Posted on Monday, 1st August 2016 by Dennis Damp

FEGLI Open Season Update

A number of our subscribers have sent questions about the upcoming FEGLI Open Season and are not sure what options to consider. Open season runs from September 1 through September 30, 2016. It’s time to review your current insurance coverage and determine your true insurance needs before it’s too late. You can’t increase coverage after you retire. Open season allows you to add insurance without the need for a physical or medical certification.

There are many variables to consider. For example, the FEGLI’s Basic coverage premium, your salary plus $2000, is reasonable. If you elect the 75% reduction in retirement at age 65 your coverage begins decreasing to 25% of your total coverage. Your premiums stop at age 65, the policy is paid up from that time forward. They also allow you to carry 50 or 100 percent coverage into retirement however you will still have to pay premiums if you elect these options.

The first essential step is to evaluate your personal situation and insurance needs. The article titled Evaluating Your Insurance Needs will help you determine exactly what coverage you need for you and your family. Additional insurance is needed especially if you have young children, a disabled child, a spouse that is considerably younger or other special circumstances. If you and your spouse are on your own many opt to carry just enough to cover final expenses, pay off outstanding loans and bills, and to settle an estate.

After determining your needs read the following articles to understand what FEGLI coverage is best for you and the associated costs. I wish I would have had this information when the last open season was held in 2004, just before I retired. I would have signed up for additional coverage.

• FEGLI Open Season
• FEGLI Retirement Options (Part 1)
• FEGLI Insurance Options (Part 2) Options A, B and C
• FEGLI Insurance Life Event Changes (Part 3)
• FEGLI Rate Changes

Check out your options carefully. This may be the last time you will have to make these changes before retiring.

Long Term Care Rate Increase Update

I can’t tell you how many readers emailed about their personal LTC premium increases. The premium hikes are outrageous and it doesn’t stop there. Our Medicare bill has increased dramatically for Part B this year because I’m not going to take Social Security until I’m 70 and due to high income adjusted premiums, most didn’t have an increase. It seems that every time we turn around we are either getting hit with increased taxes, insurance & medical premiums, and on top of that… NO ANNUAL COLA! They reported recently that it is highly unlikely a COLA will be issued in 2017.

That being said, long term care is often an essential part of one’s estate plan…, it is important. My wife and I are going to elect the reduced benefit amount and our premiums will stay about the same, a dollar less each month. Without it we could end up burdening our family and draining our estate. Hopefully, we will never have to use it. This will drop our coverage from five to three years and the daily amount decreases to $194. My original article on LTC was published a month before the new rate increase and I mentioned that our premiums had increased just over 100% since we started the program back in 2003. The latest increase hiked the premium in less than 6 months another 100%! If I tried to do that in my business I would be out-of-business overnight.

Tammy Flanagan wrote an article titled Long Term Care Insurance: What Should You Do About Rate Hikes? that you will find informative. She too has federal LTC coverage along with her husband. Tammy writes for Government Executive Magazine and we keep in touch on a number of subjects.

Several that wrote me about their increase wanted to form a group to voice their concerns to Congress and OPM. The group that fights for and represents us is NARFE, the National Active and Retired Federal Employees Association. I’ve been a member for many years and without them we would not have the voice we do in Congress.

NARFE is also fighting to eliminate or reduce WEP that impacts most retired CSRS annuitants Social Security benefits and there is a good chance that will happen this year. They have a legislature hot line, have groups in many areas that actually meet with their congressman about subjects like this. Members are encourage to join these groups and become active members that lobby Congress about key issues like this.

I suggest that active and retired federal employees join NARFE if you haven’t already. Their web site address is www.narfe.org. They need to increase membership to maintain their lobbying efforts. it isn’t expensive and you receive a monthly magazine with a lot of information for active employees and annuitants. I’ve called my congressman and discussed this with him last week and now that Congress is in recess NARFE groups across the country will be meeting with them at home about WEP, LTC and a host of other issues.

Life Style – Activity Counts

Even though I’m still a desk jockey at age 67 I’m in good health overall. I’ve been close to the same weight for the last 30 years or more. Prior to retiring I was trapped in my FAA office often loosing track of time and spending most of the day tied to a desk.

After retiring from federal service I expanded my part time business to full time and am still committed to working many hours at my desk but on my terms. I’m able to take breaks and go shopping with my wife, visit and watch the grand children as needed, travel, and still work 30 to 40 hours a week.

I rarely sit still and must have something to do while I’m sitting there. I’ve been this way as long as I can remember. I’ve never been able to sleep once the sun is up and get up at 6:15 am ready for the day ahead. Most days I’m in my office by 7:15 reviewing reports and planning the day’s activities.

My nervous energy burns calories but I didn’t have a way to gauge approximately how much energy or calories that I was expending each day until April of this year. I purchased a FitBit One for my wife and I and have been amazed at just how much Mary and I walk and stay active during our daily routines. It was eye opening and the FitBit gave us incentive to do even more and we compete daily against each other, friends, and family to see who walked more. In the past I tried pedometers however they proved to be unreliable.

I started using the FitBit One on April 24th and since then I walked 479.35 miles, averaging 4.84 miles per day (approximately 10,000 steps daily). Mary had her FitBit a week before me and she walked 507 miles, averaging just under 5 miles a day. The FitBit also measures activity levels by four categories; sedentary, lightly active, fairly active and very active. On average we had 4 hours of lightly active, 35 minutes of fairly active, and 20 minutes of very active time daily! You can also use the FitBit to track sleep and you can log your food and water intake. My best day was 18,000 steps, just over 8 miles.

The American Heart Association recommends 30 minutes of exercise a day and FitBit and other exercise-band companies use 10,000 steps as a starting target to maintain and improve your health. A recent Washington Post Article by Ariana Eunjung Cha suggests one hour of exercise for 8 hours of sitting.

I like the FitBit One because it holds a charge for up to 7 days and you clip it on your pocket. The clip is strong and the unit reliable. I sync my wife’s to our smart phone and when we are walking it tracks each step and you can watch the count go up as you stroll along. They base the stride to your height and weight and it also measures calories burned based on your activity level. It even accounts for inactive time for calories. Your body burns calories all day, even when you are sleeping. The more activity the greater amount of calories burned each day.

