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Is a Timeshare right for you?

Posted on Saturday, 7th December 2013 by

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As a Federal Employee I traveled a lot of miles and earned points at Hilton and Marriott hotels. One evening, while minding my own business, I received a call from Hilton Honors with a great deal, three free nights at a Hilton Grand Vacations Club (HGVC) Resort in Las Vegas.  All I had to do was attend a one hour presentation for their new Resort on the Strip in Las Vegas.  Well, I hadn’t been to Las Vegas in twelve years and I had been planning to go just to see Celine Dionne at Caesar’s Palace.  I took advantage of their generous offer and planned a cool January visit. In addition to Celine we saw O at the Bellagio as well. The HGVC property was beautiful, off the strip so it was quiet and it felt like home.  The kitchen was fully equipped with beautiful cabinets, granite counters and included free Wi-Fi and a Jacuzzi tub to relax in after a long day.  It had a beautiful living room complete with a balcony and large flat screen TVs in the living and bedroom. We used the tram to travel around the strip.

The presentation at the Hilton club resort on the Strip certainly took more than one hour but it did entice me to consider buying into their club.  While I wasn’t ready to commit during that visit they offered an Introduction Package which consisted of a one week stay at any of their club properties. After attending a presentation at the club property, if you decided to buy, the cost of the Introduction Program Package would be applied to your club purchase.  The Intro Program Package made sense and I was getting something for my money. I used the Intro Program deal to visit their Club at the Hilton Hawaiian Village. That sold me!

I’ve been a Hilton Grand Vacations Club member for nearly 7 years now.  If you asked me how I like it; my answer would be that I wouldn’t buy it if I could go back in time.  However, I’m also not willing to sell or give it up. It would have been more cost effective had I purchased the time share from a club member on the resale market.  I’ll explain that later.

I earn 6300 points every 12 months that equals a one week stay in my home property, Kingsland on the Big Island. I do have flexibility to carry points over to the next year and then use my points for a two week vacation or more depending on the property I chose to vacation at. I can borrow from the next year to enjoy a longer stay or I can convert my HGVC points to RCI points.  RCI, a worldwide time share organization, will then give me a two year window in which to use those converted points.  When I call HGVC to book a RCI vacation club stay they are very good about letting you know the condition of the property, such as it’s in need of updating or HGVC members weren’t satisfied with the location or had problems at that property.  They will also tell you about the best RCI properties for the area where you are planning to vacation.

But here’s the best part of that decision to buy. The purchase of the Club membership does exactly what I was hoping it would do when I made the purchase.  It pushes me to go someplace special for a couple of weeks at least once every year or two.  It also allows me to invite friends to join me.  They save the cost of a hotel and we all stay in a Resort that I would never pay to stay at if I weren’t a member.

How the Club Point System Works

The Marriott Resort Club, from talking to members, operates similar to the Hilton Grand Vacation Club.  The following information may help you in considering either HGVC or a Marriott Club membership, or at the very least provide information that will help you ask questions prior to making a purchase decision.

The clubs operate on a point system that is determined by the property you are purchasing a week of time at. My one week on the big island of Hawaii is valued at 6300 points each year. It’s not a beach property, its near golf courses, but you have shuttle service and access to the Waikoloa HGVC resort and the beach at that resort.  Kingsland is one of their premier properties so my annual point allowance is higher than other HGVC resort properties.  That means I can spend one week at Kingsland or I can stay for nearly 2 weeks at many of their other Club properties in Florida or Las Vegas, if I plan ahead.

The other benefit of the Club Point plans at Hilton and Marriott is their agreement with RCI.  You exchange your club points for RCI points for a fee, so that you can vacation at any RCI resort property.  This was an option that I liked and had a lot to do with my decision to buy.  But it’s not as easy to stay where you want, when you want with RCI.  It’s best to look in advance at availability before exchanging club points for RCI points. Make sure they have lots of vacancies where and when you want to go before completing that exchange.

About the fees:

  1. There are reservation fees except for your home property week. 
  2. It’s cheaper to book yourself online. Currently Hilton charges $49.
  3. There are also exchange fees to turn your Hilton club points to RCI points, $169.  In addition, you will be charged a fee to book a stay at an RCI property, another $169.  But, having that option is worth it for a nice property.
  4. You can change your HGVC points into Hilton Honors points but this isn’t a good deal. Use it only if you have small balance left.

