TODD CARMACK

Todd Carmack has been one of the lead writers at psretirement.com for over a decade now. His excellence and knowledge of the field is second to none. Over the years he has been writing and debating on the public sector retirement news and his verdict is really valued in the community. He knows about almost every aspect of the game.

Visit Todd Carmack’s author page to read more.

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Social Security: Forecast For 2023 COLA

May 20, 2023 /by todd carmack

With 2023 rapidly approaching, Social Security beneficiaries will soon learn how much their monthly payments will increase next year based on the current quarter’s inflation rate. According to The Senior Citizens League, a non-partisan seniors advocacy group, the predicted Social Security cost-of-living adjustment (COLA) for 2023 is 8.7%.

Its forecast was modified on September 13, 2022, in response to the Labor Department’s Consumer Price Index for All Urban Consumers (CPI-U) report. According to the report, overall inflation jumped 8.3% in August compared to the previous year, as monthly rises in food, lodging, and medical care offset a sharp decline in energy and gas prices. The August increase followed an 8.5% increase in July.

The Social Security COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which differs somewhat from the CPI-U. The COLA is determined using the year’s average inflation rate in the third quarter. When those results are released, the data from July, August, and September will be combined and divided by three to calculate the average. The third quarter 2021 average will then be compared to the 2022 figure to establish the percentage change for 2023.

The group’s most recent COLA projection is significantly lower than earlier estimates this year, which projected a Social Security hike of up to 10.5% in 2023. Even an 8.7% growth would be the greatest in more than four decades.

“A COLA of 8.7% is highly exceptional, and it would be the highest ever earned by the vast majority of Social Security pensioners alive now,” said Mary Johnson, Senior Citizens League’s Social Security and Medicare policy expert. “It was higher only three other times since the introduction of automatic adjustments (1979-1981).”

The Senior Citizens League and other senior advocacy organizations have frequently challenged the formula used to calculate the Social Security COLA since it does not account for increases in the Medicare Part B premium, which is 14.5% more this year than in 2021. This frequently results in Social Security payouts for seniors falling short of the real inflation rate.

According to The Senior Citizens League, the Medicare Part B premium and other fees are typically disclosed in mid-November. It does not anticipate a significant increase in premiums in 2023.

Even if you exclude this year’s higher Medicare costs, the 2022 COLA of 5.9% is already considerably below the total inflation rate. According to the Senior Citizens League, the August COLA fell short by an average of 48%.

What Does 8.7% COLA Imply?

According to The Senior Citizens League, an 8.7% COLA increase next year means that the average Social Security beneficiary would receive $1,656 in monthly payments, an increase of $144.10 per month. Retirees can calculate their exact increase by multiplying their current check amounts by .087.

“COLAs are supposed to help sustain the purchasing power of Social Security income when prices rise,” according to the Senior Citizens League’s estimate. They are permanent increases that will gradually boost retirees’ total Social Security benefits throughout their retirement. Without a COLA that keeps up with inflation, Social Security benefits buy less and less over time, which can be difficult, especially as older Americans live longer lives in retirement.

Medicare Part B Premiums May Fall in 2023

While costs for nearly everything has risen in line with inflation this year, it is obvious that Medicare premiums will fall in 2023.

It is the duty of The Centers for Medicare & Medicaid Services (CMS) to announce the 2023 Medicare Part A and Part B premiums, deductibles, and coinsurance amounts, as well as the 2023 Medicare Part D income-related monthly adjustment amounts.

The Social Security Act establishes the monthly Medicare Part B premium, deductible, and coinsurance rates. The regular monthly cost for Medicare Part B users in 2023 will be $164.90, a $5.20 drop from $170.10 in 2022. In 2023, the yearly deductible for all Medicare Part B participants is $226, a $7 drop from the previous year’s $233.

Contact Information:
Email: [email protected]
Phone: 6232511574

Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.

Minimize Your Medicare Costs and Social Security Taxes with Roth IRA Conversion

May 14, 2023 /by todd carmack

Suppose you are using a tax-deferred account like 401(k); you can have more money by converting your 401(k) funds to a Roth IRA before claiming your social security. Converting your tax-deferred money to Roth IRA funds helps you reduce taxes. Still, this process may be challenging when deciding the amount to convert.

Roth conversion occurs when you convert your pre-tax deferred accounts like the traditional IRA to an after-tax account that is tax-free. Your money will be taxed like your regular income once you convert it. This means you have decided to prepay taxes that will not be due for many years. Making a Roth conversion will also benefit your relatives and beneficiaries in the future.

Roth conversion is good if the expected marginal tax rate when you withdraw money from a tax-deferred savings plan is higher than the current tax rate. Suppose you retire and have not started collecting social security benefits. In that case, you have a higher chance to do a Roth conversion due to your lower tax bracket.

Roth conversion can also benefit employees with low-income or high-income earners with a temporary lower tax bracket. Roth conversion will be more advantageous if you have enough money to cover the taxes. This money should not be from a tax-deferred account.

It is necessary to estimate the future tax rate before making a Roth conversion because this will determine your social security taxes and Medicare premium costs.

When you convert your money to Roth IRA funds, you should estimate the amount to convert through a process known as conversion optimization. You can optimize your Roth conversion using mass-market programs such as TurboTax or other software.

You can have higher retirement savings when converting your tax-deferred money and delaying your social security claims. With this approach, you can stay within the lower tax bracket through your retirement period.

Contact Information:
Email: [email protected]
Phone: 6232511574

Social Security Facts: A Quick Reference for Advisors and Clients

April 26, 2023 /by todd carmack

Counselors of Social Security should be knowledgeable about the program’s benefits, as it will provide a large percentage of retirees’ income in the future.

When clients reach the age when they may begin receiving Social Security payments, they should be ready to point out important information. They should also direct them to the right person or area for additional information.

Following is a guide sheet for advisers to use when clients are approaching the age of eligibility for Social Security benefits. However, this is merely the initial step. Social Security is a tricky subject with numerous levels and complexities that might have an impact on customers’ financial situations.

Here are ten topics that should be addressed with customers for the time being.

1. Social Security payouts are still subject to taxation in the twelve states of the US

There is a variation between the state’s income level and the tax rate. However, the states that continue to impose some form of tax on Social Security benefits are the following: Colorado, Montana, Kansas, Missouri, Vermont, New Mexico, Utah, West Virginia, Rhode Island, Minnesota, Nebraska, and Connecticut.

2. Every year that Social Security payments are delayed beyond the Full Retirement Age (FRA) results in an increase in payouts of 8%

For instance, for a customer who earns roughly $36,000 yearly at full retirement age (FRA), commencing the payouts at the age of 70 would lead to nearly $49,000 payments annually, demonstrating an increase of 36% in the annual benefits payment. Obtaining a systematic increase in the benefits by 8% is significantly challenging due to current market conditions.

3. Even if the trust fund fails, Social Security will persist

If Congress does not take any action until 2033, the Old-Age and Survivors Trust Fund will deplete. This is why many prospective retirees are concerned about the future of Social Security. Most professionals assume that Congress will surely act at some point, but even if that occurs, about 75% of the regularly scheduled payments will be paid out by the program.

4. Eligibility criteria of the divorced couples to receive benefits from the Social Security of their ex-partner

It is legal if their marriage duration is a minimum of 10 years and the divorce has been finalized for two years. It does not matter whether their ex-spouse remarries. There will also be no changes to the benefits they receive. Remarrying will prevent the receiving spouse from getting the advantages of the prior marriage. However, if the previous or current spouse of the receiver dies, they can claim for the higher payouts.

One-half of the PIA of the ex-spouse is the highest amount that may be granted to the client. The divorce of the client must be inquired about first. However, the client may be eligible to collect on their ex-spouseâ€™s earnings record, even if the divorce was finalized 30 years ago and there is no contact between them.

