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Flexible Spending Accounts (FSA)

Posted on Sunday, 21st July 2019 by

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I would like to welcome Shawn McCoy, President and Founder of Federal Employee Benefits Advocates, LLC (FEBA) an educational and training company, to our guest forum.  Mr. McCoy is an expert on Federal employee benefits and has spoken to over 19,000 Federal employees over the last 10 years.  This is his first of many artilces to come for our Retirement Plannng Blog. For more details about the training programs offered by FEBA check their website. They offer retirement benefit seminars nationwide.
 
With the Federal Open Season for benefit selection coming up in a few months this is a great time to review a benefit that is not widely used by Federal employees, the Federal Flexible Spending Account Program (FSAFEDS).
 
The first question most Federal employees ask is “What is the Federal Flexible Spending Account Program (FSAFEDS)?”
 
FSAFEDS allows you to save money for health care expenses with a Health Care or Limited Expense Health Care FSA. Think of it as a savings account that helps you pay for items that typically aren’t covered by your FEHB Plan, the Federal Employees Dental and Vision Insurance Program, or other health insurance coverage. Things like deductibles, out of pocket expenses, and other expenses that may not be cover by the medical coverage (FEHB) and Dental or Vision (FEDVIP)
 
FSAFEDS also offers an account for families with young children or elder care expenses – the Dependent Care FSA. This account allows you to set aside money to pay for your day care expenses.
 
Eligible employees can enroll in FSAFEDS each year during the FEHB Open Season, November 11th to December 9h, 2019. Contributions are made directly from bi-weekly pay on a pre-tax basis into the FSA. New and newly eligible employees who wish to enroll in this program must do so within 60 days after they become eligible, but before October 1 of the calendar year. Retirees are not eligible to participate in the FSA program.
 
The next question is “How does it work?”
 
There are three different Flexible Spending Accounts plans available:
 
Health Care FSA (HCFSA)
 
With a Health Care FSA, you use pre-tax dollars to pay for qualified out-of-pocket Health Care expenses. The money you contribute to a Health Care FSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck. Used to pay for:
 
  • Eligible medical, dental, and vision care expenses not covered by the plans
  • Co-pays, co-insurance, and deductibles
  • Professional services: physical therapy, chiropractor, and acupuncture
  • Prescription drugs, insulin, and prescribed over-the-counter medicine
  • Over-the-counter health care items: bandages, pregnancy test kits, blood pressure monitors, etc.
Specifics
  • Can contribute up to a maximum of $2,700 (2019)
  • Access the full amount of your account on day one of the plan year
  • Can carry over up to $500 from one plan year to the next (You must sign up for a least $100 to be deducted for the next plan year)
  • Can be reimbursed by check or direct deposit into checking or savings account
 
Limited Expense Health Care FSA (LEX HCFSA)
 
If you’re enrolled in an HSA-qualified high-deductible health plan and have a Health Savings Account (HSA), you can increase your savings with a Limited Expense Health Care FSA (LEX HCFSA). This pre-tax benefit account helps you save on eligible out-of-pocket dental and vision care expenses while taking advantage of the long-term savings power of an HSA.
 
Specifics
 
  • Can contribute up to a maximum of $2,700 (2019)
  • Used to pay for eligible dental, and vision care expenses not covered by the plans Co-pays, co-insurance, and deductibles, Vision exams, LASIK surgery, contact lenses, and eyeglasses Dental cleanings, X-rays, fillings, crowns, and orthodontia
  • Access the full amount of your account on day one of the plan year
  • Can carry over up to $500 from one plan year to the next (You must sign up for a least $100 to be deducted for the next plan year)
  • Can be reimbursed by check or direct deposit into checking or savings account
 
Dependent Care FSA (DCFSA)
 
A Dependent Care FSA (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services, such as preschool, summer day camp, before or after school programs, and child or adult daycare. It’s a smart, simple way to save money while taking care of your loved ones so that you can continue to work.
 