Initial Cost and Annual Fees

The initial cost for club properties can be quite high, often $20,000 or more for one week ownership and there are annual fees.  You will pay club fees, real estate tax, maintenance costs, etc.  The initial annual fees may sound reasonable but they can go up annually and my experience has been that it’s rare that they don’t increase.  HGVC properties in Florida and Las Vegas have lower purchase prices and lower annual fees than their Hawaiian properties. HGVC has enough flexibility to allow you to plan ahead on how to use your points in a way that makes sense for you.

Do some cost comparisons before making a purchase.  For example, a room at one of the HGVC resorts costs between $329 and $349 per night plus tax it adds up to between $2600 and $2800.  You can save around $40 a night by paying for your entire stay in advance when booking.  The weekly rate is approximately twice the annual maintenance fee. Basically your upfront cost of $20,000 plus the annual fees would result in breaking even over approximately a 15 year period.  At this time the only club property that requires room tax and parking fees from your weekly stay is in Hawaii.  The tax is around $5 a day and parking around $25.

If You have your favorite place to vacation and go there every year, then a time share may be a good choice for you.

Here’s what I would do differently.  I would have opted out during my one week to change my mind, which is required when buying in Hawaii by state law.  Then I would have shopped for a HGVC property being sold by a current owner. While the property points for Hilton and Marriott resort club properties can be sold, like any other time share, they do hold more value better than most time shares. Your ownership period with Hilton is permanent and is transferable at a cost similar to home buying, meaning lots of paperwork and transfer fees, taxes etc. 

Buying someone else’s Club Membership will save you money on the initial cost, likely 50% of the original purchase price or less.  On the downside, you may not understand how it works unless you attended a presentation at a Club Resort in advance or find a chat room to discuss these timeshare options and the fees involved for reservations, saving points from one year to the next, or converting points you can’t use within their expiration time frame. Ask the seller if they have a recent Club Membership book that you can look at before making a purchase.  The book will explain all your options for using your annual Club points.

Before finalizing your purchase read the contract carefully to make sure you won’t be charged additional fees by the timeshare company to change property ownership. In some cases the owner is required to sell the property back to the company if selling within a specific time frame after making your initial purchase.

Request a FREE Retirement Benefits Summary Analysis from a local adviser. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections. A sample analysis is available for your review. This service is not affiliated with www.federalretirement.net

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

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The information provided may not cover all aspect of unique or special circumstances. Travel policies and packages are subject to change without notice. To ensure the accuracy of this information, contact travel providers and hotels at the time of your bookings to confirm pricing, itinerary, and all costs. The comments and observations are limited to the author’s personal experience and your results may vary significantly. This article and replies to comments are not intended to substitute for professional travel services. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Posted in LIFESTYLE / TRAVEL, Travel

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Is it Time to Update Your Designated Beneficiary Forms?

Posted on Wednesday, 27th November 2013 by

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OPM recently added a new feature to their Retiree Service Online site at https://www.servicesonline.opm.gov/. You can now download and print out a current copy of your FEGLI Verification of Life Insurance (VOLI) Coverage.  You can also print out duplicate 1099s for 2013 on this site when they are released.  Previously you had to request a copy by phone.  If you haven’t registered to use this site yet contact OPM at 1-888-767-6738 and they will send your initial temporary password in the mail. You will need your retirement claim number and the password provided by OPM to register for this service.

Unfortunately FEGLI Beneficiary  designations are not available online and if you are not sure who you designated call OPM or fill out a new SF 2823 Designation of Beneficiary form.  If you wish to change beneficiaries or if any of your beneficiaries moved since you originally completed this form send in an updated form. This is also important for the TSP, CSRS, and FERS Civil Service Retirement System designated beneficiaries.

I retired 9 years ago this December and OPM’s announcement reminded me to review copies of the designated beneficiary forms that I retained with my retirement application and for other insurance policies and financial accounts . All had to be updated because of designated beneficiary address and name changes over the years.  You should also update beneficiary forms for your bank accounts, insurance policies, and investment accounts of all types including savings bonds that you may have.

The SF 2808 and SF-3102 forms are needed if balances remain from your retirement when an annuitant dies before all of their contributions were paid out. These two Designation of Beneficiary forms are used to designate who is to receive a lump-sum payment which may become payable after an annuitant’s death. They do not affect the right of any person who is eligible for survivor annuity benefits.

