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TSP Fund Performance, Skyrocketing FEHB Costs, and Updates

Posted on Thursday, 27th January 2011 by

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I have always been fairly conservative with my TSP account considering that I’m now retired and may need these funds down the road. I look at my TSP performance from several perspectives. First, I compare my contributions to market value for total gain, the amount my account has grown since retiring, and then look at year to year statistics to track performance for recovery periods such as the latest recession. My TSP account is now worth more than it was in 2008 and my total account has grown substantially above my contributions over the years. I actively manage my account moving funds from the conservative G Fund to other funds as the business environment changes.

Even though the TSP posted its second year of positive returns you may not have fully recovered suggests Linda Duncan, our Benefits and Finance Forum host. If the funds have done so well in the past two years, how come your account balance might not have fully recovered from the devastating market downturn in 2008?

In 2008, the C, F, and I funds lost between 36.99% and 42.43%. The C fund gained a total of 41.74% in 2009 and 2010 combined, yet your account balance has not fully recovered. If you had $100,000 in the C fund in 2008 and left the funds in the C fund through 2010. The year-end accounting would look like this:

  • 2008: $100,000 – 36.99% = $63,010 new balance
  • 2009: $63,010 + 26.68% = $79,821 new balance
  • 2010: $79,821 + 15.06% = 91,842 new balance

Therefore, if you left all your money in the C fund and did not contribute additional funds, you are not quite back to what you had before 2008.  For the C fund to return to the pre-2008 balance of $100,000, the C fund would have to earn at least 8.89% in 2011.

Simply put, if you have a 25% loss on your savings followed by a 25% gain, do you have the same amount of money that you started with? The answer of course is no because of the amount of money the percentage is derived from is different.

Check your historical account balances in your TSP account at www.tsp.gov to determine if your TSP account has made a full recovery yet.

Skyrocketing FEHB Costs

I reported in my October 2010 article that my FEHB premium increased 12% and since then many feds have been shocked to discover their premiums went even higher. Abby’s FEHB coverage in New York increased $188.03 per month and her carrier attributed the increase to the new health care bill. She immediately contacted her Senator’s staff because she thought that the new health care bill would be cost neutral.  The staff at first was at a loss for word;  however, they called back several days later to advise her that “the bill included an increase for all federal workers in 2011 and that in the future retirees may need to absorb more of the health care costs.”

I’ve known Abby for many years and she was a respected senior federal manage.  When you talked with her you knew you were getting a straight answer, not a politically correct reply. You may not have liked the response but you knew you didn’t need any clarifications after the discussion. That is what we need from our politicians today, straight talk based on known facts and research not subjective conjecture.   I met with my Congressman about this and other issues in late 2010 and he advised me that he voted against health care reform for this and many other reasons.  When they added children up to age 26 to all existing policies and now insurers can’t exclude anyone with pre-existing conditions and then waived signup making it OK to sign up when you get sick, costs for insurance companies are projected to skyrocket! Now that the new regulations are starting to take effect, the administration has granted hundreds of waivers because companies simply can’t afford to maintain coverage under the new system. If you recall, Nancy Pelosi said when they placed the new health care legislation up for a vote and I quote, “We have to pass this bill so we can find out what is in it.”

Unfortunately… what I and many others are finding out is that they should have READ THE BILL and understood what was in it before passing it! Would you buy a house without a walk through, checking out the neighborhood, a home inspection, and understanding what you would have to pay for it!

Updates

  • Roth Conversion – If you converted a part or all of a retirement account to a ROTH in 2010 to take advantage of paying the taxes on the withdrawal in 2011 and 2012 you will received a 1099-R from your brokerage account. The statement will show the full amount of the withdrawal. The 1099-R doesn’t show the transfer to a ROTH account. Don’t panic, you will receive a Form 5498 showing the transfer and will use that to substantiate paying the taxes in 2011 and 2012.
  • Need a Break from the Cold? Read Nancy Holston’s January article on great travel Deals this time of year. After spending the past month getting out in the weather to participate in her favorite activities she needed a break from winter so she can survive winter.
  • The TSP is launching the new L 2050 fund on January 31. Check out the new fund on www.tsp.gov. Their new web site is far more functional than the older site and I like the feature where you can go back and check your funds value on any past date.  Go to the date you retired and print out the report and keep it with your retirement paperwork. It provides a basis for determining your gain since retirement.
  • House Bill H.R. 408 is a five year spending reduction bill.  The President mentioned this in his State of the Union Address on January 25th. Section 401 is titled “Extension of Federal Employee Pay Freeze.”  The bill proposes extending the pay freeze to 2015. There are 24 cosponsors of the bill and only time will tell if it is passed.
  • COLA calculations for 2012 are still pointing in the negative direction which doesn’t bode well for a cost of living increase next year. There is still plenty of time for inflation to raise its ugly head but I wouldn’t hold my breath. That seems hard to believe when you consider how fast our health care premiums; fuel and food prices have escalated over the past year!

