Posted on Wednesday, 5th October 2011 by Dennis Damp

It has been a trying time for annuitants and Social Security recipients who have essentially been forced to live on fixed incomes these past two years. Finally it looks promising; we may receive a COLA in 2012 of around 3.6% if Congress doesn’t block the payout for whatever reason. If we are fortunate enough to receive the increase some of it will be absorbed by a reported 3.8% average 2012 FEHB premium increase. The FEHB average increase for 2011 was 7.3%. However, it is a relief to many who had to absorb those costs and live on less these past two years, much less when you consider how skewed the CPI-W formula is when it comes to true inflation. My personal feeling is that Congress won’t interfere because it is an election year. Time will tell.

TSP Returns

The G and F funds had small gains in September, 0.16% and .73% respectively. The S fund was the biggest looser dropping 10.73% and the I Fund was a close second dropping 10.55%. There is little good news to report, over the past twelve months only three funds are ahead, the C fund with a meager 1.11% increase, and the G and F Funds with 2.58% and 5.34% increases respectively. Visit our TSP pages for more information on the THRIFT program.

The market continues to be highly volatile and this week the S&P was at the same level it was three years ago with virtually no gain over that time period. The S&P hit 1099.23 on October 3, 2011 the same level it was on the same date in 2008!

The Savings Dilemma and Higher Yielding Savings Options

What are we to do? The administration bailed out GM, Chrysler, the banks, teachers, municipal workers, and Fannie May and Freddie Mac to name a few at the expense of those in retirement and on fixed incomes. Many retirees and those approaching retirement planned, saved, and did the responsible and right things to get ahead only to be left behind by this administration. Then, the Federal Reserve stepped in to artificially keep interest rates at or near zero and anticipate maintaining that rate for some time. The current federal funds rate has been kept artificially low at less than 0.25 percent since December 2008. Savings accounts and CD rates have followed suit and rates are often less than 1.0% no matter how much you have in your account.

One of our CDs came due last month and I complained to the bank manager about the low rates they were offering. He replied rather sarcastically, “Why would we pay more to use your money when we can borrow what we need from the Federal Reserve at near zero percent.” The Motley Fool posted an excellent article titled “Where to Park Your Cash” and summarizes savings account options that can best match your needs.

Unfortunately, there are far too few options for retires and conservative investors that like to park their life savings in safe havens. The few that are left, such as I-Bonds and Treasury purchases through Treasury Direct, are becoming more restrictive, with cumbersome new regulations to further confuse participants. The Treasury Department is phasing out paper savings bonds as of January 2012 except for savings bonds that can be purchased with your federal tax return.

What was once an easy-to-use process has now become unavailable and onerous for those who aren’t computer literate or dislike opening and maintaining online investment accounts. The Wall Street Journal recently reported the following in one of their articles, “It’s true that Americans will still be able to buy savings bonds electronically, through a Web-based platform known as Treasury Direct. But the system isn’t user-friendly, and it presupposes ready Internet access, which about 35 percent of all Americans and 65 percent of low-income Americans do not have. And the system requires a user to have a bank account, effectively excluding the 17 million American adults who are “unbanked.” This may explain why less than 1 percent of the 55 million people who own savings bonds have Treasury Direct accounts.”

Up until a year ago, federal employees and retirees could easily purchase paper savings bonds through automatic payroll deductions. A bond would arrive in the mail shortly after you accumulated sufficient funds to purchase the denomination elected. Anyone could go to their local bank, credit union, or savings-and-loan institution and purchase E or I savings Bonds for themselves, their children or grandchildren, and the bond would arrive in the mail. You can still elect payroll deduction but you must set up an online Treasury Direct account and your bonds are now held in a book-entry system.

Several years ago the Treasury decided to dramatically reduce the dollar amount of savings bonds that anyone could purchase in one year to $10,000 per person ($5,000 in paper bonds and $5,000 through the online Treasury Direct program). Starting in 2012 only $5,000 a year can be purchased. If you would have preferred converting a low interest CD to an I-Bond, currently paying 4.6%, you are just out-of-luck. Instead of making things easier for the public, everything now is considerably more complicated with new cumbersome regulations, limitations, and restrictions.

Treasury Direct doesn’t even offer regular quarterly statements or provide a customer service phone number to call if you are having major problems with your account. Imagine the fines and penalties that a private financial institution would be assessed by government regulators or FINRA if they didn’t supply these basics. For example, when you go online to Treasury Direct after setting up an account, you never receive a quarterly statement or any statement of any king, EVER! They advise you to print out the screens on your computer.

Here are a few of the issues I have with Treasury Direct

• No official quarterly or annual statements (EVER)
• The summary screens, when printed for your home records, don’t format correctly and they don’t have a print screen function on the site. You get overlapped content.
• I had to log on to my account four times today because of the antiquated navigation used on their site. The site is not user-friendly.
• Your summary screen doesn’t show accumulated Treasury bond values. You have to select each bond in your account to determine its current value and then manually add the gains. For example, if you own Treasury Inflation Protected securities you only see the face amount on the summary screen, not the accumulated inflation values.
• No option to convert book-entry bonds into paper bonds. What happens if the Treasury Direct site is down for an extended period or there are major Internet connectivity problems?  You don’t have any statements from Treasury Direct to confirm your holdings.
• No customer support or phone numbers to call if you have problems with your account. When you click on contact, all you have is an online form to fill out!!!
• You have to transfer your Notes, Bills, Bonds or TIPs to a bank or brokerage account if you want to sell them before their maturity date. Book-entry Savings Bonds are cashed in on the site and the funds from the sale are transferred direct into your bank account.

