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.
Are 5000 new TSP Options Too Many?
/by marvin duttonWhat if your favorite eating establishment’s menu grew from 15 to over 5,000 new options? Could you deal with it? Do you think it’s a good idea, or do you think it’s a bad idea? Maybe you’ll choke on your options.
Prepare to be surprised.
Starting later in the year, the federal Thrift Savings Plan (TSP) will dramatically boost the number of investment options available to active and retired government and military personnel. TSP participants might have up to 5,000 new investment alternatives by the end of the year.
So, what comes next?
The TSP is the government’s version of a 401(k) plan. It is currently valued at $770 billion. It is one of the world’s largest investment vehicles that private companies and organizations have sought a piece of since Congress established it.
The TSP is the crown jewel of investment alternatives, with a 5% match for most investors and strict control. Members of Congress, ambassadors, and the Supreme Court are all covered by the TSP, encompassing everyone from SEC lawyers to park rangers and even astronauts.
TSP has only five funds at the moment. They include three stock index funds, a bond and treasury securities fund, and ten Life Cycle funds that automatically adjust to your needs.
Environmental, social, and governance (ESG) funds will be included in the new investment possibilities. This will gratify investors who have been clamoring for greater ESG for decades. Investors will transfer up to 25% of their TSP balance to one (or more) of the newly approved funds. They’ll also have to pay more administrative costs than those who adhere to the five essential funds.
At the end of the day, the main question is whether you should invest some (or all) of your retirement savings in new options with higher growth potential.
Alternatively, you may get into the tank! According to some estimates, the TSP will provide a third to half of the income that more federal or military investors will get in retirement, assuming they invest wisely and effectively.
The new alternatives will be a boon to federal employees. They have been trying to time the market by forecasting high and low moments and then investing accordingly, especially if they know to buy low and sell at a higher price, which is more difficult in practice than it appears in principle.
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].
Seven Aspects In Which Your Financial Literacy Changes Once You Retire
/by todd carmackFinancial literacy covers a broad range of topics, including budgeting, saving, investing, and retirement planning. However, your financial literacy broadens to cover circumstances that weren’t as important during your working life once you retire. For example, income declines typically in retirement, while costs may remain constant or even grow, depending on your lifestyle and overall health.
Here are seven crucial subjects to learn if you wish to avoid financial pitfalls in retirement.
You’ve been paying into Social Security since your first payday. Still, as you near retirement, you should plan your Social Security withdrawal strategy. Your Social Security benefits partly depend on how much you earned throughout your working lifetime. You should also consult a tax or financial professional to determine if you should start benefits early, at full retirement age (FRA), or even later.
Medicare is a complicated system of health insurance for seniors. To use it efficiently, you must understand how it works. Medicare has two fundamental portions, A and B, covering hospital and medical costs. Part B has a monthly premium. If you need prescription medication coverage, you can add Part D. Medicare Advantage (Medicare Part C) is a private company’s version of Original Medicare. You’ll probably need to consult an expert to understand Medicare’s financial implications with so many options. Notably, neither Original Medicare nor Medicare Advantage is likely to cover care outside the US.
Required Minimum Distributions (RMDs)
As you’ve paid Social Security taxes during your working life, you’ve also contributed to your retirement accounts. But you can’t keep your money in them forever. Traditional IRAs and 401(k) plans demand annual distributions beyond a specific age to avoid a 50% penalty tax. Congress has extended the deadline for taking RMDs to April 1 of the year after your 72nd birthday. Since Roth IRAs are funded after-tax, they don’t require you to take minimum distributions.
Taxes
Taxes are easy if you have a paid job. Generally, your company will deduct taxes from your paycheck, while all you need to do is supply your W-2 information when filing your taxes. During retirement, you may get many forms like 1099-Rs and K-1s. Some of these may have different tax implications, so you should familiarize yourself with them before retiring.
Expenses
Even if you’re used to budgeting, your retirement budget is likely to vary dramatically. For instance, many retired people have already paid off their mortgages. However, some expenses, like medical bills, are likely to climb, even with good insurance. Other costs will vary based on your lifestyle. Some retirees increase their travel and dining expenses, while others reduce them instead. Budgets differ significantly from one person to another, but they often shift after retirement. Be prepared and aware that your retirement costs might increase or decrease drastically.
End-of-Life Planning
Nobody wants to talk about the end of their lives, yet it’s a necessary step in financial preparation. First, you should create a will and/or trust to identify who will inherit your assets after you die. You may also consider consulting an estate attorney about optimizing the value of your asset transfers to heirs. Nonfinancial considerations include preparing instructions for end-of-life planning in advance if you become disabled. For example, you might want to sign an advance directive, such as a durable power of attorney for healthcare, which authorizes someone else to make medical choices on your behalf.
Asset Allocation
You’ve probably heard of asset allocation in your pre-retirement years, whether in a 401(k) plan or your personal investing account. However, as you approach retirement, you will almost certainly need to revise your asset allocation, which should have served you well during your working years. You will have fewer years to recover from a slump in your assets in retirement and less money to contribute to your account while markets are down.
As a result, many financial consultants may advise you to adjust your portfolio toward more conservative assets as you become older. As each person’s financial position is unique, you should assess your income, spending, and financial requirements, maybe with the help of a financial counselor, before making any significant changes to your portfolio.
Contact Information:
Email: [email protected]
Phone: 6232511574
Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.
Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.
The Oklahoma City Bill Exempts Veterans From Retirement Taxes.
/by aaron steeleRepublican Reps. Kevin McDugle, Tammy Townley, R-Broken Arrow, Robert Manger, and R-Ardmore of Oklahoma City celebrated the approval of their bill in the House of Representatives. This bill would grant Oklahoma veterans a 100% tax exemption on their retirement benefits due to their service to the country.
The present exemption would be extended until December 31, 2022, under House Bill 3693. Under the new law, veterans in Oklahoma City will be exempt from paying income taxes on their retirement payments beginning January 1, 2023.
Veterans of the United States Armed Forces get tax breaks for about 75% of their retirement payments, or $10,000, from any other part of the United States Armed Forces.
Speaking about the bill, McDugle said, “During the interim study we had, the most common request we received from various business sectors, especially the aerospace industry, was that we do everything we can to keep veterans in Oklahoma.”
“With this bill, we can keep our veterans and their families in Oklahoma, where they may continue contributing to the state’s workforce.”
“We want to motivate folks leaving military duty to stay in Oklahoma at various bases,” Rep. Townley said.
Our veterans are experts in their fields, and many opt to work in the civilian sector after leaving the military. They’ll opt to stay in Oklahoma because of veteran-friendly retirement benefits, filling our workforce shortfalls, and contributing to their community and state.
Rep. Manger, a member of the House Military and Veterans Affairs Committee, said, “The law is just one more way to say thank you to those brave individuals who have served our country. Every little effort helps these heroes, and I’m delighted that we’re doing our part to ensure that our servicemen and women are treated with respect and dignity.”
In late March, H.B. 3693 passed the House by 88-0, making it eligible for consideration in the Senate.
According to a budgetary estimate issued by House staff on March 24, the bill will have no fiscal impact in Fiscal Year 2023. A net drop of $5.677 million in state income tax receipts is expected in the fiscal year 2024. The bill’s primary author in the State Senate is State Senator Julie Daniels, R-Bartlesville.
Contact Information:
Email: [email protected]
Phone: 3604642979
Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.
Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.
Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.
Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.
Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.
With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.
Aaron can help you and your family to create, preserve and protect your legacy.
That’s making a difference.
Disclosure:
Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.