With a Dependent Care FSA, you use pre-tax dollars to pay qualified out-of-pocket dependent care expenses for your child who is under age 13.
  • Before and after school care
  • Babysitting and nanny expenses
  • Daycare, nursery school, and preschool
  • Summer day camp
 
Care for your spouse or a relative who is physically or mentally incapable of self-care and lives in your home.
 
  • Can contribute to up to a maximum of $2,500 per year if you are married and file a separate tax return (2019), $5,000 per year if you are married and file a joint tax return or if you file as single or head of household. Both cannot claim $5,000 (2019)
  • When the account has the funds, you can use your balance to pay for eligible expenses
  • Can only use the funds that are available in the account, not the entire election amount
  • Funds must be used by March 15th, 2021 or lose it and claims must be submitted by April 30, 2021
 
As a rule, you can’t change your Health Care FSA (HCFSA), Limited Expense Health Care FSA (LEX HCFSA), or Dependent Care FSA (DCFSA) election amount during a benefit period (the plan year). That’s why it’s important to plan an election that suits your needs for your entire benefit period.
 
But there are circumstances – called Qualifying Life Events (QLEs) – when you can make changes.
 
The final question is “How do I calculate how much to contribute to the FSA?”
 
This question can be a tricky because it depends on the individual, the family, FEHB plan selected and the Dental or Vison plan selected. The amount can vary based on other factors such as the plan copayments, deductibles, out of pocket expenses, prescription drugs and planned medical or dental procedures.
 
A good starting point is to look at your 2 years of uncovered expenses. You can obtain that information from your FEHB and dental and vision insurance plan providers by looking at your Explanation of Benefits (EOBs). These can be obtained go going on the carrier’s website or contacting the carrier directly. Add up the two years’ worth uncovered expenses and subtract out any extraordinary expenses, i.e. broken foot. Then divide by 2. After you get that figure add in any planned expense for procedures you may have for the upcoming year, i.e. Lasik surgery. If you are unsure you can always just contribute $500 for the first year. And since you can carry over up to $500 remaining in either your HCFSA or LEX HCFSA account from one plan year to the next (must re-enroll each year), there’s no reason not to take advantage of the tax savings this year and every year.
 
For more details on eligible expenses or to enroll in the plan go to the Federal Flexible Spending Account Program (FSAFEDS) website at www.fsafeds.com.
 
K. Shawn McCoy is the President and Founder of Federal Employee Benefits Advocates, LLC (FEBA) an educational and training company located in Parker, Colorado. Mr. McCoy is an expert on Federal employee benefits and has spoken to over 19,000 Federal employees over the last 10 years. For more details about the training programs offered by FEBA check their website. www.febadvocates.com
 
Helpful Retirement Planning Tools / Resources
Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections
Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH

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A Marriage of Convenience – Medicare & FEHB

Posted on Thursday, 11th July 2019 by

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Many approaching 65 ask, “Why shouldn’t I simply sign up for Medicare A and B and cancel my FEHB plan?” They believe at first glance that Medicare A & B duplicates what our Federal Employees Health benefits (FEHB) plans provide. I reply to this question many times throughout the year and refer those asking to the series of articles I wrote on Medicare enrollment. I thought it best to add another article on the subject just to talk about how the two programs work so well together.

 

 

Request a Personalized 27-page Retirement Planning Report to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Federal retirees with FEHB coverage typically opt for the Original Medicare Plan, Parts A & B, because it is available nationwide and you can go to any doctor, specialist, or hospital that accepts Medicare.

Medicare covers some but not all of your health care costs and you are responsible for the remainder unless you have supplemental coverage through a private insurance carrier. FEHB provides that additional coverage when it becomes your secondary provider after signing up for Medicare. Most FEHB plans also pay the majority of your copayments, coinsurance and deductibles for Medicare enrollees. Your FEHB plan also provides the same prescription drug coverage after you enroll in Medicare so you don’t have to sign up for Medicare Part D prescription drug coverage.