We are too dependent on the Internet today and this is just one more example. The Treasury must step back and reevaluate this program and where it is going. Are there no internal audits, controls, feedback that is actually collected and reviewed? Government over regulates almost everything in our society today except themselves it seems. In this case it is just about as lax as you can get when dealing with equity accounts and financial matters.

I would hope they will reconsider and continue selling paper Savings Bonds, dramatically increase the purchase amounts, and improve their web site.

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 independent adviser. A sample analysis is available for your review. This service is not affiliated with the author or www.federalretirement.net

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• FREE Federal Employee’s Retirement Planning Guide
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• Federal Employee & Retiree BLOG
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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our articles are not intended nor should they be considered investment advice. 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 Friday, 23rd September 2011 by Dennis Damp

Saving Grace (Ways to Save)

I often mention just how important it is to retire with minimum debt and that means paying off your mortgage and credit cards. I’m not the only one that preaches being debt free in retirement. Money Magazine featured an article titled “Live Well On Less” in their October 2011 issue where successful retirees present six ways to save and SAVE BIG. With the market volatility, shrinking savings and THRIFT accounts, it makes even more sense today to be prepared and save anyway you can for and in retirement. If you aren’t able to pay off your mortgage consider refinancing. I refinanced my mortgage numerous times during my career to cut costs and save thousands in interest expenses. On average 25% of a homeowner’s total spending is used to pay their mortgage payments. Today more older Americans now have mortgage or home-equity loans and considerably higher credit card debt than they did just a decade ago.

Mortgage interest rates are at their lowest level in decades and if you can save 1% or more by refinancing you can potentially save tens of thousands in interest costs over the life of the loan. I used the online Bank Rate loan calculator to determine the refinancing savings for a $100,000 loan.

Your monthly principal and interest payment for a 30 year loan at 5.5% would be $567.79. By refinancing for 30 years at a 3.85% rate your monthly payment would decrease to $468.81 for a savings of $98.98, that’s just under $1200 a year that you can use for other purposes. If you refinance this same amount for 15 years at 3.25%, your monthly payment would increase by only $134.21 per month and you would pay off your mortgage in half the time. Divide the figures by 2 for a $50,000 loan or if twice the amount multiply by 2 to determine your payment and savings. There is a HUGE savings in total interest payments. The total interest payments on the original $100,000 thirty year loan at 5.5% would be $104,403. If you refinanced for 15 years at 3.35% you total interest payment would be $26,480, $78,000 less than the 30 year lone total interest! You could have purchased several cars over the life of this loan with your interest savings alone.

One of the six strategies mentioned in the Money article included working part-time. Certainly there are many options to consider. Our Retiree Jobs Center was recently updated and we added more job listings and opportunities for you to consider.  A work centered life is what we are accustomed to throughout our career and many retirees find part-time work rewarding and it helps them stay involved and active. Volunteer work provides the same benefits and for those who don’t need the income you also have the satisfaction of serving others in your community, church, or organization.

Fear of the Unknown

Turn on your TV or radio, read your local newspaper or national magazine today, and you encounter the negative sentiment now being showered on all things government, including our benefits. This sentiment is driven by the financial crisis at hand and the out-of-balance budget with government now borrowing 42 cents of every dollar they spend! Add unemployment, the housing and international banking crisis to the mix and there is no wonder why there is so much talk about the need to be fiscally responsible. All Americans are concerned. We understand the basic problems and know that things have to change and in some cases dramatically. Change is a constant in all of our lives and it’s the fear of the unknown and how these changes will impact our family’s health and well being now and down that road that concerns us most.

Knowledge and understanding can help to alleviate or at least moderate our fears until actual change comes our way. One of the best ways to stay informed about pending federal benefit changes is to join NARFE, the National Active and Retired Federal Employees association. Their informative monthly magazine focuses on federal employee benefits and retirement issues and their “Protect America’s Heartbeat” campaign fights against unfair attacks on federal workers and annuitants. NARFE sheds light on the many proposed benefit and retirement changes now being considered. Here is a short list of proposed changes:

• Workers to pay more for their FERS defined-benefit annuity (from .8% to 5.8% of salary)
• New employees would not receive a defined-benefit (FERS) annuity
• Higher health insurance premiums (paying a larger share of the total cost)
• COLAs to go down through weighted adjustment calculations
• Future retirees would receive an annuity based on the average high-five years of salary
• Pay freezes

None of the above changes have been implemented to date. Stay tuned for updates.

Keys to a Long Life

The oldest man in the world, Walter Breuning, died this year at the age of 111 and his life story is compelling and fits into this column nicely. He was born in 1896! Can you imagine a world without TVs, cars, air conditioning, planes and all of the technology that we have surrounding us today? His wife of 37 years died in 1957 and he retired from the railroad in 1967 with 50 years of service! He continued to work until the age of 99 and was the manager and secretary for his local Shriners chapter. He claimed five simple truths for his longevity:

1.     Embrace Change, even when the change slaps you in the face. He accepted all change as inevitable and therefore good.