Each Sunday morning I plug in our units into my computer’s USB port to charge them up, it takes about an hour. The one thing the FitBit One doesn’t do its monitor your heart rate, they do have wrist band models that will do that as well and I may buy one of them when this one wears out. If you decide to purchase one shop around, I purchased ours through Amazon.com Prime.

The best way to get started exercising is to simply walk wherever and whenever you can. My wife walks at least three 20 minute sessions mostly in the house plus all of the daily housework she does, the miles rack up. When the weather is nice, and cool, we walk outside. Housework and projects can add a lot to your statistics, ours does. Start with a realistic target, say 2500 steps a day if you are mostly inactive during the day. The Washington Post article mentioned that, “Those in the least-active bucket were active less than five minutes a day, while those who were most active exercised 60 to 75 minutes a day.” The article also states, “A new study suggests that to decrease mortality a person should exercise one hour for every eight hours they sit.”

The word exercise turns many off, think of it as simply getting up and staying ACTIVE. It doesn’t have to be at a gym or in an exercise class. You too will be surprised at just how much you are already doing once you start using the FitBit or other activity monitor.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Helpful Retirement Planning Tools
Distribute these FREE tools to others that are planning their retirement

• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2016 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development Center

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 advisor. 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, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Thursday, 21st July 2016 by Dennis Damp

OK, I might have been a little too gracious in my June article titled Long Term Care Insurance – Is it worth the cost? I received a notice from the Federal Long Term Care insurance provider increasing our premiums by over 100 percent in less than 7 months from our last increase in January!!! I was comfortable with our coverage and the premiums until I received this notice today.

I find it difficult to comprehend how any company can warrant such a huge increase when we weren’t scheduled for another increase for 18 months. I reported in my June article that in the private sector MetLife, according to the Kiplinger’s Retirement Report, “requested rate increases of 43% to 60%, and the insurance department approved a 20% increase.” Other providers requested increases of up to 88%. The states stepped in and softened the blow, who will soften the blow for federal employees and annuitants?

My premium for a daily benefit of $203 for 5 years with the Future Purchase Option (FPO) increased from $77.17 monthly to $174.40 and my wife’s premium increased correspondingly. The new premium is over twice my current premium! It feels like highway robbery to me.

We all have until September 30, 2016 to make our elections. If we do nothing the new premiums go into effect starting November 1, 2016. I also stated in the previous article that, “In the private sector many are paying thousands more annually and getting hit with huge premium increases.”

I can only imagine what federal employees will have to pay for the Automatic Compound Inflation Option (ACIO) coverage that is considerably more expensive than our FPO coverage. This isn’t anything new, under the Affordable Care Act (ACA), the majority of health care exchanges are either closed or contemplating closing because they simply can’t make a profit due to the cumbersome and limiting ACA rules and regulations. Premiums have skyrocketed for them as well and unfortunately most providers have increased deductable payments to such levels that members won’t go to their doctors because they can’t afford to pay the required deductable.

John Hancock does provide options to retain the same or lower premium with drastically reduced benefits. In my case I can reduce my coverage from 5 years to 3 years and my daily amount decreases $9 to $194.00 with total benefits decreasing $158,045 to $212,430. I can also take a paid-up, limited benefit and no future premiums, that would give me $203 daily with a total lifetime maximum benefit of $8,777.82! Wow, how generous can you get? I’ve been paying into this system since its inception back in 2004.

Review your options carefully, there are a number to consider, before making an election. I believe I’ll take the reduced benefit options with the same or slightly smaller premium after I put this aside for a week or two and calm down.

If you haven’t received your notice yet don’t be shocked when you open the envelop. I immediately called Long Term Care Partners at 1-800-582-3337 to express my concerns. Basically they repeated verbatim the explanations that are in the notice. My next call will be to my Congressman and then to NARFE. I hope all of you will do the same.

Retiree Employment Update

Employers recruiting federal retirees and those soon to retire post jobs on our Jobs Board. A good number of new listings were posted this month including a senior software engineer earning 6 figures, an assistant human resource director,  commercial lending officer and others. Retirees are encouraged to apply. Other positions are for civilian pay, project managers, and various medical specialists to name a few.

If you are planning on retiring soon and have an active security clearance many companies are recruiting in many specialties. Visit the Security Clearance Center to research potential employment opportunities.

Private companies, contractors, and state government departments use our Jobs Board to hire skilled federal retirees for part and full time positions nationwide. Many opportunities exist for those looking to supplement their retirement income or to start a second career. We provide this free job listing service to companies that are seeking to hire experienced retired federal workers.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Helpful Retirement Planning Tools
Distribute these FREE tools to others that are planning their retirement

• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2016 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development Center

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 advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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

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Posted on Saturday, 9th July 2016 by Dennis Damp

The FEGLI Open Season runs from September 1 through September 30, 2016 and I wrote an article last October about the options available and new premiums. I began the article with, “Even if you think, like I did in 2004 when the last open season was offered, that you have sufficient coverage you may be surprised at what you discover. I wish I knew then what I know now about these attractive low cost options.” FEGLI Open Seasons are few and far between and they are only available for active federal employees, retirees can’t participate. If you are still employed and planning your retirement revisit my Open Season Article to understand your options and forward this article or a link to my article to others that may benefit from this information.

Phased Retirement Update

Since this program was announced four years ago little has been done to implement this program until recently. OPM reports less than 100 workers within 15 agencies have been accepted into the phased retirement program! The leading agency in the program is NASA with 17 participants. The good news is that in June the DOD announced plans to allow their employees to participate in the program. Other agencies that are currently using phased retirement are NASA, The Department of Commerce, the Smithsonian Institute, Nuclear Regulatory Commission, Federal Trade Commission, Library of Congress, the EPA and a few others.

If you are interested in finding out more about the program my article titled “Phased Retirement Update” explains how the program functions and review OPM’s Phased Retirement guidance. I would also call your HR office and ask them if the program is going to be implemented in your agency.

