Posted on Saturday, 6th August 2022 by Dennis Damp

Please forward this article to others that may find it informative.

This past winter our gas and electric bills doubled from the previous year. Both companies confirmed that my usage was about the same year to year. Inflation has taken its toll and we simply can’t escape the spiraling costs of everything these days.

Why are our electricity costs increasing when we have nuclear, abundant coal, and gas to power the country? Obviously, more power plants are needed; it didn’t take long to find out why.

Higher prices are near and dear to those planning their retirement and annuitants a like. With our abundant energy resources our utility bills should be much lower.

EMPOWERING OUR GRID

America is facing rolling brown outs this year; we no longer have sufficient electric generation capacity during extreme weather events. This wasn’t caused by climate change; the problem is manmade. Over 300 coal fired power plants were forced to close since 2010, mostly due to onerous new EPA regulations and cost considerations.

A third of the coal plants that closed were either converted to natural gas or replaced with new gas fired plants. A new EPA wastewater rule will cause 75 additional coal fired plants across the country to shut down if the rule isn’t rescinded.

Six nuclear power plants closed since 2013. Europe is reopening mothballed coal fired and nuclear facilities to shore up their electric grid, it seems like a reasonable course of action for us here at home.

India, China, and Japan are building hundreds of new high efficiency low emission (HELE), ultra-supercritical coal-fired power plants. EPA regulations discourage the building of HELE coal-fired power plants in the US even though these power plants have a Higher Heat Value (HHV) rating of 45% then our existing fleet of coal-fired power plants in the US that have an average efficiency of 33% HHV. The life expectancy of a HELE plant is 60 years compared to just 20 years for wind-turbines and solar farms.

According to the Institute of Energy Research (IER), “1,600 coal plants are planned or under construction in 62 countries. If constructed, these new plants would increase global coal-fired capacity by 43 percent.” In many cases these plants will use our exported coal to fuel their power grid. We should be building low emission HELE plants where needed to utilize our vast coal resources and shore up our grid.

Solar and wind projects are planned that will help. The Energy Information Administration (EIA) announced plans to deploy 21.5 GW of solar and 7.6 GW of wind in the U.S. in 2022 that would surpass the estimated 15.5 GW of solar additions in 2021.

However, wind and solar are weather dependent, during cloudy or low wind velocity days, little to no power is generated; it would cost a fortune to store their energy in huge stationary batteries to supplement supply during critical periods.

Renewables are fairly unreliable and often require huge government loan guarantees and grants. Remember the Texas wind-turbines that shutdown during freezing temperatures, California’s usage restrictions this year, and the bankrupt Crescent Dunes concentrated solar power company that shut down in 2020. This company was developed with $737 million in U.S. Department of Energy loan guarantees!  Solyndra LLC was another solar panel manufacturer that received over $500 million in government funding that went bankrupt in 2011.

Wind-Turbine Struck by Lightening in Texas

We must have a ready reserve of sustainable carbon-based power sources that can be the mainstay of our grid for the foreseeable future. Renewables will eventually provide a larger percentage of our needs, but we shouldn’t abandon or discourage the building of reliable new high efficiency carbon-based and nuclear power generation options.

To make matters worse, we currently have 93 nuclear reactors located at 55 nuclear power plants in 28 states that generate 20 percent of our power needs according to the US Energy Information Agency. Twenty-one reactors are scheduled for decommissioning!

In 2016, the Tennessee Valley Authority’s (TVA) Watts Bar Unit 2 in Tennessee became the first new U.S. reactor to come online since 1996. Two others in Georgia are under construction and will add approximately 4,234 megawatts (MW) combined when they go online; enough to power over 500,000 homes! Compare this to 29.1 MW of solar and wind projects that are planned for 2022.

One of the downsides to nuclear is waste disposal. It needs to be properly handled in new and existing plants. They currently store much of it on site in large steel containers. A catastrophe waiting to happen. Another reason to retain and expand our carbon-based energy production.

ELECTRIC VEHICLES (EVs) – Roadblocks Ahead

EVs are here to stay and owners overall seem to love them. However, the push to dramatically increase EV production and sales is irresponsible. Our infrastructure and electric grid can’t handle this without decades long upgrades and many homes would require electrical modifications as well. The high cost prohibits most from purchasing one. Yes, costs may come down over time, but not in the near future. Especially with batteries tripling in price.

