Posted on Monday, 30th April 2012 by Nancy Holston

I lived in Heidelberg Germany, thanks to the US Army, from May of 1975 to November of 1976.  While initially I wasn’t looking forward to being so far from home, once I arrived in Frankfurt I took advantage of every opportunity I could to see Western Europe.  I learned enough German to carry on a conversation, though no more than friendly exchanges and found a use for the French I studied in High School and College.  After a 24 year absence from the European continent I finally returned in October of 2010 and I’m currently preparing for a late spring trip via a Transatlantic Cruise.  I thought it might be helpful to share some of the things I’ve learned from living there and visiting to help you with any plans you may have to travel abroad.  I’d also invite you to send me any tips you would like to share from travels around the world.  I’d be happy to compile them for a future travel forum article.

Currency Exchange

I like to arrive in a foreign country with some of the local currency.  You never know if you’ll need it right away for local transportation or to purchase an emergency item when you get off of the plane.  US Airports with international flights usually have a convenient kiosk. I recommend exchanging between $50 and $100. Make sure you know the exchange rate before you leave home.  These kiosks often charge a fee for exchanging funds in addition to the exchange rate they are offering. I found the exchange rate was approximately 20% lower than what was quoted via online sites the day before my departure.  I was aware that the best exchange rates come from banks in the countries you are visiting.  I opted to get $100 exchanged, but the kiosk representative tried to tell me I was getting a really good rate from them and that fees would be higher and the exchange lower than their exchange rate.  I was certain I would do better waiting.  I was correct!  At the kiosk I was given 62 Euros and charged $5 for my exchange, so 62 Euros for $105.  I went to the bank the morning after I arrived in Venice and got over 75 Euros for each $100 and no fee was charged to make the exchange.  I would have lost more than 91 Euros had a listened to the kiosk sales clerk.  Do check though on when banks may be open following your arrival.  You wouldn’t want to be without local currency for a couple of days waiting for the bank to open.  Of course credit cards are accepted and the exchange rate used for the banking day of processing. Capital One does not charge a fee when using their card abroad.  They will charge your card according to the exchange rate the day your purchase is processed.  Just remember that the best exchange rate will be at a bank that handles international currency.

Electric Power

Be sure to buy and take a kit containing power adapters so that you can use any needed electrical or charge electronic devices while you are traveling.  Outlets in Europe take round prongs, not flat prongs. You will also need to make sure your devices work with the voltage supplied. European power is set at 220 volts. Most Apple electronic chargers for iPods, iPads, or iPhone devices will work with 120 volts as well as 220 volts. Read the fine print to verify before plugging them in.  I can’t speak for electric razors or other convenience items you may want to take along.  You can research to find out what type of power you’ll be provided during a visit abroad to make sure you aren’t carrying extra weight for no reason.  Hotels abroad are very good at providing some items commonly used so you won’t need to carry them anyway.

Be a Polite Guest

I found that your visit abroad will be more enjoyable if you take a little time to learn some of the local language when visiting non-English speaking countries. At a minimum I recommend learning the local greeting, how to ask for something you want to eat or buy, where the restroom is, and “could I have the bill please”.  Some tourists forget they aren’t at home and get frustrated that “no one speaks English”!  It’s not hard to find folks who speak English as a second language, however if you are rude they may not offer assistance when you need help. When going into a shop or store be sure to greet the sales clerk first before asking a price or asking for a specific item you are trying to find. You can relax when stopping for a meal and rest just about as long as you like in a restaurant in Europe after dining.  If you decide to wait for them to give you the bill though, you may be there awhile.  Unless most of the clients are tourists, the waiters will usually wait until you ask before delivering the checks. That’s why it’s good to know how to ask for the bill. If you have an iPad they have free Aps that for learning foreign languages.  If all else fails you can let your iPad speak for you if you need to find a restroom. A simple please and thank you in the local language is also a good way to get assistance from the locals.

Picking a Restaurant

I don’t pick restaurants close to my hotel, especially when I am in an area of the city that is packed with tourists.  I learned this the hard way. You will likely be disappointed.  Not only that, if the meal is so bad you don’t think you should have to pay or expect an adjustment to your bill, it’s not likely to happen.  Ask the Concierge at your hotel or even some of the local vendors while shopping for their favorite places to eat and try those.  Often travel books will make good recommendations but sometimes they are hard to find.  Be sure to check their hours of operation before spending taxi fare or walking a long distance to eat.  They may be closed in mid-afternoon and reopen later that evening.  I’ve never been disappointed by a local recommendation.  If you do find you’re disappointed by a recommendation by the Concierge, be sure to let them know.

Picking a Hotel

There are many options here.  You can pay in advance and save money, especially if you believe the exchange rate is really good and you are sure you’ll save even more.  Many travel sites have this option.  You can trust the ratings assigned hotels by these sites, but if you are familiar with the area that is helpful.  A four star hotel in a bad area of the city, or one with few restaurants and shops nearby may not be what you’re looking for.  Google Earth is a good tool for finding out the location of prospective hotels and what is nearby.  When I visited Venice I paid in advance for 3 nights for the hotel.  I was not disappointed in the location or the quality of the lodging, but I did find that I could have just made a reservation and for a few Euros more per day it would have included breakfast.  This time I have a reservation and breakfast is included.  In addition to that I used my Chase rewards to get a gift card that will cover $100 US on my hotel bill.

