fbpx

Retirement Application Changes, Pay Freeze & COLA Update, and FERS Employee’s Contribution Increases

Posted on Sunday, 21st October 2012 by

Print This Post Print This Post
Share

OPM revised and updated several FERS and CSRS retirement application forms in 2012. Before submitting your application check your form’s date to ensure you have the updated version.

(Forward this email to others in your organization to give them a heads up about this.)

You can download the updated forms online at http://federalretirement.net/retireforms.htm.  The forms are identified as updated and they were revised May of 2012. Even though these forms do not specify “Previous Editions are not usable” like the SF-2801 CSRS form specifies it is best to send in the most current form to avoid any processing delays.  Here is a list of the updated forms:

  • SF 3107 (FERS Retirement Application) Revised May 2012)
  • R1 92-19 Application for Deferred or Postponed FERS Retirement (May 2012)
  • 1496A OPM Form – Application for Deferred or Postponed CSRS Retirement (May 2012)

To avoid processing delays follow the guidance in the “Retirement Precautions” article that I published last January. The majority of delays are due to improperly submitted forms and missing information.

Pay Freeze & COLA Update

The President recommended a .5% raise in January for federal employees and he signed a continuing resolution in September delaying the proposed increase until March 27, 2013. NARFE reported in their November issue that “President Obama was extending the two-year pay freeze until Congress was able to pass successfully the fiscal 2013 spending bills.” There is still some uncertainty surrounding this increase.

Retirees won out here. They, along with all Social Security recipients will receive an increase in January. My last column announced that the Congressional Budget Office was anticipating a 1.3% to 1.9% Cola increase for 2013. The Social Security Administration announced a 1.7% cost-of-living adjustment last week that will apply to FERS and CSRS annuities starting with our January 2013 checks. All CSRS employees will receive the COLA. FERS retirees under age 62 don’t receive a COLA except for FERS survivors, disability retirees, and those in law enforcement and fire fighters who retired under special retirement provisions.  You can view all COLA adjustments since 1999 on www.federalretirement.net to see how annuities have increased over time.  Since I retired on December 31, 2004 my annuity received total COLA increases of 20.5% not including compounding.

New FERS Employee’s Contribution Increase

Thankfully, only new employees hired on or after January 1, 2013 will be subject to the new higher payroll contributions under the new Revised Annuity Employees (RAE) coverage. Current FERS employees contribute .8% while new regular FERS employees will contribute 2.3 % more for a total of 3.1% of their salary after taxes. At the same time government will contribute 2.3% less. The new program is titled FERS-RAE and we added a link on our Annuity page to OPM’s Benefit Administration Letter # 12-104 that describes the changes that resulted from Public Law 112-96, Section 5001, the “Middle Class Tax Relief and Job Creation Act of 2012.”

Recent Forum Host Articles:

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. This service is not affiliated with www.federalretirement.net.

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

Visit our other informative sites

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

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. Our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

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

Comments (0)| Print This Post Print This Post

A Transatlantic Cruise

Posted on Monday, 15th October 2012 by

Print This Post Print This Post
Share

If you’ve been reading my articles over the last couple of years you have probably realized I am a huge fan of cruising. However, I had never gone on a transatlantic cruise. My first included visiting exotic places that I dreamed about for many years.

What to do with 9 days at sea.

The itinerary for the transatlantic cruises heading east usually start with 7 days at sea before a stop off the western coast of Europe or Africa.  I enjoy days at sea and since this was one of largest cruise ships sailing and offered entertainment similar to a resort hotel. There were plenty of activities throughout the day including scavenger hunts designed to acquaint travelers with the ship, meeting fellow travelers and taking photos of the ship’s out of the way and unusual places. There were plenty of activities every day; trivia, bingo, pool games, wine tasting, food carving, napkin folding, etc. and there was music starting around lunch time at the pool or in a lounge.

There were plenty of great places to sit and enjoy the view or a book. Our last day at sea took us into the Mediterranean Sea. I recall from my geography class about the Strait of Gibraltar which is a famous landmark visible to all who pass through the Strait. I was able to see the landmark as the ship passed through at sunrise.  Morocco was on one side and Portugal on the other.  The street lights were just fading along the coast as those folks were starting their day. The sun cast a haze on the Rock and it was so recognizable approaching from the east. What a remarkable sight making passage into the Mediterranean Sea.  This was our last day at sea.  The rest of the trip was non-stop sightseeing!

