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Military Credits, Health Care, Survivor Benefits, TSP, and Updates

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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 [2] 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 [3]. 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 [4] located online and read Linda Sherman’s excellent article [5] 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 [6].  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 [7] 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 [8]. 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 [9] 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 [10] 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 [10] 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 [11] 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.


Learn more about your benefits [15]employment [16], travel [17], and financial planning issues [18] on our site and visit our Blog frequently at https://fedretire.net [19] to read all forum articles.

Request a Retirement Benefits Summary Analysis [20] and receive a personal retirement analysis. A sample analysis [21] is available for your review. This service is provided by independent agents that are not affiliated with www.federalretirement.net [22] or Bookhaven Press LLC.

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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.

Last 5 posts by Dennis Damp