Section 9 of your FEHB plan booklet covers the different Medicare options and what costs they will waive and pay when you sign up.

If you opt out of your FEHB plan and sign up for Medicare A, B and D you may still need a Medicare Supplement policy that picks up some of the costs Medicare doesn’t cover. I’ve heard horror stories from several federal retirees that dropped their FEHB plan when they signed up for the Original Medicare Plan or enrolled in a Medicare Advantage Part C option and found the coverage inadequate. They had to pay excessive prescription drug costs, copayments and deductibles they couldn’t afford.

When you add up the additional costs for Medicare Part D and a supplemental policy it often makes sense to enroll in a lower cost FEHB policy when signing up for Medicare’s Original Plan.  By switching to a lower cost FEHB plan you can often save enough to pay your Medicare monthly premium. If you drop your FEHB plan you can’t go back at a later date unless you properly suspend your FEHB coverage. Suspensions are only available under certain conditions.

The simple fact is that after signing up for Medicare Part A and B, what Medicare doesn’t cover FEHB often does as your secondary provider and you retain the same prescription drug coverage you always had with them. My wife and I enrolled in the Original Medicare Plan five years ago and we kept our FEHB coverage. We haven’t paid any substantial copayments, coinsurance or deductibles other than for prescription drugs since.

There are other options that add to the confusion such as Medicare Part C, the Medicare Advantage plan.  With Medicare Advantage Plans you wouldn’t require FEHB coverage however you have to be careful. They may not have the same benefits and coverage and that could be costly. In most Medicare Managed Part C plans, you can only go to doctors, specialists, or hospitals that are part of the plan.  Medicare managed care plans provide all the benefits that Original Medicare covers. Some cover extras, like prescription drugs.

If you decide to enroll in a Medicare Advantage Plan, Part C, instead of the Traditional Part A & B Plan you are able to suspend your FEHB coverage. If coverage is suspended you can enroll in a FEHB plan during the next open season if the Medicare Advantage Program you enrolled in doesn’t work out.

Federal Employee Retirement Benefits Seminars – Check Availability

All of these programs are discussed in detail in the articles listed below.

Jobs Update Employers continue to recruit federal retirees and those soon to retire. A number of companies post job vacancies on our Jobs Board and you will find listings for both part and full time positions at locations nationwide. Those with security clearances also have many opportunities to consider.

The good news for anyone that wants to work is that “For Hire” signs are posted everywhere today. With an unemployment rate of 3.7% the country is at full employment. The only way for companies to find more employees is to attract those who voluntarily stopped working, including retirees. Wages are increasing so that is good news for anyone interested in supplementing their retirement income.

We recently added a HR Curriculum Manager position with the Graduate School in Washington, DC and a Safety Specialist position with the Massachusetts Port Authority in East Boston that may interest some of our newsletter subscribers. Visit our jobs board for additional opportunities.

Helpful Retirement Planning Tools / Resources

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

Posted in BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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FERS Retirement Options

Posted on Friday, 21st June 2019 by

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I receive many queries from FERS employees asking the question; When can I retire?  They aren’t sure what they would be entitled to and when they can start collecting their pension. A number of options are available depending on your years of service and age at the time you wish to leave.

When Can I Retire!
  • Request a Personalized 27-page Retirement Planning Report. Federal retirement specialists may be able to answer all of your questions and concerns. A one hour session with a Certified Financial Planner is included, that alone is worth more than the $79 introductory price.

Essentially, you will be able to collect a pension from Uncle Sam as long as you have a minimum of 5 years of creditable service.  For those who leave federal service with at last 5 years of creditable service, and don’t withdraw their FERS contributions, can collect a deferred pension at age 62 with less than 20 years of service or at age 60 with at least 20 years of service. Benefits don’t increase if you delay applying for a deferred annuity beyond age 60 or 62 as noted above. Your federal annuity payment doesn’t increase like Social Security does when you wait to apply at age 70.

