thrift savings plan

The Thrift Savings Plan is one of the most important parts of a Federal Employee’s retirement plan. The Thrift Savings Plan is similar to a 401(k) plan offered to Private Market employees and has very similar rules and regulations. An Advantage of the Thrift Savings Plan is the automatic contributions that FERS eligible employees receive along with the relatively inexpensive average internal expense ratio that is charged to Federal Employees on TSP Fund investments.

Considering retiring soon? How skyrocketing inflation will affect your retirement

October 15, 2023 /by marvin dutton

Inflation. There are no indications that it will slow down any time soon, and there is no quick fix. The timing is, therefore, terrible if you have just retired or are about to retire. Nobody has been concerned about inflation for almost 40 years. A whole generation has never even known how inflation might affect their finances. However, the current inflation rates are the highest since 1982.

Families are worst hurt by price hikes in electricity, autos, housing, and food. But it goes further than that.

Even the costs of travel (flights, lodging, and rental cars), TVs, appliances, and furniture have risen to heights that were unthinkable just a year ago. Everyone will be affected by these exorbitant rates. However, pensioners will be more affected than working families.

The “silent killer” of retirement: inflation

When you have a fixed income, spending more on groceries and gasoline means making trade-offs someplace else. And before you realize it, you can be compelled to choose between purchasing necessities like food or medicine.

Many experts are concerned that the current inflation rate may be worse than we think, while some people think a recession could be coming soon.

The 71st Secretary of the Treasury of the United States and economist Larry Summers have expressed their concern that we are already approaching a point when cutting inflation without triggering a recession will be challenging.

The effects on your nest egg are still felt even at modest inflation rates of 2% or 3%.

Marketwatch claims that a 3% inflation rate would gradually reduce your ability to buy things. For instance, if your retirement budget is $5,000 per month, your purchasing power would decrease to $3,720 a month in 10 years. Your purchasing power would be only $2,760 per month after 20 years.

Therefore, even with a mere 3% inflation rate, your purchasing power might be lost in just 20 years.

Think about what recent inflation rates might quickly do to your retirement savings. But set aside the numbers and consider inflation differently. What did your home cost twenty or thirty years ago? It was significantly less expensive than what someone would pay today, right?

What do you believe the value of your home will be in 20 or 30 years? I think it’s safe to say that it would be worth a lot more. The same is true for every purchase you make, including that brand-new La-Z-Boy recliner, groceries, and gas.

Most retirees encounter difficulties in this area. They set a savings target based on current prices rather than projected prices for the next 20 or 30 years. And this can increase the likelihood that you’ll run out of money in retirement.

But not all the news is negative. You can use a few easy tactics to prevent losing purchasing power to inflation. These techniques may help reduce risk while providing a solid hedge against inflation. The sooner you take concrete action, the better off you’ll be in either case. Nobody can afford to ignore inflation when rates are this high.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

Can You Retire Just Yet? Three Things to Consider

October 15, 2023 /by jason anderson

You may not be ready to retire unless you’ve prepared for these three realities. The thought of retiring, which may have seemed far away 30 years ago, is now closer. You may not know when to call it a career. Some mistakenly believe they’re ready for retirement. They take the plunge but discover retirement isn’t as carefree as they thought since their retirement plan, or a haphazard imitation of one, had major holes and didn’t meet their requirements and goals.

If you’re close to retiring, consider all the financial ramifications. Here are three things to consider before retiring:

Lifestyle matters

Know what you want to do in retirement, where you want to go, and how you want to feel â€“ confident, secure, free, and in charge. Example: Consider an early retirement vacation to Italy. You’re there for two weeks, but you’re constantly thinking about money â€“ how your investments are doing or how much you’re spending. You’re nervous and not enjoying your ideal vacation. Maybe you can put your worries about money and assets on hold while vacationing. It shows poor planning. If you’re worried about the cost of going out to dinner, purchasing a present, or buying a vehicle, you’re not enjoying retirement as intended.

Predictable cash flow and revenue are crucial

These factors determine a happy retirement. Pensions and Social Security covered most, if not all, of the preceding generation’s living demands. Today, savings fund retirement. Fewer individuals get pensions, the cost of living is rising, Social Security barely meets necessities, much alone desires, and seniors want to do more, which costs more. Create a consistent income flow to fulfill your living necessities. Without dependable financial flow, your retirement lifestyle will depend on turbulent markets.

Without consistent financial flow, your lifestyle will fluctuate with the stock, bond, commodities, or foreign markets. When circumstances are good, you may spend more; when they are poor, you must cut down. This might imply postponing or canceling a trip. Most retirees don’t desire lifestyle fluctuations. Financial advisors can explain the investment and insurance solutions with downside market protection, upside possibility, and predictable income flow.

Taxes can’t be ignored

Many internet retirement calculators are deceptive. These calculators typically ask for an account balance, causing consumers to believe it indicates the precise amount of money they may use. The net tax value is your true balance. The calculators use the before-tax balance to simulate your retirement. After taxes, you have money for your lifestyle. A 401(k) balance of $500,000 may be $350,000 after taxes. A $500,000 Roth account balance is accessible to spend since it’s not taxed when withdrawn if it’s been at least five years since you first contributed and you’re 59 1/2 or older. Where you put your money and how you invest it, depending on the account’s tax treatment, might affect your retirement.

Contact Information:
Email: [email protected]
Phone: 3234811328

Bio:
For over 13 years, Jason Anderson has served as a Personal Financial Advisor, Estate and Retirement Planner, helping to educate individuals from all walks of life and income levels on wise money investment and planning for a comfortable lifestyle and retirement.

Over time, Jason Anderson has become the ‘Go-To’ leading authority on personal financial advising, financial planning, and analysis, as well as retirement planning and financial planning for SMALL BUSINESS OWNERS. He also provides HIGHLY Popular financial education seminars for groups. These financial seminars empower people to more effectively budget, plan, manage their money, and achieve their personal financial goals. As a result of the excellent results, praise, and feedback that their financial seminars have received, the City of Los Angeles, The AFL-CIO union groups, as well as several other organizations, have decided to partner with Jason to more effectively accomplish their mission. He was also honored to be showcased in the November 2014 issue of Forbes Magazine “Americas Financial Leaders” and has been dubbed by the media as ‘The Financial Educator.’

Jason is passionate about the work he does because it brings him joy to help his financial planning and advising clients reach their financial goals. He finds excitement in assisting families in saving and paying for their children’s college education without stress, thanks to the financial plans he designs for them. He also takes pride in witnessing clients reach retirement and enjoy it precisely the way they desire.

Personally, Jason finds joy in being a husband and father of two wonderful children. In his spare time, he enjoys traveling, sports, hiking, and reading.

He works with Employees, Business Professionals, Business Owners, and ‘High Net Worth’ People.

► Like to discuss your personal financial situation?
☏ Call Jason at (323) 481-1328 for a FREE Consultation
✉ Email him at [email protected]

Disclosure:
All annuity and life insurance products are designed to supplement securities as part of an overall plan. The recommendation of annuities and life insurance is not designed to eliminate the need for securities in any way.

Retirement COLA? Here’s What To Do

October 9, 2023 /by marvin dutton

Millions of current and retired federal employees pay attention to the magnitude of the federal pay boost and the retiree inflation catchup every year. As a result, they are even more vital to the communities where they reside, vote, shop, and raise children.

Therefore, in his State of the Union address, President Joe Biden made a particular point of announcing that federal employees who are now working remotely will return to their offices “soon,” as in “soon.”

Both current employees and those who have already retired may be concerned about the importance of increases and COLAs, but they may be unaware of the specific amounts.

Especially when the sums are so vastly different, the system dictates that the methods used to arrive at such figures are primarily of scholarly interest to the two parties. You’ll receive what you’re looking for. Period!

Cost of Living Adjustment

The Bureau of Labor Statistics provides a cost of living adjustment for retirees. The inflation rate does not play a role in any base raise for active duty federal employees.