Federal Employee’s Career Development Center

We launched our updated and expanded Federal Employee’s Career Development Center on June 24th. This site guides federal employees and their supervisors through the Individual Development Plan (IDP) process. The Federal Employee’s Career Development Center is located online at http://www.fedcareerinfo.com.

This totally interactive site offers free downloadable assessment and planning forms, Word documents, and our checklist (http://fedcareerinfo.com/checklist.htm) walks federal employees and their supervisors step-by-step through the IDP process. There is no need to register, the site is free for all to use. Basically we incorporated 90% of my book, Take Charge of Your Federal Career for this update to provide a single interactive and updated resource for employees and supervisors to use and streamline their career development functions.

Several agencies invited me to their headquarters and field offices to conduct career development briefings (workshops). Recent events were held at the Treasury’s Financial Crimes & Enforcement Network (FinCEN), Vienna, VA., the Federal Energy Regulatory Commission (FERC) in Washington, DC, and with the Bureau of Reclamation Great Plains Region.

Bookmark this site and let others in your organization know about this free resource. Training departments and agencies can add a link on their intranet career development sites for those interested in using this free service.

Lifestyle

I typically talk about things I’m personally doing in retirement; whether it’s signing up for Medicare, discussing how I made my FEHB Open Season election, major purchases, projects, or simply reflecting on my life in general now that I’m retired. Each month I’ll set aside a section of my column to reflect on lifestyle issues.

On and off over the past 10 years I attempted to try my hand at cooking. My wife has willingly cooked for the family for 47 years now and I felt that it was time to give her a welcomed break. Most of my early attempts were… should I say, insufficient and I quickly lost interest. The cook books were just too confusing and complex with terms and procedures I didn’t understand. I know that the family cooks that are reading this may be saying, take a class or research the terms and procedures. I run a full time business and just don’t have that kind of time.

About a year ago I discovered the Mr. Food Network and since then found success with making eatable and tasty meals. Their recipes are easy to follow, use everyday ingredients, and step-by-step instructions and videos bring it all together. My three favorite meals so far are the Pork Chop Casserole, Broccoli and Ham Quiche, and Eggs and Hash Brown Skillet. When you first visit the site they ask for your email to gain access. They will send you an email several times each week with a list of really great recipes to choose from.

The Pork Chop Casserole can be converted to a chicken dish by simply switching the broth to chicken, and the condensed mushroom soup to cream of chicken soup, and of course chicken. The quiche is crust less and really good, you can substitute cheeses, vegetables, and meat to whatever you like and the prep time is only 15 minutes tops. Many of their recipes are for a family of 4 which is good for us because we have leftovers for a second day. However, if you prefer cooking for two they publish The Ultimate Cooking For Two Cookbook which I purchased and use frequently. It sells for $13 on Amazon.com.

Another recipe we like is the Grilled Shrimp Foil Packets from www.delish.com. It is easy to make and whenever I’m grilling I make these for side dishes.

If either spouse has been doing the majority of cooking in your household it may be time to give that person a welcomed break. If I can follow their directions and create meals that my wife and I enjoy you can too. Give them a try and surprise your spouse. They will really appreciate it. I know my wife does and now I plan at least 2 to 3 meals a week and enjoy making them.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Helpful Retirement Planning Tools
Distribute these FREE tools to others that are planning their retirement

• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2016 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development Center

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 advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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

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Posted on Friday, 10th June 2016 by Dennis Damp

I applied for Long Term care insurance when it was first offered as a benefit in December of 2002. Our premiums for the Future Purchase Option (FPO) at that time were reasonable for the 5 years of coverage we elected; $73.57 monthly for my wife and I.  My premium for the Future Purchase Option was 37.98 and Mary’s $35.59.

I was 52 at the time. We didn’t select the automatic compound inflation adjustments and with the future purchase option our 5 years of coverage provided a total benefit of $228,125 or $125 per day. Currently our premiums are $149.26 monthly, $77.17 for me and $72.09 for my wife,  just over a 100% increase from our initial 2003 premiums.  Our daily benefit increased to $203 per day, a 39% increase  in the daily coverage amount for a 100% premium increase!

Originally the providers were John Hancock Life and Insurance Company and Metropolitan Life. Now John Hancock is the sole provider.  Many insurance companies aren’t issuing new policies anymore and there are few providers to choose from today. Plus the prices have increased dramatically for many.

The Federal Long Term Care Insurance Program (FLTCIP) costs increase significantly if you opt for the compounded inflation coverage, the 4% or 5% Automatic Compound Inflation Option (ACIO).  Every two years under the FPO plan I receive a letter offering to either increase our premium and daily benefit amount, reject the offer and maintain current coverage, or change to an (ACIO) option. Last October we could have changed to Option 3, the 4% (ACIO) for a total monthly premium of $421.33 with a lower daily benefit or the 5% (ACIO) for $558. That is almost 4 times what we are paying now!

Thankfully we haven’t changed coverage to the ACIO options and I can decline future purchase offers 3 times without having to complete a full underwriting application to receive future FPO increases. I haven’t declined a FPO increase yet.

Many federal employees selected the (ACIO) options and are now pondering what to do with their coverage since you can’t elect the (FPO) plan that I have once you leave it.  It states in their letter that,  “You will no longer receive FPO offers” once you change to ACIO.

If you have Option 1, the Future Purchase Option (FPO), and your health is failing you can opt for the inflation adjusted rates without providing evidence of your good health concurrent with the next premium increase.  At any other time you would have to provide verification of your health to make this change.

We intend to keep our current coverage unless the premiums down the road skyrocket and if my health starts to decline I can change to one of the ACIO options if needed. With the FLTCIP plan you can call to change your coverage at any time, there number is 1-800-582-3337 or visit their online site at www.LTCFEDS.com. However, to increase coverage you will have to submit an underwriting application confirming your good health except as noted above. If your premiums become too high you can always reduce coverage by changing from a 5 year to a 3 year policy or reduce your Daily Benefit Amount (DBA).  This can be done anytime.

The majority of insurers have dramatically increased premiums for Long Term Care and in some states premiums have increased over 50% recently. In Pennsylvania four insurers requested permission from Pennsylvania insurance regulators to increase premiums for current policies.  MetLife, according to the Kiplinger’s Retirement Report, “requested rate increases of 43% to 60%, and the insurance department approved a 20% increase.”  Other providers requested increases of up to 88%.

