Five Reasons Why Federal Employees Should Consider a Roth IRA. By: Ricardo Viader
/by rick viaderTax-free investment growth is not the only one.
There’s not a person in this world that wants to pay more in taxes. We should all want to pay our fair amount of taxes, but none of us want to leave a tip.
That’s why it’s critical to have a strong tax plan in retirement to ensure you can lawfully decrease your taxes as much as possible.
Different Tax Buckets
There are three main tax buckets one can have. Those are pay-as-you-go, pay-later, and pay-never.
The pay-as-you-go buckets can be non-retirement investments like a brokerage account. You pay taxes in these accounts when you get dividends or sell investments for a profit. One benefit of this bucket is that it may be subject to long-term capital gains tax rates, and they’re always lower than your regular tax rates. The disadvantage is that you must pay taxes as you go, and not only when you withdraw money from the account.
The pay-later bucket includes a traditional IRA, traditional Thrift Savings Plan (TSP) account, or traditional 401(k) savings account. Simply put, you get a tax deduction for placing money in this bucket, since it grows tax-deferred, and you don’t have to pay taxes on it until you withdraw it.
But, of the three tax buckets, the pay-never bucket is unquestionably our favorite. This bucket covers Roth IRAs, Roth TSPs, and Roth 401(k)s. In essence, you deposit after-tax money into this bucket, and it grows tax-free. Afterward, when you withdraw the money, both what you initially contributed and the growth may be taken out without paying any taxes.
If tax-free growth isn’t enough to persuade you to open a Roth IRA (or other Roth account), consider the following five advantages:
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1. Steer Clear of Required Minimum Distributions
You must begin withdrawing funds from some types of retirement accounts at 72. For instance, if you have a traditional TSP or IRA, Required Minimum Distributions (RMDs) stipulate to withdraw a specific portion of the funds from these accounts each year—money that must be taxed.
A Roth IRA is the only form of retirement account that is not subject to RMDs. That implies that you may keep your money in a Roth IRA for as long as you want, and it will keep growing tax-free.
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2. Make a Hedge Strategy Against Higher Taxes
It’s difficult to predict what changes may be made to the tax code in the future, but most people think that tax rates are unlikely to be reduced anytime soon. So, if taxes rise in the future, paying taxes now at a reduced rate (through a Roth account) can be an excellent strategy to decrease your tax burden in the long term.
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3. Reduce Medicare Part B Premiums
Medicare is an essential component of retirement for most Americans, and Medicare Part B is not free. The cost of Medicare Part B rises in direct proportion to your income. That is, if your income exceeds specific limits, your rates will increase.
Money withdrawn from pre-tax accounts (traditional IRAs, traditional TSPs, and traditional 401(k)s, for instance) qualifies as taxable income when withdrawn. Thus withdrawing too much in one year may raise your premiums. Money withdrawn out of a Roth IRA, on the other hand, is not considered taxable income—having Roth money can help you save a lot in Medicare costs.
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4. Minimize Taxes for Your Children
Having Roth money is beneficial not just to you but also to others to whom you leave money in your will. If you die and leave your children a traditional IRA, they’ll have to pay taxes on any withdrawals from the account. However, if you leave them a Roth IRA, they’ll be able to withdraw the funds tax and penalty-free.
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5. You’ll Have Greater Financial Control
The last reason for having some after-tax money in retirement is to have additional retirement alternatives. After all, we can’t know what tax laws will look like in the future, but having money in several tax buckets will offer you some control over your taxable income during retirement.
TSP Participants Want Changes in the Program, but Majority Are Satisfied with the Savings Scheme. By: Ricardo Viader
/by rick viaderThe Federal Retirement Thrift Investment Board, in conjunction with Gallup, recently conducted a survey with 36,000 participants. The board aims to evaluate consumer satisfaction with the surveys, which help the agency make suitable changes to its plans and tools. 89% of participants said they liked the savings plan. This figure is slightly higher than the 87% of participants who said they liked the TSP in last year’s survey.
The increase in the satisfaction rate can be attributed to the service members participating in the Blended Retirement System (BRS). Last year, the satisfaction rate amongst service members had been 77%. That figure rose to 88% in this year’s survey. In addition, 33% of service members who liked the BRS said they were “extremely satisfied” with the system. In last year’s survey, only 22% of service members had chosen this option.