Confidential Notice and Disclosure: Electronic mail sent over the internet is not secure and could be intercepted by a third party. For your protection, avoid sending confidential identifying information, such as account and social security numbers. Further, do not send time-sensitive, action-oriented messages, such as transaction orders, fund transfer instructions, or check stop payments, as it is our policy not to accept such items electronically. All e-mail sent to or from this address will be received or otherwise recorded by the sender’s corporate e-mail system and is subject to archival, monitoring or review by, and/or disclosure to, someone other than the recipient as permitted and required by the Securities and Exchange Commission. Please contact your advisor if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. Additionally, if you change your address or fail to receive account statements from your account custodian, please contact our office at [email protected] or 800-779-4183.
You may be eligible for the Lump-Sum Annuity.
/by marvin duttonOne of the most misunderstood components of federal retirement policy is the “lump-sum option,” often known as the “alternative form of an annuity.” Even though it is no longer widely available, many employees nearing retirement age still ask for it.
The lump-sum option was developed to replace the previous “three-year recovery rule.” A program under which retirees are exempt from paying taxes on annuity payments for up to three years in exchange for receiving a refund equal to their contributions to the federal retirement fund. For most retirees, the tax-free period was around half that long in practice.
The initial lump-sum option permitted retirees to take out an amount equal to their contributions upon retirement while accepting an actuarial reduction of their annuity amount based on their average life expectancy. After its inception in 1986, the choice was widely available and enormously popular. However, it garnered a lot of attention from those in charge of the federal purse strings, and it was repealed on October 1, 1994, for everyone save those with a medical condition that is predicted to kill them within two years.
Although everyone currently eligible for this option has a substantially shorter life expectancy, those with life-threatening diseases may elect to get the lump sum and, as such, have their annuity actuarially decreased using the same life expectancy method.
The Office of Personnel Management (OPM) maintains a list of medical problems that automatically qualify for the alternative kind of annuity. It often requires providing medical papers for it. Other circumstances are evaluated on a case-by-case basis.
Even though that transition occurred many years ago, most employees approaching retirement appear to be making plans based on the availability of a lump-sum payment. This may be because they entered government employment around the period of the original lump-sum design and still believed in it.
Those who require a lump-sum withdrawal in retirement for a specific purpose, like paying off mortgages or other debts, or making a large purchase, should consider a Thrift Savings Plan (TSP) lump-sum withdrawal.
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].
Senate Urges Diversity in TSP Offerings
/by rick viaderSenate Democrats are urging the Federal Retirement Thrift Investment Board in Washington to give federal employees more options for investing in funds managed by various asset managers.
Their request comes ahead of plans by the TSP board to open a mutual fund window for TSP participants in the summer of 2022.
The proposed mutual fund window would open simultaneously with the board’s new contract with Accenture Federal Services, signed in November 2020.
A letter was sent to David A. Jones (board’s acting chairman) by the Senate Democrats — Cory Booker and Robert Menendez (New Jersey), Ben Ray Lujan (New Mexico), Alex Padilla (California), Sherrod Brown (Ohio), Tim Kaine (Virginia), and Jeff Merkley (Oregon). It read, “As part of this effort, we urge you to provide options for federal employees to invest in funds managed by asset managers that are ethnically, racially, and gender diverse…When it comes to their retirement assets, federal employees need the option to promote diversity on a strategic and values-based basis.”
The senators said in their letter that executive diversity is a good business practice that has been shown to improve returns, citing a 2020 McKinsey study that found companies in the top quartile for racial, ethnic, and gender diversity were more likely to have returns above their industries’ national medians.
“Given that the TSP’s present investment managers have been failing at diversity, especially at the executive level,” the senators noted, “…the mutual fund window is a significant opportunity.” “While the board manages a portion of the TSP’s funds itself, the board hires BlackRock as their primary investment manager and State Street Global Advisors as their secondary investment manager.”
In 2020, only 20% of BlackRock’s top management were female, 5% were African American, and only 3% were Hispanic. State Street’s top management consisted of 32% women, 2% African Americans, and 3% Hispanics.
The senators also cited a 2017 report from the Government Accountability Office that outlined ways that government retirement plans and other programs may improve chances for minority-owned and women-owned asset managers.
The FRTIB said five years ago that it didn’t see a mutual fund window being offered before 2020. While it didn’t rule out the possibility of offering funds managed by minority and women-owned businesses, it couldn’t guarantee which funds would be included in a future MFW because the market is always changing.
Senators stated that the board collaborated with Accenture Federal Services last fall to build tools to allow its members to search for funds managed by women and minority-owned businesses. They do, however, want to see the board do more to connect with and diversify the pool of asset managers.
They added that “more federal workers may choose to join in the TSP or boost their contributions if the board offers TSP funds specially managed by diverse asset managers.” “The board might encourage more federal workers to join the TSP and protect their pensions by responding to the public’s desire for diversity.”
The Thrift Board manages the TSP, a $774.2 billion retirement scheme for 6.4 million federal employees and uniformed service personnel.
Participants will have access to more than 5,000 mutual funds when the mutual fund window goes live, according to Kim Weaver, the board director of external relations, in an email Thursday.
“The mutual fund window will allow participants to take a portion of their TSP account and put it into a wide range of investment options, allowing them to customize their retirement portfolio,” Ms. Weaver explained. Participants will be able to incorporate a certain investing outlook into their portfolio through the mutual fund window to the extent they choose.
Ms. Weaver said, “We’re excited to answer to the senators and provide them with information about the mutual fund window.”
Contact Information:
Email: [email protected]
Phone: 9568933225
Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.
In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.
His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.
How Congress Wants to Curb Early Retirement Withdrawals
/by rick viaderMoving a 401(k) from one employer to another might be inconvenient. Still, it’s preferable to cash out the account and possibly lose thousands of dollars by retirement, not to mention the extra taxes and penalties you’d have to pay.
Every year, Americans’ retirement portfolios suffer from “leakage,” defined as early withdrawals from retirement funds for reasons other than retirement. Most retirement plans require investors to reach 59 1/2 before receiving penalty-free withdrawals, although misfortunes such as job loss, disability, or death in the family do occur.
Non-emergency distributions, such as cashing out an account when changing jobs, might unnecessarily jeopardize an American’s future retirement.
During a Senate Committee on Aging hearing on “A Financially Secure Future: Building a Stronger Retirement System for All Americans,” Sen. Tim Scott said that almost $92 billion in retirement funds were lost due to leakage in 2015. Scott, a Republican senator from South Carolina, is the committee’s ranking member.
The significance of that is that when you have that leakage every year, it means fewer funds will be available for you when you need them the most — when you want to retire and live well in the future, Sen. Scott explained. Too many of your resources may have spilled out along the road. Scott stated he took an early withdrawal in his late twenties and didn’t know how significant it was until he had to record the distribution as ordinary income and pay a 10% penalty on top of it.
According to the senator, switching employment is one of the biggest leakage drivers. People no longer work for the same company for decades — it’s not uncommon for the average worker to have between seven and eleven employers during their careers, he says — which opens up more options for people to take their retirement funds with them.
According to a Savings Preservation Working Group research, cash-outs at the time of job switching were more prevalent than hardship withdrawals and loan defaults. The study found that at least one-third of employees, but as many as 47% of plan members, withdraw some or all of their retirement portfolios when switching jobs.
Workers are also more inclined to cash out their retirement accounts when their balances are low, according to J. Spencer Williams, founder and CEO of Retirement Clearinghouse, who testified at the hearing. When savers reach $10,000 in their retirement accounts, their perspectives begin to shift, he said. Moving money from one employer’s retirement plan to another can also be time-consuming. According to him, we need to make it incredibly simple because every time someone switches employment, they have to decide, especially at the lower end.
Americans not only pay ordinary income taxes and a penalty for taking early distributions, but they also miss out on the power of compound interest, which is when invested money accumulates on top of itself and creates returns over time. That might cost savers tens of thousands of dollars, if not more, throughout a lifetime.
