TSP Archives

TSP stands for “Thrift Savings Plan” is an essential component of federal employee retirement savings efforts for federal employees. The Thrift Savings Plan is similar to a 401(k) plan, allowing participants to make contributions on a pre-tax basis. The TSP also has several competitive advantages, such as automatic contributions for certain federal employees, lower costs (compared to most private-market investments) and employer matching contributions.

Disability Insurance And Retirement Security Go Together

November 28, 2023 /by michael crowe

Most individuals are aware of the advantages of disability insurance in protecting one’s income if they become ill or injured and cannot work. However, in addition to income protection, disability insurance can help protect retirement goals by avoiding early withdrawals. Early withdrawal from retirement plans might be more expensive in the long term due to the loss of retirement savings and tax penalties.

According to the 2022 Insurance Barometer Study, 24% of consumers believe they would use their retirement assets if they became disabled. Only about one-fifth of those polled stated they would use supplemental insurance, disability insurance, or workplace compensation. According to the LIMRA study, most consumers don’t have disability insurance and would have to rely on other sources of financial support, jeopardizing their long-term financial goals.

Interestingly, according to the Barometer Study, retirement planning was the top reason consumers gave for getting disability insurance in 2022, increasing by 6% from January 2020 (27% versus 21%). That indicates that consumers are more aware of the risks a disability can cause to a household’s income and retirement funds.

Other reasons for purchasing disability insurance include knowing someone who was negatively affected because they did not have coverage (27%), joining the workforce (25%), getting married (15%), having a kid (14%), and starting a business (13%).

Currently, only 14% of customers have private disability insurance coverage, a 17-point decrease from an all-time high of 31% in 2012. Almost half (49%) of respondents say a disability would cause financial hardship in their home in six months or less.

Disability Insurance Awareness Month (DIAM) is an industry-wide program coordinated by Life Happens to emphasize the necessity of having enough disability insurance coverage to secure one’s income in the case of illness or injury. Every year, LIMRA is happy to sponsor the DIAM campaign.

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!

The Federal Government wants to Improve Retirement Ways: Add Gold to Spend Golden Years with Ease

November 26, 2023 /by todd carmack

People are now looking for better retirement plans to make their future secure. In the U.S., Washington D.C. wants to improve how people live their retirement days; therefore, they want to improve the retirement system. According to a report, the Senate and House of Representatives could sign a $1.7 trillion spending bill for 2023, which is 4,100 pages long. That bill has been planned with the name “Secure 2.0,” which would allow workers to be prepared for their future life after retirement.

Things are getting more strict. Employees should enroll themselves in the plan of retirement to avoid inconveniences later. According to the CNBC report, organizations hiring employees should automatically enroll their employees in the 401(k) plan at a rate of 3% at least but should be at most 10%. It should only be done if they have fewer than ten workers or if they have had their own business for under three years. Moreover, workers should withdraw their RMDs when they reach the age of 73 as soon as 2023 starts. The period would go to 75 in 2033. Right now, the age limit is 72. The fine for not taking RMDs would decrease from 50% to 25%, and in some scenarios, it can reduce further to 10%.

People want to make better plans to ensure the safety of their future. Therefore, to improve their retirement plan, workers can now add an extra $6,500 every year to their account under the 401(k) plan when they reach the age limit of 50. The limit would be increased to $10,000 or 50% more than the regular amount for people aged 60 to 63 in 2023. It has been proven to be very helpful for many employees. They could make a better savings plan once they retire. Also, these catch-up amounts may be increased due to the current inflation going around the globe.

Furthermore, all these catch-up amounts are added to the Roth treatment. This rule does not apply to workers earning $145,000 or less. The plans have also tried to accommodate employees who are paying their student loans. Employers can contribute to the 401(k) plan for their employees who are paying their student loans instead of saving for their post-career days.

Sometimes, employees face emergencies. They would require money to deal with their problems. An innovation has been made to the plan. In emergencies, they have set a new plan for the employees. Therefore, employees can withdraw amounts up to $1,000 from their retirement account in case they have emergency payments to make. Also, they would not have to pay a 10% tax fine for making an early withdrawal if they are under the age of 59. Companies can help their employees by allowing them to create an emergency account. In this way, they will automatically add a certain amount they could withdraw anytime during critical situations. The amount added to the emergency savings account can be $2,500, which would be deducted automatically from their pay.

Employees who work as part-time workers who have been working for two consecutive years for around 500 to 999 hours instead of fulfilling the requirement of three years could be eligible for the company’s 401(k). Workers should have as much as $200,000 for their qualified longevity allowance contract. The current limits of 25% of the value of the retirement accounts and $135,000 are eliminated. A new addition has been made. The bill has eliminated the pre-death distribution requirement for the 401(k) plan and now allows tax-and penalty-free rollovers to Roth IRAs. Many of them are from college saving accounts which have been said to be 529 accounts done under certain conditions. Also, the bill has now included an incentive for small business owners so they can set up a retirement.