Renting a Car

I have never driven outside the US or Canada.  I had thought about renting a car to explore Tuscany but opted to wait until next time.  The first order of business is to get an International Driving Permit.  It is required in some countries but having it won’t lead to any unpleasant surprises.  You will also want to avoid driving in big cities.  If driving in New York City or Chicago intimidates you, so will driving in Paris or Rome. The best advice is to travel by train into large cities, but if you’re visiting small towns and exploring the countryside take a car.

Travel Resources:

Exchange Rates: http://www.x-rates.com/

Language advice:  http://goeurope.about.com/cs/languages/a/europe_language.htm

Picking Restaurants or Hotels: http://www.tripadvisor.com/

Trip advisor has a phone and iPad application that will detect your location let you know what is nearby and give you reviews.  But, be sure you know the cost of using the data or find a free Wi-Fi spot before using the Ap.

Renting a car in Europe:  http://europeforvisitors.com/europe/articles/driving_in_europe.htm

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

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• Stolen Car Plates & Recovery Guide
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• Take Charge of Your Federal Career (A Career Planning Workbook)
• The Book of U.S. Government Jobs (How to Apply for Federal Jobs)

• 2012 Excel Leave Chart (target 2012 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• 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.)

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.

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Posted on Sunday, 22nd April 2012 by Paul Risser

Many people underestimate lifestyle costs, medical expenses and inflation.

Presented by Paul H. Risser

What is enough? What is not enough? If you’re considering retiring in the near future, you’ve probably heard or read that you need about 70% of your end salary to live comfortably in retirement. This estimate is frequently repeated … but that doesn’t mean it is true for everyone. It may not be true for you.

You won’t learn how much retirement income you’ll need by reading this article. You’ll want to meet with a qualified financial professional who can help you estimate your lifestyle needs and short-term and long-term expenses.

That said, there are some factors which affect retirement income needs – and too often, they go unconsidered.

Health. Many of us will face a major health problem at some point in our lives – perhaps even multiple or chronic health problems. We don’t want to think about that reality. But if you’re a new retiree, think for a moment about the costs of prescription medicines, and recurring treatment for chronic ailments. These minor and major costs can really take a bite out of retirement income, even with a great health care plan. While generics have slowed the advance of prescription drug costs to about 1-2% a year recently,¹ one estimate found that a 65-year-old who retired in 2007 would need $215,000 to pay for overall retirement health care costs – up about 7.5% from 2006.²

Heredity. If you come from a family where people frequently live into their 80s and 90s, you may live as long or longer. Imagine retiring at 55 and living to 95 or 100. You may need 40-45 years of steady retirement income.

Portfolio. Many people retire with investment portfolios they haven’t reviewed in years, with asset allocations that may no longer be appropriate. New retirees sometimes carry too much risk in their portfolios, with the result being that the retirement income from their investments fluctuates wildly with the vagaries of the market. Other retirees are super-conservative investors: their portfolios are so risk-averse that they can’t earn enough to keep up with even moderate inflation, and over time, they find they have less and less purchasing power.

Spending habits. Do you only spend 70% of your salary? Probably not. If you’re like many Americans, you probably spend 90% or 95% of it. Will your spending habits change drastically once you retire? Again, probably not. Most people only change spending habits in response to economic necessity or in pursuit of new financial goals. People don’t want to “live on less” once they have had “more”.

Social Security (or lack thereof). In 2005, SSI represented 39% of a typical 65-year-old retiree’s income. But by 2030, Social Security may only replace 29% of that income, after deductions for Medicare premiums and income taxes. Since 1983, retirees earning more than $25,000 in SSI have had to pay income tax on a portion of their benefits.³ This is all presuming Social Security is still around in 2030.

So will you have enough? When it comes to retirement income, a casual assumption may prove to be woefully inaccurate. Meet with a qualified financial professional while you are still working to discuss these factors and estimate how much you will really need.

Paul Risser is a Representative with Transamerica Financial Advisors, Inc.

These are the views of Peter Montoya Inc., not the named Representative, the Broker/Dealer or Bookhaven Press, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer nor Bookhaven Press gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.

LD28030-08/11

Citations. ¹ nytimes.com/2007/09/21/business/21generic.html?_r=1&oref=slogin

² marketwatch.com/news/story/health-care-costs-retirement-rise/story.aspx?guid=%7bEF2B6CDA-E176-4747-B528-76AC814051C5%7d&print=true&dist=printTop

³ money.cnn.com/2007/05/14/pf/retirement/nasi__report/index.htm

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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• Stolen Car Plates & Recovery Guide
• Take Charge of Your Federal Career (A Career Planning Workbook)
• The Book of U.S. Government Jobs (How to Apply for Federal Jobs)

• 2012 Excel Leave Chart (target 2012 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• 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.)