Congress is investigating the issue. One proposal, known as the “Portable Retirement and Investment Account Act” (PRIA), would solve the leakage issue by letting Americans relocate their retirement funds throughout their careers. At the time of introducing the measure, Rep. Jim Himes of Connecticut stated that the present system for retirement savings was ineffective.
The alternatives available to American employees vary substantially depending on their field of employment, and the procedures can be too complex. Furthermore, if they quit their work, many Americans lose access to retirement savings vehicles, and gig, contract, and part-time employees are usually ineligible. This changes with PRIA, the lawmaker added in a statement. Under that proposal, workers who leave their employment would be able to continue contributing to the plan in the same way they did previously.
Nontraditional workers, like those in the gig economy, may not participate in an employer-sponsored retirement plan (although many states address this issue by implementing auto-IRA programs). Demand exists despite low access levels among nontraditional workers, said John Scott, project director of the Pew Charitable Trusts’ retirement savings project and a witness at the Senate hearing.
It’s tough to say: well, we have one answer that will match all types of workers, he added. The gig economy encompasses a wide range of arrangements — workers may get paid in various ways or file their taxes in different ways, for example, and may not have the option of a direct deposit from their check to their retirement account. With this workforce section, we need to be more imaginative and innovative.
Contact Information:
Email: [email protected]
Phone: 9568933225
Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.
In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.
His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.
TSP Investing in Chinese Companies
/by joe carrenoIn recent years, environmental, social, and governance-oriented (ESG) investing has seen an upsurge. The Federal Retirement Thrift Investment Board (FRTIB) decided to join the trend last fall by investing in an index fund with some Chinese companies. Despite much criticism from some US senators, the board has announced that it is still on track with the plans.
In November 2019, the FRTIB had voted to confirm a 2017 decision to move the International Funds under the TSP to the Morgan Stanley Capital International All Country World Ex-U.S. Investable Market Index. Since the story broke, the board has been receiving criticisms from different quarters.
Joseph M. Giglio of D’Amore-McKim School of Business is one of the people heavily critical of the decision in mainstream media. The professor of strategic management rebuffed the board for wanting to invest in “shady” Chinese companies connected to the Chinese government and the Chinese Communist Party. Giglio explained that the move shows that the FRTIB is not acting in the best interest of the United States and knows there will be no adverse consequences for such actions.
Giglio also pointed out that the US government sanctioned some of the companies for undermining national security. He specifically points out China’s state-owned Aviation Industry Corporation, which supplies military aircraft to the Chinese People’s Liberation Army.
Members of the US military are also under the TSP, and it is anyone’s guess how they will react to the board using their money to strengthen the Chinese government and military.
FERS Act of 1986 established the Thrift Savings Plan (TSP), which offers five index funds to federal employees to help them prepare for retirement. It is similar to what is available in 401k plans. The index funds, which are invested in short term US Treasury securities, or national, international, or bond index funds, include:
- The Government Securities Investment (G) Fund
- The Fixed Income Index Investment (F) Fund
- The Common Stock Index Investment (C) Fund
- The Small Capitalization Stock Index (S) Fund
- International Stock Index Investment (I) Fund
Some US senators (Republicans and Democrats) have also criticized the FRTIB’s decision to shift to the new index fund. On August 26, 2019, Senator Marco Rubio (R-FL) and Senator Jeanne Shaheen (D-NH) wrote a letter to the chairman of the board, Michael Kennedy, asking the board to reconsider investing in the index fund. Like Giglio, the senators also stated that investing in Chinese companies poses a threat to the national security of the US.
The senators, joined by Senators Mitt Romney (R-UT), Kristen Gillibrand (D-NY), Rick Scott (R-FL), and Josh Hawley (R-MO), sent out another letter on October 22, 2019.
In response, the members of the FRTIB said political pressures would not influence them in deciding how to invest the funds under the TSP. They also explained that the Act that established the TSP lists the funds controlled by the board as private property.
To stop the board from going ahead with its plan, Rubio, Shaheen, and Romney introduced the Taxpayers and Savers Protection Act in November 2019, but the bill has not advanced beyond that stage.
But some stakeholders of the plan support the move to shift the I Fund. These people have urged Congress to stop trying to influence the FRTIB’s decision, stating that the plan is an independent entity. They also stated that the decision would put the TSP at par with other retirement plans. They also want Congress to drop the Taxpayers and Savers Protection bill.
The group cited a review from Aon, a British-American multinational professional services firm that first recommended investing in the index fund. According to Aon, TSP should expand to the emerging markets benchmark to risk being an oddity compared to other retirement plans.
The pandemic has also had a severe toll on TSP account balances. In December 2019, the number of millionaires under the plan was 49,620. By March 31, 2020, there had been a significant drop of over 45%, with only 27,212 participants having 1 million dollars or more in their accounts.
The highest TSP experienced a 14% decrease in value, moving from $7,395,476.29 on December 31 to $6,375,795 on March 31, 2020.
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.
TSP Premature Withdrawal Consequences: Traditional and Roth
/by jeff boettcherThe Internal Revenue Code imposes penalties in specific situations, including a ten percent penalty for premature withdrawals from retirement funds. What is premature? That is debatable. In this post, we will explore the age you’d have to be to escape this consequence.
When IRAs (Individual Retirement Arrangements) were launched in 1974, the consequence was enacted. People who withdrew funds from their IRA at 59 years old were immune from the penalty. Those who take their funds before turning 59 and a half years would pay the consequences and taxes imposed on the funds they withdrew. The penalty’s limit of 59 and a half means the day on which you become 59 and a half. Until 1987, every fund in your IRA account was, in fact, pre-taxed. This means that contributions were made with pre-tax monies and your account matured tax-deferred.
The Roth Individual Retirement Arrangements was first launched in 1997. At that time, all earnings you withdrew before 59 and a half were subject to a premature withdrawal penalty. Early withdrawal penalties do not apply to conversions or contributions you make before reaching that age. Withdrawals from your Roth Individual Retirement Arrangements account are viewed as arriving first from contributions, then conversions, and finally from earnings. That’s not the case with the Roth Thrift Savings Plan (explained below); withdrawals from the Roth Thrift Savings Plan are proportional to earnings and contributions.
The Thrift Savings Plan was established in 1987. Like a standard IRA, it permits tax-deferred earnings and pre-tax contributions. It features a ten percent penalty for premature withdrawals up to 59 years. However, the consequence isn’t always applicable. You are excluded from the penalty if you retire from your government position in the same year you reached 55 (or beyond).
This exclusion from the consequence will start the same year you turn 55, but on the very day you turn 55. If you split in one year before you turn 55, the ten percent penalty will become applicable until you turn 59 and a half. Suppose you’re a particular class worker (such as a firefighter or a police officer). In that case, you’re free from the consequences after you reach the age of 50. Funds taken from your Roth Thrift Savings Plan are subject to this rule.
If you split between 55 (or 50) and 59 and a half, don’t expect to pay remit taxes upon withdrawing from your Roth Thrift Savings Plan. A Roth Thrift Savings Plan account has two parts: the paid contributions and profits earned from these contributions. You pay taxes as you contribute. Still, part of the profit is only non-taxable if you take funds out of the account five years or more after creating your Roth and for a minimum of 59 and a half years.
Watch out for the “Roth Tax Trap†if you retire before 59 and a half and start withdrawing funds from your Thrift Savings Plan. The withdrawal would be commensurately from your Roth and traditional accounts. You’ll have to make tax payments on parts of your fund’s withdrawal that emerge from the income component of your Roth account until you are 59 and a half years old.