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 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

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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Need a Break from the Cold? Travel Deals Abound in January!

Posted on Wednesday, 19th January 2011 by

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I’ve been retired over two years now and the winter before retiring I had dreams of spending my winters indoors after retirement looking out into the woods during snow storms watching snow flakes gently float to the ground while Cardinals and Blue Jays feasted at the feeders scattered amongst the trees.  I would drink my coffee while reading the newspaper and enjoy not going out into the cold.  The fact is I’ve discovered that I am not the type, yet anyway, to just sit in the house and relax during the winter.  I will admit watching the snow fall and the birds eat is beautiful, but the fitness center is calling me, I want to see the latest movie and I want to have lunch out with a friend.  After spending the past month getting out in the weather to participate in my favorite activities I need a break from winter so I can survive winter.

If you’ve signed up for weekly saver fares from your favorite airline or the many agencies that send weekly emails with the latest travel deals then all it takes is a little time online to find a getaway from winter for a week or two and taste some of that warmth that’s still three months away.  Whether you just want to relax on the beach, go to an amusement park in a warmer climate or cruise the Caribbean or Mexican Riviera, with a little time you can find something that fits your budget.  I found a great deal on an 11 night Caribbean Cruise, balcony suite with ship board credit and a free dinner in my choice of specialty restaurants on board.  All for what I would normally pay for an inside cabin.  But there may be some of you that love playing in the snow.  There are deals for you snow bunnies also!

If a last minute getaway is more to your liking, then watch your weekly saver fares for a warm spot with a low fare.  Your next move is finding lodging but don’t forget to look at vacation rentals.  It is far better than a hotel, more relaxing and you have the option of fixing your own meals or eating out.  I have one recommendation about traveling to Florida in the winter.  Make sure you’re not going during the Daytona 500 before you click on “complete purchase” for that great airfare.  I made that mistake a few years ago.  I knew car rentals in Florida are very reasonable.  After buying my ticket I couldn’t find any rental car under $400 for the week.  I could not figure out why until I got on the airplane to travel to Orlando.  The NASCAR gear that covered nearly ever passenger on the plane cleared things up quickly!

Here are some of the deals available now and a list of resources to assist you in a finding your own special winter getaway, whether you live in a cold climate or want to go skiing to rejoice the fun that all those snow flakes can create.

  1. www.bookingbuddie.com has a list of hotel rooms under $100 a night, starting at $28 in Cancun Mexico up to $91 in Jamaica.
  2. www.Groupon.com and www.LivingSocial.com offer daily deals for lots of items including an occasional weekend getaway.  Living Social had a weekend getaway to Virginia Wine Country last week at the Rosemont Manor with a price of $379 for 2 nights in a luxury suite.
  3. www.vacationstogo.com has a list of deals from ports all over the US to a variety of destinations.
  4. http://Disneyworld.disney.go.com Walt Disney World has special resort rates for this winter and spring.
  5. www.usairwayscruises.com has a list of deals at great prices.  You can sign up for their weekly cruise deals email.
  6. http://cruises.continental.com also has a list of deals at great prices.  Sign up for their weekly cruise deals for a list of their best deals.
  7. www.orbitz.com can give you a snap shot of airfare deals.  I recommend you also check the airlines website which may match the price and have lower fees for a savings.
  8. www.kayak.com offers a weekly email with their best travel deals.  They will also keep track of airfares for your favorite locations and let you know when there is a sale or package deal you might want to take advantage of.
  9. www.independenttraveler.com offers a snapshot of weekly deals in an email subscription.  Their current focus is winter escapes with a list of the top 8 destinations.
  10. www.crucon.com is having a January Sail-a-bration with a list of deals weekly.  Their newsletter sent weekly to your email advising of the latest deals, some are so good you don’t want to pass them up.
  11. www.snow.com for a list of deals to go play in the snow out in the Rockies!
  12. www.onthesnow.com not only gives you the snow reports for any area of the country they also have links to show you current deals at ski resorts anywhere in the US.
  13. www.ski.com provides a list of deals but will also customize your ski vacation to meet all your expectations.

Well, that’s it for this month!  As for me, I’m off to sit on my balcony looking at the azure color of the Caribbean as I float by islands and enjoy my coffee and read my kindle…or maybe I’ll explore the ship, swim and have lunch with my friends.  Sitting is just not my style, yet anyway!

Nancy Holston

Request a FREE 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.