A few years ago, the U.S. Department of Labor ruled that employers can consider making climate change investments for their retirement savings plan. It is a change that was made from Trump-era regulations. A report was released in March. It stated that there had been an increase of 76% in the companies in California which have adopted a low-cost, accessible retirement plan. They have done so due to a law requiring the small business to choose the private market option, like 401(k), or they should go through the state-run Cal Savers program.

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.

Increased Retirement Spending Between Ages 62 and 80

November 26, 2023 /by mack hales

According to research by the Institute for Fiscal Studies, individuals and couples aged 62 to 80 spend more in retirement, disproving the belief that spending decreases with age.

The institute’s study on how spending changes in retirement sheds insight on early retirement spending patterns and refutes the premise that as people age, their spending will reduce.

On average, retirees’ total household spending per person remains relatively steady in real terms during retirement, growing slightly up to age 80 and remaining flat or dropping after that.

Spending rises for people aged 62 to 80

While total spending appears to fall drastically with age, when birth cohort differences are considered by looking at variations within each generation, the link between age and spending seems to be flat or even slightly increasing in some cases.

The IFS discovered considerable disparities in spending between five-year cohorts, especially between those born in 1934-38, 1939-43, and 1944-48, showing the necessity of accounting for generational changes when looking at age profiles of spending.

For people born in 1939-43, the average weekly spending at age 67 was $291, rising to $313 at age 75 – just under 1% a year or 7% when adjusted for inflation.

Individuals born in 1924-28 spent $234 a week at age 82, declining 6% to $220 at age 88, or 1% per year.

Holiday spending increases then decreases in the mid-eighties

Some costs diminish during retirement, but others rise because spending patterns change as people grow older.

Per-person spending on meals at home falls when appetite declines with age, possibly due to diminished activity or illness.

Spending on eating outside the home grows in retirement and declines when people reach their 80s. Spending on cars, alcohol, and tobacco decreases in retirement.

Holiday expenditures rise until the early 80s and start declining in the mid-80s, whereas motoring costs fall rapidly from the late-70s as people drive less.

The IFS reported that 57% of 82-year-olds born in the years 1924-28 spend money on automobiles and 19% on vacations.

The younger group spends 83% on vehicles and 41% on vacations. The IFS discovered noteworthy age patterns in these two retirement spending categories, which take up a relatively significant portion of spending in early retirement.

The estimated increase in vacation expenditure is considerable: $13.60 per week on average from ages 65 to 80.

Later-born generations usually spend more on leisure and vacations in retirement. These account for 7% of total spending for 65-year-olds born in the years 1924-28 and 11% for the years 1944-48.

The IFS stated this could mean younger and future retirees’ expenditures will grow faster with age than is the case for current retirees.

Increasing household costs in later years

The IFS estimates that people between the ages of 75 and 85 spend $6.70 more each week on household expenses and services.

Andrew Tully, Technical Director at Canada Life, said it’s disturbing that bill expenditure seems to rise after age 75, maybe reflecting the death of a partner and being unable to share household costs.

Becky O’Connor, Head of Pensions and Savings at Interactive Investor, suggested that consumers may assume they won’t spend as much in their 70s and 80s, which turns out to be false.

People think they won’t go out as much or take as many vacations. Even if that’s accurate, unexpected spending requirements can break the budget later in life. If people spend more as they age, they may deplete their pensions too soon.

The IFS also observed disparities in spending patterns among various types of households.

Above-average-income households spend more in their 60s and 70s and less in their 80s.

Increasing salaries imply more people save as they age, the study found. For instance, for individuals born in the years 1939-43, 59% saved at age 67, but that increased to 69% at age 75.

Given that the state pension tends to increase faster than prices, a falling profile of private income may be desirable, especially for people who rely more on the state pension, the IFS stated.

Non-index-linked annuities render people more vulnerable to inflation if they rely on private pension income.

The IFS noted that the death of one partner affects the surviving partner’s spending because shared costs like housing don’t decrease.

The institute cautioned households to assess how such changes will influence income and spending to ensure they have enough resources to cover per-person spending increases.

Future retirees, who are less likely to receive occupational or state pensions with a survivor’s benefit, will have to consider this while selecting drawdown pace and whether to get an annuity with a survivor’s benefit.

That’s crucial given the cost-of-living crisis and inflation. With the cost-of-living situation in everyone’s mind, individuals on fixed incomes, like pensioners, will have fewer levers to pull.

Many who need to are tightening their belts, cutting energy usage, eating out less, and adjusting buying habits, and this will only get worse as inflation rises over the year.

Contact Information:
Email: [email protected]
Phone: 7705402211

Bio:
Mack Hales has spent the past 4 decades helping clients prepare for retirement and manage their finances successfully. He also works with strategies that help clients put away much more money for their retirement than they could in an IRA or even a 401k. We involve the client’s CPA and/or their tax attorney to be sure the programs meet the proper tax codes.

Mack works with Federal Employees to help them establish the right path before and after retirement. The goal is to help the client retire worry-free with as much tax-free income as possible and no worries about money at risk of market loss during retirement.