This is because you may pick which portion of the Thrift Savings Plan your payouts originate from (Roth or traditional). Suppose you are withdrawing funds from your Thrift Savings Plan before age 59. In that case, it is best to withdraw your funds solely from the conventional component of your Thrift Savings Plan.
Contact Information:
Email: [email protected]
Phone: 8007794183
Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”
Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.
A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.
Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.
Social Security and the Offset for Government Pensions
/by jeff boettcherWhat if you were employed by the government but did not contribute to Social Security while you were employed? In that case, the Social Security Administration would reduce your Social Security spousal, widow, or widower benefits by two-thirds of any government pension you get. This is known as the Government Pension Offset (GPO).
How does this work?
A spouse who receives an annuity from a job where he or she did not pay Social Security taxes, such as those receiving a CSRS annuity, has their Social Security payment reduced or eliminated by the GPO. If you fall under this category, your CSRS annuity will be decreased by $2 for every $3 you get in your Social Security spousal payment.
Your Social Security spousal benefit will be affected by your CSRS annuity to the full extent of its increase, up to and including its elimination.
For instance, you wouldn’t earn anything from Social Security if your monthly CSRS annuity was $1,500 and you were eligible for a $900 spousal benefit. That’s because $1,000 is equal to two-thirds of $1,500. If you deduct it from $900, you’re left with nothing.
Why would the government treat its workers this way?
The Social Security System was created to give those who did not work or had little income during their working lives a basic minimum level of financial security. In other words, spousal payments weren’t intended to supplement the Social Security benefits of working couples who were each eligible for one.
If one of them qualifies for both an earned Social Security benefit and a spousal benefit, they can only receive the benefit with the higher amount, not both.
CSRS beneficiaries who were married to Social Security beneficiaries were formerly entitled to both a full CSRS pension and a full Social Security spousal payment. However, Congress determined in 1982 that a worker who was enrolled in a retirement system for which they were not paying Social Security payments was benefiting unfairly. So, the statute was altered.
The Social Security Administration has created two clarifying examples that provide the best justification for the change:
Jude Fred receives a monthly Social Security income of $600. Ana, his wife, may be eligible for a wife’s benefit of up to $300, or 50% of Jude’s.
However, Ana also contributed to Social Security through her employment, making her eligible for a $400 retirement payout. Since her $400 retirement benefit effectively cancels out her $300 spousal benefit, she will not receive any spousal benefits.
Jude’s next-door neighbor, Robert, also receives a monthly Social Security income of $600. However, his wife, Mary, was employed by the federal government and received an $800 monthly civil service pension rather than a job requiring her to pay Social Security taxes.
Mary would have been qualified for both her $800 civil service pension and a $300 spousal benefit on Robert’s Social Security record had the government annuity offset rules not been in place.
With the offset clause in effect, Mary is treated the same as Ana because she is no longer eligible for Social Security benefits as a spouse.
The GPO affected about 11.5% of the 6.25 million spouse or widow(er) beneficiaries in 2020. The average non-covered pension for GPO beneficiaries in 2020 was $2,531, more than $1,000 above the typical Social Security retired worker payment of $1,544. The average non-covered pension for beneficiaries impacted by the GPO was $3,193 per month. Nearly three-quarters of beneficiaries had their entire spouse or widow(er) benefit deducted.
The way forward
It is frequently suggested that the GPO should be repealed since it was some accident or unexpected effect of a poorly thought-out amendment in the legislation during the Social Security reforms of 1980.
Congress consciously implemented the GPO to eliminate what it saw as an unfair advantage. Knowing that is little consolation to those experiencing its effects or who will retire in the future. But until and unless it is changed, it is the law.
It’s best not to hold your breath in hope, despite recent efforts in Congress to repeal or relax both the WEP and the GPO. Those proposals have been circulating since shortly after those provisions were passed nearly forty years ago.
Plan instead as if they will still be in place. Verify that your additional assets and investments, along with your CSRS and Social Security benefits, will be enough to cover your retirement expenses.
Contact Information:
Email: [email protected]
Phone: 8007794183
Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”
Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.
A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.
Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.
Re-designation of Many Federal Employees for Higher Pay Zones
/by mickey elfenbeinMany employees have been removed from their positions due to locality-based payments. It was planned and estimated by the evidence provided. According to the report provided by the U.S. Office of Personnel Management (OPM), many employees will be re-designated to an area of high locality for the year 2023.
This may apply to an estimated 32,000 employees. Each year, federal employees receive adjustments for their pay based on the Employment Cost Index for the workers of the private industries subtracting 0.5 percentage points. Therefore, allowance for locality-based pay would be made in areas where the difference in pay between federal and non-federal employees is much more than five percent.
New areas have been defined where the employees would receive the locality-based payments. Among the list of cities with new regulations, California, Fresno, Nevada, Rochester, New York, Washington, Reno, and Spokane will be the new locality pay areas. Also, many workers would be shifted to existing locality pay areas, the OPM said in the report.
Press Secretary Viet Tran said while stating to Federal Times that 85 percent of the federal workforce lives outside the area of D.C. Thus, the OPM is working to ensure that locality pay is competitive in every community throughout the country. Also, the Department of Labor and the OPM, has revised the Federal Salary Council recommendation to create four new pay localities, expanding the existing areas.
The federal Pay Agent has identified the areas with local pay discrepancies. Therefore, they have made some suggestions to the president so he can address them. It was created as a part of an annual review. The Secretary of Labor, along with the White House Office of Management, Budget, and OPM directors, have made up the president’s Pay Agent.
Furthermore, the changes that are in consideration to be made for locality pay areas are tentative and will only be approved once the suitable rule-making is complete to make these changes permanent. The timing for the rule-making has yet to be established. The modifications discussed for the locality pay area should be implemented from January 2024 at the earliest.
As per the Federal Employees’ Pay Comparability Act of 1990, the U.S. Bureau of Labor and Statistics has been asked to conduct a survey and collect data on salaried workers that are non-federal. The National Compensation Survey estimates the salary difference level of work from the occupational average as said by the reports. The Occupational Employment and Wage Statistics data indicates the average salaries of many occupations in every locality pay area. Moreover, the changes made for 2023 state that federal employees will see a salary rise across the board of 4.1%. Also, the average locality pay would increase to 0.5% from January.
Contact Information:
Email: [email protected]
Phone: 6122163911
Bio:
Mickey Elfenbein specializes in working with Federal Employees relative to their retirement benefit plans, FEGLI, TSP, Social Security and Medicare, issues and solutions. Mr. Elfenbein’s mission is to help federal employees to understand their benefits, and to maximize their financial retirements while minimizing risk. Many of the federal benefit programs in place are complicated to understand and go through numerous revisions. It is Mr. Elfenbein’s job to be an expert on the various programs and to stay on top of changes.
Mickey enjoys in providing an individualized and complimentary retirement analysis for federal employees.
He has over 30 years of senior level experience in a variety of public and private enterprises, understands the needs of federal employees, and has expertise built on many years of high-level experience.
TSP Account; Do You Know Your Beneficiary?
/by george learnedThere is a need for people to be certain of their TSP-3 beneficiary. Thus, this article focuses on the ways to do that.
The person listed on your most recent TSP-3 form may be someone you know, but the TSP (Thrift Savings Plan) may not know who they are. Some individuals have stated that the website’s beneficiary information is correct for their primary beneficiary but not for contingent beneficiaries.
Indeed, the Thrift Savings Plan admitted that 266,000 beneficiary designations were not transferred to the new system due to data quality issues. Then they cryptically say that the beneficiary forms are still on file.
Please do not assume that the beneficiary information you have provided is accurate. Here are some suggestions:
If you haven’t already, set up your new TSP account immediately. Examine the account to ensure that your beneficiary designations are correctly recorded.