As a result, federal employees in high-paying cities like New York, Houston, and Los Angeles earn more than their counterparts in lower-paying states like Kentucky and Idaho. COLAs are frequently granted to retirees even while government salary increases are capped, as in 2011, 2012, and 2013.

Pay for government employees increased by 2.7 percent in 2013. Old-system civil service retirees received a 5.9 percent cost of living increase, while new-system federal employee retirees received a 4.9 percent adjustment.

In January 2023, then Vice President Biden proposed a 4.6 percent increase for federal employees. The September cost of living statistics must be reviewed to establish the retiree COLA. However, considering how quickly things have evolved, the COLA for 2023 might be a monster.

Raises vs. Cost-of-Living Adjustments

For most people, the debate over a pay increase versus a cost-of-living adjustment is purely academic. There is disappointment among those who receive the lowest percentage raise. And so it goes. However, “regular times” is the most important word. These, on the other hand, are not.

We’re in the thick of a European land war. Refugees, mainly women and children, have fled to six nations, including the United States, Germany, and Canada. Nearly 11 miles from Poland, the Ukraine conflict has shifted its focus to the east.

One assault on a member of NATO (the United States included) is an attack on all NATO members. Many people in the United States think that the recent election was rigged. Many people are eager to see how the elimination of controversial mask mandates will affect the economy.

Ex-President Barack Obama tested positive for COVID earlier this week. Who knows what effect the first large-scale gatherings in recent years â€” from Mardi Gras in Louisiana to the Florida beaches â€” will have when people return to their hometowns and colleges?

Increase in the Cost of Fuel

The fuel price looks to be rapidly rising from $4 a gallon to $5 a gallon. Unless, of course, you reside in California, where time moves at a breakneck pace. It’s a little bit! What’s next? It’s hard to say when this “return to the office” trend will run out of gas.

Supply chain issues might become worse before they get better at present. The “economy,” as most people refer to it, is affected by various factors, including new trade restrictions. Your biweekly income and monthly annuity are also real.

Will the massive wave of retirements be triggered if the gap between a COLA and a salary increase widens? It has been foretold for over a decade, yet nothing has happened â€” for the time being. More than a hundred thousand active-duty federal employees are now eligible to retire.

They need to determine whether they can afford to retire and rely solely on diet COLAs in an inflationary environment. To achieve this, they’ll need to see how their Thrift Savings Plan account is doing and whether they need to make any changes to its allocation in light of the current economic climate.

Contact Information:
Email: [email protected]
Phone: 2129517376

Converting Money from a TSP Into an Annuity

October 8, 2023 /by todd carmack

Even though it’s one of several ways to withdraw money from a Thrift Savings Plan (TSP), the least common choice is to purchase an annuity. The payments can be made in one large sum, every month, or any mix of the two. A little more than 10% of withdrawals from the TSP are used to purchase annuities. You need to be familiar with its characteristics before committing it to paper. The distributions for annuities under the TSP are more adaptable than those under the FERS and CSRS.

TSP provides customers with the following options for annuities:

1. A permanent annuity that pays just you during your whole life is called single life.

2. A combined life with spouse annuity provides you two with payments for as long as either of you is still living. When one spouse passes away, the other will get an income for the rest of their lives.

3. Joint life with a non-spouse, also known as a joint annuity, is an annuity paid to both you and your non-spouse while you are both still alive. This individual must have an interest in you that can be insured. When one of them passes away, the other will get an income for the rest of their lives. Anyone considered to have an insurable interest in you includes your exes, biological or adoptive relatives who are closer to you than your first cousins, and people with whom you have had a common-law marriage in nations that allow such unions. Blood relations are biological and adopted relatives more closely related than first cousins.

Survivors of a joint-life annuity can choose either a full or partial survivor payment. This indicates that either you or your joint annuitant will continue to receive full monthly payments (100%), or those payments will be decreased to half their previous amount (50%). Basic annuities can have additional annuity features added to them. These features include accruing awards, cash returns, and a guarantee that lasts for ten years. If payments are made more consistently, the monthly payment will rise by 2% annually. Your beneficiary will be entitled to a cash return if both you and your partner annuitant pass away before receiving payments equivalent to the account amount used to purchase the annuity. This occurs if you pass away before receiving annuity payments comparable to the sum in your account. If you choose a 10-year definite payout annuity but pass away before the end of the first decade, the remaining payments will be given to the beneficiary of your choice.

Specific types of basic annuities are not allowed to have certain features. After purchasing an annuity, the money is transferred to a private company, and the 401(k) does not deliver the benefit. Rather, the private organization carries it out. You can calculate how a certain amount would convert into income under each of the available options by using the calculator that can be found on the website www.tsp.gov.

If you are married and have a balance of more than $3,500, spouses’ rights will apply to the withdrawal option you choose. Your spouse has the right to a joint and survivor annuity with level payments and no cash return until they waive it if you are a FERS member and you are married. This entitlement is only waived if the member dies. If your spouse does not renounce this right, they will be entitled to it. If you are married and a member of the CSRS and remove money from the TSP, the TSP is required to tell your spouse.

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

Bio:
Todd Carmack grew up in Dubuque, Iowa, where he learned the concepts of hard work and the value of a dollar. Todd spent years in Boy Scouts and achieved the honor of Eagle Scout. Todd graduated from Iowa State University, moved to Chicago, spent a few years managing restaurants, and 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, Todd moved to Arizona and started working with Federal Employees, offing education and options on their benefits. Becoming a Financial Advisor / Fiduciary can help people properly plan for the future. Todd also enjoys cooking and traveling in his 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 has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.

Special Cases Exempt from the 10% Early Withdrawal Penalty.

September 26, 2023 /by joe carreno

Your IRA contributions are made to supplement your income throughout your retirement. While you’d like to keep your IRAs whole until retirement, unavoidable costs can compel you to take part of your assets out sooner. You may still pay the 10% penalty if you take withdrawals from your traditional or Roth IRA too early. Still, early withdrawal exceptions allow you to avoid the penalty.

This article discusses the exceptions to the 10% early withdrawal penalty. A list of the exceptions is provided below.

1. Unreimbursed Medical Costs.

You may be qualified to make a penalty-free withdrawal from your IRA to pay for these costs if you don’t have health insurance or have out-of-pocket medical expenses that aren’t covered by insurance.

The medical expenses must be paid in the same fiscal year as the withdrawal to qualify for it. Furthermore, your medical expenses that were not reimbursed must equal more than 10% of your 2021 adjusted gross income (AGI).

The maximum amount you can withdraw without incurring penalties, for instance, is $5,000, which is the difference between $15,000 and 10% of your AGI ($10,000) or between your AGI and your unreimbursed medical expenses ($15,000).

2. Permanent Disability

The IRS allows an individual to take money out of an IRA without incurring the 10% penalty if you become permanently disabled and cannot work. The distribution can be utilized in any way. However, remember that your plan administrator may request documentation of your condition before authorizing a penalty-free withdrawal.

3. Health Insurance Premiums When You’re Unemployed

You can withdraw from your IRA without incurring penalties to cover your health insurance costs if you are unemployed. The distribution will be exempt from penalties if you meet these requirements:

1. You were fired.

2. You received unemployment benefits over 12 weeks.

3. You took the distributions when you got unemployment benefits or the year after.

4. You received the distributions within 60 days of returning to work.

4. You Receive IRA as an Inheritance

The 10% early withdrawal penalty is waived if you are an IRA beneficiary and take distributions. The exception doesn’t apply if you’re the sole beneficiary, the account holder’s spouse, and you want to transfer your account share to your spouse (to roll over the funds into your own non-inherited IRA). The IRA will be handled as if it were yours from the start in this situation, and the 10% early withdrawal penalty will still be in effect.

When completing IRS Form 1099-R (the form used to report the distribution), your IRA provider should indicate in box seven that the money is a death distribution by entering the code “4.”