Mack has resided in Gainesville, GA since 1983, so this is considered home. Mack is married to his wife of 51 years, has two boys and five grandchildren.

Federal Retiree COLA 2023; The Highest Since 1981

November 21, 2023 /by marvin dutton

COLA at 8.7% in 2023

The Bureau of Labor Statistics (BLS) inflation data are utilized annually to create an automated cost-of-living adjustment (COLA) for employees (BLS).

Inflation has been growing in 2022, one of the most pressing concerns for Americans today. If you are retired or planning to retire, keep an eye on monthly inflation statistics because they impact the annual COLA adjustment for federal retirees and Social Security income. The additional payments will be made available to recipients beginning in January.

The CPI-W index is used to calculate the magnitude of the increase automatically.

COLA 2023, All-Time High Since 1981.

According to the Bureau of Labor Statistics’ most recent 2022 inflation report, inflation was 0.4% higher in September based on the Consumer Price Index for All Urban Consumers (CPI-U). According to the BLS, the all-items index (a different index from the CPI-U) climbed 8.2% during the last year.

The Consumer Price Measure for Urban Wage Earners and Clerical Workers (CPI-W) is the BLS index that many FedSmith readers are interested in. This index has risen 8.5% in the last year.

The CPI-W is the most important index for retirees who receive a federal employee annuity payment. It is also the amount computed for the 2023 COLA for Social Security payments.

It is now at 291.854 on the index.

The average CPI for the third quarter of 2021 was 268.421. This is critical because the yearly COLA is calculated by comparing the year-over-year growth in the CPI-W using the average of the third-quarter months of July, August, and September. This equals an 8.7% rise over the third-quarter average last year.

The greatest COLA rise in the last three decades was 14.3% in 1980. The 2023 COLA increase will be the highest since 1981, when it was 11.2%.

In 1981, inflation was 10.3%, and the annual COLA was 11.2% higher than the current amounts.

Since Obama assumed office, inflation has been on the rise. If the methods used to calculate it haven’t evolved, the current trend could be far more severe than the one observed during Carter’s tenure. In general, modifications in inflation calculations have resulted in lower reported inflation. The updated method shifted the CPI’s idea from assessing the cost of living required to maintain a steady level of life. The revised computation technique considers the cost of living rather than price increases.

According to one source that records this data, the current inflation rate would be around 17% if the earlier calculating technique had been utilized.

Are You Dissatisfied with the Cola Increase?

In 2022, inflation has remained high. As a result, retirees may be surprised by downward revisions to their 2023 COLA expectations, as earlier estimates in 2022 were 11% or higher. The bad news does, however, have a bright side.

COLAs do not fully offset inflation. As a result, the purchasing power of a retired person’s income decreases with time. For example, since 2000, the purchasing power of Social Security income has plummeted by more than 40%.

Retirees benefit financially with lower inflation and lesser COLAs. Because COLAs do not entirely replace the purchasing power of retirement income, lower inflation and lower COLAs usually better retain a retiree’s purchasing power. While huge COLA payments in response to high inflation deliver more funds, each dollar buys less than it did previously. In light of this, seniors should view lowering COLA estimates as great news.

Why Does Your Retirement System Affect Your 2023 COLA?

Retired federal employees who retired via the FERS system will get 1% less than those who retired under the CSRS system in 2023. This is because they receive the full COLA for Social Security while not the full COLA for their pension or annuity.

Beginning in 1987, CSRS was phased away. Less than 100,000 active government employees are still employed under the CSRS system. The majority of federal retirees receive CSRS benefits.

Social Security is not a benefit of the retirement plan for CSRS employees. Some CSRS employees earn Social Security benefits based on jobs other than working for Uncle Sam. However, this is not a mandatory component of the CSRS scheme.

During their federal government careers, FERS personnel can also invest for their future retirement through the Thrift Savings Plan (TSP). The federal government contributes an additional matching amount to the TSP to offer a higher income stream during retirement.

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].

Senators from The Republican Party made a last-minute appeal for the TSP to delay the opening of the mutual fund session

November 21, 2023 /by mack hales

Legislators are concerned that the newly implemented federal retirement savings scheme may encourage government employees to invest in Chinese businesses.

This week, six Republican senators requested a retirement savings plan similar to a 401(k) to delay the establishment of a mutual fund due to concerns that government employees may invest in Chinese businesses.

The requirement was established just as the Thrift Savings Plan (TSP) began transitioning to a service provider to handle the mutual fund scheme. A week before the new regime, which incorporates a phone gadget and other technologies, is slated to go live.

Members of the TSP’s retirement plan can choose from more than 5,000 mutual funds, some of which are devoted to ecological, social, and governance practice concerns. The TSP’s website is now down for most of its features due to the organization’s move to a different recordkeeper.

Because there is a possibility that certain mutual funds may have holdings in “Chinese entities,” a group of six Republican senators wrote a letter to the FRTIB, which is the authority that oversees the Thrift Savings Plan (TSP). In the letter, they requested that the authority halt or delay the provision of mutual funds to TSP participants.

