Federal Retirement NEWS
Thank you for visiting PSRetirement.com for your Federal Retirement News and other information. We focus on what matters most to federal employees about their retirement plans and benefits along with articles that will shape the Federal Employee landscape will be available in this category.
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Social Security: More Information
It is important that we gather as much information as possible to ensure the best use of our resources in retirement and maximizing your Social Security benefits (SSB) is an absolute must if you want to get the most out of your working years. Consider the facts below as part of your plan to retire well:
• Income from pensions, annuities and investments are not impacted by the earnings test. Earnings only apply to wages from a job or net earnings from self-employment.
• Forty credits are needed over the lifetime of one’s work career to qualify for Social Security retirement benefits.
• No estimate can be given if you have not earned enough credits to qualify for Social Security benefits.
• The closer you get to retirement, the more accurate your SSB estimations will be because there are fewer fluctuations in earnings and changes in the law.
• Currently you earn one credit for every $1200 you earn in wages or self- employment income. Earnings of $4800 will give you the 4 credits needed for one year.
• Actual Social Security Benefits calculations cannot be provided until you apply for benefits.
• Earnings may increase or decrease in the future.
• Once you begin receiving your SSB they will be adjusted for cost-of-living increases.
• Estimated benefits are based on current law (Laws are subject to change).
• Social Security Benefits may also be impacted by military service or pensions earned via work where you did not pay Social Security taxes.
For Federal and Postal employees the challenges of understanding Social Security stems from the fact that your employment benefits are already incredibly complex to fully understand. When you ad in Social Security you now also have to recognitize that if you focus solely on claiming at 62, 66 or 70 (the basic dates most people mistakenly select) you will miss out on a HUGE potential opportunity. Educating yourself on the different Social Security claiming strategies is a must. Recognition that if you are eligible for Social Security Benefits, in many instances if you delay claiming Social Security, your benefits will grow at 8% per year. That is an 8% guaranteed return from the U.S. Government – not too bad, especially when CDs pay 3% or less. All of this leads us to a simple reasoning, we highly recommend that you talk with a financial professional who is an expert in your FERS, CSRS & FEGLI benefits as well as one who has a great deal of expertise in Social Security claiming strategies.
P. S. Always Remember to Share What You Know.
Read more about your Social Security benefits
Having a well defined Retirement Plan is more important now than ever before
Windfall Elimination Provision (WEP)
The Windfall Elimination Provision (WEP) only impacts individuals who earned a pension in any job and did not pay Social Security taxes, but worked long enough in other jobs to be eligible for Social Security Retirement or benefits due to disability. The Windfall Elimination Provision impacts Social Security benefits when any of an employee’s federal service after 1956 was covered under the old Civil Service Retirement Systems (CSRS). Social Security was not withheld from these employees’ checks because the Social Security System had not yet been formed.
The Windfall Elimination Provision (WEP) applies to federal workers if they reached age 62 after 1985 or became disabled after 1985. It also applies if you became eligible for the first time for a monthly pension based on work you performed where you did not pay Social Security taxes after 1985. The provision still applies even if you are still working.
Lower wage earners receive a higher return on their Social Security benefits than higher paid earners. While lower paid earners may receive as much as 55% of their income before retirement, high salary earners may only receive approximately 25% of their pre-retirement income. Social Security benefits were never designed to replace all of a worker’s pre-retirement earnings but only a percentage.
Prior to 1983 before Congress passed the Windfall Elimination Provision workers who had jobs not covered by Social Security, benefits were calculated as if they were low-wage workers. This allowed them to have the advantage of receiving a higher percentage of their pre-retirement earnings in addition to receiving a pension from employment where they paid no Social Security taxes.
To see the maximum amount your benefit could be reduced visit www.socialsecurity.gov/retire2/wep-chart.htm.