5. Costs of Higher Education Expenses

A college education is a massive expense in today’s world. Your IRA could be a helpful source of funding if you’re paying for your education. With IRA funds, you can avoid the 10% penalty when paying for qualified higher education costs for you, your spouse, or your child.

Tuition, fees, books, supplies, and other costs related to a higher education program are considered qualified higher education expenses. Accommodations and board for students enrolled at least half-time are also covered.

Be sure to speak with a reputable tax expert to determine if your expenses count toward the deduction. Also, ensure the school meets the criteria for participating in the program.

6. To Purchase, Build or Rebuild a Home

You can take withdrawals that are penalty-free from your IRA of up to $10,000 (lifetime maximum) to buy, develop, or reconstruct a home. Not owning a property in the preceding two years qualifies you as a “first-time” homebuyer.

If you’re married, your spouse can contribute an additional $10,000 from their IRA. You can also utilize the funds to support a parent, grandparent, or child as long as they fit the qualifications of a first-time homebuyer.

7. Periodic Payments That are Significantly Equal

The IRS permits you to withdraw money from your IRA without incurring penalties if you need to make regular withdrawals from it for a few years.

Essentially, you must take a certain amount out every year for five years or until you reach age 59Â½, whichever comes first. This amount is computed using one of three IRS-preapproved procedures.

Contact Information:
Email: [email protected]
Phone: 8139269909

We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.

Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. 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. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. 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.

Three Steps to Help You Retire in A Slowing Economy

September 26, 2023 /by todd carmack

People who think about retiring soon and early retirees will have to navigate rough waters during these periods. With the stock market in decline, the economy weakening, and the Federal Reserve signaling future interest rate rises to battle inflation, retirees must make prudent decisions to ensure a successful retirement.

Which of the Three Financial Stages Do You Occupy?

That’s where a well-thought-out financial strategy may assist in ensuring a pleasant retirement, even in a tough market. Here are three steps that might help retirees with this significant life transition.

1. Look through your spending history.

Many people do not keep a home budget during their earning years. They also don’t want to live on a fixed budget in retirement. Therefore they should take a different approach: to examine macro trends in spending habits.

We total up all yearly spending over the previous three years. Anyone may gather all credit card and bank statements and calculate average spending.

This exercise aims to see if this spending pattern is sustainable for the following 30 years of retirement. An individual or couple must survive on portfolio savings and guaranteed income sources such as Social Security payments.

Furthermore, most new retirees quickly realize they must fill their days with at least one big activity, which generally comes at a cost. For most retirees, there were two large sums spent: one on house upgrades and another on vacation in a recreational vehicle. Certain hobbies, such as repairing a classic automobile, may quickly cost tens of thousands of dollars and strain the budget.

If spending needs to be cut, there are some simple solutions. These can include reducing monthly automated subscription payments, raising house and vehicle deductibles in return for reduced insurance rates, traveling during off-seasons, and doing some home maintenance jobs rather than hiring specialists.

Some are significant changes. These include deciding to reduce their house or selling extra automobiles to save even more money.

2. Create a plan to survive a stock market drop

It’s natural to be concerned amid uncertain times. On the other hand, those with a detailed financial plan should be able to ride it out without making costly mistakes.

Selling investments at a loss is frequently motivated by fear. Most financial planners know someone who sold their assets in March 2020 when the market fell. However, markets swiftly reversed course and achieved new highs for over two years. A person with millions of dollars in investments who sells their stocks and loses 20% of their value frequently locks in their losses, missing out on the potential benefits of market gains later in the recovery.

Strategies for Investing in a Bear Market

As a prospective recession approaches, one method that might help in planning for retirement income is to construct a bond ladder.

A bond ladder allows someone to buy various individual bonds with different maturity dates, the date an investor receives their bond’s interest payment. A person could, for example, invest $100,000 and purchase ten different bonds, each with a face value of $10,000. Because each bond has a different maturity date, an investor will receive a consistent stream of guaranteed income if held to maturity. High-quality bonds that are held to maturity can offer a regular source of income for a household for the following several years.

3. Acknowledge that you’ll require enough money to last 20-30 years.

Many individuals in their 60s who plan to retire with $1.5 million to $5 million in financial assets may feel at ease. However, people frequently don’t know whether their money will endure at least two decades, if not longer. A retiree can determine their sustainable withdrawal rate, including longevity risks, by developing a strategy based on several statistical models.

Between 1980 and 2010, America’s population of adults aged 90 and up almost tripled to 1.9 million, and this figure is likely to rise dramatically over the following four decades. That implies that new retirees will require enough money to live well for an extended period and may be unable to leave money to their heirs.

Each plan is tailored to the needs of an individual or couple. However, all of them should contribute to determining a sustainable withdrawal rate from a person’s or couple’s portfolio that’ll last a lifetime and meet their financial objectives. Some couples, for example, might want to spend every penny, while others may wish to leave something for their heirs. Each plan is designed to withstand the stress of uncertain events, like a recession or a major geopolitical event.

Remember that a retirement income strategy is essential to reducing emotional fears because the spend-down life phase differs greatly from the accumulation mindset.

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

First Responder Retirement Fix Passes the House and More

September 21, 2023 /by marvin dutton

A measure to change the retirement system for first responders who sustain injuries while on duty and must seek out new employment within the federal government was unanimously approved by the House on Tuesday.

First responder federal employees, such as law enforcement and firefighters, participate in an accelerated retirement benefits program, offering to pay more toward their defined benefit pensions with each paycheck in exchange for receiving a full annuity after 20 years of service and turning 50. They must also retire at the age of 57.

Suppose a federal first responder sustains an injury on the job that prevents them from working any longer. In that case, they are not reimbursed for the higher payments they made along the way and thus lose access to that accelerated retirement program.

The First Responder Fair RETIRE Act was proposed by Rep. Jim Langevin, D-R.I., Brian Fitzpatrick, R.-Pa., and Gerry Connolly, D-Va. This act would enable federal first responders who are compelled to seek employment elsewhere in the federal government due to a workplace injury to continue contributing to the accelerated retirement system and retire after 20 years of service and the age of 50.

The measure also allows those workers to get a refund for their prior expedited payments if they leave their federal employment before becoming eligible for an annuity.

Connolly stated on the House floor that we want to motivate our first responders to continue their commitment to this nation. He also stated that we shouldn’t hold them accountable for the harm they caused while protecting communities. And as a reward for their efforts, we ought to keep them enrolled in the retirement plan they chose when they first began their employment.

The bill was moved in July to be considered by the Senate. On August 3, 2022, the Senate Committee advanced the First Responder Fair RETIRE Act. In a letter to the committee on August 2, NARFE stated its support for the legislation.

If passed, the First Responder Fair RETIRE Act will allow federal first responders to continue their service outside their present system while still being a part of the public safety retirement system they contribute to.

TSP Transition: Lawmaker Requests GAO Probe

The difficulties associated with transitioning the federal government’s 401(k)-style retirement savings program to a new recordkeeper will be the focus of an independent study, Eleanor Holmes Norton, D-D.C., stated last week.

Thrift Savings Plan (TSP) participants have reported difficulties accessing their accounts via the new login system, losing historical account data, and correcting beneficiary information, among other issues. This started when TSP switched to a new recordkeeper and introduced several new services like a mobile app, the capacity to access mutual funds, and sign documents electronically in June.

According to TSP officials, even though they had anticipated that the transition is expected to be “bumpy” and some participants may need to call the customer service “Thrift Line” to resolve problems with beneficiaries or request old documents related to their account, their call center vendor drastically underestimated the number of calls they would receive and was unable to meet demand, resulting in hours-long wait times.

Norton has pushed for details about what went wrong with the changeover since mid-June. She met with the TSP Executive Director Ravindra Deo on June 30, and he pledged to provide her with weekly updates on initiatives to help participants who were having difficulty.

Norton revealed last week that she would request that the Government Accountability Office (GAO) look into the changeover. The Federal Retirement Thrift Investment Board (FRTIB), which oversees the TSP, will have an inspector general, adding that she would draft legislation to that effect.