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

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

Posted in BENEFITS / INSURANCE, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, WELLNESS / HEALTH

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Retirement Precautions, TSP Changes, Updates, and Retiree Jobs

Posted on Sunday, 2nd January 2011 by

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Recently OPM clarified a number of issues around interim annuity payments and what retirees can expect when they first leave federal service.  It is essential that federal employees have sufficient cash available and are financially prepared when retiring to allow OPM to complete a final adjudication of their claim.

OPM is now processing applicants in an average of 133 days however they can take up to a year to process a retirement application if information is missing or problems are encountered.  Last year OPM processed over 100,000 retirements, a significant increase over the previous year. The Federal Times reported that “retirement applications saw an unexpected spike in October. That month’s 11,411 applications were 42 percent higher than October 2010, and 60 percent higher than October 2009.”  With the possibility of many agencies offering VERAs and VSIPs in 2012 the delays can only get worse.

Many are receiving interim payments for far less than they anticipated due to a number of issues.  OPM indicates that annuitants will receive approximately 90% of their expected NET monthly payment, less federal income tax withholdings.  NET payments equal what is remaining after deducting health care and life insurance premiums from the gross amount.  I received an interim payment of 70% and my claim was processed in 90 days when I retired.  Some have reported receiving as much as 50% less due to extenuating circumstances and the problems still not resolved a year after they retired.

FERS retirees need to be aware of the fact that OPM doesn’t include the FERS Supplement in the interim payment because they don’t have the data available until the retirement is completely processed.  OPM reported that a number of factors cause reduced interim payments or prevent OPM from initiating interim payments. These factors include:

  • Court orders that are on file at OPM.  Court orders can contribute to as much as a 50% reduction in interim payments. Check out our Divorce Forum for clarifications and informative articles on this subject.
  • Part time service
  • Unpaid military deposits
  • When a redeposit wasn’t paid for refunded service creditable towards disability retirement
  • Employees entitled to special retirements for LEO, FF, ATC or other special retirement programs
  • CSRS offset applicants with 90 days of or over the age of 62
  • Non-deduction service performed after 10/1/1982 creditable under CSRS where the deposit has not paid in full
  • Deposits have not been paid for FERS creditable non-deduction service
  • VA part time Direct Medical Solutions (DMS) physicians, including doctors, scientists, and surgeons
  • Refunded service  creditable towards CSRS non-disability retirement ending on or after 3/1/1991 where the deposit has not been paid
  • Excess LWOP
  • Service  that is unverified or missing
  • Where an insurable interest survivor election is made
  • When no survivor election is made
  • Receipt of military retired pay

Don’t be left in a lurch when you leave. Check out my article titled “Can You Survive on Interim Retirement Checks” to avoid OPM retirement processing delays when you leave and learn how to be prepared for the unexpected.

TSP Salary Deferral Amount Increased

A few months ago the IRS released the new deferral limits for the TSP. For 2012 you may defer up to $17,000 into your TSP. If you are 50 or older you may take advantage of the catch up provision and defer an additional $5,500. A common question that I’m asked is, if I’m turning 50 during 2012 when can I start deferring the additional amount. The answer is if you are turning 50 during 2012 and wish to take advantage of the catch up provision you may begin the extra deferrals with the first payroll of 2012.

To change you TSP contribution amount you will need to fill out form TSP 1.

To take advantage of the catch up provision you will need form TSP-1-C.

The end of the year is also a great time to review your beneficiaries. A number of life changing events can happen throughout the year. If you’ve not reviewed your beneficiaries for a while I would recommend taking a few moments to review them. I had a client pass away a few months ago. He had changed his beneficiaries without his wife’s knowledge. When he had passed away unexpectedly I had to inform his wife that she wasn’t the sole beneficiary of his accounts. I can say first hand that visiting the spouse in this case was very difficult.

Paul Risser, our new Financial Planning Forum Host, submitted this timely update. Visit his forum for additional guidance. You can add Paul’s articles to your email newsletter list by clicking here and type in your email address.  Instructions on how to update your newsletter profile will be emailed to you.  Paul will be contributing insightful articles on economic trends and retirement planning targeted towards federal employees and retirees.  We posted the following articles that you will find helpful:

  • Why Financial Planning:  What It Is and what can it do for you
  • Next Article: What Beneficiaries Need To Know: What do you do when an account owner passes away?