It isn’t just their initial cost, it’s the higher costs we are destined to pay for electricity after plugging them in at home. My electric bills increased dramatically over the past two years.

EVs make sense for local trips, daily commutes, and for those who can afford one. A viable option for a second car from my perspective. Hybrids are another option, their batteries cost less.  It should be noted that driving a hybrid with a dead battery can cause irreparable damage to your hybrid system.

For the foreseeable future, a reliable gas-powered vehicle or possibly a hybrid would be required for a family’s primary mode of transportation. Costs can be prohibitive for EVs overall when you factor in a few variables.

EV RANGE RATINGS – REALLY!   

Manufactures of EVs provide a mileage range rating under ideal conditions, typically from the mid-200s to 350 miles per full charge. Those estimates don’t take into account extreme weather, mountainous terrain, etc. Mileage range decreases 40% to 50% if you’re running a heater or the AC, operating the vehicle in bad weather that increases drag, or have many hills to climb during your journey.

EVs with a stated range of 300 miles would realistically be around 150 to 170 miles and require more frequent charging and higher electric bills for owners. Batteries over time lose their full charge capabilities, just check your mobile phone’s battery health, mine is at 84%.

EV BATTERY REPLACEMENT COSTS

Replacement batteries cost an arm and a leg if you can get one. A friend of mine purchased a Chevy Bolt several years ago. The battery died while under warranty and it took over a year for the new battery to arrive; the installation was a nightmare. A Chevy Bolt battery costs over $16,000!

KVUE TV, an ABC affiliate in St Peterburg, Florida, reported that a 17-year-old’s parents spent $11,000 on a used 2014 Ford Focus Electric with 60,000 miles. Six months later the battery died; the replacement cost was $14,000!  A Tesla owner in Sweden blew up his car last year to protest the $18,000 replacement battery cost!

THERE ARE NO FREE RIDES

Currently, Fuel taxes account for 84 percent of federal and 29 percent of state highway funds. As we transition to a greater percentage of EVs on the road, these funds have to be collected through other methods. Many states already doubled the registration fees for EVs. Tolls on roads and bridges will increase accordingly since all vehicles will pay the same fee.

EV owners will eventually pay not only for the electricity used whenever they stop for a recharge, taxes will be applied. Those who charge from home will surely pay an add-on-tax to their monthly electricity bill, especially for those who install fast chargers in their garage.

After all is said and done, EVs won’t be less expensive than a typical internal-combustion-engine car down the road. You also have to factor in battery deposal fees that could be very high. Batteries are considered hazardous waste and will create disposal problems down the road even if they are able to recycle them with new electrolyte.

SUMMARY

All sources should be explored and used to provide efficient and reliable power for residential and commercial use, one size doesn’t fit all. A push to fast-track EVs in support of the administration’s outrageously expensive climate change agenda is destined to fail if we don’t step back and adjust our expectations.

These fast-tracked initiatives have devastating impacts on those who can least afford it.

Unfortunately, the elites, power brokers, and many of our representatives don’t comprehend the plight of the average American. They have unlimited resources, live in gated communities with private security details, aren’t subject to the same rules and regulations they espouse, travel in private jets and only care about their agenda while the majority of American’s suffer from their incompetence.

Special interests and their lobbyists have taken over Washington and are driving these initiatives before they are viable and ready for prime time.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Guide
• TSP Considerations
• Medicare Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The information contained herein should not be considered investment advice and may not be suitable for your situation. This service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: Electric Vehicle Concerns, EV Battery Costs, EV Issues, Power GXrid, Power GXrid Problems
Posted in LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION, WELLNESS / HEALTH

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Posted on Friday, 22nd July 2022 by Dennis Damp

No matter where we look today, costs are rising as fast as the early 1980s. I remember those days well; mortgage rates were double digit and inflation followed suit. We are fast approaching those lofty levels, a record we don’t want to breach.

2023 COLA PROJECTIONS

According to Wilbert J Morell III, a retired Navy Engineering Project manager, “If inflation remains constant at 9.1% and the CPI-W remains constant at 292.542 then the Social Security and CSRS COLAs will be 9.0% and the FERS COLA will be 8.0%.”

Wilber suggests, “with Inflation continuing to grow at the same monthly trend of 1.3% per month and the CPI-W continues at the same monthly trend of 1.6% per month as reported in the 13 July CPI Report, the Social Security and CSRS COLAs will be 12.5% and the FERS COLA will be 11.5%. Unfortunately, if the US inflation trend continues, by the end of December 2022 U.S inflation could be as high as 16.9%, which will be much higher than the 2023 COLAs.”