5. Make sure not to wait longer than the age of 70 to receive benefits

The bonuses of Social Security will be applied maximum until the age of 70. Waiting beyond this age is a huge financial blunder since the clients are essentially accepting a loss, whether they continue their work or not. Social Security will pay six months’ back pay if a retiree requests it once he reaches FRA. It is a loss of the benefit payment of one and a half years if the client is claiming to receive the amount at 72.

6. Spouses with lower incomes may file a claim on their spouse’s Social Security account

Minimum age of 62 is required for the lower-earning spouse. The marriage duration of the couple must be a minimum of one year to be eligible for Social Security payments.

However, there are a lot of uncertainties in this domain. Deemed filing, for example, requires low-income earners to claim all applicable benefits quickly. They have to obtain their complete payout initially. A spousal top-up is rewarded to the lower earners if the amount is not greater than 50% of the initial benefit of the higher earner. Consequently, the total amount reaches equal to half of the higher earner’s PIA. No additional spousal benefit is paid if the PIA of the lower-earning partner is higher than 50% of the higher-earning partner.

7. The regular retirement age is between 66 and 67 years old

The FRA of anyone born in 1943 or afterward is 66, with additional months based on the date of their birth. FRA is 67 for individuals who were born in the year 1960 or afterward.

This means anybody over the age of 62 may retire and begin receiving Social Security payments. It is necessary to inform the clients that their monthly benefit payment will be lowered up to 30% from their main insurance amount, which is the amount they would get if they filed a claim at FRA. However, this reduction would be permanent.

8. When it comes to marriage and Social Security benefits, gender does not matter

Couples are classified as either lawfully married or not by the agencies.

9. Social Security payouts are subject to taxation if they exceed a particular limit

Inflation is not considered when Social Security benefits are taxed, despite the fact that Congress established an annual cost-of-living adjustment for Social Security payments.

As in 1983, the tax is implemented on the Social Security income above $25,000 or $32,000 if the spouses file jointly. The benefits are taxed at the usual income tax rate. The collective income, calculated using an IRS spreadsheet, determines the real amount.

10. If the benefits of a deceased spouse are more than those of the widow, they will immediately receive the entire amount of the deceased spouse’s benefits

The funeral home registers the death. Assure the buyer that survivor benefits are not available until age 60. Unexpectedly, a surviving spouse only receives one of their own or deceased spouse’s benefits. Thus, family income might decline.

Contact Information:
Email: [email protected]
Phone: 6232511574

Answers To Your Questions About Social Security Benefits, COLA and Spousal Benefits Rates

April 26, 2023 /by todd carmack

Did I miss out on Social Security‘s 5.9% COLA for 2022?

Q: Full retirement age (FRA) was in November of last year, but I haven’t filed yet since I want to enhance my benefit by waiting until at least the middle of this year. However, I’ve heard and read that because I didn’t start collecting in January of this year, I missed out on the 5.9% COLA. Is this correct?

A: You don’t need to begin receiving benefits to obtain credit for the cost of living (COLA) raise implemented in January. Your Social Security retirement benefit rate is increased by any Social Security COLAs after age 62, regardless of when you apply for benefits.

In the year you turn 62, Social Security determines your base primary insurance amount (PIA). That PIA is then revised annually to incorporate COLAs, which are compounded. If a person begins taking Social Security benefits at full retirement age (FRA), their PIA equals their Social Security retirement benefit rate.

For example, suppose you reach 62 in 2022, and your base primary insurance amount (PIA) is projected to be $1000. In that example, by the time you achieve your full retirement age (FRA) of 67, your PIA would have climbed to around $1217.10 after rounding.

You would also be compensated for any COLAs after you reach full retirement age (FRA). You could improve your PIA by working and replacing one or more of the years used in your PIA calculation with a higher year of earnings. Also, you might receive delayed retirement credits (DRC) by deferring your benefits until you’re 70 years old.

Will my wife receive half of my benefit if she starts her own benefits at 62 and then switches to spousal benefits?

Q: My husband’s Social Security retirement payment will probably be less than half of mine. Will his spousal benefit be half the amount of my benefit if he claims his benefit at 62 and then changes to his spousal benefit at 67 when I claim my retirement benefit? Or will it be decreased from that level because he started at 62?

A: Your husband cannot move from receiving his retirement benefits to receiving only spousal benefits. Once a person applies for Social Security retirement benefits, the benefits are guaranteed for the rest of their lives. Suppose they become eligible for a greater spousal or survivor benefit. In that case, they can apply for an extra spousal or survivor benefit. Still, they cannot simply move to the other benefit.

So, if he files for his retirement benefit at the age of 62, he’ll receive a lower rate in exchange for commencing her benefits earlier. Once you apply for your retirement benefit, he’ll be eligible to submit for an excess spousal benefit, which will be added to his total reduced spousal benefit and her reduced retirement benefit rate.

His unreduced spousal benefit would be 50% of your PIA, which you would receive at full retirement age (FRA). If he waits until his FRA, her excess spousal benefit won’t be decreased. Still, if he gets spousal benefits before his FRA, his extra spousal benefit will be lowered. His unreduced excess spousal benefit equals 50% of your PIA, less a 100% of his PIA.

When I become eligible, will I be able to switch to my own benefit?

Q: I recently started receiving my widow’s pension at 61. My retirement benefits at 62 will be more than my widow’s pension. Will I be able to transition to my retirement once I’m eligible?

A: You certainly could, but you probably shouldn’t. The only reason switching to your benefits at 62 would make sense is if you have severe health conditions that will significantly limit your life expectancy. Suppose you begin drawing your benefits at the age of 62. In that case, you’ll get a considerably reduced monthly benefit rate for the rest of your life.

Instead, you should seriously consider receiving only your widow’s benefits until you reach the age of 70. After that, you should transition to your retirement benefit. As long as you haven’t claimed your retirement benefit, it will continue to grow each month following your full retirement age (FRA) until you reach 70.

Contact Information:
Email: [email protected]
Phone: 6232511574

Seven Aspects In Which Your Financial Literacy Changes Once You Retire

April 26, 2023 /by todd carmack

Financial literacy covers a broad range of topics, including budgeting, saving, investing, and retirement planning. However, your financial literacy broadens to cover circumstances that weren’t as important during your working life once you retire. For example, income declines typically in retirement, while costs may remain constant or even grow, depending on your lifestyle and overall health.

Here are seven crucial subjects to learn if you wish to avoid financial pitfalls in retirement.

Social Security

You’ve been paying into Social Security since your first payday. Still, as you near retirement, you should plan your Social Security withdrawal strategy. Your Social Security benefits partly depend on how much you earned throughout your working lifetime. You should also consult a tax or financial professional to determine if you should start benefits early, at full retirement age (FRA), or even later.

Medicare

Medicare is a complicated system of health insurance for seniors. To use it efficiently, you must understand how it works. Medicare has two fundamental portions, A and B, covering hospital and medical costs. Part B has a monthly premium. If you need prescription medication coverage, you can add Part D. Medicare Advantage (Medicare Part C) is a private company’s version of Original Medicare. You’ll probably need to consult an expert to understand Medicare’s financial implications with so many options. Notably, neither Original Medicare nor Medicare Advantage is likely to cover care outside the US.

Required Minimum Distributions (RMDs)

As you’ve paid Social Security taxes during your working life, you’ve also contributed to your retirement accounts. But you can’t keep your money in them forever. Traditional IRAs and 401(k) plans demand annual distributions beyond a specific age to avoid a 50% penalty tax. Congress has extended the deadline for taking RMDs to April 1 of the year after your 72nd birthday. Since Roth IRAs are funded after-tax, they don’t require you to take minimum distributions.

Taxes

Taxes are easy if you have a paid job. Generally, your company will deduct taxes from your paycheck, while all you need to do is supply your W-2 information when filing your taxes. During retirement, you may get many forms like 1099-Rs and K-1s. Some of these may have different tax implications, so you should familiarize yourself with them before retiring.