Updates

Recent Forum Host Articles:

Retiree Job Lists

We continue to post new job listings on our Jobs Board from employers nationwide that are looking for retired federal employees. Many retirees supplement their retirement income with full or part time work. Here are several new job listings that you may find interesting:

  • Comptroller / Accounting Manager for the Washington D.C. area. Maintain accounts of assets, liabilities, commitments, receipts, disbursements and other financial transactions of a federal agency.
  • Coupon Merchandisers for  Reston/Great Falls, VA,  Collinsville, VA,  Richmond/Chesterfield, VA,  Tuscaloosa, AL,   Greensboro/Centreville, AL, and  Bangor, ME. Pay from $8.00 to $9.50 per hour and flexible hours.
  • Ski Resort Jobs – Vail CO, UT, CA and other locations. (Multiple positions)
  • Telesales Exec Trainee NE I, Orlando Florida

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

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

Visit our other informative sites

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

The information provided may not cover all aspect of unique or special circumstances, 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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Tighten Up! A Flash From the Past, Retirement Cost Analysis, & Updates

Posted on Friday, 31st December 2010 by

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Please Forward This Email to Others That Would Benefit From This Information

Tighten Up …….

I can vividly recall dancing to this song by Archie Bell and the Drells in the late sixties with my wife of 41 years now. I’m sort of stuck in the 60s these days with XM Channel 6 and this song brought back many memories, good ones I might add that are in conflict with what is going on today. I can hear the guitar riffs and lyrics as I write this.

Do the tighten up

Just do it

Come on and tighten up…

We all have to tighten up in so many ways today with no cost of living adjustments for social security and annuity payments, and now an across the board federal two year pay freeze.  Add to the mix inflation that government hides by fudging the Consumer Price Index (CPI). Did you know that food and fuel are excluded from the CPI calculations? I go to market with my wife and everything costs $3 and up, butter has increased over 100% in the past year, meat costs are through the roof, a small roast costs $12 or more today and only a half of that 2 years ago. We all get the point especially when you shop too, and by the way make that necessary stop at the gas station where gas now costs $3 a gallon in WINTER, projected to be $5 a gallon this summer. Yes, we all have to tighten up because of government’s out-of-control spending.  Check out the suggestions in my previous article on ways to cope with rising prices.

Most of us understand that annuitants and actively working employees from all sectors must share the burden. Do we like it – hell no! However, this sacrifice has to spread across the board to the state and local municipalities as well. A 2007 study estimated the unfunded liabilities of state and local employee pension systems (including teachers) to be as large as $1.4 trillion according to a University of Missouri–Columbia study.

Local and State government worker’s benefits are more generous than the federal sector in many cases. I requested copies of the Robinson Township, PA,  municipal worker’s and Montour school teacher’s contracts under the Freedom of Information act. They charged me – a local resident – $100 for copies and wouldn’t provide electronic versions. I was shocked at how generous their benefits are compared to the federal and private sectors.

Teachers work 190 days, 7.5 hours per day or 1425 hours per year. The highest salary for the current school year is $99,665 which is reached after 17 years, one step for each year of service.  This doesn’t include additional pay received for working summer programs, curriculum writing, detention, relinquishment of planning period, homebound instruction, and any site assignment beyond their 7 ½ hour normal school day. When you divide $99,665 by 1425 hours worked teachers with 17 years of service earn $70 an hour and unlike federal workers, many in the private sector, and all on Social Security their pay raises are fixed under a 6 year contract through 2013 at what I calculate to be approximately 2.5 to 3% per year. It isn’t only retirement, teachers also receive 10 days of paid sick leave plus 3 personal days, up to 7 days bereavement leave, and time off with pay for jury duty, certain athletic events and union association business activities each year plus up to a one year sabbatical leave with half pay after just 10 years on the job.

Pennsylvania teacher retirement benefits are based on the following formula for what they designate their Class TD benefit:

2.50 %

X Final Average Salary

X Credited School Service

Yearly Benefit Payment

+

2.00 %

X Final Average Salary

X Credited Non-School Service

Yearly Benefit Payment

Teachers with 35 years of service (at any age) and an average high three salary of $97,265 would retire under their traditional “defined benefit” (DB) pension system with a pension of .025 x 35 x $97,265 = $85,106 plus social security if eligible. Combined retirement earnings can be more than what they made while working and this calculation doesn’t include creditable non-school service for the second part of the equation or any additional pay received for time worked beyond their normal 71/2 hour day! A FERS federal retiree with the same high three average salary receives 1% times years of service times average salary for $34,042 per year!

It’s not just teacher contracts, municipal worker too receive generous benefits including 18 paid sick days, paid time off for 9 holidays, their birthday, plus 2 personal days per year, excellent pay, and attractive retirement packages. States and Municipalities across the country are on the verge of bankruptcy and residents face huge tax increases to pay for the large unfunded retirement liabilities and all too generous pay and benefits packages. It’s time for teachers, state and municipal workers, union leadership, and municipal managers and school boards to take Archie Bell and the Drells’ “Tighten Up” routine to heart and join in the shared sacrifice.