2.     Eat only two meals each day. He claimed that is all anyone needs.

3.     Work as long and hard as you possibly can. He felt that the money would help you through the tough spots.

4.     Help others. His contention was to the day he died “The more you do for others, the better shape you’re in.”

5.     Accept death. It’s going to happen regardless and he was not afraid to die. He said “You’re born to die.”

Life is a journey and we have to accept it for what it is and live life to the fullest while we are able. Time passes us by at an alarming rate and unfortunately we don’t realize it until we are well along in our own personal journey. My wife’s aunt passed away at 92 twenty five years ago and the day she died I was in her room. She woke briefly and was completely alert and aware of her surroundings. She turned to me and said “Dennis I can’t believe it’s over, the years passed by like the snap of my fingers.” She closed her eyes and never awoke.

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 Retirement Benefits Summary Analysis from a local independent adviser. A sample analysis is available for your review. This service is not affiliated with the author or www.federalretirement.net

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

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 articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, FINANCE / TIP, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 9th September 2011 by Dennis Damp

There has been some confusion around the “Best Date to Retire” and Gary, who is planning on retiring   on December 31, 2011, asked for clarification on this issue.  He has over 240 hours of annual leave to cash in and was concerned about the “Date of Final Separation” that you enter on your retirement forms and the “Official Retirement Date.” This is critical this year because the official leave year ends 12/31/2011.

If you intend to leave at the end of 2011 consider December 31 for your retirement application’s “Date of Final Separation,” especially for those who wish to sell back the maximum amount of accumulated annual leave. If you retire by this date you will receive full payment for accumulated annual leave over 240 hours up to the maximum allowable. The “Date of Final Separation” is your last day of work; retirement starts at the close of business (COB) that same day. If you plan to leave after December 31 this year, and will have over 240 hours of annual leave on the books, schedule and use your excess annual leave before you retire. Review the Use or Lose Annual Leave Scheduling Date Chart to determine when you must schedule your excess leave. Use our 2011 and 2012 Leave and Schedule Charts to select several tentative retirement dates for the annuity estimates that you should request from HR a year in advance of your planned departure date.

Don’t confuse your “Annuity Start Date” with your “Date of Final Separation” that you list in block 2, Section B of either the SF-2801 CSRS Retirement Application or SF- 3107 FERS Retirement Application forms. Your retirement annuity starts the day after you separate even though your retirement commences at the close of Business on the “Date of Final Separation.”

Retirement Planning Timeline and Assistance

There is much to consider before you leave and fortunately there are many helpful organizations, web sites, articles and free reports to help you make informed decisions.  Comprehensive retirement planning articles are offered by our Forum Hosts and we often link to other services articles and official OPM regulations for comprehensive in depth guidance. Click on the following links for retirement planning information that will help you plan your exit:

• How do I get started?
• Is it your time to retire?
• What to do starting a year before you retire (Updated retirement timeline)
• What to expect from OPM the first three months after you leave (Updated)
• How to pick the best date for your retirement.

Tammy Flanagan, the Senior Benefits Director for the National Institute of Transition Planning, Inc., wrote two highly informative articles on how to evaluate retirement estimates.  They are a must read for anyone who is approaching retirement and they emphasize the importance of this critical step. Take a few minutes to read the following two articles:

• Predicting the  Future
• Not Quite Write

We link to all of Tammy’s articles on our Resource page under the heading of “Helpful Associations / Organizations / Publications.”

TSP Update

Last month the G and F funds had small gains, 0.19% and 1.45% respectively.  The I fund was the biggest looser dropping 9.03%. The good news is that over the past twelve months all funds have gains ranging from a low of 2.6% for the G Fund to a high of 22.84% for the S Fund. The C fund was a close second with a gain of 18.46%.

The market is highly volatile now due to the depressed economic outlook here and abroad.  My last article titled TSP Panic discussed how to weather the storm and provided some insight into preparing for times like these. The market’s meteoric rise highlighted the need for caution months ago.  With Congress deadlocked on the budget and unemployment at historic highs the markets may remain highly volatile for some time.

Long term investors, federal employees in their early to mid careers are typically advised to remain invested in equity funds balanced between sectors such as what the L Funds do automatically. Those approaching retirement, that will need their TSP funds to maintain their standard of living, should be cautious as my last article addressed.

Many financial planners expect a rocky road ahead until governments worldwide get serious about addressing their national debt issues, balance their budgets, and put people back to work.

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 Retirement Benefits Summary Analysis from a local independent adviser. A sample analysis is available for your review. This service is not affiliated with the author, www.federalretirement.net or Bookhaven Press LLC.

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

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 articles are not intended nor should they be considered investment advice. Our reply is 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, RETIREMENT CONCERNS

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Posted on Thursday, 18th August 2011 by Nancy Holston

As a youngster growing up in northern Indiana, wildlife consisted of skunks, raccoons, deer and opossums and I did not find them particularly interesting since their natural setting was usually lying in the middle of the road lifeless.  But that changed in 1980 while I was enjoying a training assignment in Oklahoma City.   I stumbled across a marathon showing of Marty Stouffer’s Wild America program as part of the local Public Broadcasting System’s annual fund raiser.  It was the first time I had watched or even heard of the program but I was fascinated by all the stories being told showing the behavior of not only creatures I was familiar with but also some I had never seen or heard of.  My cat took the trip to Oklahoma with me and Wild America mesmerized her as well to the point she thought she could catch the birds as they soared across the television screen.  I spent my entire Saturday watching those programs.  From then on I was hooked on watching wildlife.