FERS immediate retirement eligibility is determined by your Minimum Retirement Age (MRA) and years of service. The FERS retirement system is comprised of three parts:

FERS Annuity Eligibility

Use the following chart to determine when you will be eligible for immediate retirement.

Immediate retirement benefits start within 30 days from the date you stop working if you meet one of the following sets of age and service requirements:

Federal Employee Retirement Benefit Seminars – Check Availability

Referencing the above charts, a FERS employees that was born between 1953 to 1964 and has 30 or more years of creditable service at age 56 is eligible for an immediate unreduced annuity. Many hold off applying for retirement to collect a higher monthly benefit. FERS employees receive 1% of their high-3 years average salary times years of creditable service if they retire under age 62. At 62 or later your high three average income is multiplied by a factor of 1.1% with at least 20 years of service, effectively increasing your annuity by 10%.

Those selecting an immediate retirement benefit under the MRA + 10 rule must have at least 10 but less than 30 years of service when they reach their MRA. If you retire under this rule, and select an immediate benefit, your annuity will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later.

You can avoid this penalty and postpone receipt of your benefit until you reach either 62 with between 5 and 19 years of service or as early as age 60 with 20 years or more of service.  If you postpone your benefit, you must contact OPM at least 2 months before you wish to start your benefit and complete their “Application for Deferred or Postponed Retirement” Form R1 92-19.

There are exceptions to these rules for Special Categories of employees with early retirement plans such as Fire Fighters (FF), Law Enforcement Officers (LEO) Air Traffic Controllers (ATC), Nuclear Weapons Couriers (NWC) and for those on FERS Disability. Employees that accept an early retirement under the VERA program or discontinued service retirements are not subject to early age reductions.  

When you retire before age 62 FERS annuitants may also be eligible for a Social Security Supplement. You can use our FERS Annuity Calculator to estimate your monthly benefit online or call your HR office and request estimates for several target retirement dates. HR must provide estimates if requested.

CSRS employees can determine their eligibility and estimated annuity payment using the information provided on our Retirement Planning Guide. There are many things to consider before turning in your retirement application. Research all aspects of your benefits when planning your exit.

Helpful Retirement Planning Tools / Resources

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

Posted in UNCATEGORIZED

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FERS Supplement Update – Are You Eligible

Posted on Thursday, 13th June 2019 by

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There are many things to consider when determining your FERS retirement benefits. If you meet certain requirements, you will receive a Special Retirement Supplement which is paid until you reach age 62. This supplement is similar to the Social Security benefit earned while you were employed by the Federal government. However, since the formula for the Special Supplement assumes a working life of 40 years, each year of FERS service is worth one-fortieth of the estimated Social Security benefit. The FERS Supplement is often significantly less than the Social Security benefit you will receive at age 62. The supplement ends at age 62 even if you elect to wait to apply for Social Security benefits.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Steps to Computing the Annuity Supplement

The FERS supplement provides a level of income before age 62 similar to what the retiree will receive at age 62 as part of a Social Security benefit, if eligible for Social Security at that age. The formula for calculating the supplement is complex and they use your complete creditable service earnings history to determine your benefit.

  • A complete earnings history is compiled using the employee’s basic civil service pay under FERS and deemed wages for years of employment.
  • The earnings history is updated for inflation.
  • The supplement is calculated using the same formula that Social Security uses to compute a Social Security benefit, including the maximum reduction for early retirement under Social Security.
  • The result of the previous step is multiplied by a fraction to approximate the proportion of a full career Social Security benefit earned under FERS.

You may be eligible for a Special Retirement Supplement if you retire:

  • After the Minimum Retirement Age (MRA) with 30 years of service;
  • At age 60 with 20 years of service; or
  • Upon involuntary or early voluntary retirement (age 50 with 20 years of service, or at any age with 25 years of service) after OPM determines that your agency is undergoing a major reorganization, reduction-in-force (RIF) or transfer of function. You will not receive the Special Retirement Supplement until you reach your MRA.