The Ports of Call

The Canary Islands are part of Spain lying to the west of the North African coast.  It was our first port of call after seven days at sea. I was happy when our ship arrived at the Canary Islands to see something besides water.  I spent the day on a tour of the island.  It was beautiful there, gorgeous beaches and good gelato! We visited two other ports of call in Spain, Mallorca and Barcelona. Mallorca is a beautiful island with lush plants and quiet spots in the hills away from the port city.  We enjoyed a nice lunch at a local spot in the town of Valldemossa. It was a beautiful day! I loved looking in the pottery shops with all the bright colors. Barcelona is a beautiful city known for the architecture of Gaudi. We set out to explore the many markets and Las Rambles, the main street with an island of activity to explore. The markets were so colorful with the produce, fruit and proteins laid out in a way that just held your attention. We wandered around enjoying the vendor’s artful displays of their bounty of food and tried our best to capture them in our photographs. We enjoyed the afternoon wandering on Las Rambles where there was lots of choices for eating and shopping. Unfortunately the tour didn’t include a visit to any of the famous buildings designed by Gaudi. That means another trip to Barcelona is on my list.

The next morning we arrived to explore the French Riviera.  The tour included Sarary, Cassis and Marseilles. My favorite, Sanary, is a small town with a large marina. It is laid out around the moon shaped coast to make the most of sea views.  It was early so only a few shops and cafes were open. It was a clear morning with blue skies, a cool sea breeze and views of the marina and the Med. It was a perfect spot to enjoy cappuccinos.  Next stop Marseilles and the Gard Du Notre Dame cathedral on the highest point that overlooks the city. The cathedral was beautiful but I couldn’t get over how large that city is!  All I could see were buildings everywhere, from the seashore covering the hills around this spot on the French coast.  We had a scant 40 minutes to find lunch.  I stumbled through my French finally giving up and asking if someone spoke English.  The owner promised she could serve us lunch in the short time we had.  A salad and “French fries” would do along with some soft drinks.  The salad was wonderful and included chunks of cooked potato, marinated and sautéed asparagus along with assorted greens and a light dressing.  I was really enjoying it when a paper table cloth caught by the sea breeze escaped the waiter’s hands and then wrapped itself around my face in mid bite.  I had nowhere to go with my fork in one hand, my drink in the other and the table covered from edge to edge with plates of food.  Thankfully the waiter came to the rescue and was relieved that I found it funny along with everyone else around me.  A photo would have been a great souvenir but I don’t think I’ll forget this anyway! Our last stop was Cassis, a small town on the French Coast where the streets follow the slopes of the hills down to the beautiful beach.

The port of Livorno, in Tuscany, is located near Pisa and Florence. Typically the weather in April is in the 60s however Europe was having a warm spring so it was very hot the day we visited. The famous Duomo is the crown of Florence and nearby stands the first replica of David outside the town hall. This is where the original stood before being moved into the gallery to preserve it. There was not enough time to go to the gallery to see the original David. We explored the Piazzas, buildings and bridges of Florence before the heat drove us to a gelato stand! After a traditional Italian lunch we set off for Pisa. The famous tower is the bell tower for the church and the entire campus for the church and its buildings has a park setting.  The church and leaning tower are surrounded by beautiful grass.  The tower has undergone some work to stabilize it and they must have cleaned it recently because it was bright white. The tower tilted away from the church it served to call the folks of Pisa to worship. We enjoyed every port!

Disembarking to Explore Rome

Our last stop was the port city for Rome, Civitavecchia where we disembarked the ship and spent a few days in Rome before flying home. We decided to decompress for one night in this port city. The highlight was a sculpture depicting the sailor kissing a nurse in celebration of the end of WWII in the waterfront park of this city.  It was huge and many people stopped to take photos with some fun poses and others a little more serious.  There was no problem getting to Rome.  Our hotel was 2 blocks from the entrance to the cruise ship port and 1 block from the train station.  We walked to both and after an hour train ride we were in Rome.  We saw the highlights of Rome but it was May Day (Labor Day) in Europe so some of the famous sites were closed for the holiday.  We stayed near the Villa Borghese Park.  It was restful and included beautiful views overlooking the city near the Spanish Steps.