The 10-year Treasury yield dropped significantly since the last monthly report to 2.96%; and the 2, 5, and 7-year Treasury yields increased significantly higher than the 10-year Treasury yield. The above Reversals validates the U.S. is now in an economic recession.

• Review the COLAs issued from 1999 to the present.

Wilbert tracks these statistics monthly, volunteers to help seniors in his community, and is highly knowledgeable about our federal retirement benefits.

TREASURY BILL YIELDS CONTINUE TO RISE

In my article titled “Ditch your Bank’s Low Savings Rates” I described the advantages of Treasury bills and in a subsequent article I outlined how to ladder them to take advantage of the rising rates. What astounds me is my local bank and credit union; they kept their savings rate at a mere .04% all this time!

When I started purchasing 4 and 8-Week bills last February they were yielding slightly more than my local bank and credit union savings rate. The 4-week bill rate has increased to 2.011% as of July 19, 2022, just 5 months later. The 8-week bill yields 2.31%; the 52-week bill is 3.070% and higher than the 10-year note rate! The rate chart below lists their performance for July of this year.

I’ve kept my 4 and 8-week ladders reinvesting for the near term until the rates plateau; then I plan to convert them to either 52-week bills or longer-term notes depending on how high the rates move. Interest rates reached 16.63% in 1981 and many locked in longer term notes and 30-year bonds at very high rates, in the low to mid-teens!

TREASURY NOTE RATE CHART

As I stated in the past articles on this subject you can purchase Treasuries direct from the government at www.treasurydirect.gov or thorough your stock broker. Generally, I purchase short term bills direct from the government. Longer term notes, bonds, and TIP are best suited for your brokerage account.

If you are holding long term notes, bonds and TIPs you can only sell them on the secondary market before maturity. Treasury Direct canceled their sell direct program some time ago. Owners must transfer Treasuries they want to sell before maturity to their private brokerage account to sell them on the secondary market; it can take months for the government to complete the transfer.

I elect the new issue auction option when purchasing Treasuries through my brokerage account. If you buy previously issued Treasuries you could end up paying a high premium if the newer issued notes and bonds are paying a higher coupon rate.

There are several issues that I have with the Treasury Direct program in general, poor customer service for retail investors like us, and they don’t send monthly or annual account statements. They are 100% paperless and online. You have to print screens for each purchase to have a record of the transactions and download your annual 1099 forms.

They are difficult to reach. I sent them an email and they replied they were not accepting new email messages at this time. When I called, I was placed on extended holds and haven’t been able to contact them to date. It’s a minor issue but it needs to be addressed. Brokerage houses purchase millions in bonds each week and have a direct line to the Treasury to service their active accounts. I’ve never had an issue with the Treasuries I purchase through my broker.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Guide
• TSP Considerations
• Medicare Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The information contained herein should not be considered investment advice and may not be suitable for your situation. This service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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

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Posted on Saturday, 16th July 2022 by Dennis Damp

The 2022 FEHB Open Season will run from November 14, 2022 through December 12, 2022. Open Season starts every year on the Monday of the second full work week in November and ends on the Monday of the second full work week in December.

OPM sent a FEHB Program Carrier Letter to all FEHB providers on February 17, 2022. This letter outlines the policy goals and initiatives for the 2023 FEHB Program. A follow-up letter provided technical guidance and instructions.

OPM GOALS

As excerpted from their guidance letter, “OPM’s focus for the upcoming plan year is advancing health equity and ensuring the federal government, as the largest employer in the country, offers competitive, comprehensive health insurance benefits to its employees, annuitants, their families, and other eligible persons and groups.”

They further state, “Our health equity initiatives for the 2023 plan year relate to maternal health, gender affirming care and services, and obesity.” They also address assisted reproductive technology, preventive health services, coverage for necessary medical food, with emphasis on the Coronavirus Disease 2019 (COVID-19) pandemic.” Mental health and substance abuse disorders were also mentioned.

PREMIUM IMPACT

The average increase for our FEHB plans in 2022 was a reasonable 2.4% while Medicare premiums skyrocketed 14%! The carriers will be challenged this year by inflation and to provide expanded coverage requested by the administration.

