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A New Reality

Posted on Saturday, 25th April 2020 by

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The Covid19 pandemic shutdown may truly be worse than the disease itself. Tens of millions have been forced on unemployment and many small businesses may never recover. Companies selectively deemed essential like Walmart, Amazon, Target, Home Depot, Lowes and others are doing great while their smaller competitors are being forced out of business.

This virus is highly contagious and targets the elderly and those with certain diseases and/or compromised immune systems. It has devastated families around the world and continues to do so especially in elder care facilities or in highly concentrated areas like New York City where it spreads like wildfire. Hopefully, what we’ve done to fight this pandemic will help us weather future storms that may come to our shores. If we practice the hygiene and social distancing recommendations to the extent necessary, we could reduce deaths dramatically during upcoming flu seasons or when the Covid19 decides to return and hopefully, without an across the board shutdown.

What I do know is that we can’t shut down our country for extended periods like this without severe societal consequences. There are limits to what the Federal Reserve and government can do, and without a running economy the States and federal government can’t function. The extraordinary measures implemented this go around still may eventually break the bank.

Now, the States are asking for trillions more to make up for all of the revenue they lost. When the country is shut down the tax revenue from sales tax and so much more isn’t there to pay State worker salaries and operational expenses. Expand that to local governments, how do they pay their police officers and expenses?

The stimulus package of around 6 trillion dollars after all is said and done, along with the Federal Reserve’s infusion of trillions more to shore up the banks and bond markets, still isn’t enough if the country doesn’t open up for business soon.

The Federal Reserve, also known as the Fed, manages the central banking system of the United States. It was founded in 1913 under the Federal Reserve Act to manage financial and economic instability.  The Fed creates the nation’s money supply however the majority of our money supply isn’t printed, it is digitally credited or debited to banks throughout the country. Simply put, a ledger entry on a spreadsheet, nothing more.

The Fed Balance Sheet prior to the shutdown was just over $4 trillion which included mortgage backed securities and U.S. Treasuries. When the stimulus started the balance sheet went exponentially off the chart upward to over 6 trillion dollars.  Where did the additional funds come from?

This is the scary part for a novice like myself. According to Wikipedia, “Money creation doesn’t have to be physical, either; the central bank can simply imagine up new dollar balances and credit them to other accounts.” In the old days the Fed actually had to print new money and prior to 1933 it was backed up with gold. For every dollar printed there was an appropriate amount of that precious metal stored at Fort Knox.  Now, they simply make a book entry and “imagine” that it is real!

I’m taken aback when I hear the Fed is infusing trillions of “book entry” dollars into our already overburdened system. Then add the trillions added most recently to shore up the economy due to the shutdown. Is it all smoke and mirrors and monopoly money?  Now that being said, with out the Feds infusion our bond market and banks could have collapsed. There was no one other than the Fed buying bonds and without bond sales our federal government can’t function.  What most aren’t aware of is that our government borrows over 25 percent of what it spends each and every year! Could you and I do this and survive?

The Federal budget for 2019 was $4.526 trillion dollars, total revenue was $3.422 trillion for a deficit of $1.092 trillion! This year with the 3 to 6 trillion additional spending for the pandemic our deficit may be close to or more than 7 trillion dollars! About twice what the Federal government generates in revenue each year.

What I imagine is either taxes are going to skyrocket or runaway inflation is on the horizon. Again, I’m a novice and look at things from a common sense perspective. Our government operates far from that realm. Actions like this create a vicious circle. The government doesn’t have the revenue for the stimulus package and they must borrow trillions by selling Treasury Bonds. However, there are no buyers. The Fed balance sheet is insufficient to support this massive infusion so they imagine the trillions by making a book entry of a sufficient amount to buy the Treasury bonds from Uncle Sam!

I drive down route 60 close to home and see one small business after another shuttered, dreams dashed, and hardship for all of the owners and workers that staff them, and the customers that are deprived of their offerings.  It’s time to get back to a new normal and fast before the country collapses under its own weight.