The FRTIB said its biennial and triennial surveys will now be conducted annually.
In January 2021, the Employee Benefit Research Institute (EBRI) had also conducted a survey that revealed that 84% of workers said they liked the TSP. That survey and the more recent one shows that the retirement saving scheme continues to outshine similar plans of the private sector.
Another notable thing about the survey is that TSP participants who save less money show lower satisfaction with the program, unlike those who save more. 50% of the participants said they contribute over 5% to the TSP. 94% of these participants said they were satisfied with the system. On the other hand, 29% of the participants said their contribution to the plan was 5%. 90% of these participants said they were satisfied with the system. Of the last group, participants who contribute less than 5%, only 86% said they were satisfied.
For members of the last group, 43% said they didn’t have enough money to contribute above 5%, 31% said they didn’t increase their savings amounts, and 26% said they didn’t see the need to change their savings amounts. The TSP noted that fewer people cited affordability as a reason for low contribution in 2021 — the percentage had been 53% in 2017 and 47% in 2020.
Participants Requested More Changes to the Plan
In a 2017 survey, the FRTIB found that 62% of participants wanted more flexible withdrawal options. The agency had made a few changes in 2019. Many participants said they liked the changes, but others had clamored for even more flexible options.
In this year’s survey, 67% of the participants said they were satisfied with the withdrawal options. The percentage is an improvement on the rate of previous years, but withdrawal options remain the weakest point of the TSP. According to the survey, participants preferred recurring payments, partial payments, and life expectancy installments over other TSP withdrawal options.
The FRTIB also conducted another survey to discover factors that participants consider when buying an annuity or making a withdrawal. The board has not released the survey results but promised to do so in a few months.
About 40% of the respondents also plan to take money out of the TSP after retirement. These workers said they would get more and better investment choices outside the TSP. They also hope to get higher returns on their investments and strengthen other investments with the funds from the TSP. About 58% of BRS participants, more compared to other participants, said they would transfer funds from their TSP accounts.
90% of the respondents want to be able to choose the investment funds they use for withdrawals. The board stated that it would consider adding this option when it completes its modernization projects. The projects will allow the agency to enhance its customer services and internal IT mechanisms and offer participants new tools, such as a mobile app.
Respondents’ Reactions to TSP Fees
The vast majority of participants, some 60%, said they knew about the TSP’s fees or had an opinion of them.
Not many respondents were satisfied with TSP fees. 46% of the respondents want to take money out of the TSP in search of better fees. About 60% of the respondents said they didn’t have much knowledge about the TSP fees. The other 40% who claimed they knew actually believed that the scheme has some of the lowest fees compared to similar plans. Three quarters said the TSP fees are low, 22% said the fees are similar to other defined savings plans, and 4% said the TSP fees are high.
The board said the agency’s expense ratio is between 0.49% to 0.6%. Steve Huber, the board’s enterprise portfolio management chief, said a majority of similarly defined contribution plans have an expense ratio of less than 2.5%. Huber explained that the board was surprised that most of the respondents didn’t know about the TSP fees and that those that knew felt the fees were higher or at the same level with similar plans. The board said it would seek ways to educate participants about the TSP’s lower fees.
VA to Rehire Former Employees of the Department as Full-time Re-employed Annuitants. By: Ricardo Viader
/by rick viaderThe Department of Veterans Affairs (VA) is planning to rehire former retired medical professionals to increase staff levels to fight the ongoing coronavirus pandemic. On Thursday, the Office of Personnel Management (OPM) took no time to grant the VA the authority to hire former employees of the department and join the department as full-time re-employed annuitants. Additionally, the authority has allowed the chief human capital officer or executives of other agencies to waive the salary offset that is usually required to re-employ any of the retired federal employees temporarily.
Brenda Roberts, the OPM’s acting associate director of employee services, said in a letter to the Veteran Affairs chief human capital officer on Thursday, “This VA authority will help the department in dealing with the COVID-19 pandemic. The VA Department must look after patient needs at a large number of medical centers, cemeteries, community-based outpatient clinics, community living centers, Veterans Benefits Administration offices, spinal cord injury units, headquarters, and other Veteran Affairs program offices operating nationwide.
The re-employed annuitants get their annuities under Civil Service Retirement System (CSRS) or Federal Employee Retirement System (FERS), and a paycheck as a federal employee, which often balances the annuity amount. Agencies have the authority to waive this salary offset requirement for part-time re-employed annuitants. They need to get permission from the OPM to grant salary offsets for re-employed full-time annuitants.