COST NEUTRALITY

According to OPM’s cost neutrality clause, “When proposing an increase in benefits, Carriers must propose corresponding benefit reductions to offset any potential increase in premium, with limited exceptions directed by OPM.”

They provide an example in the clause, “If a Carrier were to propose decreasing a cost sharing in one benefit and this increase in benefits would have an additional cost impact, the Carrier would have to have also proposed benefit decreases in other areas with an equal or greater reduction in cost than the benefit increase in the same plan option”

We could end up paying substantially more next year when you factor in inflation and expanded coverage requirements for 2023 that must be offset by reducing benefits elsewhere. Time will tell.

EVALUATE YOUR CURRENT FEHB PLAN

It’s a good time to review your current plan’s coverage and ask yourself if they met your needs and expectations this year. Ask these questions:

• Did I have coverage issues?
• What additional coverage will I need next year?
• Was I able to get the medications / prescriptions needed?
• Did I have to pay high prescription copayments?
• Where my deductibles, copayments and coinsurance excessive this year?
• Are the labs, doctor’s offices, hospitals, and outpatient facilities available in my immediate area and covered by my current FEHB plan?
• Did I have to travel out of my area to see a provider or have procedures performed?
• Was customer service helpful and easily accessible?
• Did I encounter unanticipated expenses that I thought were covered in my current plan.
• Are you signing up for Medicare this or next year? if so, you may want to consider moving to a lower cost FEHB plan.
• Explore Medicare signup options

Answering these and others will help you prepare for the upcoming open season. If you had problems this year, look for plans that will better suit your needs in 2023.

Helpful Retirement Planning Tools

• Retirement Planning For Federal Employees & Annuitant
• The Ultimate Retirement Planning Guide – Start Now
• Medicare Guide
• Social Security Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• What to Consider Before Enrolling in Medicare B (Part 2)
• Should You Change to a Lower Cost FEHB Plan When You Sign Up for Medicare(Part 3)
  • Caution – Don’t Lose Your FEHB Coverage
• Medicare Part B and FEHB Update (Part 4)
• How to Delay Part B Premiums
• Budget Work Sheet

Tags: 2023 FEHB Plans, FEHB Open Season
Posted in BENEFITS / INSURANCE, ESTATE PLANNING, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH

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Posted on Friday, 1st July 2022 by Dennis Damp

Retirement account access is critical for those who need to change fund allocations, withdraw funds, add or change beneficiaries, or process other actions such as requesting an RMD. Many Thrift Savings Plan (TSP) account holders encountered major problems when trying to login to the new site. Some spent days working to regain access and were placed on hold with the TSP customer service staff for hours.

TSP SITE LAUNCH

Considering there are 6.6 million TSP participants with approximately $743 billion in assets, problems were inevitable with such a large undertaking.

Congresswoman Eleanor Holmes Norton requested a meeting with the TSP Executive Director to discuss the many problems account holders had and are still having with the new system. I was one of the lucky ones and gained access early and without incident. Many were able to get in with only minor issues, others weren’t so lucky, and questions still linger.

TSP FEATURES AND PROGRESS

The good news is that the TSP completely modernized this country’s largest retirement plan, we can now e-sign and upload documents, receive mobile push notifications, use their TSP mobile app and virtual assistant, and they added a mutual fund window allowing many participants to purchase mutual funds. They also added new security enhancements and wait times for customer service calls are decreasing.

After the bugs get worked out, hopefully sooner than later, we all will have more flexibility and options to manage our TSP accounts.

MUTUAL FUND WINDOW (MFW)

For those who want to diversify their investments, participants can transfer a portion of their Thrift Savings Plan account balance to a MFW account. Certain restrictions apply, Thousands of low-cost mutual funds are available for purchase.

• Investment Representatives are available from 7 a.m. to 9 p.m. ET, Monday through Friday by calling the ThriftLine at 877-968-3778 and choosing Mutual Fund Window Account from the menu.

RESEARCH REPORTS

Morningstar research reports are available for the MFW that include mutual fund quotes, detailed fund analysis, performance, portfolio composition and much more.  I use Morningstar to monitor my stock and mutual fund portfolios. They are very useful and they provide a portfolio x-ray feature for their subscribers that identifies whether your investments are conservative or high risk.

MINIMUM BALANCE & TRANSFER REQUIREMENT

You can invest up to 25% of your savings plan in your MFW account. Your initial transfer into a MFW account must be $10,000 or more. This means that you are required to have a balance of $40,000 or more in your savings plan to open a MFW account. After your initial investment, there is no minimum for each individual transfer.