If you transfer to the Federal Employees Retirement System (FERS) from the Civil Service Retirement System (CSRS), you must have at least one full calendar year of FERS-covered service to qualify for the supplement.

Retirees that have earnings from wages or self-employment that exceed the Social Security annual exempt amount ($17,640 in 2019) will see their Retirement Supplement either reduced or stopped.

You can request a Personalized 27-page Retirement Planning Report that includes a summary of your retirement benefits and income sources including the Social Security Supplement payment if warranted. Their federal retirement specialists may be able to answer all of your questions and concerns.

Resources

Helpful Retirement Planning Tools / Resources

Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Retiree Job Opportunities – Federal Annuitants Have the Advantage

Posted on Friday, 31st May 2019 by

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Our Federal Retiree Jobs Board intro states, “Jobs are posted on this site by employers that are seeking highly qualified, reliable, and skilled federal annuitants and employees approaching retirement. Federal employees and retirees are sought out by corporate America due to their exceptional service, skills, education, security clearances held, and knowledge of their agency or federal programs.”

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Companies continue to submit job vacancies to our Jobs Board to attract federal retirees. You will find jobs ranging from Retirement Benefits and HR Specialists to part time job opportunities in many occupations across the country.  Opportunities exist for those looking to supplement their retirement income or to start a second career.  We provide this job listing service specifically for companies that are seeking to hire experienced retired federal workers.  

Four new HR related vacancies were posted on our Jobs Board by AvantGarde, they are looking for federal HR retirees with a focus on SES, staffing, classification and the VERA / VISP program. The AvantGarde, LLC (AG) HR Classification Specialists support AG’s federal clients by providing classification expertise to the HR office. Multiple full and part-time positions are available; most positions require working onsite in Washington, DC, suburban Maryland or Northern Virginia; for some positions in NOVA there is flexibility for partial or 100% remote work, upon supervisor and client approval. Checkout their listings on our Jobs Board.

Currently, the Census Bureau is aggressively recruiting for the 2020 Census, many part time jobs are available nationwide. Retirees are ideally suited for these high paying positions. Federal annuitants (retirees) can apply according to the local census office. All they have to do is check the dual compensation waiver block when applying. If you apply under the dual compensation waiver process your annuity should not be impacted.

A federal retiree’s annuity is not reduced when returning to work for private sector employers. Federal retirees can return to federal service under the Rehired Annuitant Program. In most cases this will impact and reduce your annuity. However, certain rehired annuitant positions offer waivers for critical hard to fill positions, allowing the applicant to retain their annuity and new salary in full.   

There are additional opportunities to work for contractors. I’ve seen first-hand, while working with the FAA, retirees coming back to work as contractors with companies such as Booz Allen, Lockheed Martin, and others.  Here is a list of the Top 100 Contractors Working for the Federal Government. If you are interested in working for a contractor after retirement, explore your options early and look for opportunities on their website.

You can earn extra income from many sources and I’ve written the following articles highlighting these opportunities.

If you are thinking of going back to work use our jobs board and job-hunting resources to get started and search for opportunities that interest you.

Helpful Retirement Planning Tools 

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Distribute these FREE tools to others that are planning their retirement

Disclaimer: Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

Posted in BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS

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70 and Counting

Posted on Sunday, 26th May 2019 by

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This December I’ll be retired 15 years! Seems like yesterday when I walked out the door with my good friend Nick Trush. The two of us returned to Pittsburgh’s Air Traffic Control Tower a number of times over the years to catch up with old friends. The ability to retire at 55 is a huge benefit for federal employees; I had 35 years and 7 months service when I left to run Bookhaven Press full time. Several months before retiring, I launched the Federal Employee’s Retirement Planning website that answers the many questions I had when I was completing my retirement paperwork.

Turning 70 is a milestone, I start collecting Social Security next month and at this time in life you look at the end game and what lies ahead.  Life after 70 can be a new beginning for many, a time to reflect on your past life and the journey that lies ahead. For me it’s a time to forge ahead as I’ve always done in life: writing a memoir, looking at the opportunities and challenges that may come my way, and coping with the frailty’s life serves up as we age. It isn’t a time to sit back on your laurels and vegetate, it’s a time to grasp what lies ahead with vigor and determination, and accept the inevitable.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

The following three paragraphs are excerpted from my memoire’s draft introduction.