I wanted to be able to go out and watch some of those creatures myself so I relocated to Colorado in 1987.  It would be hard to find a better place to go for a hike and view wildlife in the lower 48 states than Colorado.  Every weekend was a vacation to see Big Horn Sheep, Elk, Mountain Goats, Deer, Prong Horn and smaller creatures that live in the mountain habitat.

Mountain Goats reside in alpine habitat and often can be spotted walking sure footed along sheer steep mountain sides.  I could always count on finding them on Mount Evans just an hour west of Denver.  If you drive to Summit Lake, stop and patiently look around you’ll spot them.  They dig and graze in the mountain tundra often with a kid next to them.  Adults display beautiful white fur from their head to their shoulders with the rest of the body in the process of sheading a heavy coat from winter.  The little ones are sometimes playful and active near their grazing mothers.  I usually have to stifle my urge to sing the The Lonely Goat Herd from The Sound of Music when I see them.

I lived near a favorite spot of Big Horn Sheep, Waterton Canyon National Recreational Area along the South Platte River.  There is a road for walking and bike riding that goes back 6 miles to a damn and it is not only home to many of the Big Horn Sheep but is also a great place for fly fisherman.  If a road trip and exploring a mountain town is more to your liking, you can find Big Horn Sheep as you travel to Georgetown on Interstate 70.  They often graze on the north side of I-70 along the sheer mountain sides.  Color variation is limited and the Big Horn Sheep tend to blend in very well.  To spot them look for their white behinds on the mountain side.  If you want to sit and watch them there are several areas to pull over and safely get out of the car and take photos or watch with a good set of binoculars.  It can be interesting if they are on the mountain side looking precarious on little ledges sticking out from the sheer rock face surrounding Georgetown.

The Rocky Mountain National Park is a great place to see large herds of Elk and to watch mating behavior during the fall rut.  People come from all over the country in late September and early October for the rutting season.  A bull Elk sounds a warning referred to as bugling while watching over his harem of females during the rut.  If the bugling does not prevent a challenge from another male, they face off and interlock their antlers and jockey for position to determine who will win the harem of females for mating.  This can be dangerous, so watch from a distance.  The Elk are easiest to see on the east side of the park about a 15 minute drive in from Estes Park.

Moose are another treat you can find inside the national park.  You’ll need to go to the west side of the National Park taking Trail Ridge Road from the east side of the National Park over the highest point in the park to the west side between the Bowen Baker Trailhead and the west entrance to the park.  You will need to be observant to spot a Moose because they are not easy to spot.  You’ll need to watch the wet areas with Willow brush that stands about 5 or 6 feet high.  They are usually alone which makes them harder to find.  You may find them by pulling over where other cars have stopped to see what the fuss is about.  If you can find one in the water it makes for great photos especially if the light allows for good reflections.  The best time to spot activity is early hours around dawn and as the sun is setting at dusk.  Make sure you take good binoculars to view the wildlife.

Eagles are easiest to find if you are familiar with the sound they make.  If you hear them vocalize look at high perch points to see if you can find the Eagle.  Click on vocalizing at this link to hear a bald eagle to assist you in knowing what to listen for. http://www.thebigzoo.com/Animals/Bald_Eagle.asp

I don’t want you to think those are the only wild animals that reside in our western states.  After all mountain lions and bear also live there along with rattle snakes and other creatures you may not want to run across.  If you do plan a trip to the back country of the west on your American Safari, be sure to stop at park visitor centers and check to see if they have any warnings posted for these more dangerous animals.  Visitor centers also have information on what to do to avoid or protect yourselves should you find yourself in the vicinity of a bear or mountain lion.  Read the literature before going on your first hike so you know how to respond should you have an unexpected encounter.

If you have children going on an American Safari can be a great way to learn about our country and the diversity of wildlife it holds, especially if you live in the eastern United States.

Here are some web links to assist in planning an American Safari vacation.

http://wildlifehotspots.com/

http://www.iexplore.com/activity/Safari/North+America

http://www.wildlifeviewingareas.com/

http://wildlife-viewing.gordonsguide.com/search.cfm?country=US

http://www.realadventures.com/g1339_wildlife-safari-tours-united-states.htm

http://www.soft-adventure-tourism.com/Wildlife-National-parks.html

Request a Retirement Benefits Summary Analysis from a local independent adviser. A sample analysis is available for your review. This service is not affiliated with the author or www.federalretirement.net.

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

Visit our other informative sites

• http://federaljobs.net (Federal Career & Job Center)
• http://federalretirement.net (FREE Retirement Planning Guide)
• http://federalretirement.net/jobs.htm (Retiree Job Opportunities)
• https://fedretire.net (Retiree BLOG)
• http://fedcareer.info (Career Development Center)
• http://postalwork.net (Postal Career Center)
• http://searchfedjobs.com (Job Search – All Sectors)
• http://ehsjobs.org (Environmental Health & Safety Job Center)
• http://nukejob.net (Nuclear Job and Career Center)
• http://stolenplates.com (What to do if this happens to you)
• Educational Opportunities (Find educational opportunities in your area)

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 Thursday, 11th August 2011 by Dennis Damp

A site visitor close to retirement wrote that his TSP was considerably less than it should have been because he didn’t understand the TSP options and mismanaged his account throughout his career. Don’t let this happen to you.