If you request a money transfer between your Thrift Savings Plan core investments and MFW Account by 12 p.m. ET, your funds will be available for trading in your MFW the next business day. Transfers requested after 12 p.m. ET are processed the following business day.

You can transfer money from your Thrift Savings Plan core funds into your Mutual Fund Window Account at any time, however, transfers in will count towards the two per month savings plan rules.

Although the amounts that you transfer into your MFW Account are included in the amount available for a loan or withdrawal under normal plan rules, you can’t borrow or withdraw directly from your MFW Account. In order to request a loan or withdrawal, you will need to transfer MFW funds back into the savings plan core investments first.

MFW FEES – Effective June 01, 2022

Mutual Funds Transaction Fees

• $28.75 Mutual Fund Purchases/Sales
• $28.75 Exchanges within the same fund family (charged on purchase only)
• $57.50 Exchanges between fund families ($28.75 charged on purchase and sale)

Account Fees

• $150 Annual Maintenance Fee
• $5 Duplicate Statement

Note: The $150 annual fee includes a $55 administrative fee designed to guarantee that the availability of the MFW will not indirectly increase the share of TSP administrative expenses borne by the participants who choose not to use the MFW.

The fees are higher when you factor in a mutual fund’s expense ratio that can range from less than .10% to 1% and higher. For example, if you transfer $10,000 to your mutual fund window, and elect to purchase $5,000 in XYZ mutual fund with an expense ratio of 1%, your cost to own this first mutual fund would be:

• $150 annual fee
• $28.75 purchase transaction fee
• $50 (1% XYZ expense ratio each year you own the mutual fund)

To set up your account and purchase your first mutual fund, the cost would be $228.75! Additional mutual fund purchases would cost $28.75 each plus their annual expense ratio. The expense ratio is deducted from each of your mutual funds the same way the TSP Funds handle their expense ratios. You would also pay a fee when you sell or exchange a mutual fund with another.

The $150 fee is paid annually plus any trading fees and the expense ratios that the mutual fund companies deduct from your investment each year.

COMPARING THE MFW TO A STANDARD BROKERAGE ACCOUNT

If you intend to transfer a good portion of your account into the MFW it may be cost advantageous to transfer those finds to an IRA at Fidelity, Vanguard or elsewhere. Costs would be lower in most cases. For example, my Fidelity brokerage retirement account doesn’t charge a setup fee and there are zero costs to purchase any of Fidelity’s mutual funds, individual stocks, and ETFs.

However, if I want to purchase a mutual fund from Vanguard there is a $75 fee which I paid because I use the Vanguard Wellesley Income Fund (VWINX) and other mutual funds as anchors in several portfolios. VWINX has an expense ratio of .24%, yields 2.55%, and has only decreased 16.4% as of 6/30/22, while the S&P is down 25% from its 52-week high.  It is a managed fund and invests approximately 40% in equities and 60% in bonds, many of which are short term Treasury Bills. They currently hold 2.5% in cash.

SUMMARY

Overall, I’m satisfied with the new TSP website.  I downloaded the historical reports I wanted to archive before they migrated to the new system as I suggested in my article titled, “CAUTION – PREPARE FOR THE TSP TRANSISTION.” The TSP warned users that our historical documents would not transfer to the new system. If you neglected to do this, request needed documents from the TSP; they will send them to you. The new design, menu structure, downloadable forms, e-document signing options and updated security features are what was needed to modernize the system.

The MFW is advantageous for those who wish to purchase a select group of funds and don’t want to open another retirement account. It is ideal for those who wish to purchase low cost highly rated mutual funds as the centerpiece of their account and intend to keep them for an extended period. Once you set up a group of funds targeted to your investment goals, you only have to rebalance annually or as needed.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Guide
• TSP Considerations
• Medicare Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Tags: The Mutual Fund Window, TSP Site Access, TSP Site Launch
Posted in BENEFITS / INSURANCE, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 17th June 2022 by Dennis Damp

I described the advantages of Treasury bills in “Ditch your Bank’s Low Savings Rates” last March. They provide higher yields for savers; if you ladder your investments a portion of your savings will be available at set intervals throughout the year. I’ve gone through several reinvestment cycles since starting treasury bill ladders earlier this year. The yield is increasing dramatically as funds are reinvested at higher rates.