I understand the hardship on all sides of this issue; for the sick and those most susceptible, workers deprived of their livelihood, and the entrepreneurs that put their heart, soul, and life savings into their small businesses.  There are sensible options to reopen the economy and it isn’t wise for government to ignore the hardships endured by all segments of society at this crucial time.

Request a Federal Retirement Report

Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER. Helpful Planning Tools

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 FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Checks Are on the Way – CARES Act Summary

Posted on Friday, 17th April 2020 by

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The Coronavirus Aid, Relief, and Economic Security (CARES) Act is providing support for those most impacted by the pandemic. Congress passed the Act last month and one of the key provisions is providing for Economic Impact Payments to American households. Payment of up to $1,200 per adult for individuals whose income was less than $99,000 (or $198,000 for joint filers), and $500 per child under 17 years old – or up to $3,400 for a family of four will be arriving soon. Your Adjusted Gross Income will be determined by your 2019 tax filing (or 2018, if 2019 is unavailable).

 

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The amount of the payments will be reduced for those with higher incomes. For individuals filing taxes as singles, the reduced amount begins at an adjusted gross income (AGI) of $75,000 per year and is completely phased out at $99,000. For joint filers, the reduced amount begins at $150,000 and payment is eliminated at $198,000.

The IRS will use the information on the Form SSA-1099 for Social Security recipients, and Form RRB-1099 for Railroad Retirement Board recipients, to generate $1,200 Economic Impact Payments for those who didn’t file a tax return in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits.

For those who do not have their income tax refund automatically sent to their checking or savings account, the Treasury launched a web-based portal for individuals to provide their banking information to the IRS online. Individuals can receive payments immediately as opposed to waiting for checks in the mail.

RMD Waiver

Required minimum distributions (RMDs) for 2020 have been waived for 401(k), 403(b), and governmental 457(b) plans as well as SEP IRAs, SIMPLE IRAs, and traditional IRAs. The Thrift Savings Plan announced last year that RMDs would be automatically sent if a participant doesn’t request one during the year. That has changed under the CARES Act, I called the TSP today and they confirmed that RMDs won’t be automatically sent out this year. If you decide you want to make a withdrawal this year, call the TSP at 1-877-968-3778.

The reason some prefer to waive their RMD is to reduce taxes and to possibly prevent their Medicare part B premiums from increasing. Medicare Part B premiums are income adjusted and an RMD could raise your income just enough to increase your Medicare premium next year.

For those who already elected to take their RMD earlier, call the TSP or other retirement account providers to see whether you’re eligible. You may be able to return the funds to your retirement account.

The 10% early withdrawal penalty is now waived on aggregate distributions of up to $100,000 from certain workplace retirement plans and individual retirement accounts (IRAs) for COVID-19-related purposes. Individual can elect to pay the federal income tax on the distribution over 3 years or they have the option to repay the distribution within a 3-year period to an eligible retirement plan. This option isn’t available for TSP participants at this time.