P. S. Always Remember to Share What You Know.
You may also want to read Government Pension Offset (GPO)
Government Pension Offset (GPO) Reduction
In a recent post we mentioned Government Pension Offset (GPO) and gave a definition with the promise of giving more details in a later post. This time is as good as any to continue the dialogue. There is a wealth of information available to you on the website at the Social Security Administration. It is our intent to provide that information in an abbreviated and comprehensive version and make it part of our discussion on retiring well.
Under the Government Pension Offset, your Social Security benefits will be reduced by approximately two-thirds of your government annuity check. For example, if your monthly annuity check is $1400, then about $933 would be deducted from your Social Security payment. So if you were entitled to a $1200 spouse’s, widow or widower’s benefit from Social Security, you would receive $267 per month from Social Security ($1200 – $933 = $267).
You might ask, why can’t I collect both the $1400 from my annuity and the $1200 as spouse, widow or widower’s benefit?
The answer in brevity is because the amount you receive as a spouse, widow or widowers is considered dependent benefits. In our country’s history, many spouses in past times did not work but stayed home to take care of their families. The system was trying to make provisions to compensate those spouses who were financially dependent on the working spouse. As times changed, both spouses began to work and each earned their own Social Security retirement benefit.
The law requires that benefits as a spouse, widow or widower be offset dollar for dollar by the amount earned by his or her own retirement benefits.
P. S. Always Remember to Share What You Know.
You may also want to know about Windfall Elimination Provisions (WEP)
Social Security Calculator
Understanding the federal retirement systems can sometimes be complex to say the least. Yet, it is information we really need to breathe in and understand. Knowledge is power and we all want the power to live in retirement on our own terms. Did you know that there is a formula for calculating your Social Security benefit? It really is quite simple.
• The first step to computing a Social Security benefit is to determine your Primary Insurance Amount or the PIA. The PIA is the amount you would receive if you worked until age 65 if you were born before 1938.
• If you were born after that time you would need to determine your Average Indexed Monthly Earnings or the AIME. You do that by: listing all your Social Security covered earnings from 1951 to the present based on periods applicable to you. Then you adjust those earnings to account for inflation, not to exceed the maximum taxable amount in any year. We are almost finished, just a couple more steps.
• Select the 35 highest years of your indexed earnings, dropping in a zero for each year in which there were no covered earnings and then dividing the number of months (420) months in 35 years included into the total of the indexed earnings.
Should we stop here or keep going? I know by now, you are saying she has sincerely lost it and does she honestly expect us to do that. We have to add some humor somewhere in understanding the complexities of federal retirement, least we bore from all the details. No you don’t have to do all of that. We live in an age where it is much easier for us to determine calculations that will help us in the retirement planning process.
You can always go to your Social Security account on line and look at your work history and Social Security contributions. You can also use the Retirement Age Calculator at http://www.ssa.gov/planners/morecalculators.htm to estimate the approximate Social Security benefits you will receive if you retired at what is considered normal retirement age and had consistent lifetime earnings.
P. S. Always Remember to Share What You Know.
For more information on your Social Security Benefits – Click HERE
Social Security – Earning Credits
When you work and pay into Social Security, you earn credits or what was previously called quarters. The average worker earns about 4 credits per year in order to acquire the 40 credits required to be eligible for Social Security benefits at retirement.
The number of credits you need to qualify for benefits actually depends on the year you were born. For example, if you were born in 1929 or later, you need 40 credits to qualify for eligibility. If you were born before 1929, you would need fewer credits. The minimum number of credits needed by an employee to qualify for benefits would be 24. You would have had to be born around 1913 or earlier to qualify for the 24 credits. So that eliminates pretty much the entire federal and postal workforce.