Norton said she was “profoundly concerned” about the widespread issues with the new TSP online system. She heard from constituents daily regarding the new system’s numerous problems. She said although they need to learn how this fiasco came about and establish new accountability measures at the FRTIB, she will continue to demand prompt repairs to the issues. For this reason, she would ask for a GAO study and drafting legislation to establish an inspector general at the FRTIB.

Contact Information:
Email: [email protected]
Phone: 2129517376

Protecting Social Security

September 15, 2023 /by michael crowe

H.L. Mencken famously noted that the objective of politics is to keep the people alarmed (and hence clamorous to be brought to safety) by threatening them with an infinite series of fictitious hobgoblins.

He was correct, and few things in politics reflect his insight more than Social Security. Currently, the debate around Social Security is dominated by exaggerated scaremongering. Either the Republicans will gut the program, or the Democrats will kill it.

It’s politics as usual, which is unfortunate since politicians from both parties are more than willing to watch the program fail in the future if they can get a few more votes now. The program on which the rest of us rely is essentially a method of shifting voters on the margins from one party to the other on election day.

Most people are troubled by this debate framework since the passage of time is Social Security’s Achilles Heel. Last year, the program created $700 billion in promises that no one expects it to meet since Congress didn’t do anything to change the program’s financial trajectory. In 2022, the cost of doing nothing will be greater-and considerably more the following year. Congressional inactivity is responsible for almost two-thirds of the current crisis.

Politicians are incentivized to keep the status quo as long as people blame the opposition.

The latest round of drama began a few weeks ago when Senator Ron Johnson (R-WI) allegedly stated that Social Security should be evaluated as a discretionary expenditure every year so that Congress may solve faults with the program. According to the Senator, the move would bring accountability to the equation. He explicitly attributes the program’s poor prospects to a lack of oversight and negligence.

It’s uncertain how this modification can help the program recover from a $20 trillion shortfall. Congress now has oversight but chooses not to use it. Year after year, decade after decade, Congress has allowed the program to meander on a well-documented path to disaster.

He wants Congress to continue doing its job. It’s a job in Congress that no one wants. The Senator’s idea sounds a bit like a parent saying that if I make my kids wear coats and ties to dinner, they will stop throwing food at each other.

Pensions may be pretty long-lasting. Our country has recently finished paying off the last of the Civil War pensions. In Social Security’s case, the average beneficiary retires after 20 years. As a result, the goal of Social Security reform should be to create a system that can function for lengthy periods without Congressional action.

Senator Johnson would take reform in the other direction. If he had his way, the program would only be in effect for a year. If you’re 45, the last thing you want to see is Congress slapping legislative duct tape and baling wire around the program every year.

Voters should stop worrying about what the GOP would do to Social Security and instead focus on the fact that they have done nothing by far. During Trump’s presidency, the program amassed around $7 trillion in unfunded obligations. The extent of the deficit has virtually doubled.

The GOP hasn’t come up with a single Social Security proposal in almost a decade. The last major proposal was in 2016, only weeks before the final recess of the 114th Congress, when a retiring Congressman presented the “Saving Boomers’ Social Security at the Expense of Everyone Else” Act.

The name is a joke, but it’s hard not to notice that the idea would have retained benefits for people born in 1960 or earlier while decreasing benefits for the rest by more than 25% on average.

While the Republican Study Committee has included this plan in its yearly budget, no one knows if it would make the program sustainable or how much benefits would be decreased since no one has checked with the Social Security Administration to see if it’s effective.

The GOP’s strategy for Social Security is simple: assure voters that the party would safeguard benefits and hope that no one questions how they intend to uphold that promise. So far, that method has proven incredibly effective because no one will ask a disrespectful question.

The Democrats’ plan for Social Security is to pretend that the GOP is a hobgoblin and to take up righteous anger with everyone who doubts the folly of the proposition.

Contact Information:
Email: [email protected]
Phone: 6023128944

Bio:
Mike was born in Chicago, Illinois on August 13, 1946. He was brought up in the
suburb of Skokie on Chicago’s northwest side and graduated from Niles Township (
East ) high school In 1964. Two years later he joined the US Air Force in November of
1966. After 2 years of Intense training he volunteered for Viet Nam and was sent to
Bien Hoa Airbase, which was 25 miles from Saigon, the nation’s capital. He
volunteered for a number of especially dangerous missions on his days off, such as
flying as a door gunner on a US Army helicopter and as a technical assistant on a
psychological operation on an Air Force O-1E observation aircraft. Capping off his
impressive accomplishments was winning the coveted Base Airman of the Month for
March 1969, a feat which was featured in the Pacific Stars And Stripes newspaper
read by every service man stationed in the Pacific theater of operations. After his
Viet Nam tour of duty he was stationed at Luke Air Force Base in Glendale, Arizona
where he met and married his wife, Lequita.
He graduated from Arizona State University in May, 1973, and after a 30-plus year
career as a financial advisor he joined a number of service organizations including
Easter Seals and Valley Forward, sponsor of EarthFest. He was also involved with the
National Federation of Independent Business and became the longest-serving
chairman of the Leadership Committee ever. He spoke before the ( AZ ) House Ways
and Means & Senate Finance committees. He then joined Disabled American
Veterans ( DAV ) in September of 2015. He rose quickly through the ranks and
became Chapter 8 Commander in May of 2019 where he served with Distinction for 3
years before being “ termed out”. The next year, as Vice Commander, he won the
title of National Champion Recruiter!

Why you can’t rely solely on dividends to fund your retirement

September 9, 2023 /by michael crowe

It’s common knowledge that it is crucial to hold various retirement investments that enable income generation. After all, Social Security may be forced to make benefit adjustments in the future, which could mean a lower monthly payout for you.

Even if Social Security benefits aren’t reduced, those benefits will only replace roughly 40% of your pre-retirement income if you make an average salary. You will receive a lower replacement income if you earn more than average. Furthermore, while retirees can frequently get by with less than 100% of their prior income, they typically require more than 40% to live comfortably.

Because of this, you might be tempted to invest money in dividend stocks before retiring and hold them throughout your senior years. This way, you can then utilize those continuous contributions to pay for your retirement expenses.

Holding dividend-paying equities is indeed a fantastic method to increase your Social Security income. But you should venture outside of that.

Limit your reliance on dividend stocks

Keeping dividend stocks in your portfolio throughout retirement is unquestionably a good strategy. However, they should be one of several items you invest in at that time.

One factor is the general volatility of stocks. Additionally, as a senior, it’s wise to preserve some of your money in securities whose value is less likely to fluctuate dramatically, like bonds. That is but one argument against investing excessively in dividend stocks.

Another factor is that dividend payments are not assured to be made to you. When you invest in bonds, the organizations that issue your bonds are legally required to pay you interest at predetermined periods. This does not imply that individuals entitled to the interest payments can or will default on them. But when you make that investment, they are at least mentioned in terms of your bonds.

On the other hand, businesses that distribute dividends to stockholders are not compelled to do so. Furthermore, they are in no way required to maintain a specific dividend. As a result, you can fill your portfolio with dividend-producing stocks only to discover that, over time, some or all of those companies reduce or stop paying dividends altogether.

As such, dividend stocks ought to be one of the numerous income sources you set up for yourself during retirement. Your goal should be to diversify your holdings so you can earn income from various investments, including bonds, index funds, and possibly real estate, if you have the appetite for it.

Diversification is always a good idea.

When you’re younger, it’s crucial to keep a broad financial portfolio; as you age, it’s essential to continue. This entails not becoming unduly dependent on dividend stocks but instead using them as one of several resources to augment your Social Security payments and guarantee you have enough money for a pleasant retirement.

You probably need a million-dollar portfolio to live off your dividends right now, but that number will only increase.

If you’re currently saving for retirement, remember that a current retiree would need about $1 million to live off the dividends. You most likely will need 22% more if you are ten years away from retirement, and 49% more if you will retire 20 years from now. And most likely twice as much if you’re 35 years away.

