Posted on Tuesday, 22nd February 2011 by

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Military Credit Clarifications

Military credit is one of the most confusing issues for those planning their retirement. We recently expanded our Military Credit section to help federal employees evaluate their personal situation. Buying back your military time can increase your annuity; however, it isn’t always advantageous to do so. The basic retirement eligibility rule for CSRS and FERS requires that you must have at least five years of actual civilian service and be covered under the CSRS or FERS retirement system on the date of retirement.  Therefore, you cannot be a civilian employee for just one year and pay back your military service to achieve retirement eligibility. Many veterans who start working for Uncle Sam later in life must understand this basic principal.

If a veteran with 4 years military service starts working for the government at age 58 for example, he/she must work at least 5 years to age 63 to be eligible to collect an annuity – not counting military buyback time.  This individual could retire at age 63 with 9 years towards retirement (if a military deposit is made) instead of receiving an annuity calculated for just 5 years of service. The annuity would increase from 5% to 9% of their high three average salary.

Review the FERS eligibility charts located online and read Linda Sherman’s excellent article on this subject that has over 80 comments posted that you will find most helpful.

Health Care Costs

Joel, one of our site visitors commented on last month’s article titled skyrocketing health care premiums.  His health care plan costs had increased 5.9% this year plus a total of 7.13% in the two previous years.  However, he had also been paying an additional $124 a month for his daughter’s insurance coverage.  He is saving $106 per month or $1276 a year now that his daughter is covered on his FEHB policy until she reaches age 26 thanks to the new health care legislation.

He and others have suggested too that if your plan costs increase substantially evaluate other FEHB plans and change providers during open season. This is certainly an option for those who can find comparable lower cost providers. Some of the problems encountered when making changes is that you may not be able to find the same coverage for less or find coverage with the desired services, doctors and specialists, especially for those with catastrophic illnesses.

There are good and bad features for every program and benefit we receive. FEDVIP, our dental and vision care coverage providers, offer packages for self plus one instead of having to elect family coverage which is about 40% higher cost. Many retirees would like to see this changed so FEHB participants don’t have to pay higher family coverage costs when they have no children living at home.

Surviving Spouse Issues

A number of spouses have contacted us concerning their eligibility for a survivor’s annuity. A spouse is eligible for a reduced annuity, after the death of an annuitant, if the annuitant elected a spousal benefit when he/she retired. Typically, the spouse MUST sign the retirement forms concurring with a “No Spousal Annuity Election.”

If a spousal annuity is elected, when the annuitant’s death is reported to OPM, they will adjust the annuity to the reduced amount and send it to the spouse of record.  Survivors can call OPM at 1-888-767-6738 to verify their status for a survivor’s annuity if in doubt. The surviving spouse will need the annuitants SSN and/or CSA retirement account number. Call early in the morning otherwise you will more than likely get a busy signal. Printout our Master Retiree Contact list and keep this with your retirement paperwork. Also, all of the links on this document are active; keep it on your desktop to easily link to the referenced web sites. Feel free to send the contact list to others that will benefit from its use.

Another issue that we run into is whether or not the annuitant was married before he/she retired or married their current spouse after they retired. If the annuitant married after retirement he/she can elect a new survivor’s benefit for their new spouse if desired but it has to be done no later than two years after the date of marriage. Many retirees that remarry don’t make this election because it reduces their annuity by 10% to cover the spousal election.

TSP Discussion

My TSP account fully recovered to pre 2008 recession levels this past year. On January 31, 2011 I converted all of my TSP account back to the G-Fund anticipating a market pull back after the long run up we had in 2010. I was also apprehensive about the economy as a whole with food and fuel prices rising and world unrest.

The day after I made the move the DJIA rose by 100+ points and along with the S&P rose sharply until 2/22/11 when oil prices shot through the roof and Mideast tensions escalated. Many, after making an investment adjustment tend to regret the move when the market doesn’t immediately corroborate their actions. This is natural, however, when you go back and forth jumping at every turn you tend to lose considerably more than you gain and it does pay to stay the course at times.

There was so much hype about the market going to 14,000, few pundits anticipated a correction. It was actually a good thing when the THRIFT capped the number of trades you can make each month; it prevents participants from over reacting, bouncing in and out of the equity funds as the market turns.  The nice thing about the G-Fund is that it is the only fund in the universe that is guaranteed never to go down in value. You can watch for a correction to bottom out, typically about a 10% drop, and then switch back into equity funds to capture more gains. No one can time the market and you have to sometimes stay the course to protect your nest egg.

UPDATES

  • New Job Postings for Retirees – We had several new and interesting jobs posted on our employment page recently. Government Contract Solutions, Inc. (GCS) is looking for retired federal employees to fill acquisition specialist, administrative assistants, secretaries, and contract specialist positions. They posted 5 new listings on our jobs board last week and Customs and Border Protection (CBP) posted contract specialist and budget analyst jobs targeted to reemployed annuitants.
  • Duplicate 1099-R– You can download duplicate 1099-R forms from OPM’s retiree web site if you are a registered user. To become a user you have to call OPM, their contact numbers are listed on our site, go to http://federalretirement.net/faqs.htm and click on the Contact OPM link for the web address and phone number. If you call, they will also send out a hard copy of the form to you if desired.
  • Direct Deposit Change of Address – Contact OPM at 1-888-767-6738. You will need to have your CSA number handy when you call. Go to http://federalretirement.net/retireforms.htm to review the instructions on how to complete the SF-1199 direct deposit forms and other options to accomplish this.
  • Proposed Cuts – President Obama’s budget proposes extending the federal pay freeze to 5 years. Several other bills in congress propose extending these pay cuts to include any step or pay increases of any kind and a hiring freeze that only permits hiring of 1 person for every 2 that retire or leave for any reason.  Nothing has been passed as of yet and it is too soon to panic. All of the national associations and unions are lobbying congress to moderate or eliminate these proposals.
  • Projected Retirements – Many retirements are projected as each day 10,000 baby boomers turn age 65 for the next 19 years! In 2011 637,000 federal employees will become eligible for regular retirement according to OPM’s Analysis of Federal Employee Retirement Data Report. Add to this many who are eligible for early retirement and another 200,000 Postal employees that will become eligible over the next few years. Significant delays for processing retirement paperwork have been reported and if you are planning to retire be sure to submit your paperwork well in advance of your planned departure date.

Learn more about your benefitsemployment, travel, and financial planning issues on our site and visit our Blog frequently at http://fedretire.net to read all forum articles.

Request a FREE Retirement Benefits Summary Analysis and receive a personal retirement analysis. A sample analysis is available for your review. This service is provided by independent agents that are not affiliated with www.federalretirement.net or Bookhaven Press LLC.

Visit our other informative sites

The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

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    Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, ESTATE PLANNING, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION | Comments (0)