Are you planning for retirement? Here are 10 common ways you can derail your federal retirement plan.
1. Simply show up
The days of “putting in my time” and retiring with a prosperous financial life are long gone. This is especially true thanks to the dubious idea of the Minimum Retirement Age (MRA). To maximize your benefits, you’ll need a solid plan.
2. Pay your bills in full before starting any savings
No! Change that. Your income and way of life need to be separated by a wedge. The best people were those who built and sustained that wedge. They never overspent their resources and never even came close to doing so. They advanced in this fashion thanks to raises and bonuses.
3. Take out a loan for tomorrow
The use of TSP loans must be a last, absolutely last resort. Better yet, refrain from doing it. However, this practice results from a poor cash flow plan. Now hear this: debt is not a friend. Although it might be a tool, it is not a fix. One of the pillars of financially successful people is effectively managing and ultimately getting rid of installment debt.
4. Silo Save
Silo Save TSP (Thrift Savings Plan) is great, but it’s not a strategy. The retirees who are the most successful have assets in standard plans like TSP and non-retirement assets. Once your TSP has been maximized, start slipping some cash into a conventional investment account. You can do it alone or with a consultant. Just go ahead and do it.
5. Poor TSP funding
The majority of people don’t optimize their contributions. A sizable TSP balance is required if you plan to retire before age 65. Period.
6. Losing your balance
This means the allocation in your TSP, not market fluctuations. You can’t just have it fixed and forget it, even if you have configured a sensible asset mix among the five main funds in your TSP. Now, you don’t have to try to steer too hard. Remember to take another look at it a year from now if you determine that 40% of your investments should be in C funds based on your age and risk tolerance. You must do more than smile if it is now 48%. It’s time to transfer the surplus to the other funds (the ones that didn’t perform as well). This may seem illogical, but it’s the best decision you can make.
7. Poor TSP technique
Investing 20% in each core fund or a small amount in all funds (including all lifecycle funds) isn’t a recipe for success. Both aren’t entirely in C (since it’s been doing fantastically!). Your asset portfolio should fairly represent your capacity to bear risk in both good and poor times. Trying to time the market or changing your investment strategy depending on “what’s occurring” is a road to tears. Keep in mind that you will require a large balance.
8. Forgetting to bring your umbrella
This doesn’t imply that you should walk with an umbrella to avoid getting wet. It’s about not having enough liability insurance. Nothing can wreck your retirement dreams more quickly than an incident followed by a negative ruling. Get a price on an excess liability umbrella immediately and check your auto and home limitations.
9. Ignoring the risk of long-term care
Insurance rates keep rising (even for Fed plans), but the problem persists. You need to clearly understand your commitments and resources, as well as have a working plan in place. Will you look for care at home? You might require a facility. Right now, ask those challenging questions!
10. Mishandling FEGLI
The Federal Employee Group Life Insurance Plan is your best workplace plan. This does not imply perfection, though. For instance, by law, an employer plan must charge all employees similar premiums for optional coverage depending on age (the unsubsidized part). Therefore, everyone pays the same amount, whether they smoke or not, and as long as they are in good health. As a result, as we become older, these plans get significantly more expensive. This is the truth. Throughout your career, trying to shop around and examine options from the private sector might save you tens of thousands of dollars. Every cent you save can support your retirement.
Contact Information:
Email: [email protected]
Phone: 8007794183
Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”
Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.
A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.
Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.