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

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Posted on Thursday, 12th April 2012 by Dennis Damp

The Windfall Elimination Provision primarily affects you if you earned a pension in any job where you did not pay Social Security taxes and you also worked in other jobs long enough to qualify for a Social Security retirement or disability benefit.

For example, this provision affects Social Security benefits when any part of a person’s federal service after 1956 is covered under the Civil Service Retirement System (CSRS). However, federal service where Social Security taxes are withheld under the Federal Employees’ Retirement System (FERS) will not reduce your Social Security benefit amounts.

If you are a CSRS employee and accrued 40 quarters (10 years) of employment where social security payments were withheld you are eligible for Social Security benefits. Your Primary Insurance Amount (PIA), which is simply your Social Security payment, will be impacted. The Windfall Elimination Provision (WEP) can significantly reduce your Social Security payout.

Social Security benefits are based on the worker’s average monthly earnings adjusted for inflation. They separate your average earnings into three amounts and multiply the amounts using three factors. For example, for a worker who turns 62 in 2012, the first $767 of average monthly earnings is multiplied by 90 percent; the next $3,857 by 32 percent; and the remainder by 15 percent. The sum of the three amounts equals the total monthly payment amount.

The 90 percent factor is reduced in the modified formula and phased in for workers who reached age 62 or became disabled between 1986 and 1989. For those who reach 62 or became disabled in 1990 or later, the 90 percent factor is reduced to 40 percent.

There are exceptions to this rule. For example, the 90 percent factor is not reduced if you have 30 or more years of “substantial” earnings in a job where you paid Social Security taxes.  If you have between 21 and 30 years of substantial earnings the percentage of benefit increases from 45% with 21 years to the full 90 percent with 30 years of earnings.

Use one of the WEP Calculators that we have posted on our site to estimate the impact on your benefit.

The 1940 census

The National Archives and Records Administration will be publishing the 1940 census report online April 2 at http://1940census.archives.gov/.   The digital images will be accessible free of charge through 2013 at NARA facilities nationwide through their public access computers as well as on personal computers via the internet.  This is the first time the agency has released census reports online and you can now discover more about your family and what they were up to at the end of the great depression.  The forms will initially be searchable by district only. The NARA anticipates having name searches available in the future.

The questions they asked covered a wide range of subjects from what was your income in 1935 and 1939 to employment status,  place of birth,  occupation, education, Languages spoken in the home, veteran status, and 5% of all surveyed responded to 15 supplemental questions.  For anyone interested in their ancestry these reports will provide a wealth of information about their families at this critical time in our history.

Higher Yields

With CDs now at historically low yields – many earning as little as .25% and lower – where does one go to actually earn a decent return on their cash?  Savers, retirees, and investors alike are realizing negative returns on cash accounts when you factor in inflation and the devalued dollar.

Kiplinger’s February retirement report suggests considering mature dividend paying stocks such as AT&T, Johnson & Johnson, Procter & Gamble and other stocks that have yields ranging from 3 to 6 percent. They say, “Dividend payers usually decline less than other companies when the stock market tanks.”

Many today are considering mature dividend paying stocks to at least earn something on a portion of what they had in their money market, savings, and certificate of deposit accounts. There are 51 companies that are considered Dividend Aristocrats.  These stocks have increased dividends every year for the past 25 years.  The good thing about dividend stocks, according to Kiplinger’s, “is that they decline less than other companies when the market tanks.”

That being said, stock prices fluctuate in good and bad times so proceed with caution. A good example is Frontier Communications (FTR). This communications company is not considered a dividend aristocrat however it has been one of the highest dividend payout stocks on the market for several years, currently paying 9% with a market price of around $4 a share.  This company bought former Verizon territories and they provide high speed internet and communications services in rural areas. There stock price has dropped from a high of $8.90 in 2009 to a low of around $4 today and they cut their dividend by half a few months ago, although it is still paying a 9% yield.

Recent Forum Host Articles:

• Don’t Get Burned by Your Old Divorce Decree by Ann Ozuna
• Is This Coming Your Way? and the Debt Crisis by Dennis Damp
• Pension Survivor Alert – Don’t Let This Happen to You by Paul Riser, our Financial Planning Forum Host. This is a must read for anyone who is planning retirement. It relates an unfortunate true story about a couple that suffered because the annuitant didn’t leave a sufficient survivor’s benefit for their spouse.

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

• Federal Government Jobs & Career Center
• FREE Federal Employee’s Retirement Planning Guide
  • Federal Retiree Job Opportunities
  • Federal Employee & Retiree BLOG
• Federal Employee’s Career Development & IDP Center
• Post Office Jobs & Career Center
• Job Search – All Sectors
• Environmental Health & Safety Jobs Center
• Nuclear Jobs & Careers – High Paying Jobs
• Stolen Car Plates & Recovery Guide
• Educational Opportunities
• Take Charge of Your Federal Career
• The Book of U.S. Government Jobs

• 2012 Excel Leave Chart (target 2012 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• 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.)