“Life in the mid twentieth century was all that one could imagine of that time, a Forrest Gump world running at a snail’s pace. The only cell phone we encountered was in the comic strips when Dick Tracy was the rage. Computers were relegated to research facilities, filling large rooms with vacuum tube equipment racks emanating ambient light; illuminating the room’s interior.

Airplanes were just becoming the rage after World War II but most relied on trains and trollies to get to where they needed to be.  The middle class was buying cars and homes at a feverish pace yet most still could only dream about living what was referred to in those days as “The Life of Riley,” an early 1950s TV sitcom.  We watched “Father Knows Best,” the “Donna Reed Show” and others that represented the ideal traditional family infusing our dreams with visions of a stable and satisfying life surrounded by family and friends.”…

My story is that of an average person living life, at times, in what many would consider difficult circumstances. I’m not a renowned personality, infamous, or celebrated in any way. simply put, I represent what one can do with so little, and go so far, even when the world expects so little of you. This is a story of life’s struggle to not only make ends meet but to eventually succeed beyond what most others would have thought possible due to a family’s early misfortunes. My story provides a perspective of that ordinary life and how anyone with drive, motivation, and desire can make their dreams come true in America with hard work and perseverance.” 

Some proclaim that age is only a number, inferring you are only as old as you feel. That’s true to a certain degree but from my perspective it’s so much more. It represents wisdom, learned lessons that you can impart to others, humility, the ability to help family and friends, and a time to watch your children and grandchildren grow and prosper.  A changing of the guard, as it has been since the beginning of time. Each of us strive to leave this world in better shape than when we inherited it. All we can do is try our best in life; it isn’t a matter of success or failure, it’s that we do what we can to make a difference.

Life offers many opportunities for all of us to explore at any age. If we are incumbered due to age or circumstance there are other paths to achieve modified goals and aspirations. I helped an elderly neighbor use his computer for online banking and hobby research. He was 80 at the time. He developed Macro Degeneration towards the end of his life and I enlarged the displayed text so he could still work online.  Eventually, at 92, he needed a large magnifying glass to continue.  He never gave up on life until it gave up on him!

Everyone should have their estate plans formalized by the time they retire, including: wills, trusts, powers of attorney, and end of life planning. If you are 70 or older and haven’t formalized your plans start now, it’s never too late until it is. Estate planning is often put off to a later date that never arrives and our heirs suffer the consequences. Those who have estate plans, age 70 should be a reminder that it may be time to review and update your plans. Circumstances change over time.  The following list of articles may be helpful when developing or reviewing your estate plans:

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Helpful Retirement Planning Tools / Resources

Disclaimer:
Opinions expressed herein by the author are not an investment, health care, or benefit recommendation and are not meant to be relied upon in investment, health care or benefit decisions. The author is not acting in an investment, medical, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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Managing Your Required Minimum Distributions (RMDs)

Posted on Saturday, 18th May 2019 by

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Those approaching age 70 ½ and older are often perplexed about their Thrift Savings Plan RMD withdrawal options and how to efficiently manage the transaction’s proceeds. Some of the concerns are your TSP balance decreases with each withdrawal, annual income and taxes increase, and the earned income potential vanishes for the cash you now have in hand. There are many ways to use this windfall for the benefit of you and your heirs.  If you are required to take an RMD this year review “TSP Changes & Required Minimum Distributions (RMDs)” to determine your RMD amount and understand the process.