Click Designation of Beneficiary Forms to obtain copies and detailed instructions for completing the  following form

  • SF-2808 (CSRS lump sum payment that may become payable after death)
  • SF-2823 (FEGLI Designation of Beneficiary)
  • SF-3102  (FERS lump sum payment that may become payable after death)
  • TSP-3 (Designation of Beneficiary)

You do not need to make a designation if you are satisfied with the order of precedence the law provides and you do not have a certified designation on file.  That order of precedence follows:

  1. To the widow or widower. 
  2. If your widow(er) is deceased, to your child or children, with the share of any deceased child distributed equally among the descendants of that child.
  3. If none of the above, to your parents in equal shares or the entire amount to the surviving parent.
  4. If none of the above, to the executor or administrator of your estate.
  5. If none of the above, to the next of kin under the laws of the State in which you live at the time of your death.

Payment of a lump sum will be made to the first person or persons listed above who are alive on the day you die.

Review your beneficiary elections with your annual estate plan review to keep things up-to-date. Estate plan contacts, insurance policy information, and investments must be updated to keep your plan current. Estate planning guidance, including how to compile a comprehensive estate plan binder, is available on our site.

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

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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

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FEHB Open Season Online Update

Posted on Monday, 18th November 2013 by

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Another year is almost over! The older I get the faster the days go by and at an alarming rate. Christmas is around the corner and It seems like I just completed our 2012 taxes and sure enough I’m starting to compile information and purchasing Turbo Tax for 2013.

Each year I register for OPM’s FEHB Open Season Online at https://retireefehb.opm.gov and review the open season changes. This service is reserved for annuitants and you can either review the plan brochures online or have them send copies in the mail. This year I requested 9 brochures and may end up changing plans since I’ll turn 65 next year and will be eligible for Medicare. Active federal workers that are retiring soon can print out a copy of this article so they will have this information available when they leave. The two websites listed in this article help annuitants manage their retirement.

Many private sector insurers are canceling coverage or health insurance premiums are increasing dramatically because of the Affordable Care Act.  All FEHB plans qualify as minimum essential coverage (MEC) and meet the Patient Protection and Affordable Care Act’s individual shared responsibility requirement for each individual covered under the FEHB plan.  Costs are increasing an average of 4% this year; not bad considering the horror stories we hear about plan costs increasing 30 to 100 percent or more in the private sector.

Open Season Online allows you to chat with a customer service representative using Live Help, send a webmail message which will be answered by a customer service representative, and review and have hard copies of health plan brochures sent to you via regular mail.

In order to access Open Season Online, you must register every year. To create a user ID and password you will need your annuity claim number (CSA or CSF), and your social security number or email address that is on file with OPM. Once you register or sign in you can perform many functions including enrollment changes, review all of the information you will need to evaluate plans, review dependent information,  change your address, view transaction history, and use OPM’s health care plan comparison tool.  You can access the site 24/7 except for scheduled maintenance on Sundays from 12:00 a.m. to 9:00 a.m. Central Time. If you experience difficulties using Open Season Online you can call Open Season Express at their toll-free number, 1-800-332-9798, to complete your transaction.

I also go to https://www.servicesonline.opm.gov during open season to update my password and this year you can receive your IRS 1099R, annual mailer, and other informational alerts electronically. This site also allows you to print out Annuity statements, set up allotments, and much more.

Request a FREE Retirement Benefits Summary & Analysis from a local adviser. A sample analysis is available for your review. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Posted in BENEFITS / INSURANCE, ESTATE PLANNING, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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2014 Leave Record & Scheduling Spreadsheet Plus FEHB Same-Sex Coverage

Posted on Friday, 8th November 2013 by

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Our 2014 Leave Record & Scheduling Spreadsheet is now available for download to your desktop. Use it to automatically track your leave balances in all categories, annotate your schedule, and to establish realistic retirement target dates to maximize your benefits when you leave. This FREE spreadsheet automatically calculates your accrued annual and sick leave balances, comp time, and credit hours. Forward the spreadsheet to others in your organization and feel free to post it or to place a link to the spreadsheet on your agency’s web site.

FEHB Same-Sex Coverage

Married domestic partners need to be aware of their new options under the FEHB Program family member eligibility rules. These rules extend to annuitants as well.

In accordance with OPM’s Benefits Administration Letter # 13-203, dated July  17, 2013 and as a result of the Supreme Court’s decision, legally married same-sex spouses will now be eligible family members under a Self and Family enrollment. Coverage is available to a legally married same-sex spouse of a Federal employee or annuitant, regardless of his or her state of residency.