It feels like a rerun of the 2008 recession with the Dow at the time of this writing down 2,152 points, 19% in the past three weeks. The TSP C fund has dropped in line with the S&P’s 18% freefall and if you had $100,000 in your C Fund it would be down to $82,000, a dramatic drop by any standard. I mentioned in my February article that I converted my entire TSP to the G Fund because of the uncertainty in the markets and I was concerned that a major market correction was eminent. Nothing goes up forever, and with the meteoric stock market rise a correction was around the corner.  Then when you factor in the unrest in the Mideast, the national debt crisis, S&P’s downgrade of our nation’s debt from AAA to AA+, and the banking crisis in Europe, you have the makings of a chaotic financial tsunami!

Our leaders will finally have to tackle the mounting debt crisis before it collapses our system and I believe they now have the mandate, will, and courage to do so. Even with all of this uncertainty America is still a safe haven, by comparison, to almost any other country. Yet, there is a rough road ahead and we all must be prepared.

First things first, DON’T PANIC! The sky isn’t falling even though our investment accounts are temporarily on a downhill trajectory. Remember Annie’s song in the musical by that name:

“The sun will come out tomorrow
So you gotta hang on ’til tomorrow
Come what may…”

The sun will come up tomorrow and thankfully it always does. Historically, all major market sells offs reverse direction over time. The ones who panic and transfer out of equity funds after the market has already dropped off appreciably suffer the consequences. They often wait to get back into equity funds after the market recovers and they enter into a vicious cycle that drains their accounts with each new market swing.  I abide by the following principles that help me in times like these:

• Be prepared so when disaster arrives all of your eggs aren’t in the wrong basket
• Don’t make drastic changes during major market moves
• Invest conservatively when you are within 5 years of retirement

During the October 1987 stock market crash a friend of mine was on the phone until midnight with his broker selling all of his mutual funds. He lost 50% of his investments overnight. Had he stayed the course, his account would have fully recovered in less than six months! It’s hard to fight against the panic that ensues during a major market down turn when everyone is saying the sky is falling. It takes discipline to stay the course.

That being said, it all comes down to timing and what funds you should be in and when. Those anticipating retirement, that aren’t familiar with investment principles, would best be served by investing in one of the Life Cycle or the G Funds. The life cycle funds were designed for those who don’t have the time or inclination to follow and understand the markets and investment strategies. If you plan to retire between 2015 to 2024 the L 2020 fund may be right for you.  Currently the L 2020 funds are invested 36% G, 7.4% F, 20.8% C, 9.6% S, and 16.6% in the I Fund. Each quarter the fund adjusts to a more conservative mix as you approach the year 2020. The largest investment is in the G Fund that is guaranteed to never decrease in value. This mix will fluctuate much less than the S&P 500 or Dow index.

The L Income fund or the G Fund may be a good fit for those within 2 to 3 years from retirement if you will need to start withdrawing your TSP when you leave. The L Income fund offers a conservative fund mix that allows for some growth. They invest 74% G Fund, 6% F, 12% C, 3% S, and 5% in the I Fund. With the majority of the L Income Fund in the G and F bond funds your exposure to the broader market is limited and the swings will be much less dramatic.

If you are mid career or earlier select a more aggressive fund such as the L 2030 fund to maximize your retirement savings long term. Remember, you are investing each pay and you will be dollar cost averaging your investments over time. When markets drop off your contributions buy more of the funds that decreased in value the most.

Visit our retirement financial planning section for additional helpful information. I’ll discuss ways to better understand the markets and your TSP investments in an upcoming article for those who wish to be more active with their THRIFT investments.

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 Retirement Benefits Summary Analysis from a local independent adviser. A sample analysis is available for your review. This service is not affiliated with the author, www.federalretirement.net or Bookhaven Press LLC.

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

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 articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Posted in UNCATEGORIZED

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Posted on Tuesday, 26th July 2011 by Dennis Damp

Updated 2/10/2024

When I attained 25 years of service at age 44, I felt a great sense of relief. I knew that with 25 years of creditable service I would at least be eligible for an early retirement, and I could apply for a VERA and VSIP if offered.

The FAA received VERA authority in the mid 1990s during a major reorganization and I applied for the option and was denied. My position was not included in the initial offer. I was a little apprehensive when I first applied, and my wife had major reservations because my annuity would have been a fraction of what it would have been at age 55.

First and foremost, look before you leap if offered a VERA. Determine if you can afford to retire and determine what you will do to occupy your time after you leave. I applied knowing that I had another fulltime job waiting for me with my publishing business.

Voluntary Early Retirement Authority (VERA)

VERA provides agencies the option to offer voluntary early retirement when restructuring as well as when downsizing. The voluntary early retirement provisions are the same under the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS).

The use of VERA is an option for increasing voluntary attrition in agencies that are undergoing substantial organizational change (e.g., reduction in force, reorganization, reshaping, delayering).

