vary from one professional to another, and that is why it is important to ask how they are compensated. The most notable forms of compensation include; payment on a commission basis, charging a fee for based on time spent with a client, or fee plus commission.  Also, it is advisable to build a relationship with your advisor for more positive engagements.

Senator Tim Kaine has slammed Trump for his plan to empower federal agency heads through Congress to dismiss federal employees. According to Kane, president Trump was afraid of being forced to be accountable by federal employees that may just be doing their jobs.

While addressing federal workers during the annual legislative and grassroots mobilization conference organized by the American Federation of Government Employee’s (AFGE), Kane argued that Trump is a power hungry president that should not be given powers to fire federal employees at will.

On January 30, Trump called for the extension of firing powers to all federal agencies and praised the VA Accountability Act. The Act gives firing power to the head of the Department of Veterans Affairs to dismiss employees that are perceived to go against the set guidelines.

Trump claimed that federal employees that undermine public trust should be removed from federal service while good workers should be rewarded by the relevant Cabinet secretary. Currently, Cabinet Secretaries and federal agency heads do not have such powers, and Trump was calling on the Congress to empower them.

Kaine said that Trump’s remarks did not in any way surprise him and that the objective of Trump’s current campaign is to come up with a way of punishing political disloyalty in federal service. He claimed that the president has already sacked the deputy attorney general and an FBI Director for perceived political disloyalty.

According to Kaine, Trump has in the recent past threatened to stop a special investigation, and this is a clear sign of his intentions.  In fact, Kaine claims that he wants to force people to be loyal to him instead of being loyal to the constitution.

The Congress has already received a Republican proposal on the issue, but Kaine and a good number of other Senators are opposed to the new plan. In fact, the proposal can only pass the Senate with 60 votes, and Kaine is happy that this is an uphill task. Currently, Republicans have a slim majority of 51 members and any opposition from Democrats will make it difficult to pass the bill.

An attempt to extend the VA Accountability Act to other agencies is a continuation of Trump administration’s attack on Civil Service. Other attacks have been the two government shutdowns and the hiring freeze. J. David Cox, the current AFGE President, observes that there has been a rise in the leach class whose intention is to suck the life from federal service.

Federal employees that want to keep their jobs have to stay away from making political posts while at work. According to the new guidelines under the Hatch Act, federal employees have to avoid making political statements on social media platforms while on the clock.

The Act has clear guidelines on what federal employees are not supposed to post on social media. There are certain types of political activities that have been prohibited under the Hatch Act, and this means that all federal government employees are always under close watch.

Who does the New Act apply to?

The new guidelines apply to employees in all federal agencies including heads of various federal agencies, members of federal agencies, ambassadors, National Park rangers, and NASA workers.  However, the new guidelines do not apply to the legislative branches of government, the president, and the vice president. Federal employees are expected to stay within the law in their political engagements on social media.

Shares, Likes, and Retweets are Illegal

It is important to point out that the law is not limited to posting. The law extends to liking, sharing, or retweeting your favorite political posts or pictures on Instagram, Facebook, and Twitter. Moreover, federal employees are forbidden from engaging in the mentioned social media activities in both private and professional lives.

However, the employees can donate to political causes and campaigns at a personal level but are not allowed to convince or implore other people to donate to political campaigns and causes. This applies when one is on the clock.

On the Clock vs.  Off

A federal employee’s public life should be separated from activities like supporting political parties and candidates. The Hatch Act Social Media Quick Guide stipulates all the instances when an employee is allowed to engage in political activities. According to the new guidelines, an employee that is away from work can post about their support for a particular party or candidate.

Also, they can even share with their friends or followers about their involvement in fundraising events for their favorite candidates or parties. However, the employees are prohibited from such activities while on the clock or at work. Law enforcement agencies and the intelligence department are completely forbidden from such activities while on or off the clock.

Warnings to Members of the Trump Administration

Members of Trump’s administrations like the United States ambassador to the United Nations and the White House Director of Social Media have in the recent past received warnings from the Office of Special Counsel for violating the new guidelines. Apart from warnings, other punishments that one can receive include; a civil penalty of less than $1000, letter of reprimand, suspension, debarment from federal service, or removal from federal service.

Some predictions by futurists might appear like pure science fiction, but it is interesting to know that some of them might turn into reality. For instance, the prediction that some people will live more than 130 years in the coming years seems a possibility with the recent advancements in nutrition, lifestyle, and medicine.

The math of retirement savings is bound to change with the current trends. In the recent years, most people have become aware of the looming retirement crisis as the writing is already on the wall. Examples of recent events that signify a looming crisis include; an ineffective self-funding retirement, social security becoming the primary source of retirement income, and the end of corporate pensions.

The current retirement savings statistics are alarming and there is a need for policymakers to do something. For instance, the average retirement savings for 50 % of Baby Boomers and Gen Xers stand at $100,000 and $10,000 respectively.

Such figures would guarantee one a comfortable retirement in previous years, but that is no longer the case. As a result, millennials are bound to face a retirement crisis due to the ever-increasing financial pressures, which means that millions of Americans will end up living a retirement life full of financial challenges and yet they worked very hard for many years.

The future federal deficit is more likely to increase with the constant calls for the “safety net” to be expanded. As a result, the country is more likely to face an economic catastrophe, and that is why there are calls for policy changes. There is a need for policymakers and the insurance industry to come together and design policies that will save this country from the impending financial tragedy.

Techniques such as risk pooling can be adopted by insurance companies to minimize the risks that millions of Americans are likely to face when they retire. It is essential to have a reliable and protected retirement income for both derail and public sector employees, and this takes a collective effort self-regulatory, federal, and state policymakers to come up with the right policies for retirement benefits.

The current disclosure requirements and standards of conduct are inconsistent, complex, and multiple. As a result, there is a lot of confusion and increased costs due to limited access to advice. Therefore, the current regulatory thicket needs to be addressed to improve financial education and provide financial empowerment for consumers.