For federal TSP members, “we write to express serious concern over the FRTIB’s intention to create a new mutual fund scheme beginning next month.” A move like this could reveal the retirement funds of U.S. federal workers and service personnel to firms in China, such as those presently authorized by the U.S. Government for human rights violations or otherwise delisted for the danger they pose to the United States’ global defense.

TSP officials say it’s unfair that government workers can’t invest in the same corporations and market indexes as the public. They urged the Treasury Department to ban Americans from investing in banned or threatening businesses.

In their email, TSP’s argument that tracking more than 5,000 mutual funds would be “extremely expensive” was questioned by the senators. The government should at least delay adoption until they discover a means to do it.

It is highly improbable that your panel could guarantee that approximately 5,000 index funds are independent of Chinese firms that present a danger to American global defense or businesses allegedly involved in human rights violations by the Chinese Communist Party, or businesses that otherwise neglect the necessary financial trajectories given the large number of Chinese companies involved in this decision and the FRTIB’s past efforts to include such firms in TSP.

TSP representative Kim Weaver said the mutual fund window is “totally voluntary,” and TSP participants won’t need mutual funds.

Contact Information:
Email: [email protected]
Phone: 7705402211

Here’s What you should Know About The Thrift Savings Plan

November 21, 2023 /by jason anderson

Most people don’t know the main differences between the IRA, 401(k), and the Thrift Savings Plan. Some financial experts regard the TSP as the best plan for federal retirees.

Therefore, you need to know the TSP-eligible participants, its yearly contribution limit, the operating mechanism, and why the TSP is the best plan. Knowing the TSP rules related to tax and withdrawals is also essential.

TSP and Its Eligible Participants

The Thrift Savings Plan is similar to the 401(k) plan, and public sector workers use both plans. The TSP offers government employees a tax-advantaged plan.

The TSP has above 6 million participants as of 2020, with an asset value of $735 billion under its management.

The TSP has similar rules to the 401(k) plan regarding the contribution amount and government requirements relating to tax and withdrawals. The TSP has a smaller fee of about 0.05% compared to the 401(k) plan. Your entire TSP fund will work for you because of its small management costs. This is why you should put a large amount of your income into the TSP.

You are eligible to participate in the Thrift Savings Plan if you are a uniformed service member (ready reserve or active duty) or a civilian in defined service categories. You are also eligible to participate in the TSP if you are an employee under the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS).

How the Thrift Savings Plan works

Once you are eligible to participate in the TSP, your employer will likely inform you about TSP participation during the job orientation.

Suppose you want to contribute to your workplace Thrift Savings Plan. You have to decide the income percentage you will be contributing and the specific TSP (Roth or Traditional TSP) you will use for your TSP contribution. You will also determine how you want to invest your funds into the TSP, and you can select the best option that will benefit you in the long run.

You need to understand these two essential things before saving in the TSP:

• Most companies give a match: If you are saving money in this company’s TSP, your retirement account will contain your individual funds and the company funds. The highest match is 5% of your monthly salary.

• TSP offers many tax advantages: You can withdraw your money during retirement without paying taxes, lower your taxable earnings, and pay your taxes upfront with the Thrift Savings Plan. The TSP allows your investment to grow without taxes.

Thrift Savings Plan Contribution Limits in 2022

The TSP contribution limit is similar to that of 401(k). If you are below 50 years by the 2022 end, your maximum TSP contribution in 2022 will be $20,500. This will be your maximum TSP contribution limit even if you divide your TSP contributions between the Roth and Traditional TSP plans.

Those aged 50 years and above have an extra $6,500 as a catch-up contribution. You can access this contribution limit if your employer allows you to make after-tax TSP contributions.

According to the IRS, you can save new money about $61,000 in your TSP this year. For those above 50 years, the maximum amount they can contribute in new money is $67,500.

Although the Thrift Savings Plan receives less attention than the 401(k) plan, if you can access your workplace TSP, you have a higher chance of making tax-advantaged and well-planned retirement savings.

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.

The Limited Eligibility of a Lump-Sum Annuity

November 20, 2023 /by todd carmack

Lump-sum annuities (or lump-sum option or alternative form of an annuity) remain a primarily misunderstood portion of the federal retirement policy. However, trending data shows that, as they approach retirement, most employees ask for lump-sum annuities even when it isn’t readily available. So, what exactly is a lump-sum option, and will it be phased out in the future?

The lump-sum annuity was created as a replacement option for the three-year recovery rule, in which retirees were exempt from paying taxes on annuity payments for up to 3 years. Said retirees would receive an amount equal to past contributions into the retirement fund, which had previously been taxed. These individuals were also permitted to receive an amount equal to previous contributions during retirement, while they also received a reduction in their annuity based on life expectancy.

Although the lump-sum option was widely available and quite popular since its creation, it drew much attention from the federal government. Ultimately, the opportunity was eliminated in 1994 for most Americans, aside from those dealing with a medical condition deemed fatal within a two-year period. Individuals facing such life-threatening conditions can choose the lump-sum option with a few contingencies.