Expenses

Even if you’re used to budgeting, your retirement budget is likely to vary dramatically. For instance, many retired people have already paid off their mortgages. However, some expenses, like medical bills, are likely to climb, even with good insurance. Other costs will vary based on your lifestyle. Some retirees increase their travel and dining expenses, while others reduce them instead. Budgets differ significantly from one person to another, but they often shift after retirement. Be prepared and aware that your retirement costs might increase or decrease drastically.

End-of-Life Planning

Nobody wants to talk about the end of their lives, yet it’s a necessary step in financial preparation. First, you should create a will and/or trust to identify who will inherit your assets after you die. You may also consider consulting an estate attorney about optimizing the value of your asset transfers to heirs. Nonfinancial considerations include preparing instructions for end-of-life planning in advance if you become disabled. For example, you might want to sign an advance directive, such as a durable power of attorney for healthcare, which authorizes someone else to make medical choices on your behalf.

Asset Allocation

You’ve probably heard of asset allocation in your pre-retirement years, whether in a 401(k) plan or your personal investing account. However, as you approach retirement, you will almost certainly need to revise your asset allocation, which should have served you well during your working years. You will have fewer years to recover from a slump in your assets in retirement and less money to contribute to your account while markets are down.

As a result, many financial consultants may advise you to adjust your portfolio toward more conservative assets as you become older. As each person’s financial position is unique, you should assess your income, spending, and financial requirements, maybe with the help of a financial counselor, before making any significant changes to your portfolio.

Contact Information:
Email: [email protected]
Phone: 6232511574

The Decision Point for Social Security

April 26, 2023 /by todd carmack

Social Security dominates many people’s retirement income. So, when should you start receiving Social Security benefits?

While many individuals successfully retire and start receiving Social Security benefits at 62, the Full Retirement Age (FRA) for anybody born after January 1, 1960, is 67. If you wait until 67, you’ll receive 100% of your earned benefit based on your best 35 years of working. If you choose to work after age 67, your earnings won’t negatively affect your total Social Security income.

The scheme also provides a reduced early retirement payment that begins at 62. Instead of obtaining your entire benefit, you can receive 70% of it. Let’s take a look at some possible monthly benefits for different incomes:

Lower income earner: $1,000 at 62 and $1,430 at 67, with $430 being monthly difference.
Higher income earner: $1,750 at 62 and $2,503 at 67, with $753 being monthly difference.
Maximum income earner: $2,342 at 62 and $3,345 at 67, with $1,003 being montly difference.

The early retirement benefit would pay $1,750 monthly at 62, or $2,503 monthly at the FRA of 67 for the higher income earner. That’s an extra $753 each month for the rest of your life. That’s the moment you must decide: $753 every month is a substantial sum over the length of full retirement. To replace $750 monthly, you’d need a 401(k) balance of $225,000 at a 4% income stream.

Another thing to remember is that the system lets you “double-dip” if you wait until 67 to start receiving your Social Security payment. You may continue to work and earn as much as you like, $25,000, $50,000, or $100,000, while simultaneously receiving your full Social Security payment since you waited until the government’s FRA.

However, if you choose early retirement benefits, you have effectively informed the government that you’re retiring. If you decide to keep working and try to double dip (as you may at age 67), you should be mindful of the “early retirement double-dip penalty.”

If you receive discounted Social Security payments and continue to work, you must return $1 for every $2 earned over the 2022 maximum earning limit of $19,560. You would have to pay back $10,000 of your early (70%) Social Security payment if you made $39,560 on your W-2. Avoid this!

Even if you start getting your money back at 67, you’re still an “early retiree.” You get 70% of what you earned, not 100%.

Finally, if you obtained early Social Security payments and later realized you made a mistake, you can pay back the benefits and seek a “do-over.” Instead of receiving only 70% of your earned benefits at age 62, you can work your way up to 100%.

Knowing your numbers at 62, 67, and 70 will help you plan your retirement. Good luck!

Contact Information:
Email: [email protected]
Phone: 6232511574

What’s the Same or Different About FEHB Plans?

February 8, 2023 /by todd carmack

While searching for health insurance during the annual benefits open season, which ran from November 14 to December 12 this year, remember that even though plan terms might vary, sometimes significantly, all plans have a set of fundamental terms for hospital, surgical, physician, and emergency care.

FEHB’s preventative treatment for kids follows the American Academy of Pediatrics recommendations, while FEHB guidelines for adult preventive care are based on conventional medical practice.

Plans are required to provide unique benefits like prescription drugs (which can have separate coinsurance and deductibles), mental health care with equity of coverage for mental health and general medical care, child immunizations, and limits on an enrollee’s total annual out-of-pocket expenses, known as the catastrophic limit.

The plan typically pays 100 percent of covered medical costs for the rest of the year after an enrollee’s covered out-of-pocket expenses surpass the catastrophic maximum. Additionally, cost-containment clauses, such as providing preferred provider organizational networks in fee-for-service policies and hospital pre-admission certification, must be included in plans.

Nevertheless, deductible, coinsurance, and copayment rates differ amongst plans. Many plans provide customers with two or more alternatives, each with a different premium and level of coverage. If enrollees opt to use services in the plan’s network, such as those from a doctor or hospital provider, they could even be given a lower deductible and coinsurance amount.

Once you have a basic understanding of the phrases used in these sections of the plans you’re reviewing, you can focus on the more technical terms that could be of particular interest to you.

Conclusion

Your FEHB plan will change significantly in 2023, and it’s essential to plan ahead. The premium will most certainly increase, potentially significantly. Numerous plans will cost more; the average rise of 8.7% is simply an average.

The premium, albeit only one aspect of your total plan selection choice, is crucial because it is a fixed cost. You have to look into how yours is changing for 2023 and determine whether another plan would be a better investment for you and your family. 2023’s FEHB Open Season begins on November 14 and closes on December 12.

Contact Information:
Email: [email protected]
Phone: 6232511574

FEHB is a Medicare Supplemental Insurance for Retirees

January 26, 2023 /by todd carmack

It is generally unnecessary for federal employees who continue their FEHB coverage after retirement to buy Medicare insurance (Medigap), as FEHB provides many similar services. This article will help you understand Medicare’s terms and procedures after retirement. This information will help you analyze your decision before buying any coverage after retirement.

What is Medigap?

Medigap is supplemental insurance that helps fill the gap in your original Medicare. Medigap is a private insurance sold by private companies. Medicare pays for most of the services but not for all. Medigap policy helps pay for some healthcare benefits that Medicare doesn’t.

Choosing Medigap Over FEBH

Sometimes, a retired person cannot continue FEHB. Few retirees choose to drop FEHB and stick with Medicare as they would be paying twice for coverage they can receive only once. In these cases, retirees prefer to buy a Medigap plan. It is designed to cover medicare cost-sharing amounts and fill in other gaps in Medicare policies. There are various types of Medigap policies that offer multiple combinations of benefits.

Best Time to Buy a Medigap Plan

The Medigap open enrollment period is the only time to buy a new policy. It starts six months from your first Medicare part B enrollment. You also have to be 65 or older. You can buy a Medigap policy of your choice during this time and age. It is your open enrollment period.

Because of your poor health, they cannot turn you down or charge a higher price during your open enrollment period. Once this period ends, you may not be able to buy a policy of your choice. You will end up accepting whatever policy a Medigap company is offering you. If you already have Medicare part B but are not 65, your enrollment period will start once you turn 65. Many states require a limited Medigap open enrollment period for Medicare users under 65.

Things You Need to Know About a Medigap Plan

You need to know the following things before buying a Medigap plan.
To access Medigap, you must have Medicare plans A and B.
A Medigap policy only covers one person at a time.
You can easily buy a Medigap policy from any licensed insurance company; you pay them a monthly premium for your Medigap policy.
A Medigap policy is different from an Advantage Plan of Medicare.
It is essential to choose a Medigap plan that suits you.
Medigap policies no longer include drug coverage.

Conclusion

After retirement, it is necessary to choose healthcare insurance that covers all your medical requirements. Your state insurance assistance program can help you by answering your queries about Medicare and other healthcare insurance programs. You should be able to decide whether you need to buy more insurance, what types of insurance you should select, and where you should buy it.