Request copies of your township’s teacher and municipal worker’s contracts, insist they fully disclose unfunded liabilities, salary and benefits, and hold your elected representatives accountable. You too will be surprised at what you and your neighbors are funding.

Retirement Cost Analysis Update

Matthew, a site visitor sent a message asking for clarification of the Retirement Cost Analysis Spreadsheet example that I have online. He noticed that the total take home pay of the retiree in the example was less than the employee’s total expenses pre-retirement. The example leaves out the spouses income so the retiree will know what their total expenses will be based on the annuitants income only. A spouse could be laid off or stop working for other reasons. I neglected to mention that in the example and updated it to reflect this. It also leaves out Social Security income. I retired under the CSRS system however I did add a Social Security entry line on the form. You would be surprised to find out how many retirees find their income in retirement insufficient and below their total expenses if not immediately several years after they leave due to inflation and other factors. There are many reasons for this including couples marrying later in life and federal workers in their late 50s and early 60s have college age children and major expenses. That is just one reason why I highly recommend feds pay off their mortgage before they retire. My October 2010 article available at https://fedretire.net/?p=373 discusses the process I used to pay off my mortgage before I retired.

For a comprehensive cost verses expense analysis I suggest using the Retirement Planning & Expense Analyzer that you can download online at http://fedretiresoftware.com/ that was developed by John Talbot, a federal retiree. You can download a free trial version of their CSRS and FERS Benefits Calculator and Retirement Planner software program. This software has been used by tens of thousands of federal employees, since 1999, to thoroughly investigate the affordability of federal retirement. It is compatible with all 32 bit windows software from Windows 95 to Windows 7.

For a professional review of your personal situation you can submit an Assistance Request online at http://federalretirement.net/assistance.htm.  A Benefits Specialist will use the professional version of this software to prepare a free analysis of your entire situation with trend lines that reveal you and your spouse’s expenses verses total retirement income from all sources.  We posted a sample analysis online for you to review. Notice the trend lines on the report, they are very revealing.

UPDATES

  • Beginning this month 10,000 baby boomers a day are turning 65. This trend is projected to continue for 19 years, I turn 65 in 3 years. Can’t believe just how fast the time is flying by.
  • Nancy Holston, our travel editor, talks about the ins and outs of Travel Insurance in her recent article that you will find helpful when planning your 2011 trips. She touches on the many issues that must be considered including extended coverage, medical treatment while away from home and much more.
  • FEDWEEK offers a free report titled The 14 Worst Retirement Planning Mistakes a Federal Employee Can Make. It talks about not leaving retirement to chance by not attending a retirement seminar to the effect of WEP and GPO that you will find helpful. Fedweek publishes a number of helpful booklets on retirement subjects.
  • A two year federal pay freeze was passed during the Lame Duck session and affects most federal pay scales and there will be no COLA increase in 2011 for annuitants.
  • The 2% Payroll Tax Decrease in 2011 – FERS employees will notice a 2% pay increase this year due to the temporary 2% reduction in the Social Security Tax rate. CSRS employees do not pay Social Security taxes and will not see an increase in take home pay.

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

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, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS

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Travel Insurance, Peace of Mind when you’re Away From Home

Posted on Monday, 27th December 2010 by

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You have just made a deposit on a special vacation to celebrate an anniversary, mark a special event or you are finally going on that dream vacation.  Planning your trip is your first step and there are things to consider, picking out the destination, selecting a hotel, will you need a rental car, the flight and resort selection or cruise line itinerary.

If you book a cruise, buy a package deal at a resort or book a group tour the agent handling your vacation plans will likely suggest purchasing travel insurance.  If you think only in terms of protecting your vacation investment then travel insurance may seem unnecessary.  However, travel insurance is much more than securing the funds you spent to go on your vacation, travel insurance can be a life saver.

The best reason to buy travel insurance is for peace of mind.  Now that we’re in that “senior” area, and unfortunately we’re not talking about our school days, we need to think about unexpected events that could impact our dream vacation plans.  As your vacation dates approach you or a parent could become ill and need care leaving you in a position of deciding what to do about your vacation.  I once found myself in severe pain in the middle of the night while away from home on business with only a small town hospital for treatment.  Fortunately it was not a serious problem but it is an event that I remember when I plan a vacation; you could have an unexpected health problem.  You need to determine your accessibility to medical services at your vacation destination.