CARES Act Summary

  1. The deadline for filing and payment of 2019 federal income taxes has been moved from April 15 to July 15, 2020, by the Internal Revenue Service (IRS). The July date will also be the deadline to make 2019 contributions to IRAs and health savings accounts (HSAs). Deadlines associated with contributions to workplace savings plans are not affected.
  2. Direct payments of $1,200, or $2,400 for joint filers, plus $500 for each child may be coming your way as discussed in the introduction.
  3. Some retirement account rules have been relaxed. In addition to the RMD discussion in the introduction, certain beneficiaries taking distributions from inherited IRAs may also skip the 2020 distribution when calculating their 5-year distribution period. Also, loan repayments for affected participants in workplace retirement plans may be delayed for one year. These changes will be in effect through 2020.
  4. Paid sick and family leave available for more workers. OPM has issued a fact sheet titled, “Federal Employee Coverage Under the Leave Provisions of the Families First Coronavirus Response Act.” Federal employees should review this new guidance. There are enhancements to the “Emergency Family and Medical Leave Expansion Act” that working parents need to be aware of.
  5. Paid leave is required for more employees by the Families First Coronavirus Response Act. These provisions apply to businesses of 500 employees or less. Businesses with 50 employees or less may be exempt from the paid leave provisions.
  6. Unemployment insurance has been expanded.
  7. Tax credits for the self-employed may be available.
  8. Interest is waived for Federal student loan payments.
  9. More funding is now available for health care and expanded coverage. Testing for COVID-19 must be covered by private health insurance without cost sharing. Any vaccines for COVID-19 must be covered as well without cost sharing. This act expands coverage of telehealth services under Medicare. It also allows high-deductible health plans with health savings accounts (HSAs) to cover telehealth services even if patients have not met their annual deductible. For health savings accounts, health flexible spending accounts, and health reimbursement arrangements, the act includes over-the-counter (OTC) medicines (without a prescription) and feminine products as qualifying medical expenses that can be reimbursed by these accounts. Check with your FEHB provider if you have specific questions.
  10. Above-the-line deduction for charitable contributions. The CARES Act allows for a $300 above-the-line deduction for cash charitable contributions made to 501(c)(3) organizations for taxpayers who take the standard deduction. These changes go into effect beginning in the 2020 tax year.

You can review and/or download the Act online if you wish to do a comprehensive review. I’ve written several articles centered around this pandemic over the past 7 weeks that you may find interesting:

Request a Federal Retirement Report Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER. Helpful Planning Tools

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, UNCATEGORIZED

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Avoid Retirement Processing Delays (Update)

Posted on Friday, 10th April 2020 by

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According to OPM, “COVID 19 has not affected Retirement Services’ ability to process applications or deliver timely payments.” During the first quarter of 2020, 32,973 retirement packages were received by OPM and they processed 28,617. There is a backlog of 21,264 applications waiting to be processed as of March 31, 2020.

 

Attend a 2-Hour Federal Employee Benefits Briefing – Check Availability

It is now taking an average of 60 days to process retirement applications.  Of the 20,139 cases processed in the first quarter of 2020, for agencies with at least 15 cases reviewed per month, 10.6% or 2,147 had errors that can significantly delay application processing. The employee must work with their HR office to confirm creditable service and review their application thoroughly before it is sent to OPM.

Use our Retirement Planning Guide to help you through the process. It should be noted that OPM can take six months or longer to process a retirement application if information is missing or problems are encountered.  Federal employees must have sufficient cash available and be financially prepared when retiring to allow OPM to complete a final adjudication of their claim.

OPM indicates that annuitants will receive an interim payment of approximately 90% of their expected NET monthly payment, less federal income tax withholdings. NET payments equal what is remaining after deducting health care and life insurance premiums from the gross amount. I received an interim payment of 70% and my claim was processed in 90 days when I retired back in 2005. Retirees may receive interim payments for less than they anticipated due to a number of factors.

To reduce processing delays, submit your application in advance and confirm that your Official Personnel Folder (OPF) is complete. If you submit your paperwork early, your personnel and payroll offices will be able to complete their action before your retirement date.

OPM reported that a number of factors cause reduced interim payments or prevent OPM from initiating interim payments. These factors include:

  • Court orders that are on file at OPM. Court orders can contribute to as much as a 50% reduction in interim payments. Check out our Divorce Forum for clarifications and informative articles on this subject.
  • Part time service
  • Unpaid military deposits
  • When a redeposit wasn’t paid for refunded service creditable towards disability retirement
  • Employees entitled to special retirements for LEO, FF, ATC or other special retirement programs
  • CSRS offset applicants with 90 days of or over the age of 62
  • Non-deduction service performed after 10/1/1982 creditable under CSRS where the deposit has not been paid in full
  • Deposits have not been paid for FERS creditable non-deduction service
  • VA part time direct medical solutions (DMS) physicians, including doctors, scientists, and surgeons
  • Refunded service creditable towards CSRS non-disability retirement ending on or after 3/1/1991 where the deposit has not been paid
  • Excess LWOP
  • Service that is unverified or missing
  • Where an insurable interest survivor election is made
  • When no survivor election is made
  • Receipt of military retired pay

There are a number of actions to take long before you retire to expedite retirement application processing. If you work closely with your agency’s retirement coordinator to ensure your application is processed timely and accurate, the chance of delay is dramatically reduced.