These increases are to cover inflation. Of course, this quick calculation ignores factors like a downsized home, an inheritance, a decline in expenditures in your later years, etc. It also ignores the possibility that your dividends won’t keep up with inflation.

Stocks usually gain value in addition to the dividends they pay over time. You should consider increasing your capital during retirement if you intend to only rely on your dividend income.

Conclusion

Living off dividends may be possible depending on your expenses, required amount of income, and assets. It’s crucial to avoid letting dividends determine your entire asset allocation plan. This can put your income stream in danger and potentially your entire portfolio. (Re)think about the significance of living off dividends in your financial strategy as you contemplate how to retire comfortably or gain financial flexibility. It might not be as crucial as you believe.

Contact Information:
Email: [email protected]
Phone: 6023128944

An Open Season Checklist for Federal Employees

September 8, 2023 /by todd carmack

Federal employees can review and make changes to their health insurance plans annually during the Open Season. It can be daunting, with many plans and premium increases to consider. This year’s Open Season will take place from Friday, November 14 to December 12, 2022. The changes will take effect on January 1, 2023. And it’s the best time for federal employees to switch health plans and alter their existing plans. So, ensure your health plan is the most excellent fit for your family’s needs. Let’s look at the open Season checklist to guide you through the process.

High Premium Increases

Employee premium share will rise by 8.7% next year. It’s the highest increase in a decade, making this year preferable for many employees to contemplate switching FEHB plans. Premiums will go down in 56 programs, remain the same in nine goals, rise below the usual in 119 plans, and rise slightly above the standard in 78 projects throughout the upcoming year.

For instance, Self-only registrants will have to pay an additional $6,510 due to a decrease in premiums of 36.5% in Nevada, a rise in premiums of 49.5% in New Mexico, and a 34.2% rise in Illinois plans. It’s crucial to check how the premium for your FEHB plan has changed. So, here is how you can select the best health plan for 2023.

Selecting New Health Plans

Shopping for a new health plan can be daunting, but selecting the option that offers the best value is worth the effort. Total cost should be the primary factor in your selection process. It includes your premiums and the likely out-of-pocket expenses based on your family’s age, size, and expected healthcare usage.

For federal employees, Checkbook’s Guide to Health Plans ranks plan options based on total cost estimates. The differences in 2023 can be striking. For instance, a family of four living in Washington, D.C., could save more than $4,000 in estimated costs by switching from BCBS Standard to Kaiser Standard. Alternatively, this same family could keep their PPO coverage and save $3,500 by switching from BCBS Standard to GEHA Elevate.

Hence, the goal is to ensure that you select the plan that offers the best value for you and your family. Let’s see how you can do it effectively because savings can be huge.

Flexible Spending Accounts

Flexible Spending Accounts (FSAs) are a great way to save money on out-of-pocket healthcare expenses. With FSAs, you can set aside pre-tax dollars to cover eligible healthcare costs. Unfortunately, only 20% of federal employees are taking advantage of this program.

Considering setting up an FSA, it’s essential to know critical details. You can contribute anywhere from $100 to $3,050 in 2023. This money is taken out of your paycheck in equal installments, avoiding payroll taxes, which means you get an adequate 30% savings on qualified healthcare expenses!

Plan Benefit Changes

As health insurance plans prepare for significant changes across the board in 2023, it’s essential to be aware of the changes to your current FEHB plan and any plan you may be considering. These changes can significantly affect the benefits you’re entitled to and how much you’ll pay for them. It’s crucial to look at the official FEHB plan brochure and closely at Section II â€“ How Your Plan Will Change in 2023.

You’ll find detailed information on any additions or changes in your plan benefits and an overview of the cost increases you could be facing in the year ahead. Please ensure you’re prepared for a very different FEHB experience in 2023 before it’s too late.

The same goes for your provider directory, formulary updates, and dental benefits for 2023. Make sure you check your doctor’s coverage and dental needs to ensure that you are making the best decisions for yourself and your family. Updating these lists and aligning them with your needs and goals is essential in managing your health insurance.

Final words

Less than 2.5% of federal employees switched health insurance during Open Season, despite the highest premium rise in the past decade. However, professionals should check to see if their current FEHB plan is still the best option. They should look for changes in 2023 to the significant benefits, provider networks, and prescription drug coverage.

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

Why Aren’t Annuities Popular Among Retirees?

September 8, 2023 /by joe carreno

Could a defined-contribution retirement savings plan introduced in 1918 provide answers to one of the most perplexing 401(k) questions?

Yes, is the quick answer. Teachers Insurance and Annuity Association (TIAA) is a retirement savings plan that attracts members from colleges, universities, and other non-profit organizations.

The complex personal finance subject concerns how employees with 401(k) plans can convert their accumulated savings into a retirement income.

The fundamental problem is that if retirees spend too much quickly, they may have to reduce their living standards later in life substantially. Moreover, retirees who are overly cautious with their money risk regret missed opportunities and die rich. The uncertainty about life expectancy adds to the difficulty.

Investing in an annuity contract is a great way to ensure consistent income in retirement. But most retirees don’t seem interested in annuities.

Why Annuities Are not popular

Annuities aren’t particularly popular among retirees for several reasons.

Firstly, annuities are complicated contracts. When household circumstances change, annuities are rigid.

Second, many participants are deferring withdrawals from their TIAA retirement accounts until their Required Minimum Distribution (RMD) date. The RMD is the percentage of assets that individuals must withdraw beginning at a certain age. The percentage of TIAA participants who waited until their RMD climbed from 10% in 2000 to 52% in 2018. During the study period, the RMD was 70 years old. However, in late 2019, the secure act upped it to 72 years, and if the Secure Act 2.0 passes, the RMD age will eventually grow to 75 years.

Research shows that the IRS‘s RMD table is a more effective technique than other well-known guidelines, such as the 4% rule of thumb. RMD is a great way to figure out how much you can spend.”

Thirdly, retirees value their freedom. Yes, annuities protect against the risk of living longer than planned, but retirees still face additional risks, such as health concerns and unforeseen bills.

Retirees may need their money if a spouse unexpectedly needs medical assistance or an adult child returns home with grandkids after divorce. For individuals with adequate funds to wait, the RMD option is a viable option.

Aside from purchasing a private annuity, other options for reducing longevity risk are other options. For one reason, inflation-adjusted spending falls throughout retirement (with a healthcare-driven increase later in life).

It’s possible that the rise in the average retirement age among TIAA participants coincided with the rise in popularity of the RMD option. The average retirement age increased by 1.3 years for women and 2 years for men among participants.

From a public policy standpoint, politicians are correct in encouraging corporations to sell annuities to their future retirees. Unless the product is significantly enhanced, few retirees will take advantage of the offer. According to the TIAA study, retirees would like to preserve control of their savings just in case.

Contact Information:
Email: [email protected]
Phone: 8139269909

We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.

Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Fed retirees are doing better because of the FERS Annuity’s indexing for inflation

September 3, 2023 /by michael crowe

It shouldn’t be a surprise that employees nearing retirement are more scared of inflation, per a recent survey by Schwab Workplace Financial Services®. Monthly costs (mentioned by 35% of participants) and stock market volatility (cited by 33% of participants) came in second and third, respectively, behind inflation, which was noted by 45% of survey respondents.

Should government workers be as concerned about inflation as poll participants are? The answer is “No.”

It’s not that inflation is unimportant; it’s just that federal pensioners experience it to a lesser extent than the typical retiree in the private sector.

Why? Because both the FERS annuity and the Social Security payout you will receive are indexed to inflation. The majority of workers in the private sector don’t get annuities like FERS, and for those who do, the payouts are usually not inflation-indexed.

The FERS cost-of-living adjustment (COLA) is based on changes in the Consumer Price Index (CPI) between the third quarter of one year and the next. The CPI may increase by 9% by the end of September 2021, when Social Security announces the COLA amount in the middle of October.