It is always a good idea to check your Social Security statement just to make sure your information is correct and that you have the 40 credits needed to qualify for Social Security benefits. It actually only takes about 10 years in a Social Security covered employment to gain the 40 credits you need, 4 credits per year. You can check your statement online. It is simple, just set up your account with the Social Security Administration (SSA) and you can stay on top of your benefits and what your estimated payment may be at various ages. You may also be surprised to learn about all of the different Social Security “claiming strategies” that exist – if you or your (current or former) spouse are eligible for Social Security speak to a financial professional who is an expert in your benefits and also how to maximize Social Security benefits.
It is estimated that the full retirement age will increase gradually until it reaches age 67. Employees born after 1960, who start receiving their benefits at age 62, will experience a reduction of approximately 30% in their Social Security benefit. A rule of thumb is that early retirement will give you about the same total Social Security benefits over your lifetime, but in smaller amounts to take into account the longer period you will receive them.
Do your homework before you make any decisions that impact how you will live in retirement.
P. S. Always Remember to Share What You Know.
Financial Plan for the Federal and Postal Employee
Like all Federal and Postal Employees we must all consider the importance of our Financial Plan as we prepare to live in retirement – on our own terms. Whether you are part of the CSRS system or FERS you should know the importance of having an overall financial PLAN and how vital it is for a successful retirement future. Part of THE PLAN should include a financial piece – your financial plan.
What is a financial plan? It is a thought process of what is important to you and what is required for your life in order to make your dreams a reality. A financial plan assists us in identifying what we want, how to get it and how to keep it. Sometimes it is as simple as identifying the small changes that you can make today which will have large impacts in the future? Devising a financial plan means making choices, sometimes difficult ones, in order to reach your retirement goals.
The process of building your financial plan has much to do with your value system. Our value system is often shaped by our parents. As we mature our value system may change. The values we have today, we probably did not have them when we were younger. One reason being, our responsibilities and obligations have changed.
Often when we make one decision, it simply causes us to make another decision. Constructing a financial plan and making decisions also involve trade-offs.
For instance: Would you like to maintain a Life Insurance policy on yourself or your spouse so you can protect your family? The trade-off is the cost of the insurance for the benefit of that protection. Then if you make the decision to protect your family in this manner, what is the best way (most cost effective way) of managing this expense? Should you stay with FEGLI or find a different policy? Is there a ‘best and cheapest’ policy for your needs?
Another decision you will need to work through is with regard to your TSP Account. The decisions you will need to make consists of the amount and manner you take income from your savings. Additional TSP consideration include rolling your funds into an IRA or and whether or not you should hire a professional to help you with your investments
You may have to give up something today in order to gain something tomorrow that might ultimately be of far greater benefit in the future. We save now and we plan now so that our retirement years can be spent in comfort and security.
The most educated Federal and Postal employees and retirees will likely be working with a Financial Professional to help them with these decisions. That is to say – the federal employees who choose to enjoy more of their free time and worry less in retirement will likely want someone else to manage the day-to-day minutiea of their investments and retirement plan. We may know a lot about our own circumstances and may even know a lot about the economy or the markets – but I suggest that you find a financial expert in your benefits to ensure that you are looking at all of the possible savings and advantages that you have as a result of your employment.
P. S. Always Remember to Share What You Know.
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.
More On FEGLI
Each time I think I have said enough about FEGLI, someone or something always reminds me that I have not, or at least I could be a bit clearer on certain aspects of FEGLI.
Over the weekend, a friend called for some advice on her pending retirement. We started to talk about FEGLI (watch the video) and her understanding of elections and goals for life insurance. Right off, she wasn’t sure about what she had and how it worked and if she elected reductions or named a beneficiary(s).
The point being she is about 4 months from deciding on an exact date to retire and one of the most important aspects of her planning process remains vague. There is no denying, there is no easy way of getting around understanding your benefits and what they mean in retirement. She is doing the right thing; she is talking NOW about what she does not understand about her benefits.
Many employees are missing out on a great opportunity to engage their human resources offices and gather as much information as possible about their benefits in retirement. Your agency human resources office has your folder and they can answer so many critical questions and help you via the wonderful online calculators and e-tools to estimate what your annuity from your years of service will look like in retirement.