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

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Posted on Thursday, 5th April 2012 by Paul Risser

Two-thirds of us have no financial plan.

provided by Paul H. Risser

64% of Americans have no financial strategy at all. That’s right – no plan whatsoever to build wealth or keep it. That finding comes from the 2009 National Consumer Survey on Personal Finance conducted by the Certified Financial Planner Board of Standards, Inc. (The survey collected data from 1,700+ U.S. residents.)¹

Only 17% of us have a written financial plan that is updated regularly. So congratulate yourself if you are in that group. The CFP Board found that just 17% of the 36% polled who did have a written financial plan had reviewed it in light of changing times. Notably, 48% said they had benefited from having a written plan.^1,2

Just 38% of the 36% having written financial plans retain a financial advisor. The really troubling part: 37% of those with written plans are doing their financial planning on their own. Another 12% of respondents with written plans have consulted a friend or family member who isn’t a financial services professional for advice.¹

Why don’t more people have a financial plan? After all, Americans of all incomes and savings levels certainly are free to set financial goals. In the survey, the reasons varied. Some cited the expense of engaging a financial advisor; some said they get along just fine without a financial plan, and others felt their finances weren’t complicated enough to warrant one. Others were hazy about financial services industry qualifications – 40% of respondents had no idea that there were professional credentials or designations for financial advisors.

Syndicated financial columnist Humberto Cruz recently noted that when he told some fellow vacationers in Orlando that he wrote about financial planning, they all asked him if he gave stock tips. He had to explain that he was simply a journalist, not a financial planner.^3,4

Defined goals lead to definite plans. If you set financial objectives and plan for them, you vault ahead of most Americans – at least according to the CFP Board’s findings. A written financial plan does not imply or guarantee wealth, of course; nor does it ensure that you will reach your goals. Yet that financial plan does give you an understanding of the distance between your current financial situation (where you are) and where you want to be. Too many Americans, it seems, have little comprehension of their financial situation or their financial potential.

How much planning have you done? Retiring without a financial plan is an enormous risk; retiring with a financial plan that hasn’t been reviewed in several years is also chancy. A relationship with a financial advisor can help to bring you up to date about what you need to do, and provide you with more clarity and confidence when it comes to the financial future.

Paul H Risser is a Representative with Transamerica Financial Advisors, Inc.

Investment Advisor Representative with and Securities and Investment Advisory Services offered through Transamerica Financial Advisors, Inc. (TFA) member FINRA, SIPC and a Registered Investment Advisor. Non-Securities products and services are not offered through TFA.

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer nor Bookhaven Press, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

LD34290-11/11

Citations.

¹ cfp.net/downloads/CFP_Board_2009_National_Consumer_Survey.pdf [7/24/09]

² reuters.com/article/pressRelease/idUS132983+24-Sep-2009+BW20090924 [9/24/09]

³ sltrib.com/business/ci_13467337 [10/2/09]⁴ chicagotribune.com/topic/hc-cl-cruz-bio,0,84843.story [10/9/09]

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

• Federal Government Jobs & Career Center
• FREE Federal Employee’s Retirement Planning Guide
• Federal Retiree Job Opportunities
• Federal Employee & Retiree BLOG
• Federal Employee’s Career Development & IDP Center
• Post Office Jobs & Career Center
• Job Search – All Sectors
• Environmental Health & Safety Job Center
• Nuclear Jobs and Careers
• Stolen Car Plates & Recovery Guide
• Take Charge of Your Federal Career (A Career Planning Workbook)
• The Book of U.S. Government Jobs (How to Apply for Federal Jobs)

• 2012 Excel Leave Chart (target 2012 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• 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.)

Posted in ESTATE PLANNING, FINANCE / TIP

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Posted on Saturday, 31st March 2012 by Ann Ozuna

Do you know what that divorce from years ago is going to do to your federal retirement? Even though you may be a couple of years away from retirement, early out offers and changes in retirement law may tempt you to jump ship and retire sooner than you had originally planned.  That old divorce decree should be part of your retirement financial planning.

So, if you have a divorce in your history since May 1985 which mentions your federal retirement, get out that decree and look it over.

• Does your decree say that a QDRO or Qualified Domestic Relations Order is to be written to implement a division of benefits?
• Have you sent in a conformed “fuzzy seal” copy to the OPM Court Orders Branch in Washington DC to know that your order meets the OPM criteria for payment?  You should have received a letter back stating how OPM will pay your former spouse.  If this is not what you had in mind when you divorced, NOW is the time to go back to court and get things straightened out.

• Does you decree award any part of your retirement to a former spouse?
• Does the formula for dividing the retirement meet the OPM criteria?
• Does that former spouse get any kind of a survivor benefit awarded in the decree?

There are many different paragraphs that can be put into a decree or into the implementing orders which can turn your retirement into a search for another job.  If your decree awards any kind of a survivor benefit to a former spouse, you will need to have a conformed “fuzzy seal” copy to send in with your retirement application, so now is the time to go back to the courthouse where you were divorced and get that “fuzzy seal” copy of the original decree and any modifying orders.