Some tips:

When changing flights in Europe you must go through immigration. We traveled on Aer Lingus changing flights in Dublin Ireland. We had absolutely no wait going through immigration. If you’ve traveled through Paris or London you know how painful a process immigration can be.

Check the weight of your carryon bags before checking your bags.  You’re only allowed 8 Kg (about 18 lbs).  If you’re over that and they’ve checked your bag already, you could end up paying 50 Euro to check a second bag. You can buy a hand scale to take along to weigh your bags. I recommend you ask if they are weighing carryon luggage before you check your bag.  That way you can move any extra weight to your checked bag if it’s under the limit.

While I found the best way to exchange dollars for Euros while in Venice and Greece was to go to a bank that was not an option this time. I could not find a bank that exchanged money.  Kiosks that exchanged money were everywhere but they also kept about 7 Euros of every 100 Dollars you exchanged.  I opted to use the ATMs which had a nominal fee. The only caution is that all money from the ATM comes out of your checking account so deposit your travel funds in your checking account before you depart.

Recent Forum Host Articles:

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.

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

Visit our other informative sites

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

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 UNCATEGORIZED

Comments (0)| Print This Post Print This Post

The Major Retirement Planning Mistakes

Posted on Saturday, 6th October 2012 by

Print This Post Print This Post
Share

Why are they made again and again?

Presented by Paul H. Risser

Much has been written about the classic financial mistakes that plague start-ups, family businesses, corporations and charities. Aside from these blunders, there are also some classic financial missteps that plague retirees.

Calling them “mistakes” may be a bit harsh, as not all of them represent errors in judgment. Yet whether they result from ignorance or fate, we need to be aware of them as we plan for and enter retirement.

Leaving work too early. The full retirement age for many baby boomers is 66. As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for greater retirement income.1

Some of us are forced to make this “mistake”. Roughly 40% of us retire earlier than we want to; about half of us apply for Social Security before full retirement age. Still, any way that you can postpone applying for benefits will leave you with more SSI.1

Underestimating medical expenses. Fidelity Investments says that the typical couple retiring at 65 today will need $240,000 to pay for their future health care costs (assuming one spouse lives to 82 and the other to 85). The Employee Benefit Research Institute says $231,000 might suffice for 75% of retirements, $287,000 for 90% of retirements. Prudent retirees explore ways to cover these costs – they do exist.2

Taking the potential for longevity too lightly. Are you 65? If you are a man, you have a 40% chance of living to age 85; if you are a woman, a 53% chance. Those numbers are from the Social Security Administration. Planning for a 20- or 30-year retirement isn’t absurd; it may be wise. The Society of Actuaries recently published a report in which about half of the 1,600 respondents (aged 45-60) underestimated their projected life expectancy. We still have a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.3

Withdrawing too much each year. You may have heard of the “4% rule”, a popular guideline stating that you should withdraw only about 4% of your retirement savings annually. The “4% rule” isn’t a rule, but many cautious retirees do try to abide by it.

So why do some retirees withdraw 7% or 8% a year? In the first phase of retirement, people tend to live it up; more free time naturally promotes new ventures and adventures, and an inclination to live a bit more lavishly.

Ignoring tax efficiency & fees. It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming that your retirement will be long, you may want to assign that or that investment to it “preferred domain” – that is, the taxable or tax-advantaged account that may be most appropriate for that investment in pursuit of the entire portfolio’s optimal after-tax return.

Many younger investors chase the return. Some retirees, however, find a shortfall when they try to live on portfolio income. In response, they move money into stocks offering significant dividends or high-yield bonds – which may be bad moves in the long run. Taking retirement income off both the principal and interest of a portfolio may give you a way to reduce ordinary income and income taxes.