If I changed to Option Four with a 5 year policy and 5% ACIO coverage for my wife and I, our combined annual premium would be $6,696! Currently we pay $1,791 annually for FPO Option 1.  In the private sector many are paying  thousands more annually and getting hit with huge premium increases.

According to Genworth’s report titled “Annual Median Cost of Long Term Care,” the following median annual long-term rates apply:

• Homemaker Care $45,760 ($125/day)
• Home Health Aide $46,332 ($127/day)
• Adult Day Care $17,680 ($49/ day)
• Assisted Living $43,539 ($119/day)
• Nursing Home
  • Semi-Private Room $82,125 ($225/day)
  • Private Room $92,378 ($253.day)

The duration and level of long-term care according to LongTermCare.gov varies from person to person and often changes over time. They list the following average need:

• Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years
• Women need care longer (3.7 years) than men (2.2 years)
• One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years

These statistics highlight the high cost of this insurance and the need to have long-term care coverage. Personally, my concerns are twofold. I want my wife and I to have dignified care in a professional, clean, and caring facility and at the same time I don’t want to bankrupt our estate in the process. These high costs can easily drain your Thrift Savings Plan (TSP), other retirement and bank accounts, and investments. Also, I don’t want to burden my wife or our children if I or both of us need long-term health care services. The physical and mental strain that a healthy spouse, partner or family member faces when long-term care is needed is monumental and if you have a long-term policy it helps to reduce at least the financial stress to a manageable level.  You won’t have to worry about where the money is coming from.

Federal employees and annuitants that are confronted with large premium increases should contact FLTCIP to discuss their options for reducing costs. Before canceling your policy check for ways to reduce costs and explore other coverage options.

Some private sector providers are combining insurance policies with a long-term care rider and others offer deferred-income annuities if appropriate for your situation.  Lincoln Financial offers a Money Guard policy that combines both.  According to Lincoln Financial, “Unlike traditional long-term care insurance, your policy costs are set at issue and will never increase. Your policy provides benefits, even if you never need care, provided all planned premiums are paid.”

My wife and I have sufficient coverage for the majority of our projected expenses for a 5 year period and will use personal savings to cover any shortfall. Currently my coverage is $203 per day for a total of $370,475 over a 5 year period. My wife has the same coverage. Per the Annual Median Cost of Long Term Care Report mentioned earlier in this article I would have sufficient coverage for all but the semi-private and private nursing home room. A semi-private average cost is $225 a day of which I or my estate would have to chip in $23 a day and an additional $50 a day for a private room.  Call the FLTCIP and ask them for the average cost of coverage for your area.  They maintain a database of average costs for all major metropolitan areas. For Pittsburgh, where I live, the average cost for a nursing home was $283 in 2013 and this would require me to increase my daily benefit amount (DBA) or contribute more from our savings to cover the costs over my current DBA coverage.

You also have to cover the required waiting period of 90 days and that alone will require a considerable cash outlay. For example, if you enter a nursing home and are placed in a semi-private room the average cost today is $6,843 a month, the first three months are on you. You will need $20,531 to cover this waiting period. After that your long-term insurance will pay the bills up to your insured daily amount. You will have to pick up the tab for any charges above that.  You only need to satisfy the 90 day waiting period once during your lifetime. If you stay at an assisted living facility first for 30 days and then enter a nursing home, you would only have to wait 60 days since you already had 30 days at an assisted living facility according to the FLTCIP customer service representative that I talked to this week.

Many believe that Medicare and your FEHB plan will cover long-term care costs. Medicare states on page 72 of their guide, “Medicare and most health insurance plans, including Medicare Supplement Insurance (Medigap) policies, don’t pay for this type of care.”  If you don’t want to burden your family when you need these services research your long-term care options NOW. The younger you are when you apply the lower your monthly premium, start early and research your options.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Helpful Retirement Planning Tools
Distribute these FREE tools to others that are planning their retirement

• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2016 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development & IDP Center

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 advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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

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Posted on Monday, 9th May 2016 by Dennis Damp

Historically, approximately 40% of total stock market returns are generated from dividends and today you can expect to receive from 2 to 5% or more in yield from these investments. Many that recommend conservative dividend paying stocks look for companies that continue to grow their yield and share price over time with low risk.

It’s been eight years since the crash in 2008 and the markets have recovered to where they were just before the crash. Quality dividend paying stocks continued to pay increased dividends during the downturn and their price generally recovered quicker than others.

I reviewed the following list of conservative dividend paying stocks, all rated #1 for safety by Value Line, for this article. The stock name, symbol, yield and price is listed as of 5/6/2016. Five of the eight are listed in the *Dividend Aristocrats Index, a list of 50 stocks that have increased their dividends each year for 25 plus years. To be on this list the company must also be listed in the S&P 500 index and according to SureDividend.com, “The Dividend Aristocrats Index has outperformed the market by a wide margin over the last decade.”

• *AT&T (T) 4.94%, $38.99
• *EXXON Mobil (XOM) 3.41%, $88.51
• *Johnson & Johnson (JNJ) 2.85%, $112.74
• Kellogg (K) 2.6%, $75.02
• *Proctor & Gamble (PG) 3.28%, $82.13
• Verizon (VZ) 3.59%, $51.12
• *Wal-Mart (WMT) 2.98%, $68.25
• XCEL Energy (XEL) 3.32%, $40.46

During the 2008 market meltdown the stocks listed above dropped as little as 29% to as much as 52% from their highs. In other words, on average, these eight stocks dropped 39%. If you invested in higher risk investments you could have lost considerably more of your portfolio’s value. For example, Ford Motor Company went from a high of $9.70 in 2007, just before the crash, to a low of $1 a share in 2008, a 89.7% loss in value had you sold at the bottom. Ford recovered in 2009 when it reached a high that year of $10.40 and is now around $14 a share paying a 4.51% yield.