Contact Information:
Email: [email protected]
Phone: 6232511574

FEHB Open Season Starts. Are you Ready

January 20, 2023 /by todd carmack

All the employees and retirees have been looking forward to the Open Season. The FEHB Open Season has begun for the year 2023. Here are some critical features useful to many employees and retirees. These features help them make a decision that suits them the best. This plan started on November 14, 2022, and will continue until December 12, 2023. This event is helpful for all employees and retirees since they can select the plan that suits them the best in terms of budget.

Therefore, it is the event for employees and retirees where they choose a retirement program that would be advantageous for them. There are many facilities for all these employees and retirees. During this Season, you are welcome to enroll in new health insurance coverage under the Federal Employees Health Benefits (FEHB) program. Getting yourself enrolled in this program will give you many new options that would be available in different ways. Under this program, they can change enrollment type and plan options or change your plan. Also, they can update from Self to Self Plus One or Self and Family or cancel coverage. It is a form of security for people are want to get enrolled in FEHB.

Moreover, if you have planned to do nothing, your current plan will likely continue. It means you may only be able to change it for a short time since you missed the period when you had the chance. Thus, make sure that you are comfortable with the already going plan, and you do not need to change or update your plan if you are satisfied with the current program of FEHB. There is a time when the plan coverage has ended in an area. You should change your plan if the plan’s coverage has finished in your residence or if the plan is terminating your participation in the FEHB program. Furthermore, there is little difference in the options between FEHB and FEDVIP. The options available in the Open Season are the same for the Federal Employees Dental and Vision Insurance Program (FEDVIP). Therefore, you can enroll yourself and change the plan or plan options. You can update it from Self to Self Plus One or Self and Family by changing the enrollment type or canceling the program’s coverage entirely. Also, your current plan coverage will only continue if you switch. So, ensure you have chosen the right plan for yourself and your family. You can continue without changing if you are satisfied with the current program.

Changes that are going to be part of FEHB plan 2023

Like the year has changed, so have the pan’s features and strategies. For 2023, new additions may become part of the FEHB plan. There are specific plans under the FEHB program that will be changing in the year 2023. Some federal employees may have to change their options for health insurance during the Open Season. It may prove to be a good option for them. In this way, they will not only update but vary due to the changes in plans that are clear. It is estimated that several plans will leave the FEHB program by the end of the year. These include Georgia, New Jersey, Colorado, Missouri, Illinois, and Virginia. Employees who are part of these plans will have to enroll in the new plan in the upcoming Open Season. If they do not register for a new plan, their agency will automatically enroll them in the cost-effective plan determined by OPM.

FEHB Plans Adding New Options and Enrollment Codes for the Year 2023

There are many plans which are adding a new option in 2023. These plans are primarily Medical Mutual of Ohio and Health Net of California. Hence, these changes include things previously outside of any plan of FEHB. Furthermore, there are many other changes to the FEHB plan that OPM has prepared for the coming year, 2023. This plan has included expansions of the service area without any new enrollment codes.

Also, there are plans with new enrollment codes and service area expansions. Moreover, some plans are changing names, service area names, and names of existing plans. Other than that, there are new plans to become part of FEHB in 2023, and the Indiana University Health Plan will now be available in many counties.

Contact Information:
Email: [email protected]
Phone: 6232511574

Reemployment and Its Influence on Federal Retirement Benefits

January 18, 2023 /by todd carmack

You might have seen a time when you got into a dreadful quarrel over your health benefits plan. You wanted medical procedure coverage in the plan, and it was not there for your needs. Fortunately, there is a method that would resolve such disagreements. If you disagree with your plan’s decision, you can and should ask them to reconsider. You can follow the procedure of writing to OPM mentioned in the plan’s brochure when you choose it.

But if the plan still does not agree to the demands, you can and should write to the Office of Personnel Management (OPM) and request to take a review of the claim you have provided. Also, the information about writing an application to OPM is mentioned in the plan’s brochure.

How does OPM respond to queries?

OPM has a way of accepting requests. Therefore, write an appealing application that they would consider. Make sure you provide the necessary details. If they require no information besides what you have given, they will give their final decision in 60 days. If they need more information to confirm you or the plan, they will inform you by writing you back 14 days from the day you registered. Also, they will give you a phone number through which you can have an update regarding your claim status. If the decision is made in your favor, you do not need to worry and take a pause.

But in case your claim has been rejected, you can file for it in Federal Court. You are free to do so. Furthermore, the best way to resolve your case early is by reading what is written on the brochure very carefully. Remember that your brochure is a contract. It is similar to any other agreement you make.

How will your contract help you win the case?

When a dispute is seen, you need to stick to your contract to prove the validity of your point. Then, you will have to gather all the facts and support your argument. The better you do this, you will likely get a positive response for the reconsideration application. If this does not work as you want it to, you must go to OPM. It would be best if you had a logic that would counter the decision OPM has made for you. You could point out the mistakes or the vague language in the contract. It might allow you to get the help you want.

Remember one thing. If there is a particular medical procedure or a service that needs to be covered in the brochure and it is not covered (which is the last thing you would expect), the chance of getting a payment for it is zero. But other than that, your argument might be why it should get covered. It may be a huge help since it will add to the contract for the coming year, and many would benefit.

Contact Information:
Email: [email protected]
Phone: 6232511574

What Advisers Need to Know When discussing Medicare

December 14, 2022 /by todd carmack

According to Steve Vernon, president of Rest-of-Life Communications, the best strategy advisers can use to encourage their clients to consider their Medicare alternatives more carefully begins with a candid discussion about how their healthcare requirements may change as they age.

Vernon said that you must emphasize the significance of these choices to the clients and encourage them to give it some thought.

Vernon observes that many retirees struggle to create a plan that best suits their needs. He suggests a three-phase structure, claiming advisors are in an excellent position to help by first interacting with and teaching clients about the benefits of obtaining their ideal Medicare plan.

The next phase should be to create a step-by-step manual to analyze the possibilities. Vernon’s final role was to “enable” people, as he put it, by helping them in putting decisions into practice and removing any obstacles or misunderstandings.

He said advisors frequently only concentrate on assisting their clients through phase two, omitting the significance of the first and third phases.

Even when someone is motivated and engaged, barriers might hinder them from acting because they are sometimes merely psychological. “The client frequently has an objection in their head, like, “Oh, that won’t work for me,” or something like, “My sister said HSAs are no good.”

Kevin Smith, a senior vice president at Wealthspire Advisors, said another difficulty many people encounter is accepting that no one solution will be effective for everyone.

Smith urged the need for rigorous and individualized study, saying, “It’s going to be very, very client-specific based on what their healthcare condition looks like, what drugs they’re already taking, and what doctors they employ.”

Given the intricacies and complexities to sort through, careful preparation starts with putting your plans in place before you turn 65. Seniors automatically enroll in Medicare Parts A and Part B on the month they hit age 65 if they are already receiving Social Security benefits.

A first enrollment period starts on the first of the month, three months before turning 65, and concludes on the last day of the month, three months after their 65th birthday, if they are not automatically registered.

A person may be penalized if they don’t sign up for Medicare when they first become eligible during the Initial Enrollment Period unless they meet the requirements for an exception. If you then have to pay for Part A, you’ll be required to pay an extra 10% of your monthly premium for twice as many complete years as you were eligible for Part A but did not receive coverage.

Your Part B premiums will go up by 10% for every 12-month period during which you are qualified yet uninsured. And the penalty is indefinite as long as you maintain Part B coverage. (Part D is subject to fines as well.)

Smith advised financial advisers to start discussing this with their customers far before their 65th birthday by gathering specific information about their clients’ needs as “it compounds itself over time.” He also recommends some introspection for advisors. For example, he advised that they consider collaborating with a Medicare expert if they lack the knowledge necessary to analyze the best results.

According to Smith, traditional Medicare consists of Part A, which is often supplemented with a Medigap plan, as well as an additional Part D plan that would provide coverage for prescription medications.