Request a Federal Retirement Report Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER.

Helpful Planning Tools

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, SURVIVOR INFORMATION

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Keeping Up to Keep Up – The Saga Continues

Posted on Friday, 3rd April 2020 by

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The administration is considering new options to combat the Coronavirus including the wearing of facemasks for the general population when they go out and about. The CDC may soon recommend that everyone wear face coverings in public settings when they go to a pharmacy, grocery or other public places.  Essentially, they are concerned that those not exhibiting symptoms may be unwittingly spreading the virus to others.

Stylish and functional facemasks made at home by my niece.

They want us to wear cloth masks, not the N95 masks needed by our health care providers. Many seamstresses and home makers are producing masks across the country. I have the commercial construction trade N95 masks that I use at home when spraying chemicals and paints. I wear one while out in the public. Any face covering will do, including a scarf or any cloth material that you find suitable. I believe it’s a great idea.

The administration may eventually relax work restrictions in areas of the country where the virus isn’t prolific and spreading. That will help to restart our economic engine. Farmers need migrant workers to plant and harvest their crops now and because of the crisis their visas have been delayed. This is a critical issue for our food supply and I’m certain the administration is working to correct this.

It’s been a busy week trying to stay healthy and “ahead of the curve” as we use to say. After trying for several days, I finally locked up a Walmart Grocery Pickup Slot last Wednesday. I entered our grocery order online and initially all of the pickup and delivery slots were taken. I went online in the early morning and again around 6 pm each evening until several slots opened up.  I also tried to access one of the major groceries online ordering sites without success.

Everyone and their uncle must be ordering online for pickup and delivery these days. Many older retirees and those at risk should take advantage of this excellent service. Major chain stores now have early hours for older customers and those at risk.  I went to one of the first ones they offered in our area at 6 am on Monday morning several weeks ago. The grocery shelfs for many products were empty.  They didn’t have time to restock from the weekend.  That may have been an anomaly.

Walmart is hiring new associates so they can handle more grocery order pickup and delivery requests. You can change your order up to 4 hours before the scheduled pickup and I added 4 items the night before. They had to substitute several items and they notified me by email for approval. You can approve the substitution or cancel that item if it isn’t desirable.

Walmart sent me a text when the order was ready.  I replied that I was en route on their Walmart Grocery App. Upon arrival, I entered the line number I was in so they knew where I was parked. It’s very efficient and the order was spot on.  I will use the service again and since you pay using a credit card you don’t have to handle cash that may be contaminated with who knows what these days.

Some companies are offering concierge services where you pull up to the store, hand your order to a worker, and they fulfill it and bring it to your car. Sam’s Club started doing this recently. You can go online, make a written list of what you what and never get out of your car to get your ordered filled. It does take time for them to pull the items off the shelf, so be patient.

This week I had all of the spring landscaping completed and power washed the driveway and sidewalks. Spring cleanup took up a lot of my time, putting out the yard statues and porch furniture, turning on the outside water faucets, cleaning out my shed, and so much more. There was little time to dwell on the obvious gorilla in the room.  The Corona virus is still front and center however southwestern PA’s cases fortunately don’t seem to be on a pronounced trajectory like New York and others.

Some reporters and news media are sensationalizing everything and I believe causing undue stress for many. The dire predictions are hopefully just that, created from a model that with time is modified by reality. Life will return to normal sooner than later. The best way for me and my wife to combat this is to stay calm, go out in public as little as possible, wear gloves and masks while out, keep active, and take care of things on the home front.