If you are going to be on a cruise or visiting an exotic remote area you may require special transportation to a medical facility in an emergency. I want to be sure the insurance policy covers the cost of an unexpected illness or medical emergency, especially if it requires special transportation to a proper medical facility for treatment.  You could end up paying thousands of dollars without travel insurance.  The last thing you want to be worrying about is how to pay all the costs when you need to focus on your recovery or that of a loved one.   If your vacation plans include a cruise, cruise lines are normally only prepared for minor medical problems while at sea.  If you need significant medical care the cruise ship will arrange for your transport from the next port of call to the nearest medical facility in a medical emergency, but you will be responsible for the costs.  Travel insurance will cover those costs up to the limit of the policy you purchase.  Some policies include an option to pay some of your medical expenses as well, depending on your needs and the policy you decide to purchase.

A second concern I have when selecting a policy is covering the cost of a delay in arriving at my departure point due to bad weather, especially when my favorite time to get away is winter.  I want to get out of the cold and enjoy my warm vacation, not sit in an airport wondering just how long the delay will be and how will it affect my reservations etc.  If you are going on a cruise and miss the embarkation of your ship some policies will pay for your transportation to the next port so you won’t “miss the boat” for the entire cruise.  Travel insurance can pay for unexpected hotel needs, additional costs for change in flights as well as lost/damaged luggage up to the amount specified by the policy.  Check your policy before you leave so you’ll know what kinds of support services are available through your policy.  Some insurers provide support 24/7 with an 800 number you can call should you need help changing flights or getting a hotel if you are delayed by bad weather.

If you have a last minute family emergency that forces you to cancel your vacation plans, nearly every policy includes trip cancellation with a list of what the insurance company will reimburse you for, up to the actual cost of the vacation.

Resorts and cruise lines offer their own travel insurance, however they may not be the best choice since they are directly involved in your travel, i.e. have a vested interest in whether they reimburse you or not.  There are many companies that offer travel insurance and you can easily compare plans on the internet selecting the one that best meets the needs of your specific travel plans.  These policies typically cost less than the insurance offered by the cruise line, resort or tour company.

The peace of mind I get from buying travel insurance is worth every penny.  Travel insurance policies range in price from $10 to $20 a day per person depending on your age and preexisting  medical conditions and the destination of your travel plans.  Be sure to read your policy thoroughly and take a copy along.  When you complete the policy information, be sure you provide accurate information since any discrepancy could lead to a denial of a claim.

Safe and healthy travels!

Resources:

Travel Insurance web sites:

www.insuremytrip.com
www.squaremouth.com
www.mnui.com/quotes.asp
www.travelguard.com/travelinsurance
www.quotewright.com

International Travel Insurance quotes:

https://insurancequest.com

Reviews of Travel Insurance providers:

www.travelinsurancereview.net
www.travelinsurancereviewer.com

Nancy Holston

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

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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One, Two, Three – Its so Easy, Thoughts and Updates

Posted on Monday, 29th November 2010 by

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One – Two – Three…….

Remember the lyrics “One, Two, Three, It’s so Easy” by Len Berry from the 1960s?

One, two, three

That’s how elementary it’s gonna be

Just fine and dandy

It’s easy

Like taking candy from a baby

Well, most of the good things in life don’t come easy and retirement is just one of the arenas that you have to pay particular attention to long before you leave. The process can be complicated, requiring lots of planning before and after you leave in order to keep you and your family safe and secure. Notice that I said ARENAS, not areas! You must enter the arena, called retirement, and get involved to make it work effectively for you. I entered this arena after my military service ended in my early 20s. I applied for several private sector and federal jobs and chose government even though salary was considerably less then. My wife and I discussed the issues and I decided on government based on the ability to retire early and the excellent benefits available overall.

I listen to XM radio and “One, Two, Three” came on this week and the melody keeps playing over and over in my head. I remember when this song was first released in the mid 60s. I was 16 and purchased my first tape recorder and played this song over and over again until I knew all of the lyrics and it still lingers in my subconscious. In your teens everything appears to be easy and life is a joy ride waiting for us to get on board and ride it out. Little did we know back then all of the twists and turns we would encounter along the road! Just maybe this song had something to do with my overall success. I’ve always been the type to tackle anything with positive intent and interested in learning new things. Maybe that song kept replaying in my subconscious telling me nothing is impossible and “life is so easy, like taking candy from a baby.”

Many feds tend to rely solely on their federal annuity, TSP, and COLAs with little thought to alternatives. This can lead to a false sense of security that could derail your welfare and health in retirement. An example is the suspended COLAs for two years running.  Our annuities haven’t changed while insurance premiums, Medicare payments, food and fuel costs have increasing significantly. Then factor in the unexpected; things change, couples divorce, health problems arise, and President Obama’s bipartisan fiscal commission and other groups are recommending significant changes that will potentially impact all of us long term. There is talk of freezing government salaries, changing the way federal COLAs and annuities are calculated such as using your average high five salary to reduce future annuity payouts for starters. All of this is conjecture at this point however with the national debt exploding, government, no matter what party is in power, will have to take decisive actions to stop the bleeding.