The other choice is the Medicare Advantage Plan (formerly known as Part C), which functions more like an HMO or PPO with a network of partaking health providers, often covering everything from medical care to prescription drugs and dental and vision requirements.

Here, Smith said, “It’s essential to engage with the client and to get an accurate listing of which physicians, medicines, and pharmacies they currently use.” “You may really end up with considerably higher out-of-pocket expenditures if you just change one or two of those items or if certain plans don’t cover one or two of those things.”

Additionally, he added, it’s crucial to reevaluate this option every year to ensure it still meets the person’s needs today.

Smith advised against treating this as a simple set-it-and-forget-it situation. Because things change, it’s something you should keep an eye on and maintain reviewing annually.

Vernon advises highlighting the distinctions between employer-based health insurance programs and Medicare. In his experience, many people have misconceptions regarding Medicare even though they believe they are knowledgeable about it.

These can include people who assume that Medicare functions similarly to their employer’s health insurance plan but are later shocked to realize that vision and dental care, as well as some chiropractic and acupuncture treatments, are not covered. In comparison to employer-sponsored insurance, Medicare often has higher deductibles and copayments.

Or, he added, more fundamentally, some people believe Medicare is cost-free. Others fail to consider how flexible traditional Medicare is in allowing beneficiaries to choose any doctor who accepts Medicare coverage.

Traditional Medicare and Medicare supplements can let you choose your physicians. Still, Vernon pointed out that because you have to self-refer, it only demands more understanding on your part.

Another potential danger Vernon warned about is unexpected problems arising when people switch between the two options. Working within a network makes Medicare Advantage potentially easier, he added.

Medicare Advantage permits people to switch providers during the open enrollment, giving them a great deal of freedom. They can also switch between regular Medicare and Medicare Advantage if their circumstances change. But occasionally, someone can be barred from Medicare supplement insurance.

It can be confusing because many people are unaware that the Affordable Care Act eliminated preexisting condition exclusions, with the exception of Medicare supplement plans, Vernon said. “People don’t realize that Medicare supplement plans in certain states can have preexisting condition exclusions.”

You can purchase a Medicare supplement plan without being concerned about a preexisting ailment when you first become eligible. Vernon refers to it as a “trap for the unaware.”

The choice of which Medicare option to choose is assessed and reviewed annually, after which the choice of how to pay for medical care is strategic.

Health Savings Accounts (HSAs) can help with monthly costs and can be used to pay for all qualified medical bills, including premiums and copays, but ideally, they should be set aside for longer-term medical needs.

When you’re young and contributing to an HSA, “We encourage paying for out-of-pocket expenses outside of the HSA wherever possible because that allows more money inside the HSA to grow over time,” Smith says.

After matching 401(k) contributions are reached, Vernon believes that HSAs are the best retirement savings vehicle because they offer federal income tax breaks on contributions, allow earnings to grow tax-free, and provides tax-free distributions, provided those distributions are utilized for qualified expenses.

According to Vernon, the consultant should ask the client to max out their HSA if they are under 65 years old because doing so is tax avoidance rather than tax deferral.

He also urges advisors to assist their customers in setting aside HSA balances for long-term care. Vernon says it’s bad for individuals to say, “That’s quite far away; I’ll have time to figure it out by then,” when transitioning into retirement.

When advisers ask their customers, “Did any of your parents or close family friends need long-term care?” “They can help their clients focus on the long term. What exactly caused them the pain and the disruption? Let’s discuss strategies now that we have your attention.”

HSAs can still be considered a long-term investment, even for people in their 60s. But if those resources are insufficient, Vernon added, many people may have home equity that they can use as a last resort by selling their property or taking out a reverse mortgage.

He also suggested purchasing a qualified longevity annuity contract (QLAC) as an additional resource. Advisors can encourage younger clients to plan ahead and think about simplifying, downsizing, or moving to a more convenient place.

Vernon advised me not to wait until it was too late. You can understand why one likes to deal with things as soon as possible rather than when they become huge and hairy.

Contact Information:
Email: [email protected]
Phone: 6232511574

Financial wellness is crucial for overall well-being

December 8, 2022 /by todd carmack

Many people may experience financial stress and insecurity as the holiday season draws near. When discussing one’s well-being, it’s common to neglect the importance of financial well-being, which has various effects on individuals.

Financial wellness includes managing bills and costs, paying debts, handling unforeseen financial emergencies, and planning long-term financial objectives like saving for retirement or funding your child’s education. This article outlines the rules and steps to financial wellness.

The Four Rules of Financial Well-Being

1. Set up a budget

Building financial well-being starts with creating and following a budget. A budget makes it simpler to pay your bills on time and save for higher costs like a car or home by keeping track of your spending and eliminating unnecessary expenses.

It offers a guide for managing ongoing finances, getting ready for monetary emergencies, and setting long-term goals. A detailed budget will enable you to identify areas where you overspend and give you more control over your expenses.

Overall, having a budget gives you more financial stability.

2. Debt Repayment

Long-term debt management and eliminating consumer debt can lower saving and long-term financial planning obstacles. Your credit score can rise with diligent credit management, giving you access to better borrowing terms for mortgages, vehicle loans, and other significant purchases.

Pay off your debt as soon as possible, especially credit card debt. It’s always strange to see people with money in their bank account but credit card debt who aren’t making any progress in paying it off.

In addition to charging you extremely high rates on credit card debts, the bank pays little to no interest on your deposits.

3. Investments and Savings

You should save about 10% of your monthly income and invest between 10% and 15%. Savings are for the short term, but long-term investments are better because they help you increase your wealth and achieve specific life goals.

Long-term investments and savings can offer retirement planning financial security and peace of mind. Additionally, having emergency cash on hand to pay for scheduled expenses like holidays, house repairs, and other planned expenses prevents adding to your debt.

4. Security and Coverage

You may be financially protected from unforeseen events by having insurance and emergency funds. Your insurance policy can cover losses brought on by fires, floods, or medical problems.

Similarly, an emergency fund provides coverage for unforeseen situations. Both can help keep you from spending your long-term savings or incurring debt.

Steps to Financial Well-Being

1. Establish a Budget: You must be aware of your monthly financial activities. By creating a budget, you may live within your means and establish practical financial objectives for the future.

2. Establish an emergency fund: Your emergency fund, which should be equal to three to six months of household income, should be funded partially right away. This might help pay for expenses if you lose your job or incur an unforeseen expense.

3. Pay off debt: Know the maximum debt amount you can handle. The more debt a person has, the less money can be saved or invested in increasing their wealth. Paying off debt will raise your credit score, so you can easily borrow money for major purchases like a house or car.

4. Invest your money: Your savings can grow if you set aside money from each paycheck. Think about various possibilities for short-term savings, like money market funds or conventional savings accounts.

5. Carry money: Spending money can seem a little too simple compared to using a credit card or debit card. But when you have to take out money for every purchase, you become more conscious of your spending. Only withdraw a certain amount each week to help you stay within your budget and reduce impulsive spending.

6. Raise your credit score: A low credit score will prevent you from achieving your financial goals. Pay off outstanding obligations and pay off all new expenses immediately to raise your credit score. You might want to think about setting up automated bill payments so that you don’t unintentionally forget to make payments.

7. Make retirement and other long-term goals a priority: Recognize the interplay between various retirement resources, including Social Security, retirement savings, federal retirement, thrift savings plans, and annuities, to help you generate income in retirement.

Contact Information:
Email: [email protected]
Phone: 6232511574

How to Avoid Two Major Mistakes During Medicare Enrollment

November 10, 2022 /by todd carmack

Medicare coverage doesn’t have to be out of reach for retirees. Individuals looking to enroll in Medicare can benefit significantly from this type of healthcare coverage, especially if they were uninsured before retirement. Whether you are the type of person who likes keeping tabs on the Market yearly, the process of Medicare enrollment has never been more straightforward. However, as with any enrollment process, there are a few significant missteps you should work to avoid if you are looking for a smooth transition process with the highest level of benefit.