Account fees must also be watched. The Department of Labor notes that a 401(k) plan with a 1.5% annual account fee would leave a plan participant with 28% less money than a 401(k) with a 0.5% annual fee.4

Avoiding market risk. The return on many fixed-rate investments might seem pitiful in comparison to other options these days. Equity investment does invite risk, but the reward may be worth it.

Retiring with big debts. It is pretty hard to preserve (or accumulate) wealth when you are handing chunks of it to assorted creditors.

Putting college costs before retirement costs. There is no “financial aid” program for retirement. There are no “retirement loans”. Your children have their whole financial lives ahead of them. Try to refrain from touching your home equity or your IRA to pay for their education expenses.

Retiring with no plan or investment strategy. Many people do this – too many. An unplanned retirement may bring terrible financial surprises; retiring without an investment strategy leaves some people prone to market timing and day trading.4

These are some of the classic retirement planning mistakes. Why not plan to avoid them? Take a little time to review and refine your retirement strategy in the company of the financial professional you know and trust.

Paul H. Risser is an Investment Advisor Representative with and securities and investment advisory services offered through Transamerica Financial Advisors, Inc. (TFA) Member FINRA, SIPC, and Registered Investment Advisor.  Non-securities products and services are not offered through TFA.  Neither TFA nor its representatives provide legal, tax nor accounting advice. Persons who provide such advice do so in a capacity other than as a registered representative of TFA.  LD044634-09/12

Recent Forum Host Articles:

Visit our other informative sites

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

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Posted in UNCATEGORIZED

Comments (0)| Print This Post Print This Post

2013 COLA and Retirement Application Submission Clarification

Posted on Friday, 28th September 2012 by

Print This Post Print This Post
Share

Recently, the Congressional Budget Office has suggested that a 1.3 percent cost-of-living adjustment is pending for Dec. 1 that includes military, civilian, retired pay, and Social Security recipients. There was talk of an increase of as high as 1.9%. We will see the increase in our January annuity check.

Today, 1.3% doesn’t look that bad considering that we can’t get that on our CDs these days because government is funding their out-of-control spending and borrowing on the backs of retirees and those who have saved throughout their lives to ensure a comfortable retirement. My article titled Retiree Reflections – The Way it Was Then and Why describes how the lack of sound money management principals and spending over 4 billion dollars a day that we don’t have is negatively impacting our economy and our wallets.

The Federal Reserve continues to print money which devalues our currency and there has been a major shift from China and other foreign countries that use to buy our debt to the Federal Reserve. The Federal Reserve doesn’t have money to buy anything; they simply print the money to buy the Treasury Bonds Uncle Sam auctions off regularly. Wouldn’t it be nice if we could do the same thing and just print money when we need it instead of having to scrimp and save to put food on the table and savings in the bank?

The impact on retirees is that savings, 401Ks, and cash will buy less and less with the potential for higher inflation down the road as the printed money makes its way from the bank values into the economy in general.  Essentially, the government is redistributing retiree’s wealth, actually anyone’s wealth from their savings, to the Federal Reserve so they can borrow money at artificially low interest rates! If this continues we could end up like Greece and the many other countries that have lived beyond their means for decades.

Retirement application Clarification

One of our readers asked if he needed to file two applications for retirement because he had both CSRS and FERS time.  You only need to file one retirement application for your most current retirement system. That would more than likely be a FERS application. The CSRS time will be computer as a CSRS component, but the FERS retirement eligibility rules will apply if you are currently a FERS employee.

Recent Forum Host Articles:

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. This service is not affiliated with www.federalretirement.net.

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

Visit our other informative sites

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

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. Our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

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

Comments (0)| Print This Post Print This Post

How to Receive Social Security Benefit Statements

Posted on Friday, 21st September 2012 by

Print This Post Print This Post
Share

Social Security resumed mailing annual statements to all who are 60 or older and I received mine several months ago.  They also started sending a statement to workers when they first turn 25 to give them an idea of what their retirement benefits will be down the road.  For all of those in between you can now sign up online to view your personal account including the following:

  • Estimates of the retirement and disability benefits you may receive;
  • Estimates of benefits your family may get when you receive Social Security or die;
  • A list of your lifetime earnings according to Social Security’s records;
  • The estimated Social Security and Medicare taxes you’ve paid;
  • Information about qualifying and signing up for Medicare;
  • Things to consider for those age 55 and older who are thinking of retiring;
  • General information about Social Security for everyone;
  • The opportunity to apply online for retirement and disability benefits; and
  • A printable version of your Social Security Statement.