While quite a bit of time has passed since changes were enacted, many employees on the heels of retirement are banking on lump-sum annuity availability. This confusion may be due, in part, to the time in which they entered government employment, around the original design of lump-sum options. A Thrift Savings Plan (TSP) may serve as a decent alternative for those looking to pay off loans, a mortgage, or make a significant purchase.

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

Is It Right to Offer Too Many Health Benefits

November 9, 2023 /by michael crowe

Companies offer health benefits to attract the best employees and retain their workforce. The pandemic has motivated many companies to propose a variety of health benefits. However, despite spending the excellent health benefits, they have yet to go too far with their policies and offers. So, the question is whether benefactors are spending money on suitable approaches or whether these are just flashy gimmicks. Should you offer more health benefits or update the existing ones?

This article will highlight whether companies spend their time and energy on the right policies. Besides, we will tell you how you can make the right choice and not spend unnecessarily on useless policies.

Tips to Improve the Right Benefits:

Your health policies should benefit your employees the most and cost you less. So, here are three tips that can help you modify your health-related policies better.

1. Communicate With Your Employees What They Want:

Several surveys have proved that most employees want improved health, dental, and vision insurance, accompanied by flexible working hours and vacations. Besides, they want less expensive medical treatments and cost-effective prescriptions. However, most companies don’t know that. As a result, they make the mistake of offering too many complex health plans that remain useless for their employees, partly because they are challenging to understand and partially because they don’t fulfill everyday needs.

How To Avoid It?

Well, the answer is simple. First, communicate with your employees directly in a straightforward manner. Then, your employees should be able to understand the health plans without any doubts. The best way is to circulate a questionnaire and ask your employees what they want. According to a survey, for employees, comprehensiveness and cost are the favorite aspects of their health coverage.

2. Focus on the Most Common Health Benefits:

Employees want specific benefits that help them maintain good health at work. Harvard Business Review surveyed 2,000 employees about the health benefits they liked the most. At the top of the list was health insurance, including dental and ENT services, with flexible hours. The bottom of the list included on-site gyms and free fitness or yoga classes – benefits that sound great on paper but often didn’t get used. When asked what they liked least about their jobs, the cost was overwhelmingly cited as a downside. As healthcare needs changed during the pandemic, companies must keep this in mind when developing their benefits programs. Employees want affordable plans that cover their healthcare needs.

Don’t Stay Back in Offering New Health Benefits, But Be Ready to Pivot:

The pandemic has brought an explosion of new offerings – and that’s a good thing. As employees’ needs have changed, so too have what employers should offer. Therefore, you mustn’t fall back on providing new health benefits. First, it’s essential to measure how much employees use them and their satisfaction regularly.

In 2021, “39% percent of smaller firms and 58% of larger firms provided or expanded online counseling services for emotional or financial distress, relationship issues, or other stressful situations,” according to the Kaiser Family Foundation.

It suggests that online counseling is becoming a more common part of employer health benefits. But whether these offerings will become a regular part of employer health benefits remains to be seen. As you experiment with health plan offerings, it’s essential to use analytics to determine what is working and what isn’t.

Final Words:

Offer Affordable Health care Plans That Will Keep Your Employees Satisfied.

These days, finding the best healthcare policies for your employees is more complex than ever. That’s why keeping your options open when providing benefits is essential. Some employers offer healthcare through their insurance policies, while others provide their employees the opportunity to purchase individual health insurance policies. Either way, you must ensure that your employees can access affordable plans that cover their healthcare needs.

One way you can do this is by offering employee health savings accounts (HSAs). These accounts allow employees to invest money they earn in them and use the money to pay for medical expenses. It is an excellent way for your employees to get affordable coverage and invest in their long-term health if you’re looking for other ways to provide affordable healthcare benefits.

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

The FERS Annuity Is A Great Deal

November 9, 2023 /by marvin dutton

Whenever it comes to ensuring your financial security in retirement, the FERS annuities are a comparative steal.

What is a FERS annuity?

In 1986, Congress explicitly created the Federal Employees Retirement System (FERS) for federal civilian employees. Benefits are available under the FERS retirement plan from three main sources:

Basic Benefit Plans
Social Security
Thrift Savings Plan (TSP)

Two of the three benefits under FERS (TSP and Social Security) will go with you if you leave the federal government before retiring, according to the Thrift Savings Plan (TSP).

What’s the value of your FERS annuity?

The government and you must make mandatory contributions to the FERS defined benefit plan. You spend less money on this benefit than Uncle Sam does. Your service history (measured in months and years and high-3 yearly pay) determines your FERS annuity.

If you retire before age 62 and have completed at least 20 years of service, you will earn an annual annuity based on 1%. If you retire after the age of 62 with at least 20 years of service, you will earn an annuity based on 1.1% per year. The 1% component is used for individuals who are 62 years or older but also have fewer than 20 years of service. Employees in particular categories (such as firefighters, police officers, air traffic controllers, etc.) would be paid a larger proportion.