Enrolling at the appropriate time is crucial for any healthcare coverage, and Medicare is no exception. So, how would you go about calculating your enrollment window? It’s simple: your window begins three months before your birth month (starting at age 65) and extends three full months after for a full seven-month opportunity. Once you begin receiving Social Security at 65, you will automatically enroll in Components A and Half B, also known as Unique Medicare. Should you choose to work for your employer past the age of 65 (with fewer than 20 employees), you can enroll in Medicare Half A on your own. While you have the option of enrolling into Half B, ultimately, you should speak with a representative from your employer to see whether you should delay enrollment. If you work for a company employing more than 20 employees, you must enroll within eight months of retirement to avoid protection gaps and various penalties.

Failing to take on additional plans for extra coverage is another mistake that could end up costing you in the long run. For example, you will pay higher Medicare premiums by not enrolling in a Part D prescription plan (also known as PDP). Even if you aren’t currently using any prescription drugs, failing to register in Part D will be stuck paying higher Medicare premiums regardless of whether you enroll in Part D later. Additional protection plans will also benefit your Medicare coverage long term, including Medigap plans, MA, and Half C plans. Medigap bridges the gap caused by Components A and B as an add-on, whereas MA and Half C are provided through non-public insurers to strengthen the Components A and B features.

By working to avoid these two major Medicare mistakes, you will be well on your way to enjoying affordable coverage well into your golden years. However, the journey toward Medicare enrollment can feel uncertain and confusing. As the costs associated with healthcare continue to rise for seniors across the country, it pays to take advantage of free Medicare and Medicaid counseling. If you need help navigating the world of Medicare, your local State Health Insurance Assistant Program (SHIP) can answer your questions and help you get started today.

Contact Information:
Email: [email protected]
Phone: 6232511574

Working Longer Not the Only Way to Boost Retirement Funds

October 8, 2022 /by todd carmack

Several strategies increase the amount of money available to pay for your retirement. In this post, we’ll examine two additional strategies: 1) continuing to work part-time after retirement; and 2) downsizing or relocating to a region with a cheaper cost of living.

You can work part-time after retirement if continuing in your government position is not an option because: 1) you detest it, or 2) you must resign by law. You can postpone applying for Social Security by working part-time, allowing it to increase to a higher sum. It will also keep you busy since not everyone adjusts well to having an extra 45 to 50 hours per week to fill.

If you choose to, nothing will prevent you from continuing to work full-time after retirement. Consider working at a job you enjoy, or that makes use of your existing skills.

Consider downsizing, moving to a region with a cheaper cost of living, or doing both if working after retirement is the last thing you want to do. This is ideal for people who have lived in high-cost areas for a long time and have built up home equity in the high six figures.

Additionally, you might not require as much space as you did when raising your children (in fact, reducing the number of bedrooms in your house is an excellent way of keeping your children from moving back in). Downsizing will result in savings even if you stay in the exact location. You will discover that expenses (such as taxes, utilities, and so forth) will be lower for your new, smaller home, in addition to the difference between what you paid for your previous home and what you received when you sold it.

You can increase your retirement income by moving to a region with a lower cost of living because you will spend less for a similar home and even less if you downsize.

According to statistics, most individuals do not relocate after retirement. Thus not everyone may benefit from the relocation strategy. A survey from Boston College’s Center for Retirement Research found that 17% of seniors move at the time of retirement, and a further 16% move later in retirement, usually when health issues dictate it.

Do you have to pay taxes on the capital gain you made when you sold your primary residence?

Due to the sale, you will likely owe little or no tax. You can shield $250,000 in capital gains from taxation if the house you sell has been your primary residence for two of the previous five years or $500,000 if you file jointly.

There are many ways to improve your finances in retirement, but if you’re still young and the methods we’ve covered here don’t particularly appeal to you, there is something you can start doing right away. That is, make as many TSP contributions as possible to ensure that there won’t be any income gaps when you retire.

Contact Information:
Email: [email protected]
Phone: 6232511574

OPM’s FERS Retirement Timeline: What to Expect

September 8, 2022 /by todd carmack

Are you considering retiring from your federal job? Congratulations! You’ve dedicated yourself to public service for a long time, and now it’s time to reap the advantages of that fantastic benefits package you’ve heard so much about throughout your career.

Unfortunately, to complete the retirement process and earn your pension, you must jump through some hoops. It’s a time-consuming and costly process (if you’re not careful). Since the epidemic, the average processing time for retirees has been around 60-90 days.

Timeline for Retirement Paperwork

The application for FERS retirement is merely the first step. First, your department’s personnel office will ask you to sign a few documents and begin the process of certifying your service, which can take a long time if any paperwork is missing. Your life insurance (FEGLI) and health insurance (FEHB) enrollments are also transferred to the OPM.

Then it’s off to the payroll office. They authorize your final paycheck and the payout of unused yearly leave once they receive your papers from personnel. They also send your salary, retirement contributions, and service history to the Office of Personnel Management (OPM).

When OPM receives all of your papers from these other offices, they provide you with a civil service claim number that you may use to keep track of everything. Then you wait for them to assess your eligibility, compute your annuity, and Ã¢â‚¬â€ at long last! Ã¢â‚¬â€ sending you your check.

So, how long will this all take? Here’s where we are now in terms of the board timeline:

â€¢ Day 1: The date of your retirement. Congratulations! Get rid of your alarm clock and start doing those things you’ve always wanted.

â€¢ TSP monies are available for withdrawal on day 30. The payroll office will notify TSP of your automatic retirement, and you should be able to withdraw your funds without penalty within 30 days of retirement.

â€¢ Day 30-45: A lump amount payment for annual leave is sent. This payout takes at least two full pay periods to complete following your retirement date, and it can take up to six weeks to receive. The payroll department is responsible for this process.

â€¢ Day 45-70: The Office of Personnel Management (OPM) sends out the first retirement letters. OPM will send you the Civilian Service Annuity Number (CSA#) six to ten weeks after your retirement date, which you will need any time you contact them. Later, they’ll send you a letter with an online password to set up future communication.

â€¢ Day 45-70: The Office of Personnel Management (OPM) provides an interim retirement check. You’ll get your first annuity check when you get your first letters, but it’ll only be for 60-80% of your estimated annuity. This is only to keep you afloat while they process your paperwork, which should arrive between six to ten weeks after your retirement date.

â€¢ Day 90-120: The Office of Personnel Management (OPM) delivers your complete retirement check. When OPM has finished processing your papers, they will issue you a check for the entire amount of your annuity. This pays you the balance due from the interim check, minus insurance and taxes. This entire check may take three to six months to appear.

Contact Information:
Email: [email protected]
Phone: 6232511574

Understanding Deferred and Postponed Annuities

August 26, 2022 /by todd carmack

Let’s look at two different types of retirement that are open to folks who desire to take a break before finishing their job.

Deferred Annuities

You’ll become eligible for a deferred annuity if you leave the government before meeting the age and service criteria for an instant annuity, have at least five years of creditable civilian service, and do not take a refund of your retirement payments when you depart.

You can get a deferred annuity at various ages under FERS rules: Age 62 with 5 years of creditable service; age 60 with 20 years of creditable service, and at your minimum retirement age with 30 years of creditable service. MRAs span from age 55 to 57, depending on when you were born. Only at the age of 62 will you be eligible for a deferred annuity under CSRS rules.

With just 10 years of service as a FERS employee, you could apply for a deferred annuity at your MRA. Unless you have up to 20 years of service and an annuity starting at age 60, your annuity will be cut by 5% every year (5/12 of 1% every month) if you are under the age of 62 under the MRA+10 provision.

The standard FERS and CSRS calculations are used to calculate deferred annuities. At age 62, you’d start getting annual cost-of-living adjustments (COLAs) under both retirement schemes.

You would not be eligible for the special retirement bonus, which approximates the Social Security income received while covered by FERS, as a FERS deferred retiree.