I’ve written several articles centered around this pandemic over the past 4 weeks that if you didn’t orignal have time to read, go back and take a look:

Request a Federal Retirement Report Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER.

Helpful Planning Tools

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 LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, WELLNESS / HEALTH

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Federal Retirees Needed to Provide COVID 19 Pandemic Support

Posted on Sunday, 29th March 2020 by

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Federal retirees are generally able to reapply for federal jobs under the rehired annuitant program. The government is fast tracking dual compensation waivers that will allow reemployed retirees, with critical skills needed to fight this pandemic, to return to work without impacting their annuity.

In light of the continued impact of COVID-19 on the Federal workforce, the U.S. Office of Personnel Management (OPM) is accepting delegation of authority requests for dual compensation reduction (salary off-set) waivers under 5 CFR 553.202, based on a hiring need resulting from the COVID-19 pandemic health crisis.  The delegated authority enables agencies to waive the dual compensation (salary off-set) to reemploy individuals needed in response to COVID-19.  Agencies are provided a fast track template that agencies can submit via email to OPM for expedited review.

OPM is working closely with all agencies involved with this crisis to provide updated information to Federal agencies and employees as it becomes available. HR offices should submit their requests direct to OPM.

OPM has also delegated authority direct to the U.S. Department of Veterans Affairs (VA) to issue dual compensation reduction waivers, enabling the VA to quickly reemploy retired subject matter experts and deploy them to where they are needed most to combat COVID-19.

The VA must respond to patient needs at numerous medical centers, community-based outpatient clinics, cemeteries, community living centers, spinal cord injury units, Veterans Benefits Administration offices, headquarters, and miscellaneous VA program offices nationwide.  This delegation provides the VA with the flexibility needed to accomplish its mission in providing quality medical care to our nation’s veterans.

This delegation allows the Chief Human Capital Officer or their designee to waive the salary reduction when necessary to reemploy a retired federal employee temporarily in response to COVID-19.

Detailed guidance is now available from OPM related to Coronavirus Disease 2019 (COVID-19). Employees should contact their human resources office if they have further questions on specific authorities and flexibilities.

If you are retired and have the skill sets needed for this emergency, contact your former employer if you are interested in returning to work to help out.

Request a Federal Retirement Report

Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER. Helpful Planning Tools

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, EMPLOYMENT OPTIONS, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS

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Hunkered Down for the Duration – A Retiree’s Perspective

Posted on Tuesday, 24th March 2020 by

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Everyone young and old is dealing with this crisis as best they can. The majority reading this column are either retired or planning their retirement and of the older generation. The ones most susceptible to the Coronavirus.  Like the rest of the country that isn’t providing essential services, my wife and I are at home waiting for the worst of this disaster to pass.  Yet, I would say to the younger generation, “Welcome to Our World.”

 

 

I was listening to a talk show recently and one of the hosts called her elderly aunt to ask how she was getting along. Her aunt replied that life wasn’t much different than usual. The older generation is used to being at home for extended periods and have set routines.

I’m elderly! …. That snuck up on me. Some may consider me ancient at 70. I don’t feel a day over 39. Like Jack Benny back in the day. Jack was a 20th-century comedian who portrayed being a miser, played his violin poorly, and claimed to be 39 years of age, regardless of his real age. I recall watching him on TV in the 1960s. He would cock his head to the side, and with a smirk on his face proclaim he was 39, again! My mother loved his act.

Sorry, I got a little off track.  Getting back to the subject; retirees often buy in bulk to reduce trips to stores and overall costs if they can afford to. I typically buy the large packaged paper products at Sam’s Club every three months or so and we do the same with the staples we use. We didn’t have to run to the store to stock up, we naturally do it on a regular basis. I also work from home, and have since 2004 when I retired from the FAA. I’m use to isolation.