Sign up at www.ssa.gov/mystatement to create your online account. You must have a valid email address and social security number to proceed and you will be prompted to create a unique user name and password for your new account.  You can also enroll at your local Social Security office if you experience problems setting your account up from you home computer.  Extra security is available and you can elect to have a special text message sent to your cell phone with a unique access code each time you log on.

The nice thing about this program is that you can access the account any time to check on your status and to review and print out updated reports.  Visit http://federalretirement.net/social_security.htm for updated information on CSRS and FERS Social Security benefit issues.

Recent Forum Host Articles:

Request a 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. This service is not affiliated with www.federalretirement.net.

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

Visit our other informative sites

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

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. Our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Posted in ANNUITIES / ELIGIBILITY, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE

Comments (0)| Print This Post Print This Post

What Will You Do in Retirement?

Posted on Saturday, 15th September 2012 by

Print This Post Print This Post
Share

Updated 12/15/2024

Most fantasize about retirement while working. I recall telling my wife when I was in my mid 20s that I wanted to stay with federal service because I could retire at age 55, which I did by the way. However, we live in the real world and retirement is a HUGE decision that changes your routine and life forever and hopefully you will move on to bigger and better things.

There are many issues to consider when you retire and I’ve discussed how to be financially and emotionally prepared when you leave and other key considerations in my column and throughout my web site at www.federalretirement.net. That being said, there is one fundamental question that you must contemplate first, discuss with your significant others, and come to terms with long before you make the leap.

What Will You Do In Retirement?

You must honestly answer this question from a practical and realistic point of view or your retirement could end up your nightmare. Yes, we all fantasize about travel, free time, and doing what you want when you want to but think about it. What will your new routine become? Right now you have a set routine with work and family that you are very accustomed to. You may think you don’t like it but it’s an established norm for you and when that’s behind you there will be a void to fill.

When I retired in 2005 I knew that I would simply continue to work in my home business that I established 20 years before.  Even with my home business, retirement was still a major adjustment. Prior to retirement I was out of the home 5 days a week at work where I socialized with fellow workers and found satisfaction with my work and routine there.

When I suggest being realistic about your expectations you have to consider health issues, natural limitations that we all suffer with age, financial resources, interests, and the entire gambit of concerns from all aspects of one’s life. These issues have to be resolved with your spouse as well because their routine and expectations will also be impacted.  Don’t assume anything.

Federal employees who are retiring soon and recent retirees with security clearances
can search thousands of high-paying defense and government contractor jobs.

One area that has caught me by surprise is the limitations that we all have as we age. We tend to think we will be physically able to do what we’ve done in the past with ease. Not so. I enjoyed tackling about any and every home improvement that you can imagine.  We tend to plan our life naturally around our past experiences however the paradigm changes as we age.  I can no longer do the heavy physical work due to various medical conditions that limit my ability to perform those functions.

The new Phased Retirement program will be helpful for those you want to test the water before retiring full time. I believe honesty is the key to a true evaluation of your personal situation and determining what you will do in retirement.  Address the following areas honestly and frankly with the significant others in your life before leaving.

Take all of the time that is necessary to evaluate your personal situation before sending in your retirement application. Learn more about your benefits, employment, and financial planning issues on our site and visit our Blog frequently at  https://fedretire.net to read all forum articles.

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

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. Our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Posted in ANNUITIES / ELIGIBILITY, EMPLOYMENT OPTIONS, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS

Comments (0)| Print This Post Print This Post

Phased Retirements Introduction & Movies Then and Now

Posted on Saturday, 8th September 2012 by

Print This Post Print This Post
Share

Had this program been available when I was planning my retirement I might have considered it to test the waters before leaving altogether? The new Phased Retirement program is authorized under section 100115 of Public Law 112-141, the “Moving Ahead for Progress in the 21st Century Act,” or “MAP-21,” approved on July 6, 2012. If you select a phased retirement your future annuity will drop a little since you would be drawing a reduced pension while still working part time under this program.