How much money would you have needed to accumulate on your own to obtain a payout similar to what you will receive from your FERS annuity?

A lot of it! Consider the scenario where you have 30 years of total federal employment and retire before age 62. Your top three salaries are $100,000 annually. Once you turn 62, your FERS pension will be $30,000 per year with a cost-of-living adjustment. The COLA begins to apply when a special category employee retires.

What amount would you have to save to earn a $30,000 annual inflation-indexed income?

The consensus is that the answer is $750,000. This is based on the so-called 4% rule, which states that if you start taking withdrawals from a lump sum at 4% and adjust them for inflation each year, there is minimal risk of running out of money. The 50 years between 1926 and 1976, encompassing the Great Depression, were used to create this rule. Then, it was compared to withdrawal rates that would protect capital.

Bill Bengen, the financial planner who conducted the analysis, concluded that there wasn’t any possibility that a person who adhered to the 4% rule would’ve run out of cash in fewer than 33 years, even under exceptionally unfavorable market conditions. In reality, Bengen asserted that a 5% rate could be more practical, reducing the sum that must be amassed for the individual in our case to around $625,000.

According to a recent MetLife analysis, the average retirement fund amount is anticipated to be $450,000. However, for the individual in this scenario, that amount would not be sufficient to match the value of the FERS annuity.

Would you have been capable of replacing 30% of their pre-retirement salary with savings?

Whenever it comes to ensuring your financial security in retirement, your FERS annuities are a relative steal.

How your FERS annuity is computed

The first step is to find your current “high-3” – the highest average basic wage you have received during three consecutive years of employment. A federal employee’s high-3 pay is typically the sum of the three most recent years of compensation.

Divide your full creditable years of service by your high-3 average yearly salary, then multiply that result by 1%.

If your high-3 average is $85,000 and you’ve worked for the government for 30 years, then you qualify. Your FERS annuity would then be $2,125 per month or $25,00 per year. Your annuity will now receive a bonus if you retire after age 62 and have at least 20 years of service. You will multiply your service years and high-3 by 1.1% instead of 1%. As a result, instead of receiving $25,500 per year, as in our previous example, you would now earn $28,050 ($2,337 monthly instead of $2,125).

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

Medicare Deductibles and Premiums Will Decline in 2023

November 3, 2023 /by michael crowe

The projected cost of Medicare in 2023 surprises some younger seniors but not those who have been paying premiums since 2011.

Will Medicare Part B premiums decrease in 2023? Will the Medicare Part B deductible increase in 2023? Yes.

Although a drop in Medicare spending is unusual, it has happened in the past. Medicare began in 1966 with a $50 deductible and a $3 monthly Part B cost. The annual deductible and premiums for Medicare Part B have historically increased or decreased. However, 2012 saw a change in that.

The physician fee formula served as the primary justification for the 2012 cutbacks. Due to the Medicare and Medicaid Extenders Act (2010), the method used to figure out how much Medicare doctors would get paid in 2012 was expected to go down by 29.5%.

Due to the physician fees in that year, both the premium and the deductible reversed course and decreased to the advantage of the beneficiaries. In 2011, the Part B premium was $99.90 per month, which was $15.50 less per month than in 2010. In addition, the yearly deductible decreased to $140 from $162.

Medicare’s monthly Part B premium will drop from $170.10 in 2022 to $164.90 in 2023. In addition, the annual deductible will decrease from $233 in 2022 to $226 in 2019.

Aduhelm, a recently released Alzheimer’s medicine, is the main driver behind the 2023 Medicare adjustments that have been disclosed.

Aduhelm is a costly medication. In preparation for the 2022 Medicare Part B premiums, it was estimated that each patient would spend upwards of $56,000 annually. As a result, Part B premiums increased by $33 over the prior year.

The Part B premium will also increase to $26.30 per month in 2022. Medicare Part B participants also had a $30 rise in their yearly deductible that year, bringing it to $233.

Medicare decided in April of this year to consider just covering Aduhelm for government-approved clinical trials. The yearly deductible and the monthly premiums were both decreased by this policy change. As a result, Medicare beneficiaries will receive cost savings in 2023.

The Centers for Medicare and Medicaid Services published a fact sheet each year outlining fundamental changes to Medicare and Medicaid for the upcoming year.

You might find the following information in this document interesting:

• Starting in 2023, certain Medicare enrollees who are 36 months post kidney transplant and are no longer eligible for full Medicare coverage may elect to continue Part B coverage of immunosuppressive medications by paying a premium.

• The Income-Related Monthly Adjustment Amounts (IRMAA) affect approximately 7% of people with Medicare Part B. In addition, the immunosuppressive medication premium is $97.10 for 2023.

• Those who have had coverage for at least 30 quarters or are married to someone who has had coverage for at least 30 quarters may purchase Part A at a discounted monthly premium cost, which will be $278 in 2023, an increase of $4 from 2022.