The hard part for many my age is the separation from our children and grandchildren. We use face time frequently and keep in touch through Facebook, text messages, and phone calls. We especially miss our we little ones. Yet, we understand that the older generation is most susceptible to this disease and keep our distance.  We keep debating whether or not to visit them and then we consider that all of our children are working in essential services and out and about. Our daughter is in the middle of it all as a critical care respiratory therapist, my son works in the banking industry. Both are able to watch their children through split work schedules and some work from home options for one.

There is so much to keep us occupied and productive even while ordered to stay at home. Each day my wife and I spend time working on one home project or another; cleaning out and organizing closets and storage areas, house work and exercise.  A little each day goes a long way. I’m power washing our driveway and sidewalks this week. My wife still walks over 10,000 steps daily, I’m down to an average of 7,000 steps a day during the winter months. We do most of our walking indoors.

There’s a Swedish word for decluttering for the older generation: dostadning, a hybrid of the words for death and cleaning. Essentially, retirees go through their house and declutter so that when the time comes, their heirs won’t have an unimaginable task ahead of them. I watch Mike and Frank, hosts of American Pickers on HGTV. They search through mountains of what I consider junk accumulated over a lifetime to find a few nuggets of recoverable treasure.  When I see this, I cringe for the children who will inherit this mess. I’ve been working on decluttering for several years and for me this also includes developing comprehensive estate planning instructions for our loved ones.  So much to do and so little time to do it.

My home business still keeps me busy; responding to retirement questions, researching and writing articles, updating website content, and other typical tasks. Then when you add in managing investments, working around the house; there is little time left over at the end of the day.  I also learned to cook in retirement to give my wife a welcomed break, several days each week, after 50+ years of marriage and actually enjoy that too.

I can understand how the younger generation may be going stir crazy when they were use to the hustle and bustle of life and now must stay at home.  For those providing essential services there is no down time and with schools closed those families are struggling to find viable childcare options. For those who are at home and find they live from pay check to pay check, review your finances and possibly work up a budget to see where the money is going and ways to save when you start back to work.

There are always productive things that I can find to do. Often, mundane tasks, yet things that need to be done eventually. When I address tasks that I hate to do or would typically put off until tomorrow; at the end of the day I realize what I did this day can potentially make my life easier when life returns to normal. For those planning their retirement from federal service, it would be a good time to explore your options.

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My last article discussed the stock market crash and my thoughts on the subject. I plan to follow that up with a discussion of how my conservative investments faired compared to the major indexed in the next article. Hopefully, we will be able to return to a semblance of order soon. A long term economic shutdown would result in severe consequences for all.

Request a Federal Retirement Report

Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER. Helpful Planning Tools

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 ESTATE PLANNING, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, WELLNESS / HEALTH

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The Investment Dilemma – Walk, Don’t Run to the Exit

Posted on Monday, 16th March 2020 by

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I’ve written many articles over the years, during good and bad times, focusing on preservation of capital for retirees and those close to retirement. A common sense approach to investing that protects the assets you accumulated during your career.

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The recent stock market crash, due to the Coronavirus proliferation, has devastated retirement accounts across the nation. The Sky is Falling, the Coronavirus article I wrote last week discussed these stock market gyrations. The fix for this pandemic may be more devastating than the disease itself. Our lives are now fundamentally changed for whatever time it takes to get through this, due not only to the disease but to social distancing, and all that goes along with that dynamic.  

If you are one of those who stayed fully invested in the market or have a large percentage of your retirement savings invested in stocks, ETFs, and mutual funds, you are naturally worried.  Many retirement accounts are down considerably and if your portfolio isn’t on life support you may feel like you are. For those who were invested in fundamentally sound investments, there is life after the crash. However, keep your seat belts on. The return to sanity, and company profitability, may not be nearly as fast as we would like.  