Since the FERS COLA trails the CPI by 1% in years with inflation of 3% or more, FERS retirees are likely to get a COLA of 8% or more. The full Social Security COLA is per the CPI.

FERS retirees will have access to social security, the FERS pension, and the Thrift Savings Plan as their three primary income sources. These three sources have been adjusted for inflation in two of them.

Nearly half of all retirees in the private sector will participate in a defined contribution plan like the TSP and receive Social Security benefits. Thus, inflation will have a negative effect on a more significant portion of their retirement income.

In the Schwab poll, one-third of participants were unsure of the lifespan of their funds. In a previous American Advisors Group® poll, 29% of respondents predicted that their financial situation would likely worsen before time ran out (although they would still have Social Security).

You won’t run out of funds from your FERS pension, Social Security, or any of those sources, leaving your TSP.

What steps could you take to ensure that your TSP balance won’t be depleted and that your withdrawals will be able to cover inflation? Here are a few ideas.

• Increase your TSP contributions while you’re still working to have more money when you retire. Remember that the amount you can contribute increases by the year you reach 50.

• Start with a specific proportion of your account each year (many financial advisors advise starting at 4%), then raise it each year by the rate of inflation to ensure that your withdrawals stay up with inflation. According to studies, using this method, sometimes known as the “4% rule,” increases your chances of not running out of money during retirement.

• You might want to think about choosing installment payments calculated using the IRS life expectancy chart if you plan to utilize your TSP as a source of ongoing income. Your payment will be revised by the TSP each year. The amount you withdraw would be adjusted upward in a “good” year and downward in a “poor” year since this re-calculation is based on your year-end balance (for example, the 12/31/2021 balance was used to compute the 2022 installment payments, etc.).

Keep in mind that this, too, shall pass. Yes, inflation has been high, but monetary policy has finally controlled it. Note that inflation has averaged 3% a year over the past century. High inflation may be there for a while, but it won’t last forever. Not to worry.

Contact Information:
Email: [email protected]
Phone: 6023128944

TSP Strategies- Are You in Control of the Market or are You Being Played?

August 15, 2023 /by jason anderson

What do a Las Vegas gambling trip and stock (or bond) market timing have in common? Frequently, the same thing. Most people at a casino or home watching Wall Street let their emotions rule. People that are nervous zig when they should zag. They were lost before they even got out of the starting gate.

So, how should you handle what matters most in these exciting timesâ€”your retirement nest egg, the TSP? It’s an uncertain time with issues ranging from the Ukraine war to record inflation and soaring gas costs, which are expected to deteriorate even further. Perhaps even worse! In difficult times, most federal TSP accounts are vulnerable. Remember that it might provide anything from one-third to one-half of your retirement funds. And the greater the sum and the later you begin spending it, the better.

The 100,000-plus TSP millionaires (as of December 20, 2021) shared a few characteristics.

Except for a few politicians, political appointees, and federal judges, the vast majority were not already millionaires.

Most invested in the TSP stock funds regularly for an average of under 30 years, particularly during difficult times (2008-2009) when the markets were down. As it turned out, market timers sold low, while steady-as-she-goes investors acquired equities at low prices.

When things are going well, many investors know what to do. The fight-or-flight response occurs when things go wrong, which they frequently do in times like these. So we’ve asked a few financial planners what they’re advising their active and retired clients these days.

Here’s what they said.

The TSP has a double-down dose.

Except for G, the value of all TSP funds fluctuates. That includes both down and up. And, except for G, the stock and bond funds both fell in the last quarter.

How bad did it get? The first-quarter returns for the five traditional funds are explained here.

First of all, all L Funds, including L Income, fell in the first quarter.

According to the Wall Street Journal, on April 1, 2022, bond markets fell at a rate not witnessed in over 40 years, while equities had their worst quarter in two years. Among the reasons are:

The Federal Reserve raising interest rates,
inflation skyrocketing to its highest level in forty years,
Russia’s invasion of Ukraine, and
a downturn in the Chinese economy.

During the first week of April, both the bond and stock markets continued to fall.

So, that’s unsettling. However, what does it mean for TSP participants?

It indicates that participants must focus on longer-term returns for funds needed in five years or later. However, past performance is no guarantee of future results, long-term returns for US stock funds strongly outpaced bonds and overseas equities.

Employees not nearing retirement should be aware of two investment risks: volatility and market drops. However, the drops provide an opportunity to “buy low” with bi-weekly contributions.

Retirees supplementing their Annuity and Social Security benefits with TSP withdrawals should aim to withdraw from their G Fund holdings until the other funds recover. Unfortunately, participants in the TSP cannot withdraw from only one of the funds they’re currently invested in. Withdrawals are made from each of the funds in proportion to the participant’s current allocation. If you have 50% in G and 50% in C, half of your withdrawal will come from G and half from C.

Contact Information:
Email: [email protected]
Phone: 3234811328

Personally, Jason finds joy in being a husband and father of two wonderful children. In his spare time, he enjoys traveling, sports, hiking, and reading.

He works with Employees, Business Professionals, Business Owners, and ‘High Net Worth’ People.

► Like to discuss your personal financial situation?
☏ Call Jason at (323) 481-1328 for a FREE Consultation
✉ Email him at [email protected]

TSP With a Pay-To-Play Arrangement

July 28, 2023 /by michael crowe

A magazine reporter once questioned a PGA Tour golfer about their starting salary. Their response was that, for their first year, they actually lost money. Today’s economy makes establishing a career in this profession more expensive than a generation ago. Accommodation, food, and transit costs rapidly increase while traveling for weeks. Then there are the tournament fees, a fixed salary for the caddy (who also gets a percentage of winnings on a scale with more for top finishes and wins), coaches, trainers, dietitians, etc.

To succeed, you must break even. When the TSP investing window opens in June, it’s crucial to provide participants (within constraints) access to outside mutual funds. Investors have long grumbled about the TSP’s limited choices of broad, index-based products. Success costs them.

It will take some time before the TSP becomes a full-fledged pay-to-play organization. In response to a minority of investors treating their TSP funds more like passbook banking accounts than long-term retirement savings, the program decided to start charging $50 for customers who took out a loan. Loans were taken out for various reasons, such as paying a semester’s worth of college tuition and then repaying over some time via paycheck withholding. The TSP’s overhead increased due to each of those transactions, and the program determined that individuals who caused the expenditures should bear the burden.

So, it shouldn’t be surprising that the TSP has adopted the same investing strategy. The $28.75 trade fee is an additional charge. As a result, if a person decides to invest $10,000 outside of a mutual fund, they will be approximately 2% behind at the start of their new investment.

Are mutual funds focusing on specific market sectors, or even wide ones, capable of beating the TSP stock index fund in terms of performance? Sure. At the very least, it will have to perform at least as well to avoid a financial loss. And the losses will be more significant if it becomes worse. The TSP aims to “redetermine” such costs every three years, implying they will go up or down depending on market conditions. There will also be an additional $600 cost for processing alimony and child support orders as part of the more extensive set of changes to the TSP tied to the new record-keeping system.

To make the TSP more affordable for investors, the program’s general expenditures are divided out among all participants reasonably. On the other hand, certain services come at an additional cost, and individuals using them are expected to foot the bill. Even if individuals who must pay the fees feel slightly irritated, that’s how the TSP is going.

Contact Information:
Email: [email protected]
Phone: 6023128944

The Installments vs. Annuity Dilemma When Using TSP for Regular Income

July 21, 2023 /by marvin dutton

The primary reason we contribute to our Thrift Savings Plan account is so that we can begin withdrawing from it at some point in the future. In addition, most of us view our TSP balance as a source of monthly income to augment our government annuity and Social Security (both of which are also paid monthly).

If we want to replace 80% of our pre-retirement income (as many financial advisers recommend), the great majority of us will fall short of that objective if we rely only on an annuity and Social Security. As a result, many retirees choose to receive TSP payments regularly.