When I started purchasing 4 and 8-Week bills last February they were yielding slightly more than my local bank and credit union savings rate of .04%. The 4-week bill rate has increased to 1.055% as of June 14, 2022, just 3 months later, while my local bank and credit union rates remain unchanged.

TREASURY BILL INVESTEMENT RATES

The chart below shows the interest rate increases for 4, 8, 13, 26 and 52-week bills during this period. The 52-week bill issued on June 16,2022 yields 3.134% and on June 14th the 2-year note yield was 3.324%! These rates far exceed my local bank and credit union’s .04% rate.

It’s easy to move savings that include funds previously invested in certificates of Deposit (CDs) to the Treasury for better yields. When rates level off, it will be a good time to lock in higher rates with Treasury notes of 2,3,5,7, and 10-year maturities. You may also find attractive CD rates at that time.

If rates go through the roof, like they did in the early 80s, it could be possible to pick up Notes and Bonds with very high yields. In 1981 the 30-year Treasury bond paid as high as 15.21%!

On the flip side, I relocated in the early 1980s under Permanent Change of Station (PCS) orders; our mortgage interest rate was 11%! The sellers laughed at the closing when they saw the 30-year total cost with financing.

If you are planning your retirement, learn an easy technique to retire mortgage free and other ways to economize before submitting your retirement application.

COMMON SENSE FIXED INCOME ALTERNATIVE

Treasury bills are sold at discount (below face value); when the bill matures the investor receives face value. These rates may seem insignificant to some. I can assure you the results are worth the effort.

Put another way, if you are fortunate enough to have $50,000 in combined savings earning .04%, your bank would pay you a grand total of $20 a year to keep these funds in their institution! A 1% yield would pay out $500 or $480 more than your bank is willing to pay you. Short term Treasury yields increase each reinvestment cycle and interest compounds as the Federal Reserve continues to raise rates.

If you invested the same amount in a 52-week bill, currently yielding 3.134%, you would earn $1,567. Essentially you would pay $48,433 for the 52-week note and at the end of the 12-month term the Treasury will deposit $50,000 back into your account.

CDs, Bank, and credit union interest rates will eventually rise to entice customers back to the fold. Right now, they are flush with cash and have no incentive to payout more. They are also aware of the fact that most depositors are unwilling to change and stay regardless.

TREASURYDIRECT.GOV

Visit TreasuryDirect.gov to register, explore the options, and start purchasing Treasury bills, notes, and bonds, TIPS, and savings bonds. You are buying direct from the government and eliminating the middle man; there aren’t any fees charged for purchases. Most brokerage accounts offer clients access to Treasury auctions and will purchase them for your account; the longer-term notes and bonds can be sold on the secondary market if needed. Here is more information on the Treasury’s programs:

• Treasury Bills In-depth
• Treasury Notes In-depth
• Treasury rates (Yields)
• Auction schedule

COLA UPDATES

According to Wilbert J Morell III, a retired Navy Engineering Project manager, if inflation remains constant at 8.6% and the CPI-W at 288.012 the Social Security and CSRS COLAs will be 7.3% and the FERS COLA will be 6.3%.

If Inflation continues growing at the same monthly trend of 1% per month and the CPI-W monthly trend of 1.2% per month as reported in the 10 June CPI Report, the Social Security and CSRS COLAs will be 11.2% and the FERS COLA will be 10.2%.

US inflation by the end of the year could be as high as 12.6%.

Wilbert tracks these statistics monthly, volunteers to help seniors in his community, and is highly knowledgeable about our federal retirement benefits.

I-Bonds yields should also rise again this November in this invironment, they already pay 9.62%!

SUMMARY

Is the stock market keeping you up at night?  With inflation on the rise and costs increasing across the board, a recession is surely on the horizon. As the Fed raises rates, Treasury yields will follow suit and provide viable options for our cash.

Financial analysts on the major networks suggest a recession is coming our way in 2023 or beyond. It may be much sooner than they think.

A recession is defined as a significant decline in activity across the economy, lasting longer than a few months. Two consecutive quarters of negative economic growth, measured by a country’s gross domestic product (GDP), is the technical indicator of a recession. The country isn’t fighting on one front in this battle, we are surrounded with conflicts, all with significant negatives for our economy and well being.