Significant changes to Medicare Plans

• Lower Part B deductible

Additionally, the Part B deductible drops by $7 to $226 per year in 2023. As part of the Part B durable medical equipment benefit, members of Medicare who use an insulin pump will no longer be required to pay a deductible as of July 1. The proposed Inflation Reduction Act of 2022 will limit cost sharing for insulin to $35 per month starting in 2023.

• Part A Increase.

There are deductibles for each hospital stay, even though most Medicare members do not pay the Part A monthly premium, which covers skilled nursing facilities, inpatient hospitals, hospices, and some home healthcare services. The Part A deductible for stays in 2023 will be $1,600, a $44 increase from this year.

The monthly premium will also go up for individuals who have not worked long enough to be eligible for Part A without a premium. In 2023, a $7 rise will result in the complete Part A premium being $506 per month. Depending on the beneficiary’s job history or spouse, they may be required to pay the entire Part A payment. Hospital costs should be confirmed with the beneficiary’s Medicare Advantage plan.

Some people in online discussion forums are already complaining that the financial savings for Medicare beneficiaries in 2023 would be negligible. But don’t be negative. Be upbeat. You can use the additional savings to cover the membership fees for the National Active and Retired Federal Employees Association (NARFE) or the American Association of Retired Persons (AARP). Don’t forget to contribute to the American Red Cross as well. Others will greatly appreciate it.

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

How Social Security Reform Can Help Those Disproportionally Affected by Retirement Tax Breaks

October 26, 2023 /by todd carmack

With a Social Security crisis still coming, Congress must approve legislation to prevent the Social Security trust fund from running out of resources by 2034, according to GoBankingRates.com forecasts.

Some reform components urge people to save for retirement on their own. However, according to a new report from the National Institute on Retirement Security, more than half of the tax breaks meant to encourage retirement savings through other vehicles, like defined contribution (DC) plans and Individual Retirement Accounts (IRAs), currently benefit the top 10% of wage earners in the United States â€” not the middle class or lower-income wage earners.

Furthermore, the wealthiest 30% of employees earn 89% of the “present value of tax advantages for DC plans and IRAs,” according to the report.

The report, “The Missing Middle: How Tax Incentives for Retirement Savings Leave Middle-Class Families Behind,” discusses how Social Security fails to help the middle class. It has been found to aid in the reduction of poverty among older Americans, but it doesn’t offer adequate retirement income for the middle class.

Furthermore, because of marginal tax rates, the tax benefits obtained by saving for retirement through alternative methods benefit high earners more. According to the report, when these factors are combined, they result in retirement disparities tied not just to income but also to geography and race.

The report proposes potential remedies such as expanding Social Security through benefit modifications or including lifelong income choices for people who save outside the program. Reforming the tax features of retirement savings might also help motivate retirement savings outside the Social Security system by providing middle-class tax breaks.

Finally, the report proposed that decreasing abuses in the present Social Security system may contribute to the fund’s growth through federal tax revenue.

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

80% of Employees are Asking for this Retirement Benefit

October 21, 2023 /by jason anderson

Even though job openings dropped from July to August, companies may still have to compete for good workers. If you’re looking for a job and your skill set is in great demand, you might still have your pick of desirable offers.

That is a worrisome statistic for any recruiting department attempting to attract and retain talent.

Therefore, how do businesses develop and keep their best workers in the face of some fiercest competition in recent memory? Offering competitive pay and benefits is still at the top of the arsenal. However, another powerful weapon for winning the fight on talent may be hiding in plain sight.

Is the answer to attracting top talent right in front of our eyes?

According to our findings, retirement benefits, commonly disregarded as part of the overall benefits package provided to employees, have captivated the attention of today’s workforce. In particular, more employees are requesting lifelong income alternatives in their retirement plans.

According to the 2022 TIAA Retirement Insights Survey, more employees are very or extremely interested in guaranteed lifetime income inside retirement plans than in 2020 (54% in 2022 vs. 51% in 2020). Also, 48% of employees opine that their enthusiasm has increased during the pandemic.

One factor for the increase in employer interest

Employers are concerned that traditional target-date funds (TDFs) are not adequately preparing their employees for retirement. TDFs cannot guarantee a consistent and predictable income for the rest of one’s life. As a result, they’re looking into the benefits of offering guaranteed lifetime income options, known as annuities, to supplement non-guaranteed retirement income strategies.

Over three-quarters of employers are very interested in a new generation of traditional target-date funds/other asset allocation solutions that can include a lifetime income solution allocation.

Dispelling lifelong income misconceptions

Advisors and consultants can kick off the lifetime income conversation by refuting common annuity fallacies.

Defined contribution plans often include in-plan annuities and are widely acknowledged as a significant lifelong income source. However, some plan sponsors regard annuities as challenging to establish, costly, and unpopular with employees.

Other employers may believe that employees are not yet requesting annuities, which is incorrect. According to Aon, 80% of employees demand guaranteed retirement income, and over 70% of plan sponsors believe that lifelong income options should be incorporated into their DC plan.

How much is lifetime income worth in retirement?