If your designations are incorrect, take the necessary steps to update your TSP-3.
You can submit a new TSP-3 in the following cases:
- When you do not have a beneficiary form on file
- If your account needs to be updated
- When your designated beneficiary has passed away
The TSP-3 form is available in the Forms section, but you may need to be patient with the website. The Thrift Board’s website is still not up and running as smoothly as it should be. When you reach the TSP-3 link, you will be allowed to download the form or use a “wizard.” TSP form wizards make it simple to fill out any TSP form; they ask pertinent questions and, based on your answers, direct you to the next section that needs to be completed. With a wizard, you won’t have to wonder which parts of the form to fill out and which to leave blank. Printing out a filled-out version of the form allows you to take it to a notary if you need it notarized, which is frequently the case with TSP forms.
What if you don’t have a TSP-3 on file or if it was “lost” during the system transition? In that case, the Thrift Savings Plan will use the standard order of precedence to determine who will receive your TSP funds when you pass away. The TSP will disregard any wishes you have expressed in a will or trust. In estate planning, it is a general rule that beneficiary forms (or the standard order of precedence) take precedence over any other stated wishes. The legal order of priority for federal benefits after your designated beneficiary is:
- Surviving partner
- Children (per stirpes) (unless formally adopted, stepchildren are omitted)
- Parents (except step-parents who have officially adopted you)
- The legal representative of the estate, such as an executor or administrator as appointed by the court
- Next of kin
The TSP-3, like most beneficiary forms, allows you to name contingent beneficiaries who will receive the funds if the designated beneficiary dies before you. You can also select multiple beneficiaries. If you choose this option, ensure the total adds up to 100%.
If your beneficiary is:
- Your federally employed or retired spouse: they have the option of taking the money out of your TSP, rolling it into their own, or choosing an inherited IRA.
- Your non-federally employed or retired spouse: they may take over your TSP account, elect an inherited IRA, or withdraw the funds. The TSP will set up a beneficiary participant account for the beneficiary if they choose to take over your account. The beneficiary participant account’s initial allocation is in the age-appropriate L fund.
A non-spouse may choose an inherited IRA or withdraw the funds. The SECURE Act has restricted the “stretch IRA” for almost all non-spouse beneficiaries, who must now deplete the account entirely within ten years.
You’ve been saving for retirement your entire career. You want to ensure that if you don’t live long enough to deplete your TSP, the remainder is distributed to a person or persons of your choosing.
Contact Information:
Email: [email protected]
Phone: 3037587400
Going Back To Work Again After Retirement
/by jeff boettcherFederal agencies frequently reach out to federal retirees as a potential source of recruits, particularly for highly specialized positions or when a sudden increase in work necessitates it. They prefer to hire individuals with experience in government services instead of new entrants.
Meanwhile, some federal retirees look for re-employment because they feel they still have more to offer the workforce or because retirement is not going as well as they had hoped financially or in other ways.
However, there are a few unique considerations when returning to work after retirement.
If you willingly retire, you will still be paid your annuity, but your new job’s income will be lower because of that pension. For instance, you would receive just $60,000 ($100,000 – $40,000) if your annuity was $40,000 and your salary was $100,000.
However, if your retirement were forced due to a RIF, job abolition, transfer of function, reorganization, or right-sizing, your annuity would end, and you would start receiving the entire income of your new position. Therefore, you would share the same employment status with any other government employee holding a similar post and a comparable service record.
You will also become eligible for a supplemental annuity if you worked full-time, continuously for at least one year, or its equivalent if you worked part-time.
On the other hand, if you worked for at least five years or the equivalent, you would typically be entitled to a re-determined annuity that would take the place of the one you are presently receiving. To be eligible for those extra benefits in either scenario, you must contribute to the retirement fund while working or until your next retirement.
You would also need to meet the age and service criteria if your annuity ceased when you started your new job to be able to retire again.
In exceptional circumstances, you might be able to get both your annuity and your total wage. Initially, this exception only applied to jobs for which it was difficult to find or keep a qualified employee, where there was an immediate danger to your life or property, or when an emergency situation called for employment.
But over time, several other authorities have increased this payment for additional reemployed annuitants. Limited-time appointments are a government-wide authority, and agency-specific regulations are mostly in DoD. Ask if one of the exceptions applies to you if you are a retiree being considered for re-employment.
Impact of going back to work after retirement.
1. The Good: Health Insurance
The natural aging process can result in future increases in healthcare expenses. These expenses can deplete your funds, depending on your health benefits.
Health insurance may be the main reason for returning to work for those who retire before they reach 65 (especially considering the costly out-of-pocket costs of private insurance).
Consider returning to work if you’re purchasing pricey private health insurance before turning 65, when you would be eligible for Medicare.
In most circumstances, enrolling in a group health plan through your job could be less expensive than paying for your own health care out of pocket.
2. The Bad: Social Security
Your Social Security benefits can reduce if you opt to re-enter the workforce, depending on your age at retirement. According to the Social Security Administration, the full retirement age (FRA) is 67 for those born in 1960 or after.
The amount of Social Security payments you might get will reduce if you retire before FRA. If you haven’t reached FRA, there is an offset that, dependent on when you retire, can reduce your Social Security payment.
For every $2 you earn over the annual cap while not at FRA, the Social Security Administration will withhold $1 from your benefit payments. That cap is $19,560 for 2022.
They’ll also take $1 from your benefits for every $3 you earn over $51,960 in the year you attain full retirement age (FRA).
3. Potentially Bad: Pension Suspension
Your pension from your previous agency may be affected if you start working again. If you re-join the workforce for a different agency, you can still be eligible to receive pension benefits from your previous employer. However, regulations may vary from plan to plan.
By collecting pension payments from your previous employer while being paid a salary at a new one, you’ll be able to expand your revenue stream further. Payments might halt if you decide to work for your former agency once more.
The agency paying your pension will often stop paying benefits if you work for them again, though regulations may differ based on your employer’s pension plan. If you decide to return to your old job, speak with the firm to learn more about how your pension can be impacted.
Contact Information:
Email: [email protected]
Phone: 8007794183
Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”
Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.
A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.
Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.
FERS OPM Disability Retirement: The Mixed Case
/by mark heinrichIt is easily argued that every case is “mixed,” which means that the topic must always consider case law and statutory requirements in addition to the facts of the case. This is especially true for Federal Disability Retirement applications, where the medical records must be interpreted.
Given these facts, it is all the more important to understand that in a case involving a Federal Disability Retirement, merely repeating the medical records does not settle any points of contention. In consistently rejecting the federal employee’s claim for Federal Disability Retirement, OPM disregards the applicable statutes or behaves like an authoritarian bureaucracy free from any legislative or judicial obligation of the controlling laws.
In reality, every Federal Disability Retirement case is a mixed case in which precedents from similar cases have led to legal decisions affecting particular issues inherent in every application. The core disputes that arise rarely center on the medical documentation but rather more frequently on the legal interpretation that results from the application of the relevant laws upon the medical documentation.
Because the “medical specialists” at OPM are not lawyers, they are unaware of the significance and implications of the constantly expanding body of laws governing federal disability retirement. This is why the U.S. Office of Personnel Management frequently makes mistakes in its initial determination when denying a Federal Disability Retirement application.
This being the case, it is crucial to always reply with the force of the law when responding to an OPM denial of a Federal Disability Retirement application and to repeatedly remind OPM that their refusal to approve your case is not just a matter of analytical opinion; instead, it is a glaring and blatant violation of the laws that govern the issues about your Federal Disability Retirement application.
This is one area where a disability attorney can help. Disability lawyers know how to present a case in the most favorable light for their clients, from submitting the application to the hearing level and beyond. Your attorney can help you focus on the information that will be most persuasive to Social Security when submitting your initial application.