These conservative stocks continued to increase their dividends yearly unlike Ford that suspended their dividend for 5 consecutive years after the crash. Kellogg increased their dividend each year from $1.30 in 2008 to just over $2.00 a share today and their stock price only dropped 29% during the crash. Kellogg’s high just before the crash was $58.50, its low in 2008 was $35.60 and in 2009 it already recovered to $54.10. The patient ones, that didn’t panic and held conservative stocks had a much less volatile and rocky road to recovery.

AT&T recorded its low of $20.90 in 2008 from $43 in late 2007, a 53% drop. This stock has historically paid an excellent dividend, around 5%, and each year since the recession the yield has increased from $1.60 per share to $1.92 today. The stock price has hovered around the high 30s for the past 5 years and currently is $38.99 still less than the high just before the recession. Its stable earnings, low price to earnings ratio, and cash hoard of $259 billion dollars keeps the yield growing. They also have annual sales of $169 billion! If you had $10,000 invested in this stock for the past 8 years you would have earned an estimated $4,774 from dividends. Value Line projects that AT&T’s stock price could possibly increase to between $45 to $55 a share in 2019 to 2021.

Johnson & Johnson is another company worth mentioning. They pay close to a 3% yield and the stock recovered quickly after the 2008 crash. This stock dropped 36% from a high of $72.80 in 2008 to a low of $46.30 in 2009. By 2012 it reached its previous high and continued on from there to its current price of $112.74. Their dividend increased from $1.80 per share in 2008 to $3.15 a share today. A 43% increase. J&J was founded in 1886 and is one of the Dow Jones components. Who hasn’t heard of this company’s products and they are one of only two American companies still rated AAA for financial strength. Back in 1980 there were 60 companies rated AAA.

All of the listed stocks recovered to their pre-crash share price with the exception of AT&T, it is still about $4 below the $43 value it hit just before the downturn. According to SureDividend.com, “The company’s high dividend yield and long history of dividend increases make the company a favorite holding for many dividend investors.” If you are interested in dividend stocks the list in this article along with the stocks listed in the Dividend Aristocrats Index will get you started on your search.

When I evaluate a stock I consider many parameters including the Beta rating. A Beta of 1 means that the stock will more than likely follow the market in lock step. If the market goes up 2% a stock with a Beta of 1 may follow. The lower the Beta the less reactive the stock is to market volatility. Seven of the stocks listed above have a Beta of .65 to .75. This goes both ways. Less volatile stocks don’t lose as much in a down market or gain as much in an up market. EXXON has a Beta of 1.

The question is… Are conservative dividend paying stocks a safe haven for retirees? There isn’t a yes or no answer to this question because it depends on many factors including how losses ─ or perceived losses ─ impact your sleep at night. A loss is only a loss if you sell below your purchase price or panic and sell at the bottom. Many thought the sky was falling in 2008 and sold great stocks at significant losses only to see those same stocks recover six months to a year after the fall. It only took Ford a year to recover in price and those who added to their positions or purchased the stock at less than $2 a share made huge gains.

When investing in retirement it’s all about moderation and balance. What percentage of your total assets are invested in the market, bonds, cash and equivalents. You should only invest in the stock market if you are able to sleep at nights when the market corrects and you have sufficient cash or equivalents to see you through a serious correction. Many use a factor of either 100 or 110 compared to their age to determine what percentage of their investments should be in stock. I mentioned this in previous articles, essentially you subtract your age from 100 or 110 to determine what percentage of your investments should be in stock. In my case I use 110 and at age 67 I invest 43 percent in stocks, stock mutual funds and ETFs. Federal annuitants have their annuity to cushion market swings and that is why I use the higher 110 factor. Most retirees in the private sector have to withdraw from their savings to cover living expenses.

If you are seriously considering investing a portion of your assets in dividend stocks there are options available to further reduce your risk. There are a number of mutual funds and Exchange Traded Funds (ETFs) that focus on high quality dividend stocks. Helaine Olen and Harold Pollack in their book titled “The Index Card“ recommends avoiding individual stocks and Rule #5 in their book reads, “Buy inexpensive, well-Diversified indexed Mutual Funds and Exchange-Traded Funds.” I purchased multiple copies of this basic personal finance primer for my children and other family members this year.

The following is a sampling of mutual funds and ETFs that focus on dividend paying stocks:

SDY – SPDR S&P Dividend ETF (A Money 50 fund)(Expense Ratio .35%)

• SDY focuses on mid cap value U.S stocks, ones that have paid increasing dividends yearly for the last 20 years. The fund’s performance generally follows the S&P High Yield Dividend Aristocrats Index. AT&T, Caterpillar, Emerson Electric, and Nucor are among their top holdings. The ETF was established in 2005 and is rated 5 stars by Morningstar for 3, 5, and 10 year growth. The fund yield is 2.49% and it has a market return of 8.33% since its inception.

SCHD – Schwab US Dividend Equity ETF (Expense Ratio .07%)

• SCHD tracks the Dow Jones U.S. Dividend 100 Index and focuses on large cap value U.S stocks, ones that pay consistent dividends with sound financial strength compared to their peers. Microsoft, Coca-Cola, Chevron, Verizon, Exxon, and Intel are among their top holdings. There are a number of Dividend Aristocrats in this group. The ETF was established in 2011 and is rated 5 stars by Morningstar for their 3 year growth. The fund yield is 2.93% and it has a market return of 14.39% since its inception. This fund has the lowest expense ratio of this group.

NOBL – Proshares S&P 500 Dividend Aristocrats (Expense Ratio .58%)

• NOBL tracks the S&P 500 Dividend Aristocrats Index and focuses on large cap value and growth stocks, the majority of the selections are directly from the Dividend Aristocrats list. Nucor, Emerson Electric, Leggett & Pratt, Target and 3M are among their top holdings. They currently have 50 stocks in their portfolio and must keep at least 80% of their total assets in this index. This fund was established in 2013 and the yield is 1.89%. It has a market return of 12.62% since its inception.

VDIGX – Vanguard Dividend Growth Fund (Expense Ratio .32%)

• VDGIX seeks to provide income and long term capital gains by investing in dividend paying large cap value and growth stocks. This fund invests about 10% of their assets in international stocks and currently has close to 3% in cash. Microsoft, UPS, Honeywell, Colgate-Palmolive, McDonalds, and Coca-Cola are among their top holdings. They currently have 48 stocks in their portfolio. This fund was established in 1992 and the yield is 1.91%. It is rated five star by Morningstar for 3, 5, and 10 year performance.