If your decree states that a QDRO or a COAP will be written and one has not been written, OPM will wait to receive that order before dividing your retirement with a former spouse and this will slow down your retirement processing and receipt of a full retirement check.  So, now is the time to get that done.  You might even find out one was written by your former spouse and entered into the court record without your knowledge.  If this QDRO order gives your former spouse more that the original decree, OPM will treat it as a modification of the original decree and go with the latest order on file.

When OPM receives the QDRO or COAP, it will process it proactively, not going back and making back payments to your former spouse.  This means that you will get to make those payments and pay the taxes on the money your former spouse received before OPM started making the payment.  Once OPM begins making payments to the former spouse, OPM will take taxes out of the former spouse’s share and that payment will be taxable to the former spouse.

OPM will interpret the language in your decree for awarding a portion of your retirement to your former spouse.  It will not accept any language which references a state court decision or a (such and such name) formula.  All the variables must be spelled out in the order or the word “prorata” used.  Unless there is specific language in the decree which stops the calculation of your high-3 as of the date of your divorce/separation, your final high-3 salary will be used.  There is also specific language which can include or exclude the counting of sick leave time and creditable military time in the calculation.

If you are thinking that the remarriage of your former spouse means s/he doesn’t get anything from your retirement: think again.  Unless your decree specifically states that fact, the remarried former spouse will still be eligible for the portion of your retirement specified in the decree.  If s/he was awarded a survivor benefit, and remarried before age 55, the former spouse loses the survivor benefit.  However, if you two were married for 30 years, your former spouse gets to keep the survivor benefit, even if s/he remarried before age 55.

Even the death of a former spouse may not stop the payments if your decree states that his/her benefit will continue to be paid to the court or the estate or children upon your former spouse’s death.

If your former spouse was awarded a “full” survivor benefit or a “maximum” survivor benefit in the decree and you now have a current spouse at time of retirement, you will need to consider your survivor benefit elections carefully.  The survivor benefit is not free in retirement.

If the decree is silent as to who pays for the survivor benefit or it states that you do – here is up to another 10% of your retirement you won’t get.  Then if your current spouse is dependent on you for health benefits or income, you will need to consider electing an “insurable interest” for your current spouse at retirement.  Read the section in the retirement application on instructions for survivor benefits elections very carefully.

Bottom line……If you have a divorce in your history, get it out now as part of your retirement planning.

I once had a client ask me “I am thinking of retiring and getting a divorce in the near future – which should I do first?”

My answer “Get a retirement estimate from your agency first and decide if you can live on half of it.  If the answer is yes, then get your divorce before you retire.  That way, if the divorce turns out to be more costly than you first thought, you can always work longer.”

The preceding is a high level overview of things to consider.  Individual circumstances and orders may affect the final outcomes.  OPM has the final say in how they pay benefits.

Ann Ozuna is TheFederalRetirementLady.com and assists feds and their attorneys making sense of what happens to federal benefits in a divorce.  Her website is www.thefederalretirementlady.com .

Helpful Retirement Planning Tools

• Retirement Planning for Federal Employees & Annuitants
• The Ultimate Retirement Planning Guide – Start Now
• Deciding When To Retire – A 7-Step Guide
• Annuity Expectations – Before and After
• Master Retiree Contact List
• TSP Guide

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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

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Posted on Monday, 26th March 2012 by Paul Risser

Little details worth paying attention to as April approaches.

Presented by Paul H. Risser

Every year, the IRS institutes big and little changes – and some don’t get as much notice as they should. This year is no exception. Here is a rundown of some of alterations and asterisks affecting taxpayers this year.

Don’t forget Form 8949. If you are reporting capital gains or losses for 2011, you must file this new form along with your return. Speaking of new paperwork, if you own foreign financial assets whose total value exceeds the applicable reporting threshold, you will need the new Form 8938.¹

Be sure to report Roth rollovers. Back in 2010, did you convert or roll over a traditional IRA to a Roth IRA or other Roth account? If you didn’t report the amount of the rollover on your 2010 federal return, you can report half the amount on your 2011 return 2011 and the remaining half in 2012.¹

A select few can still take the first-time homebuyer credit. By 2011, the credit had disappeared for just about everybody … but select military personnel and intelligence agents are still able to claim the credit for 2011.¹

If you’re deducting mileage, rates changed in the middle of 2011. The IRS is giving taxpayers a better break given the recent hikes in gas prices. So, if you’re deducting mileage driven while operating an automobile for business, the rate for the first six months of 2011 is $0.51 per mile, and the rate for the last six months of 2011 is $0.555 per mile. The standard deduction rate for medical or moving mileage was also raised: $0.19 a mile from January 1-June 30, $0.235 a mile from July 1-December 31. The mileage deduction rate for providing services for charitable organizations got no boost – for all of 2011, it is $0.14 per mile.²

Fewer cars qualified for the alternative motor vehicle credit last year. Only new fuel cell motor vehicles qualified for the tax break in 2011.¹