This decision does not extend coverage to registered domestic partners or individuals in civil unions. In addition, the children of same-sex marriages will be treated in the same manner as those of opposite-sex marriages and will be eligible family members according to the same eligibility guidelines. This includes coverage for children of same-sex spouses as stepchildren.

OPM Example:

Tonya is an FEHB enrollee. She and her same-sex spouse, Sally, have two children together but Tonya is not biologically related to the children nor has she adopted them. Based on the eligibility changes, Tonya can cover Sally and their children under her Self and Family enrollment. If Tonya already has a Self and Family enrollment, she may contact her carrier directly to notify it of her newly eligible family members. If Tonya has a Self Only enrollment, she will need to complete an SF 2809 to change her enrollment to Self and Family.

From this point forward, the word “spouse” in any OPM documentation pertaining to the programs discussed in the subject Benefits Administration Letter refers to both same and opposite-sex spouses, the word “marriage” refers to both same and opposite-sex marriages, and the word “child” refers to children of both same and opposite-sex marriages. If there is a need to differentiate between same and opposite-sex spouses, their marriages or child(ren), OPM will do so explicitly.

Request a FREE Retirement Benefits Summary & Analysis from a local adviser. A sample analysis is available for your review. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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

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2014 COLA & Military Deposit Rule Changes

Posted on Friday, 1st November 2013 by

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Federal retirees, social security recipients, and military retirees will receive a 1.5% COLA next year!  This is the lowest COLA since 1985 not counting the two years we did without one. Based on the average retiree’s annuity the 2014 COLA will add approximately $48 monthly for CSRS retirees and $18 for FERS retirees age 62 or older.  It’s hard to believe inflation was only 1.5% considering all of the increases my wife and I have experienced first hand in just about everything we purchased this year plus our FEHB health insurance premiums are scheduled to increase an average of 4.4% for 2014. About the only thing that I see going down is our standard of living these days however that is another story of and in itself.

The rules for federal employees who wish to apply their military time towards retirement have changed.  OPM issued a Benefits Administration Letter this year that discontinued the practice of allowing employees to complete payment of their Post-1956 Military Service Deposits after separation. They did allow one exception for administrative error that would have prevented the employee from completing their deposit prior to separation.

Previously you could submit military deposit paperwork with your retirement forms and make payment to your agency prior to adjudication of your retirement claim. however now you must initiate the paperwork and complete payment to your agency prior to separating.  It can take months to receive pay estimates from military finance centers, make payment to the agency, and receive confirmation of payment. Start the process long before you retire if you decide a military deposit makes sense to you.

The Benefits Administrative Letter states that “The retirement applications for CSRS and FERS, SF 2801 and SF 3107 respectively have since been revised and the OPM form 1515 has been discontinued. Both applications now clearly state the deposit must be completed before separation.”   These forms are available for download with revision dates of June 2007 and May 2012 respectively.  It appears that instead of issuing new revised forms OPM simply added the statement (You must make this deposit to your agency. You cannot pay OPM after you retire) to the existing forms under Schedule A – Military Service Information, item number 2. 

Because the applications clearly state the fact that deposits must be completed before separation, OPM will not grant an exception for employees who were counseled but have not yet separated. These employees must be informed of the correct procedures regarding the payment of military deposits.

Many who served in the military have questions about the impact, if any, that a deposit will have on their military benefits. If you make a military deposit, there is no effect on your other military benefits such as medical benefits, base access, commissary, or VA benefits, including any disability payments from the VA. It only affects (active duty) retired military pay; you cannot receive 2 separate retirements (military and civilian) for the exact same period of service. Reserve or National Guard members under Title 32 can collect both a federal civil service retirement and a Reserve or National Guard retirement.

Other Military Deposit Resources:

 

Request a FREE Retirement Benefits Summary & Analysis from a local adviser. A sample analysis is available for your review.
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

Visit our other informative sites

The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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

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Borrowing to Pay the Mortgage

Posted on Thursday, 17th October 2013 by

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I would say that anyone who has to borrow to pay their mortgage is in trouble, wouldn’t you! Can you imagine having to borrow not only to pay the mortgage but to just make the interest payments on your credit cards and other debt? Fortunately the government shutdown is over and everyone should be back to work shortly. However, the bad news is that with all of the hype over passing a clean continuing resolution (CR) and allowing government to continue to borrow 40 cents of every dollar it spends can’t be good for any of us long term. If a typical family tried to do this they would be bankrupt within the year and lenders would toss them out of their office. I wrote an article titled “Is This Coming Your Way & The National Debt Crisis” last year that describes the debt crisis by comparing it to a typical family’s income and expenses that you may find revealing.