They can advise you on your “alleged onset date” of disability, make the case that your condition qualifies as one of the impairments listed in the “blue book” of impairments, and more. Your attorney can gather and submit pertinent medical evidence at the reconsideration and hearing levels, get your doctor’s opinion, draft a thorough brief to the Administrative Law Judge, and prepare you for questions at the hearing.
They will also collect helpful testimony from you during the hearing and may even cross-examine the vocational expert or medical expert to prove that you cannot work.
An attorney can also create complex legal arguments to demonstrate that Social Security incorrectly denied your case at the subsequent appeals stages at the Appeals Council and federal court.
Contact Information:
Email: [email protected]
Phone: 9187441333
Bio:
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Mark’s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families.
Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation.
Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.
Disclosure:
Securities offered through GRF Capital Investors, Inc., 6506 South Lewis Avenue, Suite 160 Tulsa, OK 74136 Phone: 918-744-1333 Fax: 918-744-1564
Securities cleared through RBC Capital Markets, LLC. 60 South 6th St., Minneapolis, MN 55402
Member FINRA www.finra.org / SIPC www.sipc.org
Broker Check http://brokercheck.finra.org/
Medical Retirement of FERS OPM: Replacing Substances
/by marvin duttonYou might have observed that matters need to be dealt with in more suitable ways. But unfortunately, we all reside in a world where people do not prefer facts since they have been forsaken. Not only have these logics stopped being essential to many, but they do not matter anymore. Everything is being replaced by something wild.
People need to consider a meaningful way of delivering their thoughts. Instead, they would sarcastically reply with unwanted humor and shout instead of talking politely. Not only has it been going on, but people have now labeled it under the norm. The issues in our society are being addressed in gibberish, which no one would understand except for some groups.
It is now common to replace simple things with unfamiliar terms; it’s a new trend that modernizes people in front of others. Our system could now improve many things that we need to correct. But some things may improve. Although replacing substances has been messed up, an education system can play a minor role. Since the world is looking at new trends, the vintage and classics are left-behind. They have lost the values they used to hold. Other than that, anything that demands your ability to analyze critically is not worth it.
Therefore, people prefer to let go of hard work. Logic does not carry weight anymore. If you are to present any logic against your opinion, you are being difficult. Keep these valuable thoughts to yourself, or use easy terms. Also, realistic dialogues are censored; thus, they are no longer considered healthy chats. To prove your point, you only have to bang tables and ensure everyone understands and agrees. You have to be loud and clear to let people know who you are. People think it is a new way of addressing problems and concerns.
Federal Employees and U.S Postal workers who are about to file for Federal Disability Retirement benefits utilizing the U.S. Office of Personnel Management under FERS, on the brighter side, “The Law” should reign and the substance replacement. It is not wrong to say that it still exists in the denied letters issued by the U.S. Office of Personnel Management. Therefore, they must keep themselves engaged in the appropriate weight of law of cases and legislative power. Then and only then will they be able to achieve what they are looking for. These things are understood much better with the help of a lawyer. Hence, you should contact a lawyer specializing in Federal Disability Retirement cases who can explain it to you, which, without a doubt, does not allow the substance replacement of the rights you own as a Federal Employee under FERS. Indeed, with help, you will see the law prevailing, and they will understand your concerns.
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].
Inflation’s Bite Gets Worse for Retirees.
/by rick viaderManaging Retirement finances is becoming complicated. Many seniors are cutting back or eliminating essential costs due to rising gas, housing, and egg prices.
As prices climb, CNN Business interviewed several retirees about their spending habits. The shock of the substantial food price increase—especially in meat, fruits, and vegetables—was a recurrent theme.
Additionally, the price of groceries increased by 10.8% from April 2021 to April 2022.
Inflation affects much more than just the grocery store. Here is how some retirees claim to be handling things.
Struggling and facing a rent increase
A local food bank truck comes to Donna Lyons’ apartment complex every two weeks, but she claimed she would need additional food for the month. Lyons is a retired woman from Fort Collins, Colorado.
“I depend on the food bank,” added Lyons, 67, who relocated to Colorado from Pennsylvania in 2020 to be near her two children and grandchildren.
She survives on her Social Security and Pennsylvania education system pension for decades of clerical and event-security labor.
In September, her rent will rise by $200, a 14% increase. After rent, taxes, insurance, prescriptions, and utilities, Lyons says she’ll have $150 a month for groceries and incidentals.
Since her funds are almost gone and her most recent grocery bill was $187, she’s still determining if she can stay in her apartment. However, she claimed she still needed to find cheaper local housing.
Lyons said, “I’ve considered packing my belongings and returning to Pennsylvania, but I don’t want to leave my family behind. She couldn’t imagine life without her kids after being hospitalized.
Her retirement expectations were far from reality. “Financial stress surprised me. I worked for 50 years, and saving was hard as a single mom. So I’m slowly consuming my savings to survive.”
Restarting part-time
Morgan Hill, California, resident Marisa Flynn, 73, is a retired teacher. Before beginning a second profession as a teacher in a public school, she had long managed her own electrolysis business.
Flynn needed to understand that her teacher’s pension would cut her Social Security payments by $400 a month. She stated that Medicare gets a higher share of her Social Security cost-of-living adjustments.
US petrol prices reached a record $4.60 per gallon. According to the Bureau of Labor Statistics, energy prices in April increased by 30.3% year over year. Natural gas and electricity are the most common forms of household heating and cooling energy.
Flynn consumes less heat and air conditioning. Even to visit her 40-minute-away daughter and grandchildren, she drives less. “I used to get in my car without thinking.”
California’s water constraints make it difficult to wash her automobile for $20. In addition, she said she couldn’t afford home repairs, internet, or eating out.
Flynn substitute teaches two half days a week to help make ends meet; she did this before the pandemic but has since restarted it even though it puts her health in danger from COVID-19.
She claimed that in addition to getting Meals on Wheels, she periodically visits a nearby senior facility for a free lunch.
“Not the retirement I had in mind. It is demoralizing. The government frequently discusses aiding child-bearing households. Elders from the middle class feel forgotten and invisible, “Flynn stated.
Flynn has contemplated moving to a cheaper place like Lyons, but she wants to stay with her daughter and grandchildren.
Shrinking financial buffer
Inflation is changing seniors’ behavior, but not all are struggling financially.
Richard Thomas, 73, of Arkansas City, Kansas, diligently planned for retirement throughout his career as a Boeing mechanic producing composite jet engine parts. That planning paid off, even though he received a pension that was less than he had anticipated in 2005. As a result, he was compelled to retire earlier than he had intended.
Thomas owns his home and has no credit card debt. “I invested in my 401(k) and savings after paying off my home. I retired financially stable.
Thomas and Peggy can handle their monthly expenses with Social Security, his pension, and an annuity they bought. That surplus is decreasing.
Thomas said, “The financial “cushion” I worked so hard to build is losing some of its paddings because of inflation.” It needs adjustments. As a result, they now travel even less.
Thomas agrees that the couple’s financial planning is helping them get through this time of rising prices better than most people. However, he stated that inflation is becoming burdensome.
Contact Information:
Email: [email protected]
Phone: 9568933225
Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.
In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.
His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.
Benefits and threshold adjustments based on inflation are about to take effect.
/by rick viaderInflation-based adjustments to benefits, criteria, and other areas are made around this time of the year, and the numerical changes for the year are also announced within this period. We are all aware that the COLA for CSRS and Social Security is 8.7%, and for qualifying FERS employees, it is 7.7%. At the same time, things like the Social Security income test and the monetary amounts used to determine Social Security retirement payments have increased as a result.