Previously, the OPM granted dual compensation waivers in case the agency demonstrated that it is facing severe challenges while recruiting or needs an emergency hire, or needs to keep a specific person under unusual circumstances. The OPM’s waiver is applicable for more than a year, until March 31, 2021. On Tuesday, the VA said they planned to start hiring activities this week. The department has invited retired laboratory technicians, physicians, pharmacists, nurses, respiratory therapists, and other medical professionals to fill up a registration form for reemployment.
On Tuesday, Veteran Affairs Secretary Robert Wilkie said that this action plan would help the department get more work power. He thanked the OPM on behalf of all veterans for quickly taking action and inviting their retired healthcare workers to come back to VA during this hard time. Across the United States, the VA has 170 medical centers and more than 1,000 outpatient care centers. The department has been dealing with a shortage of staff, especially in the medical profession, for a couple of years.
According to the latest data, the Veterans Health Administration had 40,985 vacancies within its medical facilities at the end of the first quarter in 2020. These numbers of vacancies have always scared some members of Congress and are a big reason to worry today. During the ongoing global coronavirus pandemic, the Veterans Health Administration is the one serving the backup hospital system of the nation. The OPM said the new dual compensation waiver of the VA would help the department to hire annuitants using the appropriate authorities. The department should use USAJOBS.gov to update the post positions for Veteran Affairs re-employed annuitants.
The OPM said agencies need to adjust the work schedule of annuitants without giving any advanced notice or procedures. Annuitants getting a salary offset waiver may not contribute to retirement or take part in the Thrift Savings Plan. This rule allows you to pay annuitants under a temporary, time-limited, or term appointment on a full-time work schedule for up to 40 hours/week.
In 2014, Congress authorized agencies to grant dual compensation waivers on their own to re-employed annuitants working for 20 hours per week. This authority was expected to expire at the end of 2019, but Congress extended it until 2024.
Things Not to do While Managing Your TSP During a Pandemic. By: Ricardo Viader
/by rick viaderWe aren’t surprised by the changing activities in the Thrift Savings Plan. After all, the TSP after the coronavirus pandemic clobbered the performance of the stock market.
Kim Weaver, the director of external affairs of the TSP, while giving an interview on the TV show Government Matters this week, said the government saw a hit in the inter-fund transfers. But that spike has been reported only from the 5% of our participants, said Kim. Ninety-five percent of the TSP participants are sitting idle and doing nothing. But she advised people to stick to their old plans.
It is natural to worry about the volatility of the stock market amid the coronavirus pandemic and worry about retirement in general. Kim received an email from a client this week, and we will discuss the email and solutions suggested by Kim.
One client working under the Federal Employees Retirement System (FERS) had already submitted her retirement paperwork in December 2019. She worked for the federal government for 22 years and will retire on March 31, 2020. This decision was made long ago, so she applied for her Social Security benefits and will be receiving her benefits starting in May 2020.
But all of us know about the third leg of our FERS retirement, the TSP. The client took her TSP last September and gave it to a very reliable financial adviser to manage for her. She also has some of the remaining TSP funds which have matured since September 2019. She had been actively saving in her TSP since she started her job with the government and actively contributed to the catch-up contribution. Now she can see her retirement savings declining day by day, and she doesn’t have any time to make it up for her, like the time she had when the market plunged the last time.
According to her understanding of the documents, her paperwork has been reviewed and approved by the government. Still, she has not received the estimate of her annuity due to the agency’s software problems that the agency uses to calculate the annuity. So, she has no idea about the money she will receive monthly. She is in the middle of the checkout process that is expected to complete electronically only if things go as per plans. It’s too late for her to stop or delay her retirement at this point, so what should she do? It looks like she needs to look for a part-time job after retirement—she never planned anything like that!
Kim replied to her email and said, “If you think you are not ready to retire at this time, you still have time to hold your retirement application. Taking retirement is a voluntary action, and you haven’t left your job yet. This guidance comes from the Office of Personnel Management that says an agency must allow a federal employee to hold or withdraw his or her retirement application before the effective date of retirement, giving a valid reason and explaining the reason in writing to the employer.