Phased Retirement encourages federal employees with experience to continue working part time to provide continuity of operations and to share their knowledge with those who would take their place in the work force.  The main purpose of Phased Retirements is to mentor and train employees who will be filling the positions of more experienced employees who are preparing for full retirement. It’s intended to encourage experienced employees to remain, in at least a part-time capacity, until less experienced employees are fully equipped to fulfill the same duties and responsibilities as those employees who wish to retire.

This program is voluntary and requires the mutual consent of the agency.  Essentially older employees can work a part time schedule (if approved by your agency) to ease them into retirement.  This can be from a short period to years and you have the option of returning to full time service if desired.

Employees who elect phased retirement receive a reduced annuity in proportion to the time worked. One of the good things about this program is that you would still receive annual pay and step increases until you took full retirement.

Phased retirement provides agencies an excellent opportunity to train employees to backfill critical positions. It would also allow employees entering the program a way to judge what to expect when they retire full time. I like the thought of easing into full retirement and it could be good for all parties.

Visit http://federalretirement.net/phased_retirement.htm to find out more about this program.

Movies Then and Now

The last time my brother and I were at a movie theater together was probably in the early 1960s at the Rolland Theater in Wilkinsburg where we grew up. What a change since then.  Back in 1962, on a rare occasion, we would go to a Saturday matinee to see several cartoons and the feature of the day.  It costs us 50 cents to get in and a small bag of popcorn and a drink costs 10 cents each; for a grand total of 70 cents we had a great time.  I would collect pop bottles for weeks before the show and cash them in at the local grocery store for 2 cents each for 12 ounce bottle and 5 cents for a quart bottle for spending money in my early teens.

I can still remember the auditorium with balcony, not so comfortable seats, and the popcorn machine; a large glass domed affair, where you put your dime in and it filled up a bag that held maybe two cups of popcorn. If you wanted butter you just put it on yourself using a dispenser they had next to the machine.

I think the last time my wife and I went to see a movie was about 6 years ago shortly after I retired. It isn’t that we are shut-ins or antisocial we just enjoy renting movies and watching them from the comfort of our own home which you couldn’t do when we were growing up.

My wife and daughter were going to see the American Idol concert recently and I didn’t have anything planned. My brother wanted to see the new Bat Man movie and called to ask me to come along.  The movie admission was $5.25 for seniors, not bad considering how much everything else costs these days.  However, when we went to the concession stand the prices were astronomical. A tiny bag of popcorn costs $4.50 and $4.50 for a small soft drink!

When we went into the theater the sound system was on steroids blaring out preview after preview and I had to turn my hearing aids off. Even with them off the sound was way too loud for comfort.  For some reason they keep this theater’s temperature so low that we were both shivering the entire time. I thought maybe someone was going to come around and offer to rent us blankets. That may be a good side business for some enterprising entrepreneur.  The movie’s special effects were realistic but contrived and it seems that today it is easier to use computer animations than actually staging real events. Whatever happened to great movies like Cleopatra and so many others that were made on a grand scale back in the 1960s?

I fondly remember the shows at the Rolland growing up. It was always a treat to go. I won’t say the same for my recent experience.  It may be awhile before they see me at a theater in town again.

Recent Forum Host Articles:

Request a 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. This service is not affiliated with www.federalretirement.net.

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

Visit our other informative sites

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

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. Our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS

Comments (0)| Print This Post Print This Post

You Can’t Hide In Fixed Income

Posted on Thursday, 6th September 2012 by

Print This Post Print This Post
Share

Investing timidly may shield you against risk … but not against inflation.

Presented by Paul H. Risser

When is being risk-averse too risky for the sake of your retirement? After you conclude your career or sell your company, you have a right to be financially cautious. At the same time, you can risk being a little too cautious – some retirees invest so timidly that their portfolios barely yield any return.

For years, financial institutions pitched CDs, money market funds and interest checking accounts as risk-devoid places to put your dollars. That sounded good when interest rates were tangible. As the benchmark interest rate is now negligible, these conservative options offer minimal potential to grow your money.