Government should be setting an example of sound fiscal policy not of reckless abandonment and the sad fact of the matter is that most just don’t realize just how dire this situation is. If government doesn’t get spending under control and focus on putting people back to work the negative impacts will ripple through all of society.  The glimmer of hope that came out of this past several weeks is that the President stated many times that if congress passed a clean CR and extended the borrowing limit he would be willing to sit down and negotiate on any subject. I hope that he and congress follow through prior to early next year when this all could happen again.

The 16 day shutdown is like a shot across the bow of a ship; a near miss never less a shock to the system. I read several stories about federal employees that were furloughed struggling without their biweekly pay coming in on time. I went through a number of shutdowns while in federal service and was sent home as non essential twice.

One story focused on a family of four where the federal worker was in his 50s with kids in College and bills coming in that he couldn’t pay on time. The family was living pay check to pay check and struggling to get by during this 2 week period. I can certainly understand the stress this family was going through. Fortunately, furloughed federal workers will eventually receive back pay and in effect received extra paid days off. Not bad considering that many in the private sector simply were laid off without any hope of back pay.

What these stories highlight is that many simply aren’t prepared for the unexpected and have little to no savings set aside for a rainy day. Sure we have secure jobs in the federal sector but that doesn’t mean we shouldn’t be fugal, live within our means, and save for that rainy day that will eventually come our way. All workers, especially those in their 50s and close to retirement, should have savings set aside for emergencies and retirement, other than their THRIFT plan, even with kids in school. That is why retirement and financial planning is so critical and should be addressed early in ones career. If you were in the same boat as the story line relayed above it’s time to get serious about financial planning strategies and retirement planning.

A fellow worker once said to me that he didn’t have to put anything aside for retirement because of his CSRS annuity and his THRIFT Plan savings. Not so, sure the CSRS annuity can be generous however you never know what is coming your way and the costs of everything is increasing. I mentioned in a recent column that in the past few months our home owners and car insurance premiums increased over 30% and our real estate taxes were just raised 30% as well. That was unexpected and a huge hit especially for someone on a fixed annuity and/or Social Security considering that retirees are expecting up to a 1.5% COLA next year!  They just announced that federal employees will receive a 1% pay increase in January.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publishe

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

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Making Retirement Work For YOU

Posted on Saturday, 5th October 2013 by

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I retired in 2005 at age 55, almost 9 years ago! Honestly, I wouldn’t have retired if I didn’t have 35+ years of service at the time and an avocation, my business to fall back on.  Had I stayed I would be retiring with 45 years and a maxed out annuity.

What I enjoy about hosting my federal employees retirement planning site is talking with so many retirees that are truly making retirement work for them and their families. Take Frank for instance, he retired around the time I did and since then has traveled extensively recently returning from a three week tour of Europe staying two weeks in Italy at a friend’s villa and then took a one week bus tour of Rome, Pisa, Verona, and Venice. His next adventure will take him to Portugal! Frank and his family truly enjoy traveling and he spends a lot of time with family and friends .

Nancy, our Travel Forum host, loves cruises and frequently visits the west coast, Hawaii, and Europe plus she is planning an African safari.  Another recent retiree, Janet, a friend from my old job in Pittsburgh, traveled to London with her husband to attend the Pittsburgh Steelers’ game. What a way to start off retirement.    

On the flip side there are those who retire to grow a small business or non-profit. Randy Baldwin did just that, his business Just Write Laser Engraving specializes in unusual and unique gifts for retirees, fund raisers, corporate, military, and others. He devotes full time to his business. He also had a side business while still in government that made ink pens out of about any material. He made three pen sets from a wood hammer handle that was the only thing that I had from my father who died in 1951 when I was a year and a half. I display the pen set in my office along with a FAA retiree logo coffee mug from his current company.  

Another excellent example of a federal retiree’s entrepreneurial spirit is Ann Ozuna a former federal personnel specialist and our HR and Divorce Forum host. Ann took an early retirement in 1996 and founded Personnel Solutions Federal Benefits Counseling located online at www.TheFederalRetirementLady.com. She assists individuals in understanding all their federal retirement options as well as individuals and attorneys with interpreting the OPM divorce rules.

