Have you ever asked how federal retirees are coping with lesser income after retirement? Most federal employees admit that they struggle financially after leaving their workforce because then they earn less compared to their working days.
Here is a list of the five common things retirees wish they had known before they retired. You should make the best use of this list while planning your retirement.
1. Use Roth TSP for your retirement savings
The major complaint from retirees relates to their retirement savings accounts. Most retirement savings accounts make your retirement assets taxable whenever you take distributions. Not saving in a Roth IRA should not affect your retirement, but no retiree regrets saving in Roth TSP and Roth IRA.
You will benefit more during retirement when you have access to several taxable buckets. The three major tax buckets include income tax-free, taxable, and tax-deferred bucket. You have more taxable income control when you have the three major tax brackets. If you retire with these buckets, you will also save more taxes for life.
Some retirees may not prefer Roth TSP, but having a tax-free income fund after retirement is incredible.
2. Talk with a financial expert.
The fact that all kinds of financial information are available on the internet does not make all information suitable for use. Finding the most relevant information may be challenging if you don’t know about finance. However, you can easily develop your retirement plan and evaluate your retirement goals with financial advisor assistance.
Young federal workers don’t need asset management help, but the following financial advice may be helpful. The advice includes:
• How much TSP savings is enough for retirement?
• Should they use HSA or not?
• The right time to retire.
• Which TSP is best? Roth TSP or TSP?
• The best life insurance policy.
The advice can cover different aspects while answering other questions. You should talk with a financial expert soon if that is beneficial.
3. Save for retirement early
Building a greater nest egg for your retirement usually depend on your retirement savings. The earlier you start saving, the more money you will save. If you start saving when you are young, you have a higher chance of having more investment than those who start saving when close to retirement.
Federal employees retiring in a few months or years will like to maximize their TSP. Although this act is not bad, such money will have little growth due to the short interval between the saving period and retirement.
4. Leave the TSP
Some employees leave or change their Thrift Savings Plan (TSP) investment because they don’t want to take more risks. This decision is usually based on feelings, and they eventually move their funds from stocks into the G fund.
You need to understand how stocks work and their emotional influence if there is a market decline. However, most retirees with a higher TSP balance invest their funds in stocks without making any change.
5. Abandon FEGLI
FEGLI start to increase as employees get older. Most federal employees are unaware that the FEGLI increases as they get older. Different FEGLI options have varying increase rates, but option B has the most worrying increase rate if it passes beyond 60. Because of this increase, seniors will want to get rid of this insurance.
If you are a federal employee with a good health record, getting your insurance policy earlier while starting your career will be best. With this, you can save a considerable sum of money over your career period.
Some federal retirees have regrets because they are unaware of these five common things they wish they had known earlier. Take your time to evaluate this list, and identify the changes you need to make to avoid such regrets.
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Mark’s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families.
Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation.
Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.
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