The Thrift Savings Plan and Individual Retirement Arrangements are affected by the changes that the Internal Revenue Service has announced. These number changes may have already been mentioned to you (they were first revealed in October), but just in case, here they are.
In 2023, the TSP’s and other employer-sponsored plans’ voluntary deferral limits will be $22,500, and the catch-up amount for anyone 50 and older (including those who turn 50 in 2023) will increase to $7,500.
In 2023, IRA contributions are limited to $6,500 with a $1,000 catch-up contribution. The catch-up amount for IRAs is not adjusted for inflation.
Traditional IRA contributions are tax-deductible up to a certain income cap, which for 2023 is as follows:
Single filing status
You’ll get a full deduction if your income is less than $73,000.
You’ll get a partial deduction if your income is between $73,000 and $83,000.
No deduction is permitted if your income exceeds $83,000.
Joint filing spouse enrolled in a workplace retirement plan
You can take the full deduction if your income is under $116,000.
You can make partial deductions if your income is between $116,000 and $136,000.
No deductions are permitted if your income is more than $136,000.
Joint filing spouse not enrolled in a workplace retirement plan
You can take the full deduction if your income is under $218,000.
You can make partial deductions if your income is between $218,000 and $228,000.
No deduction is permitted if income is more than $228,000.
Additionally, there are income thresholds at which Roth IRA contributions are entirely prohibited.
Single filing status
The full contribution is permitted if income is less than $138,000.
A partial contribution is allowed if your salary is between $138,000 and $153,000.
Contributions are only permitted if your income is less than $153,000.
Joint filings status
The full contribution is permitted if your income is less than $218,000.
A partial contribution is allowed if your salary is between $218,000 and $228,000.
Contributions are not permitted if income exceeds $228,000
You can make non-deductible contributions to a conventional IRA regardless of your income.
How much have these figures grown over time as a result of inflation?
The income restriction for persons in the single filing status was $25,000 in 1987, when the deductibility of IRA contributions was initially restricted; this year, it is $73,000. Over time, a dollar’s purchase value has slowly declined. Knowing this, we should modify our TSP and IRA withdrawals to reflect it; perhaps we start withdrawing at a lower rate and modify TPS withdrawals annually for inflation. We are fortunate that CSRS, FERS, and Social Security automatically adjust for the cost of living.
Additional Retirement Plan Modifications
Other adjustments to retirement programs were made. If you have specific questions, you might want to talk with a financial professional about how these changes could affect your investing plan.
Retirement Age Previously, you had to start taking distributions when you turned 70 1/2. The required minimum distribution (RMD) age has been raised to 72. If you attain 70 1/2 before January 1, 2020, it is still 70 1/2.
Deadline for IRA Contributions 2022
The last day to make an IRA contribution for the tax year 2022 is April 15, 2023.
Do you know…
Your choice to purchase a TSP life annuity is final if you do so. You are obligated to stick with your choice, even if circumstances change. Perhaps this explains why a far higher percentage of participants select flexible installment payments than life annuities.
More opportunities to invest and increase your retirement wealth result from larger contributions, particularly for self-directed IRA investors. In an era where retirement savings are so much more important than they once were, the industry has been calling for change, and perhaps this is a beginning in the right direction. Please consult a tax expert if you have any questions regarding the tax ramifications of these IRS adjustments.
Contact Information:
Email: [email protected]
Phone: 9568933225
Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.
In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.
His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.
Why You Need a Power of Attorney
/by marvin duttonHaving a power of attorney on hand might be very helpful. The inability to sign your name legally could have dire financial ramifications if, for example, you suddenly suffered a stroke with no warning signs beforehand. One way to safeguard yourself against such a situation is to have a power of attorney.
As a result, a power of attorney document is essential for most people. You’re free to name more than one and indicate whether each must work together or operate independently. Your children might be named “attorneys-in-fact,” stipulating that they both need to sign off on any actions taken in your name.
Anyone you want to nominate must be someone with complete confidence. Usually, this is a younger and closer family member. You may delegate various responsibilities to various individuals if you so choose. For instance, you could give your spouse the power to decide where you live and your son the responsibility of handling your finances.
While you still have control over your faculties, you should refrain from granting a family member authority over your possessions. Many states recognize springing powers of attorney to address these issues. The granting of these rights is conditional on other circumstances, such as a medically-verified incapacity or placement in a nursing facility.
What if springing powers aren’t legal in your state? A durable power of attorney plus a letter detailing when the power will take effect can have the same effect. The attorney can hold both forms of identification until you are needed.
Types of Power of Attorney
Financial and healthcare power of attorney documents are the two most common. The difference between both is extensively discussed below.
Financial Power of Attorney
Suppose you need help understanding or making decisions regarding your business and financial affairs. In that case, the individual you assign can handle matters such as signing checks, submitting tax returns, mailing and depositing Social Security checks, and maintaining investment accounts. To the degree that the agreement specifies the power of attorney obligation, the agent must carry out your intentions to the best of their ability. A financial power of authority grants the designee broad authority over your financial affairs, including managing the account’s funds, writing cheques on your behalf, and changing the account’s beneficiary designations.
Healthcare Power of Attorney (HCPOA)
Suppose you wish to delegate a decision-making attorney over medical treatment to another person. In that case, the assigned individual can execute a healthcare power of attorney (HCPOA). This document is a healthcare proxy and details your agreement to grant the personal power of attorney for medical purposes.
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].
Could You Benefit From Semi-Retirement?
/by jeff boettcherIn recent years, the idea of “semi-retirement” has been added to the classic notion of “retirement” as the point at which people quit working altogether. People typically work fewer hours during this transition phase to full retirement, either at their previous jobs or in a new part-time position.
The benefits of semi-retirement include increased income, engagement, satisfaction, and even greater physical and mental health. This article examines everything you should know about semi-retirement.
Semi-Retirement Foundations and History
A person enters semi-retirement when they quit working full-time in their prior career and start working fewer hours or, possibly, putting regular workweeks at another money-earning endeavor they find more fulfilling and delightful.
Deciding to semi-retire is different from maintaining a regular work schedule as long as possible, even after retirement age.
The federal policy that reduced Social Security benefits when recipients made money from working discouraged semi-retirement for a long time. But thanks to revisions to the earnings limit regulation, social security recipients can earn any amount of money from working after reaching full retirement age without reducing their benefits. This has made semi-retirement more appealing.
According to the 2022 Transamerica Retirement Survey, over six in ten (58%) workers now intend to continue working at least part-time in retirement.
Forms of Semi-Retirement
Working fewer hours for your current employer, taking on new part-time employment, or launching a business are all semi-retirement options. According to an Express Employment Professionals survey, 79% of respondents chose semi-retirement to convert to a flexible work schedule. In comparison, 59% want to work fewer hours for the same employer or become consultants.
Each of these choices has its advantages and disadvantages. For example, a person is likely to make more money per hour working for the same employer while working fewer hours remotely or on a flexible schedule. But only 21% of businesses, as per the Express Employment survey, provide semi-retirement employment opportunities.
Similarly, part-time or seasonal employment might provide freedom and the chance to pursue a personal passion or learn a new skill. However, part-time employment may not offer any benefits at all and is likely to pay less.
Also, starting a business can be rewarding, but the hours may be challenging, and getting a new firm off the ground may be challenging without incurring debt. Another option is consulting, which offers the chance to make more money per hour without needing to invest in a firm.
Pros of Semi-Retirement
One of the biggest advantages of semi-retirement is the ability to earn more money. Without a pension or significant personal assets, retirees may be concerned that their Social Security income won’t be enough to support a comfortable standard of living.
Semi-retirement is a valuable source of supplementary income to aid with living expenses. Retirees with some personal assets and a pension might postpone claiming Social Security payments while in semi-retirement, increasing their monthly benefit.