The DOW and S&P are down more than 20% signaling a bear market. Many issues are driving this trend: skyrocketing inflation along with the highest gas prices in history, supply chain problems, food shortages including baby formula, COVID lockdowns in China, rising interest rates, out of control spending, the war in Ukraine, lawlessness, and the open borders and fentanyl drug crisis that killed 108,000 Americans last year, to name a few. We’ve lost more people to fentanyl overdoes than guns, suicides and traffic accidents combined last year!

Adding to our problems, electric utilities are warning of rolling blackouts this summer across the country. The early retirement of fossil fuel plants has accelerated the destabilization of the grid. Ten coal fired power plants closed in Pennsylvania in the past ten years; two more are scheduled to close this year. Maybe, just maybe we should restart a few of those plants until we have sufficient alternate power sources available!

Hopefully our leaders will wake up, rise to the occasion, and not end up like Nero, Rome’s emperor who fiddled while Rome burned.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Guide
• TSP Considerations
• Medicare Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The information contained herein should not be considered investment advice and may not be suitable for your situation. This service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 3rd June 2022 by Dennis Damp

The Thrift Savings Plan (TSP) has updated their site and requires all account holders to establish a new login to regain access to their account. I was able to sign into my new TSP account on Thursday June 2^nd without incident. Their updated site is now up and running. However, you may have problems accessing the site at peak times due to the large number of TSP participants attempting to regain access to their accounts.

SIGN ON SCREENS

The following screens will familiarize you with the new sign in process.

FIND YOUR ACCOUNT

To gain access to your new account click on “Set up new login for my account” and then enter the personal information the TSP needs to find your account and connect it to the new system.

UPDATE YOUR ACCOUNT

You will be asked to select a preferred multi-factor authorization (MFA) and then set up a new user ID and password. I selected text message (SMS) which I use for most other accounts. The TSP also requires account holders to create a PIN that can be used to quickly identify yourself when calling the ThriftLine. 

SUMMARY

The new signup process takes about 10 minutes tops; the site is easy to navigate and use. I viewed current holdings and visited each area including the beneficiary election page. There is new Mutual Fund Window that you can explore and determine if you are interested in moving a part of your account to over 5,000 publicly traded mutual funds.

To access this new feature, select “Change Investments” on the main page and then select “Set Up a Mutual Fund Window Account.”  You can invest up to 25% of your savings plan in your MFW account. Your initial transfer into a MFW account must be $10,000 or more. This means that you are required to have a balance of $40,000 or more in your savings plan to open a MFW account. After your initial investment, there is no minimum for each individual transfer.

There are additional fees to consider. I intend to review this new feature in an upcoming article. There are pros and cons to this new investment option.

Visit www.tsp.gov to regain access to your account. I was pleasantly surprised just how easy the new sign in process was. Especially after spending hours on the phone this past Thursday working with customer support to update my business accounting program!

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Guide
• TSP Considerations
• Medicare Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 27th May 2022 by Dennis Damp

Retirees use OPM Services Online to start, change or stop federal or state income tax withholdings; download 1099-R forms, change your mailing address, start or change direct deposits and view annuity payments. This system is available to those under the Civil Service Retirement System (CSRS), Federal Employees Retirement System (FERS), FERS Special, or the Organization Retirement and Disability System (ORDS).

OPM is switching to multilevel authentication procedures for their online services to prevent others from gaining unauthorized access to our accounts.

The new procedures may create confusion for some, especially for older retirees that are unfamiliar with computers and internet protocols. Once you create a new or use your existing login.gov account, and pair it to your original OPM Services Online account, it won’t be so daunting.

LOGIN.GOV ACCOUNT

OPM is deploying enhanced security protections for accessing your servicesonline.opm.gov account on May 26^th. Login.gov provides an extra layer of security by using multi-factor authentication and stronger passwords to protect your account. Other government agencies, such as the Small Business Administration and the Social Security Administration, already use this process to provide secure access to their services.

I logged into my Social Security account to check this out. They now allow access using Login.gov or you can still use your original access user name and password. If you use your original access credentials, Social Security now requires a second level of verification, either a text message code sent to your cell phone or email address that you have on file with them.

When I read OPM’s email announcing this change, I set up my www.login.gov account. This saves time and confusion when first visiting OPM’s online services starting on May 26^th. If you already have a login.gov account there is no need to set up a new one.

LINK SERVICES ONLINE ACCOUNTS TO LOGIN.GOV

The following screen is what I encountered at Servicesonline.opm.gov on the morning of May 26^th. Since I already created my LOGIN.GOV account, I simply clicked on “Sign in with LOGIN.GOV” and entered my LOGIN.GOV user name and ID. If you haven’t set up your new login.gov access, you will be prompted to do so.