Another important issue she unearthed was not having a full understanding of her TSP being separate from the pension (annuity) she would receive upon retirement. She also did not have a clear understanding of whether she had named a beneficiary on her TSP account.
Some of her issues were easy to resolve. First, if you are planning to retire, you should not bother yourself about whether you named a beneficiary or even who it was. So many changes take place in our lives over the course of our work careers that the easiest approach to the beneficiary question – is to do a completely new set of forms as part of your retirement check-up list.
Many of us enter into the federal service very young and we make our choices and designations, often not revisiting those forms for a very long time, if ever. This was certainly the case with my friend, even some of the designees she named had passed away.
Getting ready for retirement is a huge undertaking so wherever you can simplify the process, do it. Take the fuss out of what you did not do and what you thought you did and just complete a whole new set of forms for FEGLI. Also contact the Thrift Savings Plan (TSP) and complete a new set of forms with the TSP as well.
We are going to discuss and clarify a couple of things about FEGLI to follow.
P.S. Always Remember to Share What You Know.
RELATED TOPICS – More Federal and Postal Insurance Information
Federal Employees Health Benefits (FEHB)
Federal Flexible Spending Account (FSAFEDS)
Federal Long Term Care Insurance Program (FLTCIP)
Federal Employees and Medicare
Federal Employee Dental and Vision Insurance Program (FEDVIP)
FEGLI – Did You Know?
The Office of Personnel Management (OPM) is the only entity that has a record of your FEGLI file. They can tell you how much coverage you have and who your beneficiaries are. With proper identification of yourself for safety and security, OPM will gladly provide that information to you if you need to verify or confirm your coverage… But there are limitions.
Conversely, OPM has nothing to do with a claim being filed or answered in the event of the policy holder’s death. So don’t get upset if you call OPM concerning a claim and they due to privacy issues cannot respond to your questions. Not to mention OPM cannot make recommendations to you about the amount of coverage or whether or not FEGLI is the best solution for you. Remember – FEGLI is not insurance provided by the Federal Governement – but a contractor who still has a profit motive.
FEGLI Coverage
The administrative arm of the OFEGLI (Office of Federal Employees’ Group Life Insurance) represented by MetLife will handle your claims issues and concerns. MetLife pays death claims for Federal Employees covered under FEGLI.
If the claim is less than $5,000 it is paid to the beneficiary via check. If the claim is $5,000 or more, it is paid in two ways: By check or TCA (Total Control Account). Under TCA an interest bearing account is set-up in the name of the beneficiary with MetLife. If no decision is made as to how the claim payment should be distributed, then MetLife sets up a Total Control Account.
If a policy holder passes away family members may contact OPM via phone or use the website to inform OPM of the death.
Discuss these provisions with your family members so that they will be informed and take the proper steps necessary to assist in taking care of the business of your life.
P.S. Always Remember to Share What You Know.
RELATED TOPICS – More Federal and Postal Insurance Information
Federal Employees Health Benefits (FEHB)
Federal Flexible Spending Account (FSAFEDS)
Federal Long Term Care Insurance Program (FLTCIP)
Federal Employees and Medicare
Federal Employee Dental and Vision Insurance Program (FEDVIP)
FEGLI – The Extra Benefit
FEGLI – The Extra Benefit
We have talked a lot about FEGLI and yet there are many aspects of the Federal Employees Group Life Insurance we still need to touch upon. If we don’t hit upon every single aspect of FEGLI and FEGLI Rates and there are still things you need and want to know, just drop a comment so that we can address your concerns. Our goal is to hopefully answer your questions and discuss topics in a way that is clear and refreshing.
We certainly try to use an approach that is more like talking to your friend in the living room or for me; the hang-out is the kitchen. Wherever you decide to have the conversation, the important thing is to have it. End of life discussions can be difficult for families and friends. I like to refer to life, whether it is the beginning or the end of the journey as –Getting Prepared for the ME.