Three healthcare changes to note. If you qualify for the health coverage tax credit (HCTC), that credit might be larger for 2011 thanks to recent law changes. Did you receive the 65% tax credit in any of the last 10 months of 2011? If so, you get to claim an additional 7.5% retroactive credit on your 2011 federal return – the HCTC was bumped up to 72.5% from 65%.³

The range of qualified medical expenses was reduced for HSAs & MSAs last year. In 2011, only prescription drugs and insulin counted as qualified medical expenses for these accounts. Another asterisk worth noting: if you took a distribution from an HSA or MSA in 2011 that wasn’t used for a qualified medical expense, the tax penalty for that increased to 20% last year.¹

Lastly, take the self-employed health insurance deduction on your Form 1040 for 2011. If you are looking at Schedule SE and wondering where it went, it has migrated over to line 29 of Form 1040.¹

The AMT exemption amount got another COLA. Thanks to this adjustment, you are subject to the AMT for tax year 2011 only if you earned more than $48,450 as a single filer, $37,225 if married filing separately, or $74,450 if filing jointly.¹

Don’t send your return to an obsolete filing address. Some of the filing locations for federal tax returns have recently changed. Visit www.irs.gov to see where you should send your return this year – it is probably the same address as always, but check and see as it may be different.¹

Finally, you get two extra days. Procrastinators, take heart: once again, the federal filing deadline this year falls on Tuesday, April 17. That’s because April 15 is a Sunday and April 16 is a holiday within the District of Columbia (Emancipation Day).¹

Investment Advisor Representative with and Securities and Investment Advisory Services offered through Transamerica Financial Advisors, Inc. (TFA) member FINRA, SIPC and a Registered Investment Advisor. Non-Security products and services are not offered through TFA. (DBA Name) and TFA are not affiliated.

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.

Neither Transamerica Financial Advisors, Inc. (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.

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Citations.

1 – www.advisorone.com/2012/03/05/irs-top-12-tax-law-changes-for-2012 [3/5/12]

2 – www.irs.gov/newsroom/article/0,,id=240903,00.html [6/23/11]

3 – www.irs.gov/individuals/article/0,,id=109960,00.html [2/24/12]

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

• Federal Government Jobs & Career Center
• FREE Federal Employee’s Retirement Planning Guide
• Federal Retiree Job Opportunities
• Federal Employee & Retiree BLOG
• Federal Employee’s Career Development & IDP Center
• Post Office Jobs & Career Center
• Job Search – All Sectors
• Environmental Health & Safety Job Center
• Nuclear Jobs and Careers
• Stolen Car Plates & Recovery Guide
• Take Charge of Your Federal Career (A Career Planning Workbook)
• The Book of U.S. Government Jobs (How to Apply for Federal Jobs)

• 2012 Excel Leave Chart (target 2012 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• 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.)

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

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Posted on Saturday, 17th March 2012 by Dennis Damp

Starting in 2013 newly hired FERS employee’s retirement contributions will increase from .8 percent to 3.1 percent of salary. Originally this was intended to apply to all FERS employees. There is another vote pending in the house that proposes increasing all employees’ contributions by 1.5 percent that will be phased in over a three year period starting in 2013. This same bill eliminates the FERS annuity supplement for the majority of those who retire before age 62. Recently the White House proposed a 1.2 percent contribution increase for all employees twice while the House proposed a 1.5 percent increase.  Numerous proposals from the White House and Congress could potentially impact retirement benefits and employee contributions.

The upcoming budget resolution process may further impact federal employees and annuitants. Last year proposals ranged from extending the pay freeze, raising employee retirement contributions even higher, to reducing the federal work force through severe hiring restrictions. With the national debt at 100 percent of our annual Gross Domestic Product (GDP) we may all find uncomfortable times ahead.

Social Security Statements (These may not come your way if the SSA has an incorrect address)

Fran, a SSA employee, replied to my article titled Social Security – When Should I Apply and Replacing a Lost Card to clarify the issue concerning when you can expect to receive your Social Security Statement.  The latest change to the Social Security Administrations (SSA) statement program limited mailings to those age 60 and above. These statements are mailed to the address the IRS has on record. If you don’t get one, consider doing what Fran did. She obtained a copy of the IRS’s 8822 Change of Address (COA) form, completed, and returned it to the specific address listed in the form instructions for your area.

Fran went on to say that the IRS, like SSA, had a data base conversion years ago, which caused statements to go to old addresses. Similarly, but exclusively causing the SSA’s social security number history to be reversed in some cases. Your latest SSA social security number history may have your older information which is known to cause mismatches in the databases. When the IRS, Motor Vehicle Administration, and Social Security have conflicting Bio information it causes e-filing of taxes to reject and driver license renewal problems.

She strongly encourages the next generation to keep their name exactly the same among employers, Federal and State Agencies, and for the 60 plus folks to review their Social Security Statements for possible Date of Birth (DOB), name, and earnings corrections, etc.  If you’re 60 and not receiving an annual Social Security statement do as Fran suggests and submit the COA form ASAP.

My wife had a similar problem with this when she applied for Social Security in January. She listed her complete middle name on the application and the Social Security office only had her middle initial on record. They corrected it over the phone and her application was approved.