After signing up for this service, and using it to enter your servicesonline.opm.gov account, you will be prompted to enter a code, prior to gaining access to your account. The code is sent to either your cell phone or email address that verifies you are the one accessing your account.

The next screen advises account holders to click on “Connect to servicesonline.opm.gov” and the following screen popped up asking me to enter the code that was sent to my cell phone.

After entering the code and clicking on “Submit” I was redirected to my account and home page.  I logged in and out of my site several times to ensure it was working properly. The only change that I encountered was the login process, all other features of my original account were the same as before. If you encounter problems, use OPM’s step-by-step guide and you will be back online in no time.

I use OPM’s online services frequently. It is difficult getting through to OPM by phone and with their online services you often are able to download what is needed or make changes to your account online instantly in many cases. If you already have access to this service, follow the guidance when you first enter after May 26^th to keep your account active. For those who don’t currently use this site, this is a good time to sign up.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Guide
• TSP Considerations
• Medicare Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 13th May 2022 by Dennis Damp

The TSP is updating their website and adding new investment choices. A short summary follows along with steps to take now that will familiarize you with the pending changes. If you were planning to initiate a new withdrawal or any changes to your investments from May 26^th through the first week of June, you won’t have access to your account.

TSP TRANSISTION DATES

Mark the following dates on your calendar. Full access under the new system will be available the first week of June.

• May 16 to the first week of June: Certain My Account transactions, online tools, and forms will be temporarily unavailable. You can sign in to your account through May 25^th using your original username and password.
• May 26 to the first week of June: All transactions will be unavailable, including changes to investments. My Account and the ThriftLine will also be unavailable during this time.
• First week of June: Full TSP service returns with new features, expanded support options, efficient online transactions, a new My Account with convenient navigation, and much more.

When the new website is launched in early June you will be required to initiate a new login for your account.

During the transition period, your savings will remain invested in the TSP funds you’ve chosen. Your payroll contributions and loan payments will continue. Installment payments scheduled to be paid May 24 – May 31 will be disbursed early on May 23.

These changes were designed to provide account access flexibility, additional investment choices, more options to contact TSP representatives for help, and additional secure online transactions.

NEW FEATURES

These features will be on par to those offered by most private sector retirement plans and adds more investment options. When you run into problems a virtual assistant will be available online and the new TSP Mobile App can connect you to a live-chat with a TSP Representative during normal business hours. The TSP phone line (877-968-3778) remains an option as before.  Here is a brief summary of what to expect:

• New My Account interface including additional security steps to verify login credentials.
• A TSP Mobile App for use on your cell phones and tablets.
• Complete forms and more transactions online, sign your name electronically, and make loan payments.
• Invest a portion of your account in mutual funds through their new Mutual Fund Window. Certain restrictions apply.

TAKE THESE STEPS NOW

Once the new system goes live you won’t have online access to your historical records. Documents and messages currently available in My Account will not transfer to the new system. You can download your historical statements and save any messages for your records. After the move you can request copies from the TSP and they will send them in the mail.

I went online to search for any historical records of interest that I may want to download. The TSP posted this notice on my beneficiary election page:

” You will not be able to access this wizard as of 11:59 p.m. eastern time on 05/16/2022 while we make enhancements to the TSP. If you are in a situation where you need to complete a TSP-3 form to designate a beneficiary, call the ThriftLine to request a paper form. Once the TSP enhancements are in place the first week of June, you’ll be able to complete most transactions entirely online, and most paper forms will no longer be necessary.” 

I printed out my beneficiary elections for my estate planning binder and downloaded my annual statements from 2018 through 2021, previous years 1099-Rs, and the most recent quarterly statement. You can also download a copy of your official Account Balance Letter. This letter is often required by banks and other lending institutions. If you are closing on a new property while the system is offline, download this letter to take to your lender. Note the following:

• Any transactions that you were planning to make from May 26 through the first week of June would have to made before or after these dates.
• Review your investments and make any changes to ensure you have them allocated in the funds desired before May 26^th.

The TSP will be sending out more information as they progress through the update. They also provide a detailed summary of these changes on their website.

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• TSP Guide
• TSP Considerations
• Medicare Guide
• Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
• Budget Work Sheet
• Social Security Guide

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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