Though the retirement process will go slowly during this ongoing period of world crisis, if this situation worries you or if you think that you don’t have a three- to six-month month emergency fund, you can delay your retirement until you feel financially strong enough to bring your life to normal.
In the mail, the client mentioned that she withdrew most of her money out of her TSP and put it in the safe hands of a very reliable financial adviser. Kim said that when any financial professional asks you to do so, he or she should give an apparent reason for his or her activity.
Kim said that the client’s financial adviser must have recommended some options to rebalance investments corresponding to retirement plans of this year. That doesn’t mean you would stay safe from the declining markets, but you should have some savings in your account to keep you stable while you withdraw savings from your retirement account without being impacted by the ups and downs of the changing market.
“It’s common for professional financial advisers to contact their clients in situations like this and give them some certainty. I hope your financial advisor contacted you,” said Kim. Those who plan to retire or have recently retired from government services must check these tips from the below-mentioned resources:
- Janet Novack has written an article on ways that the coronavirus will impact Boomer retirements. She has written in her report that in times like this, a “bucket strategy,” or allocating retirement savings, always works well. Taking an example, an individual nearing or already retired should save money for at least three to five years of essential expenses in cash or equivalent to cash like laddered CDs or Treasury bonds.
- Josh Sacndlen of Heritage Wealth Planning said this bucket strategy helps you to segregate your current income needs into their emergency account. In this way, you don’t need to worry about times like this when the market is getting crushed and making ends meet is difficult.
- Mark Keen has talked about many TSP issues that federal employees and retirees face in a webinar at the NARFE Federal Benefits Institute on February 27. Its saved copy is available for free to members of NARFE.
- Micah Shilanski said that TSP account holders who reserve a long-term plan for their savings and investments are not scared of the current market volatility. He further added that such employees in this condition consider this time as a buying opportunity because the stock market is low. He and Kim will be coming up with videos on March 27 and March 31, addressing issues of retirement planning during the current situation.
Last but not least, the reminder from the TSP looks relaxing during this time of market uncertainty. By the time you understand the situation and plan to react to it, the entire market situation might have changed. If you skip one or two small ups in a decade, your TSP investments may give the average market return for the entire term. It is advised to stick to your plan and don’t attend these bouncers.
Retirees Investing During the Market Downturn Sponsored by:RICARDO VIADER
/by rick viaderIt’s no longer news that the coronavirus’s uptick has affected the economy and led to an increase in unemployment. It has also had a significant effect on the stock exchange market, making it volatile since February and leaving investors in a state of uncertainty.
As the pandemic raged, investors have seen a drop in the value of the portfolio, and the challenging part is, there’s little they can do about it. Speaking on the issue, Scott Thomas, principal at Edward Jones in St. Louis, said the market saw a decline of 35% between February and March and is currently up almost 40%.
Even though the financial market has bounced back over the past few weeks, there’s still uncertainty in how things will turn out in the coming months, especially as there’s still no vaccine for the virus.
However, while it may be challenging to stay calm during this period, experts say retirees have to be comfortable with the market’s volatility.
Investors approaching retirement and those already retired are adjusting their investments in response to the market downturn.
Investing in Your 60s
The reaction from older Americans to recent market volatility has been rather balanced. Instead of panicking, many stayed on course with their portfolio investment despite the market downturn.
Pam Krueger, CEO and founder of Wealthramp, a free online service that matches consumers with vetted financial advisors in California, says the reaction of those aged 65 and above has been “pretty rational.”
According to Krueger, a survey of fee-only fiduciary financial advisors’ network shows that more than three of their clients will retire as planned despite the economic downturn.
While this may seem technical, one way to address the realignment is to examine your income versus your expenses. To develop a financial strategy that fits you requires considering those two figures.
According to a financial expert, Thoma, one thing to do in such emergencies is to have a year’s worth of income in cash to match needs and near-term necessity, so no changes are made to the portfolio.
He offered a three-pronged investment strategy for retiree investors, with risk tolerance management at the forefront, followed by considering your short-term and long-term financial needs and, lastly, having a conservative spending plan.
Stick With Your Investment Strategy
If anything, the recent downturn has highlighted the need to plan for unexpected situations and stay on top of your investment strategies.
Tom Zgainer, CEO of America’s Best 401k in Arizona, says investors should make sure that their portfolio is balanced for the next 5 to 15 years. He says that even if the market slants towards a more conservative balance, investors shouldn’t freak out and cash out because they will lose the time and value of money, regardless of their stage of life. This is the best time to take a look at your portfolio and ensure you are on the right track.