SPHD – PowerShares S&P 500 High Dividend Low Volatility (Expense Ration .30%)

• SPHD seeks to provide income with low volatility by investing in dividend paying large cap value stocks. This fund invests 90% of their assets in securities included in the S&P 500 Low Volatility High Dividend Index. They currently hold 50 stocks in their portfolio. TECO Energy, HCP Inc, AGL Resources, Baxter International, Southern Co, and AT&T are among their top holdings. This fund was established in 2012 and yields 3.37%, the highest of the funds listed in this article. Morningstar rates this fund 5 star for 3 year performance.

It’s important to note that the statistics related in this article are indications of past performance and company and fund underlying performance changes over time. Just because a fund was rated in the top of its category in the past doesn’t mean that trend will continue. The stocks, mutual funds and ETFs mentioned in this article are not recommendations on my part, I’m not a professional investor or Certified Financial Planner. They are meant to be a starting point for your research so that you can make informed investment decisions. There are many additional funds and individual stocks for you to consider. If you don’t feel comfortable making investment decisions on your own consider hiring a financial advisor.

Helpful Retirement Planning Tools
Distribute these FREE tools to others that are planning their retirement

• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2016 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development & IDP Center

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 advisor. 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, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Thursday, 14th April 2016 by Dennis Damp

Eleven years and counting since retiring in 2004 at age 55. Those who follow my column know that I didn’t retire: I just changed jobs and now work from home pretty much full time. Business keeps me busy and over the past two years I’ve simplified operations so that my wife and I can devote more time to other interests including our two beautiful grandkids. My wife and I are very active and always find interesting things to do at home and away.

I participated in a phone survey about the upcoming election last night and one of the questions was “what age group you are in” and the very last age group was over 65! I don’t know why they didn’t continue the age groups from 65 to 75, 76 to 85, and over 85. Aging is a blessing in disguise especially if you are healthy, however it’s unreal just how fast the years fly by these days.

One of the personal things I accomplished this past year was going through thousands of family pictures and slides and organizing them into 6 binders. It took me over three months to put the photos in logical order; early family life, military time, the early years, children and their many activities , vacations, all of the kids yearly school photos and so on. We also updated our estate plans, completed a number of projects around the house, and traveled. What prompted me to complete this project was that our son and daughter in-law wanted to see who the grandkids looked like. I took mostly slides when our oldest was young and I had them converted to pictures for the albums.

I also had an album created for our wedding by Moods Image Photography in Crafton Pennsylvania that I gave to my wife on our 46th anniversary. When we were married in 1969 I was in the U.S Air Force making $98 a month and the 18 pictures that we had were taken by my cousin and sister with their Brownie cameras.  Many of the pictures were so washed out and discolored that I thought they would never be able to restore them. Moods Image did a tremendous job bringing them back to life. One of the pictures they restored follows. The original was so washed out and discolored you couldn’t see any details.  By the way we still look like this!!!!  Ok I lied about how we look…… we actually look better!

Speaking of weddings, costs are just outrageous today. My wife and I were married for a grand total of $300 in 1969! I got married in my Air Force uniform, an Airmen with one stripe. We didn’t think about photo and video albums, stretch limos, flowers, banquets, etc. We were in love and none of that mattered. Mary saved for a year to pay for the wedding and her family hosted a small dinner at their apartment for the 25 that attended. Ernie, a blind family friend was the entertainment, he played the accordion. Our honeymoon was at a local hotel for one night and we could barely afford that.

Ernie

We flew to Mobile Alabama and took a taxi to Keesler Air Force Base several days after the wedding with about $300 in our pocket, we didn’t own a car. Mary left a good paying job at Westinghouse to live off base with me in Biloxi Mississippi and we arrived in Biloxi about two months after hurricane Camille destroyed much of the coast. With separate rations we were living on $150 a month! We walked four blocks to the local laundry mat with our dirty clothes in my duffel bag, eat beans and franks TV dinners for our first Christmas dinner, and to make ends meet I was a bar waiter at the base NCO club at nights. I had to sell a pint of my blood to buy my new wife a Christmas gift, she loves animals and I bought her a Siamese cat for $10. Holly was a welcomed member of our family for just over 17 years!

Those times were challenging to say the least but they built character and we learned how to persevere, do without, and take things for what they were. We bought our first TV, a 12 inch black and white model, from Singer Sewing Machine, for $50 on time at $5 a month. A friend and member of my unit was selling his 1963 Chevy Impala for $500 and the Credit Union refused to give me a car loan. Fortunately the seller cosigned for the loan and we bought our first car. The first weekend after purchasing the car we drove to Mobile Alabama to do our laundry and we felt like we were in 7th heaven. Shortly after that we visited New Orleans for the Mardi Gras that year. We look back on those days with fondness not regret.

While traveling last month I had a minor fender bender when I was backing out of a parking spot. A car raced through the parking lot behind me and to avoid an accident I turned just slightly to avoid a collision. My front bumper just tapped a guidepost. I wasn’t going 3 miles an hour, if that, and the damage cost $2200 to repair. Basically the front end of the new cars are all plastic. The lower bumper skirt popped out on the driver’s side and the pressure was just enough to crease the left front fender. In 1967 I was driving my first car, a 1956 Buick Special, and was hit in the rear on an entrance ramp by a 1962 Chevy impala going about 15 miles an hour. When I got out of the car to assess the damage the Chevy was backing down the ramp to get away. I had a small scratch on the rear bumper and drove away! I recall that a Model A Ford bumper could withstand a 20 mile per hour collision with minor damage.

Recently I purchased a FITBIT One for my wife to track her activity. It accurately tracks number of steps, miles traveled, calories burned, number of floors you went up or down, activity minutes, and it can monitor your sleep. It syncs to your smart phone through their App and you can monitor your progress, set goals, and compete with friends and family. My wife does over 10,000 steps, about 5 miles, on average each day and you can view daily graphs plus it encourages her to get up and walk to meet or exceed her goals. Mary has walked religiously for years and never knew how many miles or steps she was traveling each day. Our son purchased a mechanical step counter for her last Christmas and it was hit or miss, some days it worked an others it was totally unreliable. You can hold the FITBIT ONE in your hand and actually monitor each step to see that it does work and you burn calories all day even when you are sitting.