Who knows better about what you like and how you like it than you. Therefore, it is simply better to have the opportunity to make your own preparations just the way you like. We didn’t talk about the extra benefit provision of FEGLI in our past posts. I thought it needed its own space:
FEGLI offers an extra benefit to employees under age 45 at no extra charge. The benefit doubles the amount of life insurance payable when you are age 35 or younger. However, on your 36th birthday, the extra benefit decreases at the rate of 10% annually terminating the benefit at age 45. The extra benefit is one of those extra good-to-know items you don’t want to pass-up without evaluating it benefits to you.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
In the following posts we are going to discuss a few other important aspects of FEGLI.
P. S. Always Remember to Share What You Know.
FEGLI – Assignment
FEGLI Assignment
FEGLI Assignment of Benefits – Employees can, as of a law passed in 1994, assign their FEGLI Basic, FEGLI Standard Optional and FEGLI Additional Optional life insurance to an individual, individuals, a corporation or an irrevocable trust.
Although there are countless reasons why a FEGLI policy holder might consider an assignment of benefits, the most common cause is generally to comply with a court order. Premium deductions continue from your salary or annuity.
Once the assignment has been made, you cannot cancel your life insurance nor make any future beneficiary changes. Before we leave our FEGLI discussion, let’s discuss briefly the Living Benefit.
Although the Living Benefit is still a relatively new term for many, it has become increasingly popular as more and more individuals and families struggle with life threatening illnesses leaving them strapped for money.
The FEGLI Living Benefit allows the policy holder to cash in FEGLI Basic coverage if he or she is expected to pass away from an illness in 9 months or less. The Living Benefit is paid to the policy holder instead of survivors or beneficiaries. This option can only be exercised once. When the election is made it cannot be cancelled or retracted.
However, if the policy holder does not expire during the time expected and recovers, he or she is not obligated to pay the money back. When the full living benefit is enacted, the premium deductions stop and the policy is also terminated.
Life insurance is an important part of the financial planning process and FEGLI is a great product until you reach a certain age (speak to a financial professional to help determine when that is). Life insurance is highly personal and individual. Key decisions about your life can only be made by you and your loved ones. No matter what information you share with a professional, the biggest part of the decision-making is emotional and only you get to own it. Make sure you are working with a knowledgeable financial professional to ensure that you have the right answers to these very difficult questions.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
P. S. Always Remember to Share What You Know.
www.psretirement.com
More About FEGLI – FEGLI Option C
FEGLI Option C
In previous articles we discussed Basic insurance and Options A and B and various FEGLI rates. Now let’s talk about the third option under the Federal Employees Group Life Insurance – Option C. Option C is Family Insurance. As with Options A and B, Option C’s premiums are also based on age. Coverage continues into retirement and you pay the full cost of premiums.
Option C provides life insurance for your spouse and unmarried, dependent children, excluding foster children. Option C covers your spouse between 1 and 5 multiples of $5,000 and the children between the same multiples of $2,500.
With Option C you have two opportunities to make an election — first at retirement and shortly before your 65th birthday. Even if you are already 65, you still have two opportunities to make an election at retirement and shortly after retirement.
With Option C, you may choose two levels of coverage at first election: Full or No Reduction for all multiples. With Full Reductionq, at age 65 the amount of your Option C will start to reduce at 2% a month until it reaches zero.
However, if you chose No Reduction, at the first election, the full amount of your Option C will continue until your death unless you change to Full Reduction. At the second election, you can also choose Full or no Reduction for any or all multiples under Option C.
A Special Note: If you choose not to stop the future reduction of coverage when you reach age 65, your premiums will cease and your coverage will drop 2% per month for approximately 50 months, after this period your coverage will cease. If you choose not to end coverage, your premiums will continue.