Takeaway
Planning for life after retirement requires preparation, dedication, and a bit of sacrifice sometimes. As a retiree, limiting your expenditure and keeping to a budget during a market downturn is as essential as saving in your pre-retirement age. Adopting the right financial habits will help you manage your retirement plans for many years to come.
Federal Retirement Thrift Investment Board to Track the Impact of the Pandemic on TSP and Other Accounts Sponsored by: RICARDO VIADER
/by rick viaderOn Monday, Ravi Deo, the FRTIB’s executive director, stated in front of all TSP board members that they are tracking the impact of the coronavirus pandemic on the TSP funds and other participating accounts. The board is monitoring the effect of the pandemic on their ability to provide service to their participants and ensure that the TSP funds are running smoothly. Not to mention, the board is also tracking the impact of the virus on the health and well-being of its employees and contractors. The board has come up with a team to look at these three aspects (mentioned above). “All groups meet regularly and recommend to their Chief Operating Officer Suzanne [Tosini], and me,” said Deo.
We can see that the running stock market volatility has impacted TSP funds and other participating accounts. For example, in participating accounts, participants have made more withdrawals in March compared to previous years and recent months.
On Monday, the latest data from Sophie Dmuchowski, deputy for TSP policy operations, confirmed that TSP participants made 96,000 withdrawals in February and 95,000 in January. The data of 19th March states that participants made 218,000 withdrawals. Inter-fund transfers (IFTs) have increased as well.
As we see the running trend, more participants have transferred $21 billion into the Treasury securities G fund between 24th February and 17th March.
Sean McCaffrey, the TSP’s chief investment officer, said this transfer of funds into G fund is done from the corresponding C, S, I, and L funds. That counted to the highest volume of Inter Fund Transfer activity on an absolute basis and as a percentage of assets for the three weeks since the Thrift Savings Plan put a restriction on IFTs in May 2008.
McCaffrey said that relatively small numbers of participants are responsible for these historic levels of Interfund Transfer. Only 5% of participants initiated an IFT between late February and mid-March. Or we can say, 95% of participants were not active during the measurement period.
McCaffrey said BlackRock is responsible for managing several TSP funds and has its contingency plans during the ongoing coronavirus pandemic.
All Thrift Savings Plan service centers will remain open.
All three Thrift Savings Plan contact centers (staffed with contractors) will remain open for now. The contact centers are receiving more calls than the average volume of calls. Those calls spike at a certain point in a day. Deo said they are still answering a large number of calls in less than 20 seconds, but this situation is getting worse, and they have toreduce the staff and slip the service levels to provide safety to all employees staffed with the contact centers.
The FRTIB is exploring more telework capabilities for staff at the contact center, though the employees (acknowledged by agencies) may face some difficulty operating calls from TSP participants.
The agency is looking into more telework options for its service bureau, processing units that are special, and the operations center. Deo said the company is working on the issues with teleworking. Their goal is to enable contractors to have access to teleworking shortly.
TSP contact centers will be processing all contributions extended by the participants and agencies and systematic withdrawals, participant withdrawals, and analyze changes in the contribution allocations and inter-fund transfers done online.
Some transactions need to mail in forms, which may look complicated, especially when the TSP is asked to reduce the staffing levels due to the growing number of cases of illness.
Deo said that the FRTIB has sped up the projects that were initially planned. Hopefully, these plans would help participants to upload and submit their TSP forms online.
Employees of the Federal Retirement Thrift Investment Board are teleworking.
Employees of the Federal Retirement Thrift Investment Board headquarters in Washington, D.C., are teleworking since Monday. The workforce has been asked to telework until 3rd April (this date may change, Deo acknowledged in a statement).
Last week, an agency-wide telework “test” was conducted. Deo confirmed all 750 employees and contractors could connect into the private network of the Thrift Savings Plan. He further added that the FRTIB cleaned its Washington office as a precautionary measure in March.
Since mid-March, Deo and other TSP leaders have been active during this time and sending out daily email updates to other FRTIB workers. The agency has come up with a specific team to teach all employees teleworking and how to keep track of the sick leave and create guidance and other health resources for the workforce.