Our economy was fundamentally sound prior to the Coronavirus pandemic proliferation. That doesn’t mean it will be a quick return to normal and new stock market highs after this battle is fought. With the supply chain disrupted and companies shut down for extended periods, profits will suffer and stock value impacted. All segments of the economy are affected and we don’t know for how long at this point. What I do know is that with time this pandemic will be in the rearview mirror and life will return to normal. Maybe, a slightly different normal with a new awareness of just how fragile our world can be at times like this.

This pandemic has not only shocked the markets, it brought us all back to the reality of life: Times are not always good, markets don’t go up forever, and life as we know it can change on a dime. With over a ten-year bull market run, many became complacent relying on the ever-increasing DOW and S&P Indexes to comfort them along the way. Plus, many were lured into dividend paying stocks because of extremely low interest rates that were great for borrowers and a nightmare for savers; especially retirees living on a fixed income. Those extremely low rates are now back with us.

The market indexes fall when Investors of all stripes see storms on the horizon and sell off holdings to limit their losses. Automated algorithm trading accounts for 50% or more of the trading volume on the exchanges today. They initiate trades based on set parameters established by their creators and often cause the dramatic swings in the markets we are becoming accustomed to.

Generally, experts suggest that within six months of the start of an epidemic the stock market recovers. Hopefully, this crisis will follow suit. There is considerably more disruption involved with this pandemic. However, after the new case curve flattens and people get back to work our economy will eventually recover. Unfortunately, we don’t know when that might be at this time.

Even though retirement account balances are down, if you are invested in high quality dividend paying stocks or mutual funds that hold them, your income should continue uninterrupted in most cases. Some companies with high debt and compromised balance sheets may have to cut their dividend. However, most companies fight to keep their dividends even if they have to borrow to pay them at times. It doesn’t matter if AT&T for example is selling for $28 or $40 a share, it currently pays a dividend of $2.08 per share yearly or 52 cents per quarter to stock owners regardless of the current stock price. This has been the norm in the past; this pandemic, and the fallout associated with it, could change this scenario.  

Things seem dire right now due to the human fight or flight response. Today, many would prefer to run, and as fast as they can. Six months to a year or more from now, you may regret taking that action. As I write this on the morning of March 16th the market just opened, down over 2000 points and it was automatically shut down due to circuit breakers established to curtail panic and algorithm selling. The DOW closed down 2,999 points for the day! By far the largest single day point drop in history. 

If you were caught during this crisis with considerably more invested in the market than practical for the circumstances ask yourself these questions:

  • Do you need the funds in your retirement account NOW to live on?
  • Do you currently have sufficient income from annuities, Social Security, and savings to live comfortably until the market recovers?
  • Does stock market volatility keep you up at night?
  • Are your current investments conservative and include a fair percentage of fixed income investments?

The answers to the questions above may help you focus on your personal situation. Only you can answer them and determine what is best for you and your loved ones. If you have sufficient income now but the market is keeping you up at night, consider converting your investments to a more conservative mix after the market rebounds. Possibly allocating a greater percentage of your total assets to fixed income (bonds, CDs, and cash).  TSP participants can consider the G Fund or L Income Fund options.

I recently talked with one of our newsletter subscribers. She asked about CD Ladders. When her husband passed away, their stock investments had appreciated considerable during the bull market. She was concerned that the market would crash and converted the accounts to laddered FDIC insured CDs. A smart move that many retirees today wish they would have made prior to this downturn.

The country is in panic mode with investment accounts dropping precipitously. The descending account balances can feel almost like what one would experience with the loss of a loved one. Especially when you factor in the changes to our daily routine including the uncertainty surrounding this event. With a significant loss, it is often recommended not to make major changes until you had time to grieve.

I wrote the following articles over the past 4 years that you may find informative.  These articles were written when the market was pushing ahead and when the market corrected 10 percent at one point. When reading them, consider the circumstances at time they were written.