The first thing that came to mind for me was the potential increase in federal taxes, Pennsylvania doesn’t tax retirement account withdrawals. When you withdraw an RMD from the TSP, section 5 of the TSP-77 Request for Partial Withdrawal form requires an automatic 10% federal tax withholding for RMD distributions, 20% for an early withdrawal. They give you the option to increase your federal tax withholding and many use their RMD to pre pay taxes.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Your RMD may be sufficient to avoid paying estimated quarterly taxes on other investment income such as realized capital gains, dividends, and interest that is earned on taxable investment accounts throughout the year. If you sold investments this year for capital gains and/or have dividends and interest income from taxable investment accounts, you can use your RMD to cover all or a major portion of your tax liability this year.

Many reinvest their RMD if they have sufficient income from their annuity and Social Security to cover expenses. Unfortunately, you can’t request an in-kind TSP transfer like you have the option to do with other retirement accounts. In-kind transfers allow plan participants to transfer shares from their retirement account to a taxable account to cover their RMD withdrawal.  The transferred shares must cover the full RMD on the date of transfer.  You can’t transfer TSP funds to a private sector account, only cash.

In-kind transfers offer those with other retirement accounts to retain their equity positions and simply transfer them to a taxable brokerage account. This is beneficial for those who don’t want to lose one of their core stock, bond, or mutual fund holdings.

One of the safest investments for your TSP cash is to buy short term Treasury Bills (T-Bills) direct from the government through their Treasury Direct program. Treasury bills are issued for terms of 4, 8, 13, 26, and 52 weeks and they are currently earning just over 2.4%. All you have to do is open an account online and transfer funds direct from your savings; at maturity the Treasury deposits your initial investment plus earned interest back into your savings account. You can elect multiple reinvestments if desired.  You might also find attractive CD rates at local banks, we recently found one local bank offering 13-month CDs at 2.6%.

 

Another option is to reinvest your RMD in one of your taxable brokerage accounts, possibly in a tax-efficient investment. To reduce future taxes, invest in municipal bonds, index funds that typically don’t generate significant capital gains or individual tax efficient mutual funds. Funds such as Vanguard Tax-Managed Balance Fund (VTMFX) or the Vanguard Intermediate Term Tax-Exempt Investment fund (VWITX) are considered tax efficient.

Your RMD could raise your income sufficiently to increase you and your spouse’s Medicare Part B premiums due to your Modified Adjusted Gross Income (MAGI). Medicare Part B premiums are income adjusted.

At age 70 ½ federal retirees have at least three potential sources of annual income to rely on: your FERS or CSRS annuity, Social Security if eligible, and now your TSP RMDs.  If you worked for other private sector employers or owned a small business you may have other retirement accounts to draw from.  You must take RMDs from your retirement accounts to avoid a costly penalty. Effective management of your retirement accounts can grow your retirement savings and possibly reduce your future tax liability. Take care when making your RMD elections this and every year.                                      

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Helpful Retirement Planning Tools / Resources

Disclaimer:Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.Be Sociable, Share!

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Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH

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Trust but Verify — Do You Suffer from This?

Posted on Friday, 10th May 2019 by

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I have two short updates to cover before starting Trust but Verify. First, Joe wrote after reading It’s Time to Get Real that you need to check your individual state’s document requirements when applying for the new REAL ID. Your State may require different forms of ID and residency documentation than what Pennsylvania requires. He lives in Illinois and went to renew his driver’s license, upon arrival they advised him that only certain state driver’s license facilities accept REAL ID applications.

I also mentioned in the same article that I recently ordered replacement birth certificates. My daughter and her husbands’ birth certificates were rejected by the Post Office when they applied for passports. According to the Post Office, birth certificates must now include the names of both parents and a raised seal.  I also discussed how to replace lost documents that you may need for your retirement application and for other purposes in a recent article titled Replacing Lost or Stolen Documents.

I received a full refund from the PA Office of Vital Records because I am a veteran. I originally checked veteran status on my replacement birth certificate application and thought I had to pay for my wife’s certificate. They returned the check stating that both the veteran and spouse receive replacement birth certificates at no cost! A welcomed surprise. We need new certificates to apply for passports.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Trust but Verify

Doctor’s visits create significant anxiety for many patients of all ages. According to a recent study,“30%–40% of patients who are diagnosed with hypertension on the basis of their office blood pressure measurement alone have normal out-of-office blood pressure, according to ambulatory blood pressure measurements.”