Take your time in examining and understanding your options so that you will be pleased with the decisions you make to protect you and your loved ones.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
FEGLI – Option B
FEGLI – Option B
Let’s talk about Option B under the Federal Employees Group Life Insurance (FEGLI). Option B represents additional insurance of which you have the right to carry into retirement. The value of your FEGLI Option B insurance depends on your coverage election.
You have the option of choosing one, two, three, four or five times your annual basic pay rounded to the next $1,000. As with Option A, you are responsible for paying the full cost of the premium. The premiums are age weighted as with Option A.
With Option B, you have two opportunities to make an election — first, at retirement and shortly before your 65th birthday. If you have already reached age 65, at retirement you have the opportunity to elect when you retire and shortly after retirement.
At first election you can choose two levels of coverage: Full Reduction or No Reduction for all multiples. If you choose Full Reduction, at age 65 Option B will reduce at the rate of 2% a month until it reaches zero.
If you choose No Reduction, then the full amount of your coverage will continue until your death unless you change to Full Reduction. At the second election you can choose Full Reduction or No Reduction for any or all multiples of coverage.
If you choose not to stop the future reduction of your coverage when you reach age 65, premiums will cease and the value of your insurance will drop by 2% per month until it reaches zero.
However, if you choose to elect unreduced Option B, its value will not be reduced unless you later cancel the election or change the amount of coverage. In that respect, premiums will continue beyond your 65th birthday. The government will also contact you before you reach age 65 to request your election. You have the option to reduce part or all of your coverage.
Understanding all of the provisions of your life insurance is important and can be a challenge. You don’t have to travel this path alone; there are life insurance specialists that are available for you. These would be licensed and trained financial professionals who are experts in this field. In addition to the work that your HR department can do for you, these experts can probably help you find cheaper options, especially as you age.
Take the initiative and work with your human resources office to have a representative visit your office for a brown-bag round table where you can have the opportunity to get answers to your questions. Hint: Develop your questions before the round table so that you are sure not to miss anything.
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
Click HERE for information on Retirement Planning
P. S. Always Remember to Share What You Know.
www.psretirement.com
FEGLI Options
~~FEGLI OPTIONS
In a previous post we discussed the group life insurance, FEGLI, offered by the Federal Government to its employees. We talked about the Basic Life Insurance offered to federal employees. Let’s reiterate, at retirement your Basic insurance will be equal to your salary, rounded up to the next higher $1,000 plus $2,000. Under the Basic insuran
ce you may choose a 75% option whose cost remains the same as when you were an active employee until you reach age 65.
At age 65 your premiums cease and the value of your insurance declines by 2% per month until it reaches 25%. At your death, the benefit will be 25% of the original amount. If you choose the 50% reduction you will pay a higher premium until you reach age 65 or if you are already 65 at retirement. After which, your premiums will decrease monthly with the value declining by 1% per month until it reaches 50%. Therefore, the death benefit will be 50% of the original amount of the Basic life insurance.
If you choose the ‘no reduction’ option, which is slightly more expensive, your insurance will remain the same as it was when you retired. You’ll pay a slightly higher premium until age 65, and then your monthly premium will drop. This option allows your coverage to remain the same upon your death, paying the full amount as a death benefit.
Always talk to your human resources office or the plan administrator or a financial professional trained on your benefits to be certain you understand all the provisions of the life insurance you are choosing and the options.
P.S. Always Remember to Share What You Know.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
FEGLI – Term vs. Whole Life Insurance
FEGLI: Term Life Insurance and Whole Life Insurance – What’s the Difference?
This is a good segue to draw a distinction between term and whole life insurance. There are a number of very important issues about FEGLI (watch the video here) and how it works in retirement so that you will have all the information needed to put a plan in place that works for you.