The Debt Crisis

I received a number of comments about my “Retirees Under Attack” article. Many are concerned, and rightfully so, about today’s high unemployment, housing, and education costs. Several suggested that I need to have more compassion for all who are struggling.

My frustration is with those who choose to be irresponsible including our government, not those who acted responsible and got caught in the cross fire. All of our investments, our children’s futures, retirement, Medicare, and Social Security are at risk if government doesn’t get its act together and soon. Our national debt is now 100% of our GDP, not far behind Greece’s debt level of 130% of GDP. The government is borrowing 40 cents of every dollar they spend and we can’t continue on this path. The United States is now the largest debtor nation in world history and the debt just keeps mounting each and every day.

The following chart was sent in an email recently and it puts the budget crisis into perspective better than any words I could put down on paper. It shows the scope of the problem and unfortunately the dire straights we find ourselves in today.  This chart compares the United States’ financial position to an average American family in plain simple English. The first table lists actual government budget statistics.

• $2,170,000,000,000 – United States Tax Revenue
• $3,820,000,000,000 – Federal Budget
• $1,650,000,000,000 – New Debt (Federal Budget minus Tax Revenue)
• $15,514,000,000,000 – National Debt
• $38,500,000,000 – Recent Budget Cut

Now, remove eight (8) zeros and imagine it’s a household budget as noted below. The title for each entry was changed to a related household category:

• $21,700 – Annual Family Income
• $38,200 – Money the Family Spent
• $16,500 – New credit card debts
• $155,140 – Outstanding Credit Card Balance
• $385 – Total Budget Cuts for Year

This really hit home for me and my wife. How long could a family continue doing this without going bankrupt and insane to boot. Having unmanageable debt would drive me CRAZY. The government knows this is a problem but continues to try and spend its way out of debt.

Imagine having a $100,000 loan and to pay it off you decide it’s best to borrow more each year without substantial payments on the outstanding debt. Have you ever heard of anyone spending their way out of debt?  Then, adding insult to injury, the government brags about the huge cuts they made a few months ago! Just how huge do you think the budget cuts were when compared to a typical family financial statement?  A drop in the proverbial bucket!

We are truly in a debt crisis. Our government must pass a balanced budget amendment to restore our financial health and ensure future Congressional bodies won’t break the bank.  You frequently hear about 10 year budget reduction plans that are passed such as the recent one a few months ago. What they don’t tell you is that after the next election the new congress is not obligated to continue with those plans and often ignores them completely. Only a balanced budget amendment will hold our representatives feet to the fire.

In my opinion we don’t have a revenue problem:  we have a chronic spending problem! We need a flat tax where undue influence from lobbyists will become a thing of the past since they won’t be able to seek and obtain preferential tax treatment. There are hundreds of billions in wasteful spending across the board and we must eliminate the fraud, waste, and abuse in all programs. Tort reform is an essential part of the equation as well along with cutting foreign aid dramatically and term limits for our Congressmen and Senators that get too powerful and indignant. It isn’t going to be easy but it is necessary to avoid a collapse like we see in Greece and around the world today.

Recent Forum Host Articles:

• Social Security – When Should I Apply and Replacing a Lost Card by Dennis Damp
• Pension Survivor Alert – Don’t Let This Happen to You by Paul Riser, our Financial Planning Forum Host. This is a must read for anyone who is planning retirement. It relates an unfortunate true story about a couple that suffered because the annuitant didn’t leave a sufficient survivor’s benefit for their spouse.

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

• Federal Government Jobs & Career Center
• FREE Federal Employee’s Retirement Planning Guide
  • Federal Retiree Job Opportunities
  • Federal Employee & Retiree BLOG
• Federal Employee’s Career Development & IDP Center
• Post Office Jobs & Career Center
• Job Search – All Sectors
• Environmental Health & Safety Jobs Center
• Nuclear Jobs & Careers – High Paying Jobs
• Stolen Car Plates & Recovery Guide
• Educational Opportunities
• Take Charge of Your Federal Career
• The Book of U.S. Government Jobs

• 2012 Excel Leave Chart (target 2012 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• 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.)

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 BENEFITS / INSURANCE, ESTATE PLANNING, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE

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Posted on Sunday, 11th March 2012 by Paul Risser

Over the years I’ve talked to many federal employees about their Thrift Savings Plan (TSP). Unfortunately most don’t have an understanding of what their options are at retirement.

First, let’s discuss your current TSP allocation. Does your current allocation still meet your needs and goals? What I have found is most folks seldom reallocate investment options during their working years. The issue is that when you finally sit down to prepare for retirement you may find most or all of the money in your TSP invested in more growth oriented funds C, I, and S; which may have added more risk than you were aware of. It’s a good thing to look at your account at least yearly to see if your allocation meets your specific needs and adjust your allocation to align with your personal situation.

Secondly, should you consider taking advantage of the new Roth TSP option that will be available in May. Dennis Damp wrote an article titled Roth TSP Contributions – Are They Right For You That you will find informative.

Thirdly, let’s look at the TSP options you have when you retire.