Many suffer from what is called White Coat Hypertension. Anytime they get near a doctor, any doctor, their blood pressure goes through the roof causing erroneous blood and intraocular eye pressure readings. I believe this syndrome may result in premature high blood pressure diagnosis and treatment. High blood pressure also elevates eye intraocular pressure causing concerns for glaucoma patients. This is far more common than previously thought.

If you have been diagnosed with high blood or intraocular pressure (glaucoma) consider whether or not you suffer from White Coat Hypertension. Buy a home blood pressure wrist monitor and compare your home readings to those taken at the doctor’s office. Your office blood pressure readings may not be a reliable indicator and comparison to your home readings may put an entirely different light on whether or not you have a problem or need treatment. 

The impact of White Coat Hypertension on your eye’s intraocular pressure (IOP) is more difficult to ascertain. Your doctor has a variety of tools to measure IOP; the Goldmann Tonometer, Tonopen, and the new ICare Tonometer. All have their advantages and disadvantages. If you have thicker corneas the Goldmann may not be as reliable, it is calibrated at a fixed cornea thickness. They do have compensation tables available however many doctors hesitate to use them. The Goldmann and the Tonopen use numbing drops while the new ICare Tonometers require no medication to measure IOP. An easy to use ICare Home model is now available from some physicians. The ultimate indicator of glaucoma progression is loss of sight and optical nerve damage as indicated by the perimeter and Optical Coherence Tomography (OCT) tests, not pressure alone.

There should be a national protocol established for patients that exhibit white coat hypertension tendencies to avoid misdiagnosis and unnecessary treatments. If your doctor doesn’t use the techniques listed below, ask your physician to use them for your checkups.

The following office procedures make sense for patients that suspect they have this condition or know they have this tendency:

  1. The doctor should annotate white coat hypertension tendencies on your chart.
  2. Initially limit the patient’s exposure to the primary care physician. When the patient has to see a medical assistant, then a fellow, complete scheduled tests, and finally see the doctor; the patient’s blood pressure and IOP readings won’t be reliable. With each medical provider interaction, the patient’s anxiety escalates.
  3. Shortly after signing in, a highly trained medical assistant or the doctor should take the patient’s blood pressure and IOP readings. A patient’s anxiety increases as time passes in the office. The sooner they take the patient’s baseline pressure readings the better. 
  4. Glaucoma patience with this condition should request their IOP readings be taken before any other checks including blood pressure readings. Basically, the patient’s blood pressure readings are always high in the office so they obsess over this. High blood pressure is known to elevate IOP.
  5. Scheduled testing should be done after the baseline blood pressure and/or IOP is taken either by the doctor or trained medical assistant.
  6. The doctor should Provide breathing instructions to patients during blood pressure and IOP tests. Holding your breath causes elevated pressure readings. Doctor’s should offer pamphlets that include breathing exercises and suggestions on how to reduce anxiety.
  7. The patient can purchase a home blood pressure cuff monitor and take the readings to your next doctor’s visit. For patients with glaucoma, ask the doctor to provide an ICare Home IOP monitor for several weeks and bring your readings with you to your next office visit.
  8. Have the physician compare the home monitor readings to the office visit baseline readings to determine the patient’s true blood pressure and IOP readings.

If you suffer from or believe you may suffer from White Coat Hypertension, discuss this with your physician and have them incorporate the above protocol for future office visits. It makes sense to be an advocate for your health issues; question your doctor, ask for clarifications and get a second opinion if warranted.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections

Helpful Retirement Planning Tools / Resources

Disclaimer:
Opinions expressed herein by the author are not an investment, health care, or benefit recommendation and are not meant to be relied upon in investment, health care or benefit decisions. The author is not acting in an investment, medical, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

Posted in LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION, WELLNESS / HEALTH

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