In fact, over half of the separated employees choose a TSP withdrawal option that offers recurring income. Two income-generating withdrawal options are available: installment payments and a TSP life annuity. Installment payments can be made monthly (most common), quarterly, or annually. With installment payments, your money will stay in the TSP, where it’ll (hopefully) grow. A TSP life annuity involves withdrawing money from your TSP account and using it to buy a single premium immediate annuity (paid monthly) from MetLife; you can use all or part of your TSP balance to buy the annuity.

So, what’s the distinction between installment payments and a life annuity? Though both options allow us to collect recurring payments, the rules are significantly different. The most significant distinction is that a TSP Life Annuity is an irrevocable option, whereas installment payments can be altered frequently. Individuals who use installment payments can start and stop payments at any time and adjust the amount of the installments many times per year.

The TSP life annuity ensures that you won’t run out of money over your lifetime; you won’t have to look after your investments. But unfortunately, there’s no guarantee with installment payments, and you must watch after your withdrawals to verify that you continue receiving payments.

Both installment payments and life annuities allow you to receive payments based on a certain amount of money (level payments) or your life expectancy (increasing payments).

The Thrift Savings Plan has various calculators, including the TSP Payment and Annuity Calculator, with which we came up with the following examples. Due to the ongoing repercussions of the Thrift Plan’s new system, this calculator is no longer available on TSP’s website (as of July 2022). In our calculations (completed in April, before the new system’s implementation), we estimated that a 57-year-old retiree had $350,000 in their TSP when they started withdrawals upon retirement. We also assumed they would live to be 90 years old and that any money remaining in their TSP account would grow at a rate of 5% per year. The annuity interest rate index was 2.075% – the rate for TSP annuities in February 2022.

Level monthly payments of $1,750 would remain until death at 90, leaving a $4,244 balance in the TSP account.

Monthly benefits would begin at $1,045 and would have reached $2,247 at 90, according to the IRS life expectancy chart. As a result, $295,069 would stay in the TSP account.

A monthly annuity with a basic level payment would earn $1,394 and keep paying that amount throughout the individual’s life. At death, there would be no funds left.

A basic increasing payment annuity would have started at $998 and grown to $1,887 at 90. At death, there would be no money.

Which option is most popular among separated federal employees? Monthly payouts are significantly more common than life annuities. Separated employees appear to prefer the opportunities for continuous development and the freedom to adjust their payouts that monthly payments provide over the certainty of the Life Annuity.

According to recent research, there are 1.2 million fewer workers than before the pandemic. However, it also said that if the pre-pandemic worker growth rate had remained, there would be 3.5 million more employees in the workforce today.

Contact Information:
Email: [email protected]
Phone: 2129517376

TSP Compiles a List of June’s New Features

July 15, 2023 /by marvin dutton

All TSP participants will need to create a new login for the new My Account after the transition in June. This one-time setup process will guide you through the steps of verifying your identification, creating a username and password, updating your contact information, and securing your account. You’ll notice a new design, additional tools, and expanded functionality to help you manage your account once you log in to My Account:

â€“ The configurable, user-friendly homepage will provide rapid access to the information you want to see first.

â€“ You’ll be able to see all the information for both accounts in one spot if you have both a civilian and a uniformed services account. This includes your overall total amount.

â€“ You’ll have the option to use your device’s identification software, such as fingerprint access and facial recognition, to add an extra layer of security when you access My Account from your mobile device.

â€“ If you need tailored assistance, you can utilize our virtual assistant, AVA, to ask account-specific inquiries and connect directly to a Thrift Line Representative for a live chat session during business hours.

The window for mutual funds

TSP participants who want more investment freedom may look into the mutual fund window. You can choose from a pool of over 5,000 mutual funds if your account fulfills specific qualifying conditions. This flexibility comes at a cost, as it does with most mutual funds:

TSP participants who do not utilize the mutual fund window pay a $55 yearly fee to ensure that using the mutual fund window does not increase TSP administration expenses.

The annual maintenance charge is $95

Distributions and withdrawals

The process for requesting a withdrawal or distribution will be more efficient and time-saving with the improvements coming in June:

â€“ We’re providing the opportunity to use electronic signatures and submit many requests online, just like we do with other transactions.

Support choices have been expanded.

With our increased support options, you’ll have more opportunities to have your issues answered starting in June:

â€“ On our website and in the TSP Mobile App, you’ll have 24/7 access to help through AVA, a virtual assistant (coming in June). AVA will provide a secure place for you to ask questions regarding your account and, if necessary, will link you to a live ThriftLine agent through chat during office hours.

Online transactions that are quick and easy

We’re providing new ways to perform most transactions and requests online to save you time and reduce paperwork:

â€“ You’ll be able to request transactions, upload forms and documents, and electronically sign your name in the new My Account.

Other useful information

You’ll be able to submit beneficiary information online through a new tool in My Account or by calling the ThriftLine. There will be some modifications to the way beneficiaries are designated:

â€“ You’ll be asked to confirm beneficiary information once a year to ensure it’s accurate.

â€“ You can easily designate equal distribution to beneficiaries using the online option for providing beneficiary information through My Account, without having to list precise percentages unless you choose to.

Contact Information:
Email: [email protected]
Phone: 2129517376

Federal Employee Health Benefits (FEHB) Fast Facts

July 14, 2023 /by joe carreno

OPM’s lowest-cost countrywide plan choice will be automatically selected for you if you don’t switch plans.
The number of providers and their makeup under the Federal Employees Health Benefits program is changing more this year than in prior years.

In light of this, OPM recently released a Federal Benefits Fast Facts bulletin that started by listing the four factors that might impact your current FEHB plan enrolment:
1. Terminating the program completely
2. Narrowing the scope of its services and removing its enrolment code
3. Narrowing the service area while maintaining the enrolment code
4. Removing an alternative (such as Standard or High)
Then it offered some questions for you to think about, which are included below.

How will I know whether this will influence my enrolment?

You will get a letter from your insurance provider informing you that it is either ceasing to offer coverage in your region, ceasing to participate in the FEHB program, or removing an option.

What should I do if something affects my enrolment?

You can switch your enrolment to a different plan during Open Season or a time frame that OPM specifies.

I plan to leave the FEHB program. What occurs if I don’t switch to a different plan?
If you don’t switch plans, OPM’s lowest-cost countrywide plan choice will be automatically selected for you.

My enrolment code is no longer valid, and my plan is expanding its coverage region. What occurs if I don’t switch to a different plan?
If you don’t switch plans, OPM will automatically enroll you in the most affordable countrywide program.

My plan’s coverage region is shrinking where I live or work, but my enrolment code is staying the same. So what occurs if I don’t switch to a different plan?
You’ll only have access to emergency care services in the new plan year; to get complete coverage, you’ll need to travel to the plan’s remaining service region.

My strategy obviates my choice. What will happen if I don’t choose another plan or one of the other options?
You’ll be enrolled automatically in one of the remaining alternatives in the plan. For example, if a High Deductible Health Plan is the only choice left, OPM will automatically enroll you in the option with the lowest-priced countrywide program.

What happens to my Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) if my High Deductible Health Plan (HDHP) discontinues coverage in my service region or withdraws from the FEHB program?
You must sign up for another HDHP if you want to keep making contributions to your HSA. If you don’t do that, you won’t be able to contribute to your HSA, but you will still be able to withdraw money for allowed medical costs. If you don’t utilize your HRA credits before the plan you choose takes effect, you’ll lose them.

How can I switch my enrolment to a different plan?

If you work for an agency and are a FERS employee, you can use online self-service tools like Employee Express, MyPay, Employee Personal Pages, EBIS, etc. Call your HR department if you need further assistance. Also, call Open Season Express at 1-800-332-9798 if you are a CSRS or FERS retiree.

When does my old plan or option stop offering coverage and my new one start?

Your current plan will continue to provide benefits. There won’t be any voids in protection. Until the start date of the new plan you choose during Open Season or for another period specified by OPM. The first day of your first full pay period in January 2023 will mark the start of the Open Season enrolment adjustments.