One of the side effects of the new QE2, Quantitative Easing initiatives along with excessive spending is that it will eventually fuel inflation.  The Fed is buying Treasuries, over 600 BILLION worth with new printed money.  Compare this to a Company that offers a 2 for one stock split. A company stock that sells for $100 a share issues an additional share of stock to each owner of record doubling their outstanding common stock. The new price per share is $50. However, the stock owner retains the invested value and now has twice the stock he had before the split occurred. Unfortunately, Uncle Sam doesn’t issue citizens new shares or even backs up the new currency it printed to buy their own Treasury certificates! They don’t send you another dollar for each dollar you own and the funds that retirees and everyone holds are now worth less on the road to being worthless if they don’t address the underlying debt and spending issues.  The effect of QE2 is to flood the market with new money diluting our currency so it will buy less and things will cost more. That’s INFLATION.

What can federal employees and retirees do to prepare and moderate the impact of these changes? Planning and preparation is the key and there are many things for you to consider. The good news is that with proper planning you can at least cope with what is coming down the pike.

Thoughts

There are conflicting views on what lies ahead ranging from deflation and inflation to financial collapse, so what can you do from a practical standpoint to protect yourself in retirement. My two cents worth follows:

1)    The only good debt is NO debt. Pay off your credit cards, bills, and home if possible before you retire. It isn’t as hard as it seems. I discuss how I paid off my mortgage years before I retired in my October 29th column.

2)    Live on less than you earn, be frugal and buy wisely. Each year, starting years before I retired, I saved half to the full amount of each year’s pay increase.

3)    Determine if you are financially, emotionally and physically prepared to retire.

4)    Perform a retirement cost analysis, estimate your earnings and bills in retirement. I developed this free tool for all to use and examples are provided to help you work through the process. Explore other analysis tools.

  • Try the free trial version of the Retirement Planning & Expense Analyzer that was developed by John Talbot, a federal retiree. I wish I had known about this excellent tool when I retired a few years back.
  • For those who need help, request a detailed Free Personal Summary of Benefits Analysis. A local advisor will meet with you and use the professional version of this software or its equivalent to compile an extensive report tailored to your personal needs and desires.

5)    Prepare a basic estate plan to protect your family and loved ones.

6)    Be prepared and have 30 days or more of emergency food and water supplies set aside to the extent possible. Pick up a little extra each visit to the market, especially items with longer shelf lives that you anticipate will increase in price due to inflation.

7)    Learn about investing in mutual funds, ETFs, stocks and bonds.

  • Subscribe to Better Investing to learn the ins and outs of successful investing. I joined the National Association of Investors Corporation (NAIC) in the 1970s to learn about Dividend Reinvestment Plans, investment clubs and safe investment techniques and strategies. This magazine provides advice to novice and experienced investors alike and NAIC’s training programs are very helpful and will get you off on the right foot. It has always surprised me that so many know so little about how to manage their money. The more you learn the more you earn.

Investment options will be discussed in my next article. Many professionals suggest investing in commodities such as metals, real estate and inflation protected securities to fight inflation. Others suggest large cap diversified US and multinational corporations that are flush with cash and well managed.  The long and short of it is that retirees have to protect their assets for the long haul and you can’t take undue risks with your life savings.  There are many ways to minimize your risks and earn decent rates of return that far exceed the CD rates of today.