I present my perspective on the day’s current events in my column. These are simply my thoughts and observations as a retiree on significant issues of the day and I’m not a financial planner. Talk with a professional if you need assistance such as Hefren Tillotson, a Pittsburgh based financial planning firm. Explore their website for additional information and for all things financial. They can work up a comprehensive Retirement Master Plan for prospective local clients.

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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 ESTATE PLANNING, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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The Sky is Falling! The Coronavirus – What to Do.

Posted on Sunday, 15th March 2020 by

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The Coronavirus is now center stage and deservingly so. This invisible antagonist has upended our world for the near term: schools and businesses closing, event cancelations – including literally all sporting events, the stock market on retreat, social distancing, and empty shelves at local stores.

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Thankfully, we finally have all hands on-deck in government. Republicans and democrats are cooperating and providing a unified front to help the country combat this national emergency. There are a few exceptions with some still trying to seek the high ground and putting party ahead of common sense.

There is reason to be concerned. Initially, there were those who thought the drastic steps taken were unnecessary and an over reach. According to the Center for Disease Control (CDC), the 1918 influenza pandemic was the most severe pandemic in recent history. It was caused by an H1N1 virus and spread worldwide during 1918-1919. Over 500 million people at the time or one-third of the world’s population became infected with this virus. The number of deaths was estimated to be at least 50 million worldwide with about 675,000 occurring in the United States!

My wife lost an uncle to the 1918 pandemic and it’s a wonder that more didn’t succumb to the disease. There were few if any medical remedies at the time to fight these infections.

According to recent reports the most susceptible are older adults who have serious chronic medical conditions such as heart disease, diabetes, and lung disease. If you are at a higher risk the CDC recommends following these guidelines:

  • Stock up on supplies.
  • Take everyday precautions to keep space between yourself and others.
  • When you go out in public, keep away from others who are sick, limit close contact and wash your hands often.
  • Avoid crowds as much as possible.
  • Avoid cruise travel and non-essential air travel.

During a COVID-19 outbreak in your community, stay home as much as possible to further reduce your risk of being exposed.

This newsletter is targeted towards those planning their retirement and retirees, the most vulnerable group. It is best to avoid shaking hands when greeting others and maintain a safe social distance during the flu season. Actually, it would be best to suspend hand shaking all together. The CDC estimates that during the 2018–2019 flu season 35.5 million Americans got sick with influenza, 16.5 million people went to a health care provider for their illness, 490,600 were hospitalized, and 34,200 died from influenza!  If we stopped hand shaking and stayed home when sick there could possibly be a significant drop in flu infections and deaths overall each and every year.

The fallout from this pandemic is all around us and personal, upending our daily routine. Most retirement account balances have cascaded downward at an alarming pace.  I tracked the stock market during this event and the DOW dropped 29% from a high of 29,568 in early February to a fast tracked low of 21,200 on March 12th when the markets fell almost 2000 points in one day! It did feel like the sky was falling that day. Many panicked and sold into the down market driving it ever lower.   I wrote several articles concerning ways to sleep at night when the markets are in a frenzy. They may help those who don’t know which way to turn on days like this:

In these two articles I talk about ways to minimize the downside on retirement accounts. The TSP is a great place to invest. The L Income fund invests just under 80% in the two bond funds with the remaining distributed in the C, I and S funds.  It allows for appreciation long term that is designed to offset inflation and maintain your account balance even in times of turmoil. You can also invest in the G Fund that is guaranteed never to fall in value. I only wish there was a G Fund equivalent available in the private sector for other retirement accounts.

In 2008 the L Income Fund decreased 5.09% when the market fell off the cliff and dropped in value over 50%. The very next year the L Income fund gained 8.57%. It took the broad market years to recover.  If stock market gyrations are keeping you up at night explore ways to protect your assets from future market shocks.

The key is to not panic, use common sense, and make sound decisions based on your personal situation. This event will pass like previous pandemics and life will return to normal.

Request a Federal Retirement Report

Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER.

Helpful Planning Tools

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, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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