• In-Service Withdrawal: If you’re over 59 ½ and still working you may do a one time in-service withdraw. You may withdraw the funds in cash or roll it over into a personal IRA.

• Partial Withdrawal: After retirement you are allowed one partial withdraw. In short, if you would like to withdraw a lump sum to pay bills, go on a trip, buy a vehicle, roll to an IRA, or whatever you choose, you are allowed to do one partial withdrawal.

• Monthly Income: You are allowed to take monthly payments. Each year you will be able to set a withdrawal amount for the year; which can be recalculated to the prior December.

• Annuity Options: Moving your TSP to an annuity is an option. There are a number of annuity options to consider. I’ve been asked a number of times to compare and evaluate annuities available to the general public versus TSP annuity options. To be honest, annuities available to the general public typically have a higher payout. For example: let’s take a husband, age 64 and his spouse, age 60. They were looking at an annuity with joint life income with installment. The regular annuity available to the general public allowed for an approximate $100 monthly increase in income. You may ask why? In short, annuity calculations are determined based on current age, length of income period, and a current interest rate. It does make sense to evaluate your income options if you are considering the annuity option.

• IRA Rollover: You may roll your entire TSP account into an IRA and have a few different options. One of the most common misconceptions is that you will be taxed on the entire amount should you take this option. That is not true. If you roll your entire amount directly to your new IRA using a direct or trustee-to-trustee transfer, you will not pay tax until you start taking income. You may also create multiple IRAs and transfer the funds directly to accommodate various beneficiary designations. Your IRA can be funded using various investment vehicles. Let’s explore some of our options.

IRA Funding Options:

• Fixed Annuity: The first option would be a fixed product; which may be a fixed annuity or an income annuity. As mentioned prior, I have performed a number of analyses comparing the benefits of the annuity offered by the Thrift Saving Plan and what is available in the private market. If you’re leaning toward this option, I would evaluate what is available before making a decision.

• Variable annuity: Variable annuities provide some living benefits that vary by insurance company and various state regulations. Variable annuities can offer a death benefit guarantee and/or a lifetime income guarantee. Most variable annuities offer a number of different choices with regard to income and growth options called riders that can be added at an additional cost to the annuity to meet your specific needs.

• Mutual Funds: A mutual fund is a professionally managed type of collective investment account that pools money from investors to buy stocks, bonds, short-term money market instruments, and/or other securities. Your current TSP is invested in mutual funds. There are many different mutual funds offering a wide range asset class, objectives, and risk tolerance.

• Managed accounts: Managed accounts employ third party money managers who invest in a variety of different assets including stocks, bonds, mutual funds, exchange traded funds (ETFs), etc. One of the advantages of a managed account is that fee’s are assessed on an annual basis so that there is typically no front end or back-end charge. A managed account allows you to have multiple investments, fund companies, and possibly multiple investment vehicles in one account. Since there are no sales charges assessed, you have greater flexibility to utilize different investments and different investment companies without concerns about meeting break point levels which allows you to make changes as the need arises.

Withdrawals of a tax-deferred accumulation are subject to the ordinary income tax, and possibly a 10% federal tax penalty for withdraws prior to 59 ½. Guarantees are backed by the claims –paying abilities of the issuing insurance company and do not apply to the investment return or principal value of a sub-account.

Before investing, consider the mutual funds and/or variable annuity’s investment objectives, risks, charges, and expenses. Contact Paul Risser for a prospectus containing this information. Read it carefully.

In short, your options are quite varied when looking at your specific financial situation. Take the time to asses what’s best for you. Seek professional help to determine answers to your retirement questions such as:

• How would you like to take your income in retirement?

• Do you want the flexibility to pick and choose and make changes as the need arise?

• Do you want to take lump sum withdrawals or change your monthly income amount anytime you wish?

• Do you prefer to be in a more static position where you’re allowed one partial withdrawal and a fixed income?

There’s no right or wrong answer, but you should be informed so you can make a decision that best fits your financial situation. I’m fully licensed to be able to assist you with your personal financial questions and would be happy to help.

Paul H Risser, host of this site’s Financial Planning Forum, is an Investment Advisor Representative with and Securities and Investment Advisory Services offered through Transamerica Financial Advisors, Inc. (TFA) member FINRA, SIPC and a Registered Investment Advisor. Non-Security products and services are not offered through TFA. TFA and Risser Financial Services are not affiliated.

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.

LD42986-2/12

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

• Federal Government Jobs & Career Center
• FREE Federal Employee’s Retirement Planning Guide
• Federal Retiree Job Opportunities
• Federal Employee & Retiree BLOG
• Federal Employee’s Career Development & IDP Center
• Post Office Jobs & Career Center
• Job Search – All Sectors
• Environmental Health & Safety Job Center
• Nuclear Jobs and Careers
• Stolen Car Plates & Recovery Guide
• Take Charge of Your Federal Career (A Career Planning Workbook)
• The Book of U.S. Government Jobs (How to Apply for Federal Jobs)

• 2012 Excel Leave Chart (target 2012 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• 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.)

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

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