A basic comparison could be helpful here. Many employees buy disability insurance to ensure an income even if they cannot work. People also purchase life insurance to protect their families if they die too young. Converting a portion of your retirement funds to lifetime income is similar. Annuitizing, rather than securing your income during your earning years, protects your income during your retirement years.

Before entering into any default negotiations, benefits departments must have open discussions. This would be whether they want their plan to stay a tax-deferred savings plan or whether they want to take the straightforward steps to upgrade it to a real retirement income plan. If the latter, the first step is to conduct research and select the category of lifetime income solution that best meets the plan sponsor’s objectives.

It is now time for a comprehensive benefits review.

The forthcoming annual enrollment season is an excellent opportunity for plan sponsors to remind employees of the importance of their retirement benefits as part of their overall pay package. While the benefits enrollment period is typically focused on health and welfare benefits, it is also an excellent opportunity to remind employees about the retirement program (s). This includes urging them to do the following:

Participate as much as possible in their retirement plans.
Begin planning a strategy to convert assets to long-term income in retirement and provide ongoing income to loved ones after they pass away.
Make wise decisions now to position them for a confident and secure retirement.
It’s also a good idea to keep reminding them throughout the year.

Note for employees: Listen and react when you highlight the importance of your retirement plan and set out the complete worth of your benefits package. It could mean distinguishing between attracting and maintaining top talent and losing out on top candidates.

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]

What is the TSP?

October 21, 2023 /by marvin dutton

Put plainly, the Thrift Savings Plan (TSP) is a type of retirement plan made available to federal government employees, including uniformed service members and members of Congress. It is similar to a 401(k) plan offered by private employersâ€”it enables federal employees to set pre-tax contributions aside for investment options with funds that ultimately pay toward retirement. By educating yourself on the ins and outs of a TSP, you can reap the rewards of your investment for years to come.

Currently featuring more people than the number of citizens across several countries, the TSP is a government-created retirement program with over 99,000 millionaires. Its net worth is also larger than several nations across the globe, something the private sector is incapable of touching. As a federal employee, the Thrift Savings Plan (TSP) is a must-have you don’t want to miss out on, with advantages that will pay off well into your retirement years. Before you miss out on the available perks, please consider how the TSP was created and how it was intended to benefit government employees.

Introduced as part of the Federal Employees Retirement System Act in the 1980s, the Thrift Savings Plan (TSP) provided workers with investment opportunities much like a 401(k). The rule since its inception was to keep the TSP simple and affordable, with low administrative fees. Federal workers can make contributions up to $20,500 per year for those younger than 50. Anyone older than 50 years may take advantage of the $6,500 catch-up limit. The government also matches contributions, much like a 401(k), for anyone eligible within the Federal Employees Retirement System (FERS). For example, by contributing 5% of your salary, you are eligible to receive an additional 5%.

Depending on your plan, the overall cost of a TSP is arguably one of its best features, with expense ratios averaging to a mere 0.058% (for the F Fund). In terms of fees, for each $10,000 held within your plan, you should project paying as much as $5.80 annually. The differences between a TSP and the average cost of a 401(k) equates to additional savings you could invest toward maximizing your TSP retirement savings.

Upon reaching the age of 59 ½, TSP participants may begin making withdrawals without risk of a penalty with a few exceptions (including death or permanent disability). Should you start suffering from adverse health conditions spelled out by the TSP, you may qualify to withdraw early. This is not without exemption, though, and comes with a penalty of 10% additional taxes on the withdrawn amount. However, once you reach 72, you will be required to make TSP withdrawals. Taxes are also not paid until you begin taking distributions upon reaching the minimum age.

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

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

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

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]

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

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

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 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

Tag: TSP

Disability Insurance And Retirement Security Go Together

The Federal Government wants to Improve Retirement Ways: Add Gold to Spend Golden Years with Ease

Increased Retirement Spending Between Ages 62 and 80

Senators from The Republican Party made a last-minute appeal for the TSP to delay the opening of the mutual fund session

Here’s What you should Know About The Thrift Savings Plan

The Limited Eligibility of a Lump-Sum Annuity

Is It Right to Offer Too Many Health Benefits

Tips to Improve the Right Benefits:

1. Communicate With Your Employees What They Want:

How To Avoid It?

2. Focus on the Most Common Health Benefits:

Don’t Stay Back in Offering New Health Benefits, But Be Ready to Pivot:

Final Words:

Medicare Deductibles and Premiums Will Decline in 2023

How Social Security Reform Can Help Those Disproportionally Affected by Retirement Tax Breaks

80% of Employees are Asking for this Retirement Benefit

What is the TSP?

Considering retiring soon? How skyrocketing inflation will affect your retirement

Can You Retire Just Yet? Three Things to Consider

Converting Money from a TSP Into an Annuity

Special Cases Exempt from the 10% Early Withdrawal Penalty.

Three Steps to Help You Retire in A Slowing Economy

Which of the Three Financial Stages Do You Occupy?

1. Look through your spending history.

2. Create a plan to survive a stock market drop

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

First Responder Retirement Fix Passes the House and More

TSP & Retirement

Insurance