Many retirees devote time to their church and charities while others pursue every hobby imaginable including gardening, cooking, coin collecting, sports, watch and clock collecting, you name it and a retiree is enjoying their time and they consider it time well spent.  Anything other than work for this group and I can understand that. I’ve been working non-stop since my early teens, over 50 years of continuous non-interrupted work. Why do I do it? Basically I still enjoy the challenge of getting up each morning and coming to work and today that means going downstairs to my home office after I make a pot of coffee for my wife and take out the dog.  However, that being said there is a time to slow down and simplify one’s life and turning 65 is a major milestone that is fast approaching for me. 

One of my co-workers, many years ago, planned to retire early and devote his time to outdoor activities from fishing to farming. Unfortunately health issues got in the way and he was never able to fulfill his dreams.  The key to a successful retirement is planning and knowing upfront before leaving what you intend to do and are able to do, and if you are financially, emotionally, and physically prepared for your new adventure. Take time to plan your exit and use our retirement planning site to help you through the process.

Helpful Retirement Planning Tools
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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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FEHB and the Unexpected Consequences of the Affordable Health Care Act

Posted on Thursday, 12th September 2013 by

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This is a follow-up to my last article which talked about the potential impact the new health care legislation may have on our FEHB plans. I was going to title this article “The Unintended Consequences of the Affordable Health Care Act” however that really isn’t the case. Those who drafted this plan knew full well the consequences even though few if any of our representatives read the plan including Nancy Pelosi who famously stated in a press conference that “we have to pass the law to find out what is in it.”  It is the workers and retirees that find this unexpected and not sure which direction this will take, the impact on our health care services, and how much it is going to cost all of us.

Unfortunately new laws are often drafted through second and third parties that have vested interest and agenda and receive little scrutiny.  I personally down loaded the law and the language was confusing to say the least and open ended leaving the details for new agencies to develop. Now thousands of pages of regulations have been written as the plans are being implemented and modified as problems and issues arise.  

There is much uncertainty among all groups concerning the impact going forward as evidenced by delays, granted exceptions, and objections that arise. Three major unions that supported implementation stated in July that “the Affordable Health Care Act will shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”  The administration is considering offering subsidies to union members and if that does happen the costs for the Affordable Care Act will increase dramatically. Subsidies are reserved for low income families in the new law.   

I understand that many in the Congress that must join public exchanges this year and are eligible for retirement are considering retiring now so they can retain their FEHB coverage after they leave. It’s too soon to tell how many will take advantage of that option.  The downside that I discussed in “The FEHB Program and the Affordable Care Act” is that as employees leave the FEHB program the pool of ensured drops and costs go up. Even if all federal employees are moved to local public exchanges federal retirees could still remain in the FEHB program. However, the FEHB program would lose over half of their participants, more than 2 million workers.  Remaining retirees could conceivably see their FEHB costs double or triple in a few short years.  

Recently over 300 companies including IBM, Dupont, and Caterpillar announced that they are moving Medicare eligible retirees to privately run local exchanges to cut costs. The companies are providing fixed payments through health retirement accounts that retirees can use to buy coverage. The privately run exchanges such as Extend Health offer polices from various insures similar to the FEHB program with a broad range of options, deductibles, and features. The privately run exchanges are not affiliated with the public exchanges that start in October and are administered by the government.  Company’s health care costs are skyrocketing and this move eliminates their cost to administer the program for retirees.

The Wall Street Journal reports that “only 28% of large companies that offer health benefits to employees offered retiree coverage in 2013, down from 34% in 2006 and 66% in 1988.”

I mentioned in my last article that many companies were eliminating coverage for spouses if they are employed. This can cause significantly higher costs for couples with children because one spouse would have to retain family coverage even though the spouse isn’t covered. The uncovered spouse would have to purchase single coverage though their employer or a local exchange.  In this case couples with children would be paying a penalty!  So far I’ve heard nothing about this spreading to the federal sector, at least not yet.

It is just too early to tell how this will all shake out but I must say I’m apprehensive and fear that the excellent medical care and services we now receive may be compromised.  My preference is to stay in the FEHB program. Maybe it’s just because the FEHB has worked well for my family for over 4o years now. The old saying “If it isn’t broke don’t fix it” may apply here.  

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Posted in BENEFITS / INSURANCE, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION, WELLNESS / HEALTH

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