America saw 3.0% inflation in 2011; the annualized inflation rate was down to 2.7% in March. Today, the yield on many CDs, money market funds and interest checking accounts can’t even keep up with that. Moreover, the Consumer Price Index doesn’t tell the whole story of inflation pressures – retail gasoline prices rose 9.9% during 2011, for example.1,2

With the federal funds rate at 0%-0.25%, a short-term CD might earn 0.5% interest today. On average, those who put money in long-term CDs at the end of 2007 (the start of the Great Recession) saw the income off those CDs dwindle by two-thirds by the end of 2011.3

Retirees shouldn’t give up on growth investing. In the 1990s and 2000s, the common philosophy was to invest for growth in your thirties and forties and then focus on wealth preservation as you neared retirement. (Of course, another common belief back then was that you could pencil in stock market gains of 10% per year.)

After the stock market malaise of the 2000s, attitudes changed – out of necessity. Many people in their fifties, sixties and seventies still need to accumulate wealth for retirement even as they need to withdraw retirement savings.

Because of that reality, many retirees can’t refrain from growth investing. They need their portfolios to yield at least 3% and preferably much more. If their portfolios bring home an inadequate yield, they risk losing purchasing power as consumer prices increase at a faster rate than their incomes.

Do you really want to live on yesterday’s money? Could you live today on the income you earned in 2004 or 1996? You wouldn’t dare try, right? Well, this is the essentially the dilemma many retirees find themselves in: they realize that a) their CDs and money market accounts are yielding almost nothing, b) they are withdrawing more than they are earning, c) their retirement fund is shrinking, d) they must live on less.

In recent U.S. history, inflation has averaged 2-4%. What if that holds true for the next 20 years?4

For the sake of argument, let’s say that consumer prices rise 4% annually for the next 20 years. That doesn’t sound so bad – you can probably live with that. Or can you?

At 4% inflation for 20 years, today’s dollar will be worth 44 cents in 2032. Today’s $1,000 king or queen bed will cost about $2,200 in 2032. Today’s $23,000 sedan will run more than $50,000.4

Beyond prices for durable goods, think of the cost of health care. Think of the income taxes you pay. When you add those factors into the mix, growth investing looks absolutely essential. There is certainly a role for fixed income investments in a diversified portfolio – you just don’t want to tilt your portfolio wholly away from risk.

Accepting some risk may lead to greater reward. As many equities can potentially achieve greater returns than fixed income investments, they may prove less vulnerable to inflation. This is especially worth remembering given the history of the CPI and how jumps in the inflation rate come without much warning.

From 1900-1970, inflation averaged about 2.5% in America. Starting in 1970, the annualized inflation rate began spiking toward 6% and by 1979 it was at 13.3%; it didn’t moderate until 1982, when it fell to 3.8%. U.S. consumer prices rose by an average of 7.4% annually in the 1970s and 5.1% annually in the 1980s compared to 2.2% in the 1950s and 2.5% in the 1960s.4,5

All this should tell you one thing: you can’t hide in fixed income. Inflation has a powerful cumulative affect no matter how conservatively or aggressively you invest – so you might as well strive to keep pace with it or outpace it altogether.

Paul H. Risser is an Investment Advisor Representative with and securities and investment advisory services offered through Transamerica Financial Advisors, Inc. (TFA) Member FINRA, SIPC, and Registered Investment Advisor.  Non-securities products and services are not offered through TFA.  Neither TFA nor its representatives provide legal, tax nor accounting advice. Persons who provide such advice do so in a capacity other than as a registered representative of TFA.

LD43513-04/12

Citations.

1 – money.cnn.com/2012/01/19/news/economy/inflation_cpi/index.htm [1/19/12]

2 – www.bls.gov/news.release/pdf/cpi.pdf [4/13/12]

3 – www.chicagotribune.com/business/sns-201203141400–tms–retiresmctnrs-a20120314mar14,0,1100086.story [3/14/12]

4 – www.axa-equitable.com/retirement/inflation-and-long-term-investing.html [2011]

5 – bls.gov/mlr/1990/08/art3full.pdf [8/90]

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.

Visit our other informative sites

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

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS

Comments (0)| Print This Post Print This Post

Terms Of Use