Another worthwhile task that I recently completed was to upgrade my computers to the Windows 10 operating system. My laptop was originally configured with Windows 7 and my desktop used the Windows 8 .1 operating systems. I waited almost a year to take advantage of the free upgrade to give Microsoft time to fix any system bugs. The upgrade took about 2 hours per computer to complete and I didn’t have any problems. One suggestion, if you decide to upgrade clean up your old system first; delete temp files, virus check, and empty your trash bin and the upgrade should go easier. I believe the free upgrade offer ends soon.

Retiree Employment Update

Employers recruiting federal retirees and those soon to retire post job vacancies on our Jobs Board. A good number of new listings were posted recently including an assistant position working with Elliott Affiliates, LTD in Lehigh Valley. It’s a part time position with work 2 to 10 days per month. Retirees are encouraged to apply. Other positions are for contract field inspectors, substitute teachers, and construction estimators to name a few.

Another interesting opportunity is with the Government Employees Health Association (GEHA), my FEHB provider. This job isn’t listed on our jobs board, I received an offer to work for them next open season. Basically, they are looking for current GEHA members to represent them next open season and they will pay an hourly rate plus any travel expenses. They sent me a one page application. If you are a current GEHA member and would like to attend open season events next fall to talk with potential GEHA members call 1-800-821-6136 and request an application. All who are selected will be trained to explain GEHA benefits, refer questions and concerns, and distribute GEHA materials. If I didn’t have my business to run I would sign up.

Private companies, contractors, and state government departments use our Jobs Board to hire skilled federal retirees for part and full time positions nationwide. Many opportunities exist for those looking to supplement their retirement income or to start a second career. We provide this free job listing service to companies that are seeking to hire experienced retired federal workers.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Helpful Retirement Planning Tools
Distribute these FREE tools to others that are planning their retirement

• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2016 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development & IDP Center

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 advisor. 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 EMPLOYMENT OPTIONS, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS

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Posted on Thursday, 24th March 2016 by Dennis Damp

(Updated 2/26/2022) The current bull market is the longest in history and as all bull markets do, they eventually end in a recession. You hear a lot today about the uncertainty in the market considering all of the stimulation that the Federal Reserve has applied through their low interest policies. When interest rates are low more individuals are forced into the stock market to earn a higher rate of return artificially increasing stock prices. As interest rates decrease stock prices increase and vice versa.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Since interest rates are near zero now for banks the only way they can go is up unless we enter a negative interest rate environment like Europe today. With negative interest rates savers pay banks to keep their money!  If they charge a negative 1 percent rate on a $100,000 bank deposit you only have $99,000 in your account at the end of the year!!! Not a good thing.  If the Federal Reserve allows interest rates to go up to where they would be without intervention stocks will fall in value and newly issued bond interest will increase correspondingly. You have to understand how markets work to protect your assets.

Basically, the Federal Reserve robbed Peter to pay Paul by reducing interest rates to almost zero for banks. All of the interest that we had been earning on our savings and other accounts was transferred to the government so they could borrow huge amounts of money, estimated to be as much as 40% of the government’s annual operating expenses, at very low interest rates to fund government programs.

Making uninformed investment decisions often lead to significant losses that are hard to recover from, especially when you are retired and living on a fixed income. Unfortunately retirees can’t simply print money like the Federal Reserve does to balance the books. Successful Investing requires understanding market basics, rational thinking, and attention to detail.

When I was in my late twenties I joined the National Association of Investors Corporation (NAIC).  They are the nation’s largest non-profit organization dedicated to investment education and they publish Better Investing Magazine, an unbiased, independent source of investing news, insights and support for investors of all experience levels. They encourage members to start investing early, offer courses on investing fundamentals, and support local chapters. They showed me how to buy stocks direct from major corporations through Dividend Reinvestment Direct Purchase Programs with as little as $25 a month and no brokerage commissions.

Fidelity offers a number of online investing tutorials that you may find helpful. Their Essentials of Investing interactive tutorial can help you learn about risks, priorities, and common strategies used by other retirees. They also offer a mutual fund evaluator and many other tools to help you select and manage your investments.

Basic investment knowledge also helps federal employees and annuitants grow their Thrift Savings Plan (TSP).  You stand to lose if you panic during market corrections and invest in the wrong funds at the wrong time. Fortunately, for those who don’t have the time or inclination to learn investing concepts the TSP offers Life Cycle funds, often referred to as one-decision funds, that automatically change to a more conservative mix as you approach retirement.

Stocks, Bonds, Mutual Funds and ETFs

The purchase of stocks and bonds should be made based on fundamentals not on gut feelings or general observations. Before purchasing a stock check the company’s price to earnings (PE) ratio, yield, debt, industry outlook, book value and so much more.  Once you learn what to look for and understand the principles you will be able to make sound investment decisions. With bonds it’s about credit quality, duration, and other factors.

If you aren’t familiar with these terms take a beginning investor’s course such as that offered by NAIC mentioned earlier in this article. There are rating services that provide prepared reports for thousands of companies, mutual funds, and exchange traded funds (ETFs). I use Value Line, Morning Star and my brokerage house stock rating sheets to validate stock selections. You can view the DOW 30 Value line Investment Surveys on their site at no cost.  You have to subscribe to their service to view the 5,000 or so stocks they track or visit your local libraries reference section. Most brokerage firms provide rating sheets for stocks, mutual funds and ETFs. Services like Value Line and Moody’s are often available at your local library.

A good publication for investors is Kiplinger Magazine; I’ve been a subscriber for many years and find each issue insightful.  They also publish a list of recommended mutual and exchange-traded funds that include building block, one-decision, and custom funds for you to consider.  They publish articles on how to select a balanced portfolio using their recommended funds or you can do the same with a one-decision fund such as Vanguard Wellington (VWELX) or Fidelity Balanced (FBALX).