Social Security is still the most significant retirement benefit for most Americans. If you wait until you are 70 years old to start receiving Social Security benefits in 2022, the maximum payout is $4,194 per month or $50,328 per year. You can enhance your maximum benefit by working more and earning more money.
People who continue to work after retirement would also benefit from social interaction that might otherwise be absent if they stopped working altogether. This kind of activity can benefit physical and mental health more than total leisure.
Cons of Semi-Retirement
Choosing semi-retirement can result in having a much lower income for those who retire before being eligible for Social Security or pensions. This represents the biggest barrier to semi-retirement for many workers.
Another potential difficulty in semi-retirement is health insurance. Moving to part-time employment, whether at the same firm or a different one, a person who previously had health insurance via their employer risks losing that benefit.
Suppose the individual isn’t old enough to be eligible for Medicare at age 65. In that case, they will probably have to pay for COBRA benefits or insurance they acquire through the Health Insurance Marketplace established by the Affordable Care Act or on the open market.
Conclusion
Semi-retirement entails working fewer hours remotely or with a more flexible schedule during the transition to full retirement. Semi-retirement can give you more leisure time than you had during most of your working years while still bringing value-added income, satisfaction, and involvement. However, finding health insurance and an employer supporting semi-retirement can be challenging.
Contact Information:
Email: [email protected]
Phone: 8007794183
Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”
Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.
A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.
Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.
Will you use your retirement funds, or will you leave them uninvested?
/by george learnedWhat to do with one’s laboriously accumulated retirement assets is a significant financial concern for retirees. For instance, some people find it more rewarding to pay for their grandkids’ education than to buy a second home for themselves. It’s OK if the reverse is true.
Experts say it’s crucial to understand what each individual wants to do with their nest egg. Do you want to spend all their money on things that make you happy, or would it be more satisfying to leave your loved ones an inheritance? Read on for additional thoughts that might help you choose the best action if you’re struggling with the same issue.
The justification for depleting your fortune
On the one hand, you can enter retirement with the primary objective of maintaining the standard of living you’ve worked so hard to achieve. You may have pictured your latter years as devoted to pursuing a hobby, traveling, buying a vacation home, or fulfilling another retirement ambition.
If you fit this description, be aware that these plans probably have a cost. Retirees must be ready for a retirement that might extend for several decades, given the reality of increased life spans. This implies that in addition to standard costs, which will probably increase due to inflation, your funds will also likely need to account for the possibility of health and long-term care needs. Make sure you allow enough for these needs before selecting whether or how much money to spend down or leave behind.
Why it’s important to leave a legacy
On the other hand, it’s crucial to start finalizing inheritance arrangements early if your main aim in retirement is to leave a legacy for your loved ones. Remember that your legacy comprises what you give and cherish now and what you intend to leave as an inheritance after you pass away.
Maybe you want to lend a helping hand to your kids and grandkids. Your contribution might go a long way toward assisting them in reaching critical financial milestones like earning a college degree, buying a home, or paying off a mortgage.
Or you could donate money to a foundation, charity, or school that shares your ideals. Consider donating to the causes that matter most or have significantly influenced your life.
Create or revise your estate plan to reflect your current preferences, whether you want to leave gifts to loved ones, charitable organizations, or both. Written instructions (such as a will or trust) and current beneficiary designations on your accounts should be part of your strategy.
Achieving a balance
Spending your money and leaving an inheritance are excellent choices. However, many retirees want to achieve both. If this describes you as well, realize that a compromise is achievable. Since everyone has a different vision for retirement, you should also have a financial strategy for achieving it.
You must discuss with your spouse or partner what brings you the greatest joy as you consider your alternatives for using your savings. Inform your family of your plans once you are in alignment. Estate planning may be challenging to discuss with them, no matter how much or how little money you want to leave to loved ones. Having the discussion might ease the future strain and give your kids assurance about what to anticipate.
Retirement assets typically transfer without going through probate directly to the rightful recipients. The drawback is that these assets may be subject to federal and state estate taxes and frequent federal and state income taxation. Plan carefully, take advantage of the deduction for estate taxes on these assets and understand the required minimum distribution (RMD) requirements to help lessen the impact.
Consult a financial advisor and estate lawyer for a second view on how to realize your retirement ideal. These experts may help you discover your own happy medium between spending and leaving an inheritance with your assets by giving guidance and encouragement.
Contact Information:
Email: [email protected]
Phone: 3037587400
Four Social Security misconceptions that might jeopardize your retirement
/by george learnedToday, Social Security is a crucial source of retirement income for millions of seniors. It serves as their sole source for many.
You wouldn’t want to land in that boat in a perfect world. You can face years of financial hardship if you retire on Social Security alone. Planning to retire with various income streams at your disposal, such as money in a savings plan, multiple investments, and even part-time employment, if that makes sense for you, is a much better bet.
In any case, there’s a considerable possibility that Social Security will be a significant part of your retirement income. Therefore, it’s crucial to file for benefits deliberately. But if you believe these four falsehoods, you can find yourself claiming benefits when you shouldn’t and shorting yourself.
1. Social Security will be abolished shortly.
Social Security is experiencing a funding gap. It anticipates owing more in benefits than it receives in the upcoming years, partly due to the projected mass retirement of baby boomers.
Now that trust funds are available, Social Security can use them to fill the deficit. However, benefit reductions could be considered after the trust assets run out, which could happen in less than ten years.
Benefit reductions, however, are very different from Social Security ceasing to exist. It’s crucial to recognize this distinction.
It’s common knowledge that it’s wise to apply for benefits as soon as possible to receive payments before Social Security runs out of money entirely. But if you take your benefits early, all you’ll accomplish is eliminate a significant source of retirement income for the rest of your life, leaving you with even less cash in the face of benefit reductions.
2. You should apply for Social Security at age 65.
Medicare eligibility starts at age 65. As a result, you’ll frequently hear that you must enroll in Social Security concurrently. However, you are under no obligation to do that.
Even though Medicare eligibility may begin at age 65, depending on your birth year, you may not be eligible for your full monthly Social Security income until you are 66, 67, or 66 and a specific number of months old. Therefore, if you begin collecting Social Security at age 65, you will always get a reduced payment.
Your Social Security payments will be used to cover your monthly Medicare Part B premiums if enrolled in both Social Security and Medicare simultaneously. It’s also okay if you’re not receiving benefits. Medicare will find a way to get your money if you apply for it and start getting health insurance without Social Security.
3. You can get Social Security payments tax-free.
There’s a significant possibility you won’t have to pay taxes on your benefits if Social Security is your primary source of retirement income. If not, taxes may apply, depending on the total amount of your retirement income.
That includes federal taxes. Some states also tax the income received from Social Security.
Knowing in advance that your retirement benefits can be taxed will be crucial since it may affect how you file. For instance, you can enroll later in a larger benefit to compensate for the money you lost to taxes.
4. Your marital status matters.
Your marital status must be a significant consideration in deciding when to start receiving benefits.
If you’re married and begin receiving benefits sooner, your spouse may not be eligible for spousal or survivor benefits.
According to Jones, delaying benefits claims until age 70 might result in a boost in payments for surviving spouses. He says “one partner is “far more likely to survive for a significant period without the other.”
If you are of full retirement age and were born before January 2, 1954, you can take a spousal benefit while letting your benefits accrue. You can afterward turn it off for your own higher advantage.
However, due to modifications Congress made to the Social Security laws, anyone born after that date can no longer adopt that technique.
Clarify your facts.
There is a ton of false information about Social Security out there. Spend some time reading up on the program so you can get your facts straight if you want to avoid making what may wind up being a significant filing error.
Contact Information:
Email: [email protected]
Phone: 3037587400