Besides providing an incentive for employees to voluntarily retire or resign to avoid potential reduction in force (RIF) actions, the agency may also offer VERA to employees in safe positions that could then provide placement opportunities for employees occupying surplus positions.

Voluntary Separation Incentive Payments (VSIP)

The Voluntary Separation Incentive Payment (VSIP or buyout) Authority allows agencies to offer lump-sum payments to employees who are in surplus positions or have skills that are no longer needed in the workforce, as an incentive to separate.

Under VSIP, agencies may pay up to $25,000, or an amount equal to the amount of severance pay an employee would be entitled to receive, whichever is less. Employees may separate to accept VSIP by resignation, optional retirement, or by voluntary early retirement, if authorized.

VSIPs are an option for increasing voluntary attrition in agencies that are downsizing or restructuring. Besides providing an incentive for employees to voluntarily retire or resign to avoid potential reduction in force actions, the agency may also offer VSIP to employees in safe positions that could then provide placement opportunities for employees holding surplus positions.

Overview & Eligibility

VERA and VSIP programs allow federal agencies that are reorganizing or downsizing to offer early outs rather than lay employees off through a Reduction in Force (RIF). Agencies find it easier to offer early outs to those who wish to leave than to layoff federal employees.

Early outs reduce the potential for RIF’s because younger employees subject to layoffs generally receive lower pay and benefits than the senior employees that would be eligible for early retirement.

Agencies often offer Voluntary Early Retirement Authority (VERA) to employees without a Voluntary Separation Incentive Payment (VSIP). In this case you can retire early and receive benefits however no incentive payment of up to $25,000 is offered for you to do so.

To apply for an early out employees must be at least age 50 with 20 years of service or any age with 25 years of creditable service. If you are offered an early out, with or without a buyout, thoroughly understand the program and its impact on your finances, benefits, annuity, and retirement before applying.

If you apply and your VERA is approved, you must leave by the date specified. This tends to play havoc with plans to sell back the maximum amount of accrued annual leave or the ability to round out your sick leave to an even month by the date of departure.

Pay close attention to the CSRS penalty that may apply. If the CSRS employee is under age 55, this calculation is reduced by one-sixth of one percent for each full month he/she is under age 55 (i.e. 2% per year).  There isn’t a penalty for FERS service.

The FERS Social Security Supplement

The FERS Social Security Supplement applies under VERA for those who are at their MRA when they retire up to age 62. However, if the retiree goes back to work, the Social Security earnings limit applies. In 2024, you can earn up to $22,320 without having your Social Security benefits withheld. But beyond that point, you’ll have $1 in benefits withheld per $2 of earnings.

The limit is much higher if you’ll be reaching your Full Retirment Age (FRA) in 2024. In that case, you can earn up to $59,520 without having benefits impacted. From there, you’ll have $1 in Social Security withheld per $3 of earnings.

Early Retirement Positions

Those employees under the special 20-year retirement system, LEO, FF, ATC and NWC, can apply for a VERA if offered. If you don’t have 20 years vested in the special 20-year retirement system you will not receive the enhanced retirement benefits. With less than 20 years in the covered services their annuity would be based on the regular retirement formula.

Many under LEO, FF, ATC and NWC have regular federal civil service time as well. For example, if an air traffic controller (ATC) is age 53 and has 24 years of creditable service for retirement, but only completed 17 years of ATC covered service, the controller’s retirement would be based on the regular retirement formula because he hadn’t completed 20 years under the ATC system.

So close but so far away… A site visitor’s agency was offering early outs however he was just a few months shy of the required 25 years of service. He wanted to apply his accrued annual leave to his service date to qualify. Unfortunately, annual leave can only be used with RIFs or a discontinued service retirement when an employee is involuntarily separated or has a redirected reassignment outside of their commuting area.

Military credits can be used to qualify for a VERA

You need a minimum of 5 years of civilian service to be eligible for a civilian retirement annuity.  However, after the 5 years is met, the military service is creditable towards years of service for all the other voluntary retirement eligibility requirements: MRA +10; MRA +30; 60 years old with 20 years of service; and the VERA requirements – age 50 with 20 years of service or any age with 25 years of service. Review all eligibility requriements for FERS and CSRS retirement.

One major consideration, especially for those leaving in their 40s and 50s, is what you will do when you retire. Most will look for other employment and it is important to stay active and involved. Go to our recently updated Jobs Center to find employers that are specifically looking for retired feds with experience, including links to the top 68 federal contractors.

Many companies seek out retired federal workers because of their extensive experience in many areas. Explore your options before you sign on the dotted line, especially since you will more than likely need supplemental income with an early retirement. Our job listings consolidate national listings for all occupations and in all sectors.