Vanguard and Fidelity both offer tools to help you select a diversified portfolio of funds based on your personal situation after answering a few basic questions. Vanguard’s Fund Selection Tool is easy to use and provides a list of recommended mutual funds and the amount to invest in each.  It only takes a few minutes to complete.

Gold & Silver Discussion (Updated 2/26/2022)

I receive a number of flyers each year offering to double or even triple your investment in short order? I personally relegate these offers to the trash and don’t read them. They talk about doom and gloom and how the market is going to crash and gold or certain other investments are your only protection.  If you have considered purchasing gold and silver there are many sellers ready to take advantage of the uninformed.

A number of companies sell gold and silver at huge markups, well above the spot price for that metal. The spot price reflects the price paid for a precious metal based upon immediate delivery and are expressed as the ask or selling price or the bid or buyback price. The reason your cost is above spot price for precious metal coins, bars, and rounds is to compensate the miners, refiners, mints, and retail outlets for producing and selling the product. You will rarely buy at or below spot and newly minted coins and bars, referred to as bullion, typically sell for between 3 to 15 percent above spot depending on the coin denomination and size.

Large gold and silver dealers such as Blanchard often sell a single one-ounce gold American Eagle coin for approximately 4 to 5 percent above current spot/melt values. They will purchase them from customers at about two percent under their current selling price. If the spot price of gold is $1887 per ounce you can expect to pay from $1962 to $1981 per one ounce coin.  Some sellers offer the same coins for considerably more so shop around to get the price as close to spot as possible. Smaller denomination coins sell for a higher premium because they cost more to produce. A tenth of an ounce coin requires the U.S. Mint to strike a smaller blank ten times to produce the same one ounce of metal coins.

I’ve seen a number of 1 ounce silver bars selling for as high as $50 or more when the silver spot price is only $24.34 an ounce. Silver would have to increase by more than 100% for you to break even at those prices. Newer American Eagle silver coins are now selling for a larg premium of between 22 to 26% above spot in many cases. However, you can purchase silver rounds or bars for around $27.84 per ounce. Gold and silver bullion can be purchased from sellers across the country and also direct from the U.S. Mint. If you are interested in gold and silver coins check the spot prices online before buying precious metal coins.

Many companies offer loss leaders and will sell you a limited number of gold and silver coins just over spot at a very reasonable price. When you call they attempt to sell you graded or collector coins for 3 to 4 times what you would pay for the loss leader coins. If you do decide to buy collector coins you can check prices at the CPGS site to ensure you aren’t getting ripped off.  They also provide a grading service if you have coins that you want to have graded for your collection.

If you don’t understand market fundamentals learn about them before investing. Even if you hire an advisor it’s essential to know investing principles so you can understand and approve of his or her recommendations. Financial security is the foundation of a successful life and retirement. A little time, preparation, and pre planning goes a long way to achieving this goal and there is a lot of help available to get you there.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Helpful Retirement Planning Tools
Distribute these FREE tools to others that are planning their retirement

• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2022 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development & IDP Center

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 advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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

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Posted on Wednesday, 2nd March 2016 by Dennis Damp

Social Security File & Suspend

I discussed in a recent column the process my wife and I went through to file and suspend my Social Security benefits.  I did this so that my wife will now be able to collect a spousal benefit while I deferred collecting until age 70 and my benefit will increase 8 percent a year until then.  This option will no longer be available after April 30^th of this year.  Shortly after making this change I received a new Medicare card with a different Medicare claim number suffix. Your Medicare claim number is basically your Social Security Number followed by one of 30 plus suffix extensions. I went from a T (Enrolled in Medicare but temporarily delayed Social Security Benefits) to an A (Primary Claimant – wage earner) status.

This basically confirms that I am now officially collecting Social Security benefits and in the program even though I personally delayed collecting until age 70. My wife is now collecting a spousal benefit based on my work history.  Her total monthly check is comprised of two components, her benefit that she started collecting at age 62 plus a spousal benefit that increased her check up to half of what I would have collected at age 66.

If both you and your spouse are at your full retirement age (66) you only have a short time to take advantage of this option.  My article tilted Social Security Changes, Retiree Job Options, & Updates explains the major changes that were made to the Social Security Program recently under the “Bipartisan Budget Act of 2015.”

I’ve been concerned for some time about potential changes to the Social Security program that are proposed by both political parties.  Hopefully, if you are already in the system and collecting Social Security neither party will pass legislation to cancel those benefits. Only time will tell.

2016 Leave and Schedule Record – Entering Fractional Hours

Mary, a federal employee that uses our 2016 Leave and Schedule Record reported that she was having trouble entering fractional hours on the Excel spread sheet.  I downloaded the chart and entered 8 hours of annual leave accrued with 1.5 hours of leave taken for that period and the balance shows correctly as 6.5 hours. However if you enter 1.25 hours the fractional hours round up to 1.3 hours due to the limited space provided for that column. This happens with all four categories of leave; annual, sick, comp and credit and there is an easy correction that you can make so that the fractional hours do not round up.

The leave total fractional hours round up due to column space limitations when your total hours are 3 digits or more. You can expand the column width and the rounding will return to the actual number.

To expand the column width for annual leave totals place your cursor at the top of the form on the line between the columns T & U. Click and hold the left mouse button down and move the mouse to the right to expand the column a bit. Release the mouse button and you will see that the rounding disappears and your fractional hours will be as entered and not rounded up. You can do this with each of the four leave columns so that fractional hours will show correctly.

When we update the chart for 2017 I’ll expand the columns so this won’t be an issue.

Request a Retirement Benefits Summary & Analysis. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

Helpful Retirement Planning Tools
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• Retirement Planning Guide
  • Federal Retiree Job Opportunities
• Master Retiree Contact List (Important contact numbers and information)
• How to be Financially Prepared When You Retire
• How to be Emotionally and Physically Prepared When You Retire
• 2016 Leave & Schedule Excel Chart (FREE Excel chart tracks actual leave balances)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

Visit our other informative sites

• Federal Government Jobs & Career Center
• Federal Employee’s Career Development & IDP Center

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 advisor. 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, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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