Is a Recession on the Way? Is Your TSP Ready? Sponsored by: RICARDO VIADER
/by rick viaderAlthough it’s something we don’t like to think about, it’s essential to consider the financial ramifications of a potential recession. Historically, we know they happen every so often, and experts are always predicting when the next one will come…but are you ready?
Based on service length and salary, both postal and federal workers have a lifetime annuity (with survivor benefits) thanks to their defined benefit plan. What’s more, the majority of workers have and collect Social Security benefits. Indexed to inflation, they rise with inflation and plateau when deflation comes. For existing feds, their employer makes a 5% contribution every year into a TSP (Thrift Savings Plan) similar to a 401(k).
This is all well and good, but let’s not forget the many retired and active civil servants who were forced into withdrawing money from the C and S stock funds. Instead, they opted for the G fund and a sense of security. The good news? It never has a terrible day. The bad news? It never has an amazing day, either. Over time, most investment options outperform the G fund.
We understand that the G fund is attractive for anybody in the FERS program (where annuities stop inflation increases once past 2%) and for retirees. For everybody else, those in the G fund have missed out on huge gains in the stock market since the last recession.
Despite the potential gains elsewhere, some remain in the safer G fund. For one fed worker, they admitted to sticking with the G fund since the 1990s after losing $60,000. At the time, they liked to trade and keep tabs on the ups and downs. Suddenly, the room for maneuverability was removed when trades in the TSP were limited to twice a month. Despite the TSP not set up for day traders, the worker still made most gains from this technique.
According to this worker, this has been one of the main reasons for pulling funds in recent years, alongside previous withdrawal limits. Now at 72 years of age, the worker believes their G fund will protect them until they’re 90.
Of course, withdrawal methods have improved in recent times, so this shouldn’t be ignored. For some workers, they’re now able to pay off high-interest loans and debts thanks to one-time withdrawals. By doing this, they lose a big debt while only reducing payout by a handful of months. In some cases, this is negated anyway by the Civil Service Retirement System.
For the worker in question, they had extensive experience with these systems. Actually, they worked as a financial analyst and underwriter, which shows that it’s not just people panicking who choose to pull their funds and prioritize a safer G fund.
Is a Recession on the Way? Is Your TSP Ready? Sponsored by RICARDO VIADER
/by rick viaderAs per Ricardo Viader, although it’s something we don’t like to think about, it’s essential to consider the financial ramifications of a potential recession. Historically, we know they happen every so often, and experts are always predicting when the next one will come…but are you ready?
Based on service length and salary, both postal and federal workers have a lifetime annuity (with survivor benefits) thanks to their defined benefit plan. What’s more, the majority of workers have and collect Social Security benefits. Indexed to inflation, they rise with inflation and plateau when deflation comes. For existing and retired feds, their employer makes a 5% contribution every year into a TSP (Thrift Savings Plan) similar to a 401(k) described by Ricardo Viader.
This is all well and good, but let’s not forget the many retired and active civil servants who were forced into withdrawing money from the C and S stock funds. Instead, they opted for the G fund and a sense of security. The good news? It never has a terrible day. The bad news? It never has an amazing day, either. Over time, most investment options outperform the G fund.
We understand that the G fund is attractive for anybody in the FERS program (where annuities stop inflation increases once past 2%) and for retirees. For everybody else, those in the G fund have missed out on huge gains in the stock market since the last recession.
Despite the potential gains elsewhere, some remain in the safer G fund. For one fed worker, they admitted to sticking with the G fund since the 1990s after losing $60,000. At the time, they liked to trade and keep tabs on the ups and downs. Suddenly, the room for maneuverability was removed when trades in the TSP were limited to twice a month. Despite the TSP not set up for day traders, the worker still made most gains from this technique.
According to this worker, this has been one of the main reasons for pulling funds in recent years, alongside previous withdrawal limits. Now at 72 years of age, the worker believes their G fund will protect them until they’re 90.
Ricardo Viader said, of course, withdrawal methods have improved in recent times, so this shouldn’t be ignored. For some workers, they’re now able to pay off high-interest loans and debts thanks to one-time withdrawals. By doing this, they lose a big debt while only reducing payout by a handful of months. In some cases, this is negated anyway by the Civil Service Retirement System.
For the worker in question, they had extensive experience with these systems. Actually, they worked as a financial analyst and underwriter, which shows that it’s not just people panicking who choose to pull their funds and prioritize a safer G fund.