Term life insurance is the category of life insurance offered to federal employees. It typically has no cash value. Term life insurance’s value decreases with age except under certain conditions we will discuss as we lay out the options available to federal employees – FEGLI Basic Life, FEGLI Option A, FEGLI Option B, and FEGLI Option C. Term Life Insurance covers the policy holder for a specific period (term) of time.
Whole Life Insurance typically has a cash value and is in force for the whole (all) of the policy holder’s life as long as the premiums are paid. Whole Life Insurance can allow for the policy holder to either cash it out or borrow against the policy. However any outstanding loans and accrued interest reduce the benefit payable upon the policy holder’s death.
It is always a good idea to talk to a licensed and knowledgeable financial professional about any questions you may have concerning your life insurance. Our posts are meant to educate and disseminate information that might assist in evaluating options available to you at retirement in your benefits profile. You will almost certainly benefit from working with an expert in making sure you get the most from your insurance expense.
Educate yourself by collecting, analyzing and evaluating information that will put you on the road to a comfortable and secure future. Seek out a FEGLI calculator and compare your FEGLI costs against private life insurance carriers. Know the parameters of your FEGLI policy and when you are better off with a different policy, so that you can increase your net retirement cashflow and RETIRE WELL.
P. S. Always Remember to Share What You Know.
Click HERE for information on Retirement Planning
Suspending My FEHB
What Happens If I drop of suspend my FEHB – Can I Ever Get it Back?
That’s a good question and one that is extremely valuable in planning for a comfortable and secure retirement. When you get the information needed to make informed decisions you can ensure that you will retire well.
If you drop or suspend your FEHB under certain circumstances you can re-enroll? It is always a good idea to talk to your human resources office before you consider taking action to drop or suspend your FEHB.
It should be noted that you cannot enroll in FEHB after you retire if you were not enrolled in the plan at retirement and met the FEHB qualifying criteria. A situation when suspending or dropping your FEHB may be appropriate, is when an employee marries or is married to another federal employee with FEHB coverage. Both spouses having FEHB does not constitute double coverage, as you cannot be covered under two FEHB plans simultaneously. However, each person can decide to carry self only or a family plan can be considered. Whatever the choice, it is always a good idea to weigh the financial burden of the choice made and talking with your chosen financial planner may help with your analysis.
Regardless of your CSRS or FERS eligibility, if you are considering dropping or suspending your FEHB coverage you need to give a very good amount of time and energy to understanding what the impacts may be to you and your family. Although the cost of the FEHB premium changes annually, unlike FEGLI which gets terribly expensive as a person ages, FEHB remains cost competitive in the market with the average employee paying only about 25% of the cost. Having information and discussing options with a professional who is an expert in your benefits and your human resources office will help you make the best decision to retire well.
P. S. Always Remember to Share What You Know.
FEHB – The Decision is Yours
What You Decide to do With Your FEHB at Retirement is Your Decision…..
The best gift one human being can give to another is the gift of knowledge and information. As you get closer and closer to retirement, you may come across a myriad of discussions about whether you should keep your FEHB when you become eligible for Medicare or whether you should suspend your FEHB or wave goodbye to it. Give your friends, your colleagues, and even give yourself, the knowledge you need to make the best FEHB and Medicare decisions.
I am sure every report you read will have some pretty good sounding reasons as to what you should do with FEHB at retirement. Their arguments might be so convincing that you find it hard to resist their opinion about the very important business of your life and your Medicare or FEHB coverage.
Don’t shy away from reading and listening because you can always pick up some good tips, but remember to educate yourself on the facts – a very key ingredient to ensuring that you retire well. Get a good handle on what your health care goals are for retirement and beyond and whether FEHB fits within those plans. Speak to a professional who is an expert in your benefits and determine how you want to reach those goals and what is the best fit for what you and your family need. As you analyze the business of your life – it becomes urgently important to distinguish between what is required for you to survive and what is simply a matter of what is pleasing.
