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One, Two, Three – Its so Easy, Thoughts and Updates

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One – Two – Three…….

Remember the lyrics “One, Two, Three, It’s so Easy” by Len Berry from the 1960s?

One, two, three

That’s how elementary it’s gonna be

Just fine and dandy

It’s easy

Like taking candy from a baby

Well, most of the good things in life don’t come easy and retirement is just one of the arenas that you have to pay particular attention to long before you leave. The process can be complicated, requiring lots of planning before and after you leave in order to keep you and your family safe and secure. Notice that I said ARENAS, not areas! You must enter the arena, called retirement, and get involved to make it work effectively for you. I entered this arena after my military service ended in my early 20s. I applied for several private sector and federal jobs and chose government even though salary was considerably less then. My wife and I discussed the issues and I decided on government based on the ability to retire early and the excellent benefits available overall.

I listen to XM radio and “One, Two, Three” came on this week and the melody keeps playing over and over in my head. I remember when this song was first released in the mid 60s. I was 16 and purchased my first tape recorder and played this song over and over again until I knew all of the lyrics and it still lingers in my subconscious. In your teens everything appears to be easy and life is a joy ride waiting for us to get on board and ride it out. Little did we know back then all of the twists and turns we would encounter along the road! Just maybe this song had something to do with my overall success. I’ve always been the type to tackle anything with positive intent and interested in learning new things. Maybe that song kept replaying in my subconscious telling me nothing is impossible and “life is so easy, like taking candy from a baby.”

Many feds tend to rely solely on their federal annuity, TSP, and COLAs with little thought to alternatives. This can lead to a false sense of security that could derail your welfare and health in retirement. An example is the suspended COLAs for two years running.  Our annuities haven’t changed while insurance premiums, Medicare payments, food and fuel costs have increasing significantly. Then factor in the unexpected; things change, couples divorce, health problems arise, and President Obama’s bipartisan fiscal commission [2] and other groups are recommending significant changes that will potentially impact all of us long term. There is talk of freezing government salaries, changing the way federal COLAs and annuities are calculated such as using your average high five salary to reduce future annuity payouts for starters. All of this is conjecture at this point however with the national debt exploding, government, no matter what party is in power, will have to take decisive actions to stop the bleeding.

One of the side effects of the new QE2, Quantitative Easing [3] initiatives along with excessive spending is that it will eventually fuel inflation.  The Fed is buying Treasuries, over 600 BILLION worth with new printed money.  Compare this to a Company that offers a 2 for one stock split. A company stock that sells for $100 a share issues an additional share of stock to each owner of record doubling their outstanding common stock. The new price per share is $50. However, the stock owner retains the invested value and now has twice the stock he had before the split occurred. Unfortunately, Uncle Sam doesn’t issue citizens new shares or even backs up the new currency it printed to buy their own Treasury certificates! They don’t send you another dollar for each dollar you own and the funds that retirees and everyone holds are now worth less on the road to being worthless if they don’t address the underlying debt and spending issues.  The effect of QE2 is to flood the market with new money diluting our currency so it will buy less and things will cost more. That’s INFLATION.

What can federal employees and retirees do to prepare and moderate the impact of these changes? Planning and preparation is the key and there are many things for you to consider. The good news is that with proper planning you can at least cope with what is coming down the pike.


There are conflicting views on what lies ahead ranging from deflation and inflation to financial collapse, so what can you do from a practical standpoint to protect yourself in retirement. My two cents worth follows:

1)    The only good debt is NO debt. Pay off your credit cards, bills, and home if possible before you retire. It isn’t as hard as it seems. I discuss how I paid off my mortgage years before I retired in my October 29th column [4].

2)    Live on less than you earn, be frugal and buy wisely. Each year, starting years before I retired, I saved half to the full amount of each year’s pay increase.

3)    Determine if you are financially, emotionally and physically prepared to retire [9].

4)    Perform a retirement cost analysis [10], estimate your earnings and bills in retirement. I developed this free tool for all to use and examples are provided to help you work through the process. Explore other analysis tools.

5)    Prepare a basic estate plan [13] to protect your family and loved ones.

6)    Be prepared and have 30 days or more of emergency food and water supplies set aside to the extent possible. Pick up a little extra each visit to the market, especially items with longer shelf lives that you anticipate will increase in price due to inflation.

7)    Learn about investing in mutual funds, ETFs, stocks and bonds.

Investment options will be discussed in my next article. Many professionals suggest investing in commodities such as metals, real estate and inflation protected securities to fight inflation. Others suggest large cap diversified US and multinational corporations that are flush with cash and well managed.  The long and short of it is that retirees have to protect their assets for the long haul and you can’t take undue risks with your life savings.  There are many ways to minimize your risks and earn decent rates of return that far exceed the CD rates of today.


Learn more about your benefits [25], employment [26], and financial planning issues [27] on our site and visit our Blog frequently at https://fedretire.net [28] to read all forum articles.

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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.

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