Finally, whether you are under FERS or CSRS when you leave, you will lose coverage under FEGLI and Federal Employees’ Health Benefits and programs, and you will not be entitled to re-enroll when your annuity begins.

Postponed Annuities

Only FERS workers have access to this. If you retire in accordance with the MRA+10 provisions, you can defer your annuity payment to a later date to avoid or minimize the 5% per year age penalty described above.

The standard FERS calculation will be used to compute your annuity, which will be based on your years of service and high-3 as at the time you retired. You’ll get the amount when your annuity starts, minus any remaining age penalty.

If you were enrolled in the FEGLI and/or FEHB programs for 5 years prior to retirement, you could re-enroll in either or both of them when your annuity starts.

Contact Information:
Email: [email protected]
Phone: 6232511574

COLAs For Federal Retirees: What You Must Know About CSRS, FERS, And Social Security

August 8, 2022 /by todd carmack

Many federal retirees are uncertain about the size of the cost-of-living adjustment (COLA) that CSRS, FERS, and survivor annuitants would receive in 2023 after much debate about the high cost of living due to soaring inflation in 2022.

This article explains COLA, how it is calculated, and how it impacts CSRS and FERS annuities, survivor annuities, and other federal employee death benefits.

Method of Calculating COLAs and CSRS

The cost-of-living adjustment (COLA) given to CSRS/CSRS Offset annuitants is the same as the COLA given to Social Security disability and retirement benefit recipients. The COLA amount is calculated each year based on the percentage change in the base quarter price index from the previous year to the base quarter price index of the current year, rounded down to the nearest one-tenth of one percent. The COLA for CSRS/CSRS Offset annuitants and Social Security benefit recipients in 2022 was 5.9%, and it went into effect on December 1, 2021. Based on the data in the table, we arrived at the 5.9% estimate:

When calculating a CSRS/CSRS Offset annuitant’s new gross monthly annuity, which takes into account the COLA, the previous year’s gross monthly annuity is multiplied by the COLA factor (one plus COLA percentage).

The CSRS monthly annuity is rounded to the nearest dollar. Gross monthly annuity must increase by at least $1.00 once a COLA is implemented.

Illustration I

The preceding fact is depicted in this illustration. Jim, an annuitant of the Civil Service Retirement System (CSRS), retired from the federal government in 2014. After subtracting a $500 survivor annuity fee and a $100 unpaid deposit, Jim’s monthly CSRS net annuity for 2021 was $4,500. Because of this, Jim’s CSRS gross monthly annuity for 2021 was $5,100, which equals $4,500 plus $500 plus $100. Jim received the full 5.9 % COLA beginning on December 1, 2021. This increase was shown in his annuity check for the first time on January 1, 2022, and was calculated as follows:

It is essential to remember that the yearly COLA is applied before any deductions are made for federal and state income taxes, as well as deductions for health, life, dental, vision, and long-term care insurance premiums. Furthermore, when the COLA factor is used, the CSRS gross annuity is always rounded to the nearest lower dollar.

Illustration II

Judy is a CSRS retiree and received her pension on January 2, 2021. Judy’s CSRS annuity began on January 3, 2021, and she received her first payment on February 1, 2021. From January 3, 2021, through December 31, 2021, Judy got 11 CSRS monthly annuity payments. A CSRS annuity check was sent to her on February 1, March 1, April 1, May 1, June 1, July 1, August 1, September 1, October 1, November 1, and December 1. As a result, Judy was eligible for 11/12 of the 5.9% COLA for 2022, or 11/12 of 5.9% (the 2022 COLA) equals 5.4 % (Judy’s 2022 COLA amount).

Illustration III

Jim is a CSRS annuitant who plans to retire from the federal government on May 31, 2021. He received his first CSRS annuity check on July 1, 2021, and his annuity started on June 1, 2021. Jim received six CSRS annuity payments between June 1, 2021, and December 31, 2021. (July 1, August 1, September 1, October 1, November 1, and December 1). As a result, Jim was entitled to 6/12 of the 5.9 % COLA scheduled to take effect in 2022.

Jim’s 2022 COLA will be 2.9 % or 6/12 of 5.9 %. Amount of COLA for CSRS Survivor Annuitants (Including Spouses, Former Spouses, Insurable Interest)

After the annuitant’s death, a survivor annuity under CSRS is started for their surviving spouse, former spouse, or insurable interest (i.e., someone who is a blood relative of the annuitant but is not a first cousin, like a kid, sibling, or parent). As of January 1, following the annuitant’s death, CSRS survivor annuitants are eligible to receive all or a portion of the annual COLA. The amount of the first-year cost-of-living adjustment for the survivor annuity will depend on when the annuitant passed away after leaving federal service. The following rules will determine a survivor annuitant’s first-year COLA.

Illustration IV

On November 30, 2019, Jessica, a federal employee, announced her retirement. A CSRS annuity cheque for the first day of 2020 arrived in the mail for her. Her CSRS annuity was increased by 2.0 % on December 1, 2020, and she continued to receive them throughout 2020. In March 2021, Jessica abruptly died. On April 1, 2021, her husband, Howard, earned his first CSRS survivor annuity. On December 1, 2021, Howard’s survivor annuity payment earned a 5.9% COLA. On January 1, 2022, Howard’s CSRS survivor annuity check first showed the 5.9% COLA.

Contact Information:
Email: [email protected]
Phone: 6232511574

Simple Ways to Manage Health Care Costs in Retirement if You Plan Now

July 26, 2022 /by todd carmack

Most people estimate their retirement spending based on food, gas, utilities, and housing bills. They often overlook healthcare costs.

Not considering retirement healthcare costs might be an expensive oversight since medical expenses are a significant retirement expense. They’ve outpaced inflation for years. One severe illness can destroy your savings.

Talk about price shock! Fidelity Investments estimates that a 65-year-old couple will need $300,000 (after taxes) to cover healthcare costs in retirement. Some 80% of RBC Wealth Management study respondents are “worried about funding healthcare.” According to an April IBD/TIPP poll, about half of Americans worry about retirement healthcare expenses.

Know How Healthcare Expenses Change

Still, you shouldn’t worry much about these scary prospects. For example, you don’t have to pay 20 or 30 years of premiums, deductibles, and copays in one lump sum.

Aging increases healthcare costs. RBC Wealth Management estimates that a healthy 65-74-year-old couple will spend $12,000 annually on healthcare. The cost jumps to $21,000 for couples 75-84 and $38,000 for couples 85 and older.

Your early retirement expenses will be more consistent and manageable. That allows the money you save for medical expenses in 401(k)s, IRAs, health savings accounts (HSAs), and other assets to grow before the large bills arrive.

How can you avoid healthcare costs affecting your lifestyle in retirement? Here are some tips:

Budget For Healthcare Costs

You must consider medical expenses in your financial plan. Estimate how much to save and how to pay for it.

Consider your health and family history when estimating expenses. Expect to spend more if you smoke or have a chronic condition like diabetes. Consider your location too. Traditional Medicare costs the same worldwide, but Part D and “Medigap” supplemental plans might vary.

Retirement plans are also vital. You must bridge the insurance gap if you retire before Medicare eligibility at 65. COBRA offers 18 months of coverage after you quit a job. Consider also a state health insurance exchange policy or your spouse’s plan.

Healthcare Expenses: Cover Insurance Gaps

Filling coverage gaps is your greatest protection because it reduces price uncertainty. Knowing your costs makes budgeting easier.

Consider Medicare

Many believe Medicare covers all medical expenditures. Not really. It doesn’t cover eye tests, dental, hearing, or nursing home care. Traditional Medicare requires a monthly premium and copayments for eligible services. There’s no annual limit on what you might pay for hospital and out-of-pocket medical expenses.

Medicare can be expensive. Medicare Part A (hospital insurance) has a $1,556 deductible for each benefit period and no premiums. Part B (doctor visits, lab tests, etc.) premiums start at $170.10 per month and can reach $578.30 based on income. After a $233 deductible, you’ll pay 20% of Medicare-covered services.