There is a vast difference between need and want the decision will boil down to what you can afford. That difference will become more and more vivid as you paint a picture, as only you can, of what you want that picture to represent for you and retiring well and your health should be something that you don’t skimp on. Gather, analyze, evaluate all the information on FEHB that you can, along with all of the resources available to you so that you can make an informed decision that has the flexibility to land you in the place that fits your retirement needs to retire well..
P. S. Always Remember to Share What You Know.
Additional Information on FEHB
Strong Consideration Should be Given to Holding On to your FEHB in retirement.
Many Federal and Postal retirees will have a critical decision to make about their Health Benefits moving into retirement and whether or not they should transport their FEHB coverage. If your spouse has a health care plan outside of government and you have FEHB, in conjunction with you potential Medicare elections, you should careful analysis should be exercised to determine what fits best into your plan to retire well.
There will never be a plan or plans that pay 200% coverage, but having your FEHB and Medicare upon reaching the qualifying age of 65 could guarantee your health care security. Medicare will only pay about 80% of your health care expenses and FEHB will cover the rest. However, once you become qualified for Medicare, and you are retired, Medicare will become the primary coverage with FEHB being secondary in most instances.
If you are still working when you reach age 65 and qualify for Medicare, your FEHB will remain the primary. It should also be noted that there are many services that standard Medicare does not cover and some, even, that FEHB does not cover. A careful examination of what services are covered under both FEHB and Medicare is critical to determine the best health benefit fit for you and your family.
When you become eligible for Medicare, it is very wise to look at the important benefits your FEHB offers, particularly when compared to Medicare’s prescription drug coverage. The drug prescription coverage offered via FEHB is second to none. Therefore, even when you become eligible for Medicare, don’t forget to consider holding on to your FEHB so that retiring well will be a part of your plan to live well in retirement.
P. S. Always Remember to Share What You Know.
Special Provisions and Open Season
Special Provisions & Open Season for Federal and Postal Retirees
FERS and CSRS eligible employees have the opportunity to enroll or make special provisions to their FEHB, Dental and Vision coverage (FEDVIP) along with making the Flexible Spending Account elections (FSAFEDS) that best their families. However, during open season retirees may change their enrollment via phone or in writing.
Although changes to your health plan are made during Open Season, whether you are FERS or CSRS, certain qualifying events such as change in family status, change in employment or loss of your FEHB coverage, allow changes to be made at the time the event happens.
Open season runs from the Monday of the second full work week in November through the Monday of the second full work week in December. Employees have a menu of plans to choose from that are also available to retirees. Retirees should always take the opportunity to explore what benefit options are available to them in retirement.
If you’re interested in more information on your Federal and Postal Retirement please read this.
P.S. Always Remember to Share What You Know.
Transporting FEHB
Transporting FEHB
What Could Prevent You From Carrying your FEHB coverage into Retirement?
There might be some other conditions that prevent you from carrying your FEHB into retirement. If something happens that prevents you from carrying your FEHB into retirement, your coverage will still be active for 31 days at no cost to you. When that time expires, you either must drop the FEHB coverage, continue for a period of time or convert to an individual policy.
There is also a Temporary Continuation of Coverage (TCC), known as COBRA, which allows you to carry your coverage for 18 months. You must, however, pay your cost, the agency cost and the 2% administrative fee, totaling 102%.
There are so many changes that have taken place around Federal Employee Health Benefits (FEHB) that individuals who find there are circumstances that might prevent them from transporting FEHB into retirement, now have a number of choices to secure health coverage.
Military or Uniformed Services retirees may elect to cancel their FEHB during open season and opt for ChampVA Tricare or Tricare-For-Life These plans cover Medicare’s coinsurance, deductible and prescription drugs very much like the FEHB plan.
Be sure to check to see what your plan covers and if it allows transporting FEHB, opting always to choose the plan that offers the best benefit to you and your family.
P. S. Always Remember to Share What You Know.
You can always learn more about how FEHB and Medicare work together