Complete details for VERA and VSIP programs:

• Voluntary Early Retirement Authority (VERA)
• (NEW) OPM’s Guide to the VERA Program
• Voluntary separation Incentive Payments (VSIP)
• (NEW) OPM’s Guide to the VSIP Program

Helpful Resources:

• FREE Report – How to be Emotionally and Physically Prepared When You Retire
• FREE Report – How to be Financially Prepared When You Retire
• What should I be doing the year before I retire
  • 2024 Leave Chart (Track your leave & set target retirement dates)
• What to Expect the First Three Months After Retiring
• The Best Day to retire

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 Websites

• Federal Government Jobs & Career Center
• Federal Employee’s Retirement Planning Guide
• Federal Retiree Job Opportunities
• Federal Employee & Retiree BLOG
• Stolen Car Plates & Recovery Guide

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 articles are not intended nor should they be considered investment advice. Our reply is time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, EMPLOYMENT OPTIONS, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, UNCATEGORIZED

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Posted on Thursday, 7th July 2011 by Dennis Damp

How to Avoid a Retirement Nightmare

We continue to receive reports of significant OPM retirement paperwork processing delays and insufficient partial interim pension payments. A site visitor sent a frantic message to us last week asking for assistance after receiving notice from OPM that he will receive an interim payment of 30% of his full annuity for up to 6 months. His interim  payments are considerably less than his living expenses and he stated that he may lose his home because he can’t afford to pay his mortgage payment.

Unfortunately his situation is not uncommon today. Things may get worse as more feds elect to retire due to proposed benefit changes and potential agency downsizing initiatives.  Many federal employees, especially those under CSRS, tend to ignore financial planning all together and expect their annuity to supply all of their retirement needs. This is a false assumption and can lead to dire consequences for those who take that path.

A recent survey reported that 58% of baby boomers are concerned about not having sufficient funds for retirement and only 39% crunched the numbers to determine if they would have sufficient income in retirement. Talk about living life on the edge! I personally would be an emotional wreck not having at least an idea and a basic retirement plan prepared for this life changing event called retirement.  You can download our free report titled How to be Financially Prepared When You Retire to explore where you stand financially. Share this report with others in your organization.

Why are interim payments so much less than expected in some cases?

• There may be a divorce decree at the root of the problem.  Many federal employees that went through divorce years ago never completed the necessary paperwork after their lawyers completed the legal side of the matter. Ann Ozuna, our Divorce and HR Forum Host, reported in her recent article that, “Whether you are the “fed” or the “former spouse”, if you have retirement, insurance benefits or TSP benefits which were divided or assigned in the divorce decree, your work is not done when the ink dries at the courthouse.”  She also warns feds “If your decree was a long time ago and you have not sent off the decree/order to be “accepted for processing” at OPM, do not wait until retirement. “  OPM may reject the decree if it doesn’t conform to their specifications as outlined in her article titled Federal Benefits in Divorce – After the Decree, NOW What.
• The retiree didn’t obtain an official estimate of their retirement benefits before leaving. Believe it or not, some actually ignore this critical step and run estimates based on their retirement plan eligibility requirements without doing all of the needed due diligence. There are many things to consider; prior military service and credits, how part time work factors into the equation, your service comp date may have been incorrect, and many more factors determine the actual amount that you will receive from Uncle Sam when you leave. Your agency’s HR department provides estimated annuity payment calculations upon request from what is documented in your Official Personnel File (OPF). Even though they have your OPF you still need to review, question, and verify everything. SCD dates should be confirmed; especially if you worked for several different agencies throughout your career.
• Other reasons annuitants receive lower total compensation than anticipated include things such as lower than expected Social Security Supplement payments for FERS employees. It is often much less than expected as I discussed in my May 2011 column. Also, individuals who returned after a break in service may have neglected to buy back their prior federal time; the list goes on and on.

Most federal employees can’t rely exclusively on their federal annuity in retirement to maintain their standard of living. Thankfully most have TSP accounts, savings accounts, savings bonds, certificates of deposit, stocks and bonds to bolster their income in retirement. If more income is needed you can always go back to work in the private sector and maintain 100% of your federal annuity without penalty.  It is always best to prepare for the unexpected and have cash reserves to get you through tough times such as when OPM takes too long and provides too little upfront when you first retire. This is one reason why I feel so strongly about paying off your mortgage before you retire.

Retiree Job Opportunities

We continue to receive postings to our jobs board for many positions that are targeted specifically towards federal retirees. You will find new job vacancies from staffing accountants, accounting assistants, health service administrators, several forest and land management positions, airport advertising manager and many more jobs that you will find of interest. We provide free postings for employers that are seeking to recruit and hire highly qualified and talented federal retirees. Check the job listings out to see if there are any in your area.  There isn’t a retirement annuity penalty for federal retirees that are reemployed in the private sector. You can also explore rehired federal annuitant opportunities.

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 independent adviser. A sample analysis is available for your review. This service is not affiliated with the author, www.federalretirement.net or Bookhaven Press LLC.

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

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 articles are not intended nor should they be considered investment advice. Our reply is 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, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Wednesday, 6th July 2011 by Ann Ozuna

Whether you are the “fed” or the “former spouse”, if you have retirement, insurance benefits or TSP benefits which were divided or assigned in the divorce decree, your work is not done when the ink dries at the courthouse.  First of all, you will need fuzzy seal “conformed” copies of your decree and any augmenting retirement or TSP orders; you get these from the courthouse where your divorce was finalized.  If any part of the TSP or the retirement was divided, you will need at least three.  Both the fed and the former spouse will need these copies.  Add one more copy if the fed was required to keep life insurance in effect by the decree.

Attorneys can send off copies of your decree/order(s) to the appropriate places or you can do it yourself.  If you are having the attorney do it, be sure they send off “conformed” copies, not just ones from the copier.  Whomever does the mailing, it should be sent by either priority mail with signature confirmation required, or certified mail.