Part D (prescription medications) and Medigap (private coverage that helps defray costs for Medicare Part A and B services by paying for out-of-pocket expenses that could cost thousands of dollars a year) require an extra premium and deductible.

Check Your Healthcare Cost Options

Check if a privately managed Medicare Advantage plan (Part C), which bundles Parts A, B, and D, is cheaper. Although you’ll still have to pay the government for your Part B premium and possibly a private plan premium, your copays will likely be lower than the 20% copay for doctor visits under standard Medicare. Medicare Advantage caps out-of-pocket costs annually.

You may face a penalty if you don’t enroll in Medicare when you’re first eligible. So, remember to register on time.

Consider LTC

These insurance expenses don’t include long-term care. That’s the need for home, assisted living, or nursing home care. According to Genworth’s “Cost of Care Survey,” an in-home health aide costs $5,148 a month, assisted living $4,500, and a nursing home private room costs $9,034.

How may long-term care expenditures be reduced? If you can afford it, choose a stand-alone long-term care policy or a hybrid life insurance policy with a cash value. Another option is buying a guaranteed income annuity.

Paying out of pocket can be expensive and make it difficult to pass on assets to heirs.

Carefully Invest For Medical Costs

Roth IRAs, 401(k)s, and HSAs (health savings accounts) are good places to start saving early. The objective is to have adequate assets when needed. Create a healthcare savings bucket precisely as you do for emergencies, short-term needs, and retirement.

You should establish a fixed income stream for health bills that aren’t affected by market volatility or taxed every time you pay.

Use IRAs

Roth IRA and 401(k) withdrawals are tax-free. Another tax-friendly option is using a high-deductible HSA as an investing account since they are triple-tax-free. Money enters, grows, and leaves tax-free. Invest the annual HSA maximum contribution ($7,300 for families in 2022) in growth investments for future usage. In the meantime, pay out-of-pocket costs with other accounts.

You receive tax breaks at every level. It’s great to finance copays and other fees without using your HSA.

If you don’t have a Roth IRA, now’s a good time for conversion. Due to the market drop, the taxes you’ll pay to convert are likely lower than in early January.

A diversified portfolio allows you to use easy-to-access cash when needed and grow money in stocks for future healthcare costs.

Contact Information:
Email: [email protected]
Phone: 6232511574

More Information About New TSP Features

July 20, 2022 /by todd carmack

Over the next year, federal employees and retirees should watch the Thrift Savings Plan.

The agency in charge of the plan is in the early phases of a significant modernization operation that will replace the back-end systems that operate and protect the TSP.

However, the effort will also include new features and benefits for TSP participants. The project is known as “Converge” among the personnel and contractors involved in its technical components.

However, participants will identify it as the initiative that will ultimately deliver them a new TSP mobile app, a mutual fund window, improved security functions, and a few other elements that most consumers would recognize from online banking.

Many of these modifications have been in the works for years, particularly the technological things on the back end. However, the Federal Retirement Thrift Investment Board has said that participant feedback influences the development of some new features.

According to a recent poll of its participants, 57 percent of those under 40 want a mobile app to access the TSP. Approximately 24% of individuals over the age of 40 agreed.

Participants will continue to have access to their accounts and can contact the TSP via their online accounts, email, and the customer support phone line. They will also get access to a new TSP mobile app, a chat option, and an artificial intelligence-powered virtual assistant beginning next summer.

That will be available to the participants 24 hours a day, seven days a week, so whenever they go into the website, they’ll have access to the virtual assistant, said Tanner Nohe, the TSP’s project program manager, at the monthly meeting of the board last week. It was essentially a tutorial of queries that participants may have.

The chat option will be administered by live TSP customer care representatives, who will be able to transfer participants to other personnel who can help with more specific queries or issues over the phone.

The TSP will also introduce new features to help participants manage their money and connect with the plan. These include additional online forms and electronic signatures.

Participants will also be able to digitally scan checks into the TSP, which is a function that most banks provide.

Nohe also stated that the TSP would provide a “concierge” service to help members roll the money into the plan. This prevalent issue frequently raises concerns from government employees and retirees.

According to the TSP, there will also be an impending mutual fund window, which will open sometime next summer. Through the plan’s core five, participants will have thousands of dollars they wouldn’t usually have access to.

The plan is still creating the mutual fund window. However, according to Nohe, it will provide a search engine so members can sift through the funds and look at their options based on essential characteristics. Additionally, the plan will establish a specialized contact center for participants with queries regarding the mutual fund window.

There’ll be no trade limits after participants join the window, but certain funds may have their own, according to Nohe.

Both participants and members of Congress are interested in the mutual fund window. More information from the TSP is expected in the coming months.

Participants will witness additional security precautions in addition to the mobile app and the mutual fund window next year.

Participants might have more prompts for a one-time password, for instance, while conducting higher-risk online transactions. The objective is to enhance the online experience with more fraud detection and prevention tools. Participants will also be able to access their TSP accounts using biometric data, such as facial recognition or fingerprints.

According to the FRTIB, participants will begin to see these changes as early as next summer. Meanwhile, the TSP will start engaging with its participants next year to prepare them for the modifications.

And indeed, participants will be required to prepare actively.

Most significantly, participants must create new log-in credentials to access their online accounts. They must create a new username, password, and multi-factor authentication.

Those with several TSP accounts, for example, a military and a civilian retirement account, will need to create a single new credential to have access to everything, according to Nohe.

Before the launch, there will be a temporary blackout period during which participants might be unable to access their accounts or perform certain transactions for a limited time.

The TSP is currently ironing out the details. In the meantime, keep an eye out for further information from the plan beginning in January or February next year.

Contact Information:
Email: [email protected]
Phone: 6232511574

Life insurance for current employees | What’s to know?

July 14, 2022 /by todd carmack

Life insurance can be described as a contract between two parties; one is the insurance company/ insurance policy provider/insurer, and the other is the insurance policyholder. Employing this contract, the insurance company provides a sum of the money to your beneficiaries in exchange for a premium, on the policyholder’s death or after a set period. Other events, such as illness or critical situations, can trigger the payment.

Current employees may also get life insurance through their employers if they offer coverage, depending on their salary and age. The most common type of life insurance offered is group life insurance, which is provided to employees only and does not apply to spouses and children of the employees.

To calculate the total amount of the life insurance you would get from the electronic file or the binder where you put your personal records. The new employees are already enrolled, and getting the coverage is optional. The basic group life insurance value is your salary rate plus locality pay. This costs 16 cents if your salary is $1000 biweekly, i.e., either twice a week or every two weeks. There are different options apart from basic federal employees group life insurance to increase your coverage, including options A, B, and C. Furthermore, accidental death and living benefits coverage is also available. In option A, you can avail extra $10,000 along with basic FEGLI. Option B involves purchasing multiples of your basic pay (1-5 multiples), rounded to $1.000. Option C provides the coverage for the spouse if you purchase 1-5 multiples of $5,000 for life and the same multiples for $2,500, coverage for a child under age 22 is provided for life. With option A, accidental death and dismemberment coverage with no additional cost can also be provided. The employees who become ill and have nine months or less of life expectancy can be provided with living benefits in exchange for basic insurance.

Current employees can cancel the coverage or change the previous beneficiary with the new one at any time. If you die at 35 or older, the beneficiary will get the double benefit, but the demise of the employee at 45 years or older can decrease the extra amount by 10% each year. In addition, there will be no additional coverage. So you should purchase up to 80% of your life insurance at your youngest age so that you can get covered at all times in older age with more illness expenses.

But for the additional life insurance policies and coverage, you must research about the trusted agents, the type of insurance you are being provided, such as split-dollar, or accidental death, etc., amounts on which it is based like which percentage or multiple of your salary, increments and the flat amount, points before risking your family and money.

Contact Information:
Email: [email protected]
Phone: 6232511574

Category: Todd Carmack

TODD CARMACK

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TSP & Retirement

Insurance