What are my rights if I’m expecting or suffering from a chronic or incapacitating condition?

Enrolees who are receiving treatment from a specialist for a chronic or disabling condition or who are pregnant in the second or third trimester have the right to carry on with their care for up to 90 days or until the end of post-partum care after receiving notice that a plan is leaving the FEHB program.

How can I compare the many health plans I have access to?

There are numerous tools at your disposal to compare plans: you can use the Plan Comparison Tool or the Consult Consumer’s Checkbook to review and compare the various available programs.

Contact Information:
Email: [email protected]
Phone: 8139269909

Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. 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. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsÃ¢â‚¬paying ability of the issuing company. 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.

Investing In An Annuity With TSP

July 10, 2023 /by michael crowe

An annuity is one of several withdrawal arrangements available in the Thrift Savings Plan (TSP).

While only a tiny percentage of TSP withdrawals allow annuity purchases, ensure that you understand the benefits of investing in annuities before discarding them as a possibility.

For one point, the TSP’s annuity payout offers more flexibility compared to the standard FERS or CSRS retirement benefits.

The TSP offers three basic annuity options:

• Single life annuity – a one-time payment made only to you during your lifetime.

• Joint life with spouse annuity – a payment made to you and your spouse while both of you are alive. When either one of you dies, the surviving partner will get an annuity for the rest of their life.

• An annuity granted to you while you and another person (not your spouse) are still living while you and someone else (not your spouse) are still alive. This person must have a strong desire to help you. The survivor will receive an annuity for the remainder of their life if one of them dies. In countries that recognize common-law marriages, a former spouse, blood relatives, adopted relatives who are closer, or a person you are living with or in a relationship that could constitute a common-law marriage are judged to have an insurable interest in you.

Joint Life Annuities can provide a survivor benefit of either 100% or 50%. When either of you dies, your monthly payments will continue in the same amount (100%) or be reduced by half (50%) to you or your joint annuitant.

The basic annuity types can be paired with a variety of annuity characteristics. Increasing payouts, cash refunds, and a 10-year guaranteed payout are among them.

With the fundamental annuity kinds, a variety of features can be combined. Increasing payments, cash refunds, and a 10-year guaranteed payout are some options.

Suppose you (and your partner annuitant) die before taking money equal to the balance used to acquire the annuity. In that case, a designated beneficiary will receive a cash refund of the difference between the payments amount and the funds used to purchase the annuity. If you die within ten years after the start of the annuity, the beneficiary will receive the remaining payments.

Not all features are compatible with all types of basic annuities. Also, once an annuity is purchased, the funds are transferred to a private corporation, and that company, rather than the TSP, provides the benefit.

You can visit www.tsp.gov to use the calculator functions to see how a certain sum might translate into income under various scenarios.

Contact Information:
Email: [email protected]
Phone: 6023128944

The TSP’s Strategic Plan

July 9, 2023 /by marvin dutton

Despite the necessity of focusing on day-to-day operational concerns, many firms need help to build a practical and realistic Technology Strategy. The inability to examine essential components of an IT strategy can have disastrous effects on a company’s ability to compete in the marketplace and effectively address infrastructure and data security concerns.

Technology Leaders are well-versed in industry best practices, and their wide variety of experiences servicing customers of all sizes offers us the benefit of providing you with an informed and impartial perspective to help you find opportunities and avert catastrophes.

We are professionals in assisting loan clients in comprehending the significance of the right software, a solid and secure infrastructure, and a competent support team in achieving overall objectives. So whether you define success in terms of sales, cost savings, risk mitigation, or better company efficiency, we will happily provide a business case for each of our recommendations.

The Thrift Board has determined its objectives by considering the following five visions:

• Our procedures are executed without a hitch;

• We assist participants in making informed decisions;

• We are careful with the money contributed by participants;

• We make the FRTIB a wonderful place to work and an environment in which outstanding work may be accomplished and

• We cultivate fruitful partnerships with those with a stake in the TSP.

The Thrift Board has decided to focus on the following three goals in terms of the consequences that plan participants would experience:

• Make it easier for participants to make decisions by giving information specific to their needs;

• Investigate and put into practice any improvements in plan design and benefits policy; and

• The percentage of participants that carry out a predetermined goal due to FRTIB outreach is increased.

Concerning the achievement of another aim, the provision of services, more time is spent on the participants. The following are the four goals that fall under the participant services goal:

• Raise knowledge about how the services supplied by the TSP compare to those provided by other defined contribution plans, providers, and financial institutions;

• Work in collaboration with employment agencies and payroll offices to provide participants with more seamless service;

• Understand the requirements and expectations of participants and respond to them;

• Open up the opportunity for mutual funds. This task was finished a couple of months ago.

They also wanted the TSP to move toward a managed services strategy, another of their objectives. This shift occurred in May and June, and it needed to measure up to preserve program performance while also maintaining the participant satisfaction that the Thrift Board had set for itself.

The TSP, as of late, has been more user-friendly and proactive than it was in its earlier days. This contrasts with how it was in its earlier days. Their strategic plan will make it possible for them to enhance the services they provide for the benefit of participants who are both employed and retired.

The Target Date Fund (TSP) employs the IRS Single Life Table to calculate life expectancy-based distributions for participants who have yet to reach the age at which they are obliged to begin receiving RMD payments when those payments commence.

These participants are eligible to transition to the Uniform Lifetime Table once they reach the age for RMDs, which is presently 72 years old.

Contact Information:
Email: [email protected]
Phone: 2129517376

The Six Best Ways For Women to Stretch Their Retirement Dollars

June 6, 2023 /by Mitul Patel

When it comes to retirement, women face unique challenges. Women have a five-year advantage over males in terms of expected lifespan, yet they only earn 84 cents for every dollar their male coworkers bring in. Because of this, it’s not surprising that 60% of women in the most recent Merrill Lynch survey on women and money (Women & Financial Wellness) worry about having enough money to last until they die.

Women may expect to make about $1.1 million less than men over their working lives. Just let that number settle in for a second. Women are expected to multitask and complete more tasks in less time, whether they like it or not. To that end, this article outlines six strategies they can implement to make the most of their retirement funds.

Negotiate the Best Salary Offer You Can

The initial payment is an essential factor. The impact of compound interest can be significant over time. Women must pay close attention to their earnings from the beginning of their professions.

If the initial offer needs to be higher, keep looking. Make the most of your bargaining ability by learning the market averages for your position before entering any talks.

Take On Even More Risk

Women are typically more risk-averse investors, but this isn’t sustainable when your income is lower, and your life expectancy is higher. Investors in “target date” funds, prevalent in employer-sponsored 401(k) plans, incur additional risk at the outset of their investment careers since the funds are tailored toward a specified retirement date.

Develop Your Financial Self-Assurance

When making financial plans, there is no such thing as a foolish question. Choose a financial adviser who makes you feel confident about your financial future. Even if you believe you have a good handle on personal finance, there is always more to learn and more confidence to develop.

Put Aside as Much Money as Possible

With the gender pay disparity and increased life expectancy, women must save at least 1.5 times as much as men to meet their financial goals. You can maximize the potential of compound interest if you begin saving early in your career.

Limit Your Time Away from Work

Although it is not always feasible, continuing to work after retirement might significantly impact your final retirement account balance. Women are disproportionately expected to take on the caretaker role, but this can have a devastating impact on their ability to save money. There is the loss of wages and the forfeiture of the employer’s 401(k) match.

Have The Guts to Ask for Help

Use every resource, including the internet, people you know, accountants, and books. You can’t just take a stab in the dark and hope everything works out for your finances.

Contact Information:
Email: [email protected]
Phone: 8139269909

Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.

Tag: thrift savings plan

thrift savings plan

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The TSP’s Strategic Plan

The Six Best Ways For Women to Stretch Their Retirement Dollars

TSP & Retirement

Insurance