If your decree was a long time ago and you have not sent off the decree/order to be “accepted for processing” at OPM, do not wait until retirement.  Take action now before retirement in case OPM interprets your decree differently than you intended or your decree/order is not deemed acceptable.  In a case like this, you will need to go back to court and get an amended decree/order and then send that one in to the agency which did not accept it.  Once accepted, you will receive a letter acknowledging your decree/order and explaining how it will be implemented.  Keep a copy of this letter with your copies of your decree/order(s) in a safe place.

If your decree states that a follow-on order will be written or a QDRO or a Domestic Relations/Retirement Benefits Order will be written, be sure that is done immediately by an attorney or other service familiar with the OPM or TSP acceptable wording.  Your federal benefits are NOT subject to a law called ERISA so no references to that law should be in there.  Check the contents of the order personally before it is filed with the court to see that it says what the decree says and does not award anything not specifically mentioned in the decree.  Once this order is signed and filed, any “extras” stuck in the order are likely to be paid out, even if they were not in the original decree.

The “fed” should send a conformed fuzzy seal copy of the divorce and any implementing orders involving the retirement to the OPM Court Orders Branch, PO Box 17, Washington DC, 20044.  Include a cover letter with your return address requesting that the order be declared a COAP, court order acceptable for processing.  OPM will review and send you a letter back stating the method they will use to compute the payments out of the retirement to the former spouse, address the existence of any survivor benefits for the former spouse and who will be paying for them and acknowledge any language prohibiting or sharing a refund of contributions.  In the absence of any decree/order language to the contrary, the retired fed will have the cost of any survivor benefit awarded taken out of the fed’s remaining part of the retirement.

If the “fed” is required to give survivor benefits in a court order, the retiring fed will need a fuzzy seal copy of the order(s) to send in to OPM with the retirement application.  The former spouse will need a fuzzy seal copy of the order(s) to send to OPM to apply for benefits when the “fed” retires.  Former spouses need to keep OPM advised of address changes between the date of divorce/order acceptance and the date the “fed” retires.  The former spouse will need to send a written statement to the OPM Court Orders Branch at that time with the fuzzy seal copy of the decree/order, their current address, and a statement that they are the person (DOB/SSAN) in the order and that they have not remarried before age 55.  OPM will then request the former spouse banking information to set up direct deposit.

The “fed” should change designations of beneficiary for unpaid compensation (unused leave and the last paycheck), the retirement system (CSRS or FERS contributions), and life insurance with their agency unless the decree requires that the former spouse be kept as a beneficiary.  Forms needed are:

• SF1152, for unpaid compensation
• SF 2823 for Life Insurance
• SF3102 or SF2808 for Contributions to the Retirement Fund (FERS or CSRS)

These forms are available at http://federalretirement.net/retireforms.htm under the forms list.

• TSP3 for Thrift Savings Plan Account

The TSP designation of beneficiary form is  completed with witnesses’ signature on 2 pages and faxed or mailed to the address on the form.

These forms must be done in hard copy as the fed’s signature needs to be witnessed.

Former spouses who are on the federal health plan will come off 31 days after the divorce is final.  Notification can be made by the fed to the agency or the former spouse to OPM.  Even though the fed may still have family coverage to cover children, the former spouse cannot remain on the plan.  The former spouse can request Temporary Continuation of Coverage (TCC) for 3 years, paying 102% of the total premium (federal and employee shares) of a single federal health plan.  If a survivor benefit is awarded in the decree/order, the former spouse may apply for Spouse Equity Temporary Continuation of Coverage, allowing the former spouse to elect a single federal health plan and remain in the federal health plan system as long as they meet OPM requirements and pay 100% of the total premium (federal and employee share).  TCC must be requested within 60 days from the date of divorce in writing to the fed’s employing office, or to OPM if the fed is retired, by the former spouse who also sends along one of the “conformed” copies of the decree/orders.  The folks at TCC will send back election forms for the former spouse to make a choice and start paying for the health plan.  The former spouse may elect a different health plan and will pay the total premium rates for a single person for the plan s/he selects.  Former spouses need to pay attention to the deadlines in all correspondence.  These deadlines cannot be waived. For more information on divorce and its impact on federal employees benefits visit Ann’s Divorce Forum.

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 Retirement Benefits Summary Analysis online at http://federalretirement.net/assistance.htm.  A benefits specialist will prepare a personal retirement analysis detailing your total benefits and expenses verses total retirement income from all sources. A sample analysis is available for your review.

Visit our other informative sites

• http://federaljobs.net (Federal Career & Job Center)
• http://federalretirement.net (FREE Retirement Planning Guide)
• http://federalretirement.net/jobs.htm (Retiree Job Opportunities)
• https://fedretire.net (Retiree BLOG)
• http://fedcareer.info (Career Development Center)
• http://postalwork.net (Postal Career Center)
• http://searchfedjobs.com (Job Search – All Sectors)
• http://ehsjobs.org (Environmental Health & Safety Job Center)
• http://stolenplates.com (What to do if this happens to you)
• Educational Opportunities (Find educational opportunities in your area)

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 articles are not intended nor should they be considered investment advice. Our reply is 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, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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