UPDATES

  • Roth IRA Conversion Deadline – You have until the end of December to convert to a ROTH IRA. The advantage this year is the ability to pay the taxes due from your TSP or 401K withdrawal through equal payments in 2011 and 2012. This is the first year without an income limit and anyone can take advantage of this option. ROTH distributions are tax free, there is NO minimum distribution at age 70 ½, inheritance taxes can be reduced, and your heirs inherit ROTHs tax free. I converted one of my retirement accounts to a ROTH this year to take advantage of tax free gains and no minimum withdrawal requirements at age 70 ½. For more information on converting all or a part of your TSP account to a ROTH review the guidelines at http://federalretirement.net/tsproth.htm.
  • Travel Updates – Read Nancy Holston’s latest travel article – Her new article titled Venice in the Fall, an Enchanting City was posted on our Forum blog last week. If you ever desired to visit Venice read this highly entertaining and informative article.I mentioned a travel service in a previous article that allowed visitors to view weather along their planned route for up to 10 days in advance of their departure date. I found two excellent national services that provided extended projections that you can use when you travel to select the best date to leave. Go to www.weather.com and select “Current Weather” from the Map drop down menu. On the map page select (1) Outdoor Activities and (2) Vacation Planner and then below the map select up to 10 days out to view the projected weather forecasts along your route. For detailed 10 day forecasts for each city along the way enter the city and state in the “Find Weather” bar at the top of each page. The NOAA site at www.weather.gov is also easy to use. Select “National Map” and you will find an extended forecast below the map. You can also enter the city and state at the top left of each page for detailed forecasts.
  • New Job Postings for Retirees – We had several new and interesting jobs posted on our employment page recently. The Department of Homeland Security is looking to rehire a part time Human Resource Specialist (Classification) at the GS-201-13 grade. If you are interested in this or other job opportunities visit our Jobs Board for full job descriptions with links to employers.
  • Energy Saver Window Inserts – We installed insulated cellular room darkening blinds in our family room several year ago.  When the outside temperature is below freezing the thermal pane insulated windows sweat and ice up when we have our whole house humidifier turned on. This shouldn’t happen with our new thermal pain window.If we leave the blinds up they are fine. I found a perfect interior storm window that solved this problem. The energy saving inserts are made with an aluminum frame with foam strips on the outside that are custom made to fit snuggly into the window sill. A heavy gauge plastic is used and they are durable. I’ve been looking for something like this for years. They are more expensive than the flimsy shrink plastic you buy at your local hardware store. If you are in need of window inserts visit www.windowinserts.com for more information.
  • Medicare clarifications – Tammy Flanagan wrote an excellent article on Medicare this month. Check it out on the Government Executive site.She discusses Part A through Dand what you need to know about these programs and the impacton your health care coverage.

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

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, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS

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Venice in the Fall, an Enchanting City

Posted on Wednesday, 24th November 2010 by

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Venice embraces the water at every turn as you walk the streets, called “stradas,” exploring the city’s shops and restaurants.  You can easily cross the water a dozen times or more each day while exploring neighborhoods and observing the Venetian life style. Imagine laundry hanging between buildings, over stradas and canals alike, indicative of the locals’ simple life. The small bridges that cross the canals vary in décor, size and appearance and in some places you’ll find the water so calm the reflection provides a perfect photo opportunity. Artistic signs mark businesses and apartment buildings while flower boxes brightly adorn windows everywhere in this city.  The narrow canals were my favorite areas to explore. In these quiet areas you may find a Gondolier giving a ride to city visitors or discover how local merchants get deliveries from small wooden boats.  When you need a break you can easily find a snack bar for a slice of Pizza and some Gelato anywhere you roam in the city.

The architecture of this old city is a mixture of Byzantine, Gothic, Renaissance and Baroque, representing distinct periods of this regions fascinating history.  You will find buildings from all these periods throughout the city but a visit to Piazza San Marco is a great place to start.  Shop windows are filled with Paper Mache masquerade masks of remarkable variety, both sparkling and colorful.  Street performers wear these masks as they work for donations in the busy tourist areas.  The city is famous for Murano glass works.  Many shops in the city sell Murano vases, plates, clocks, glass wear, and other abstract pieces to decorate your home.  Cafes line the Grande Canal throughout the city, but my favorite Cafes were along the narrow canals in the neighborhoods of the city.  We enjoyed a wonderful meal at a pizza restaurant in a quiet neighborhood along a narrow canal.  It was peaceful, sunny and delicious!

I like to travel because of the adventure, the unexpected discoveries you make, whether it’s a shop full of unusual items, a gallery of local artists work or a restaurant with great tasting local fare.  I especially love exploring areas that are not frequented by tourists.  When I get home it’s the little jewels I discovered on my explorations that made the trip special.  Venice offers lots of jewels if you are brave enough to explore it.

Venice is simply enchanting.

Getting around the city

This beautiful city is surrounded by the sea and is divided into neighborhoods by the canals needed for tidal flow and used for transportation.  The only motorized vehicles transporting the people of Venice rest in the water.  As a visitor to the city, public transportation or walking are your choices.  The Vaporetto, a water bus, is the public transportation system and it is both convenient and a must if you really want to see as much as possible during your stay.  You should consider buying a multi-day pass to save transportation costs.  However, if you plan to see most of the city by walking you may want to pay-as-you-go.  The Vaporetto can take you anywhere in the main city or to other islands that make up the entire city.  Spend some time at the island of Murano exploring the hand made glassworks where they are being created.  These artists works are unique and amazing.  If it’s the beach you love take the Vaporetto to the Lido.  It’s the Outer Banks of Italy, though not nearly as long.  You can also travel to Burano, home to lace makers and fishermen.  The homes on this island are brightly colored, which is believed to be of help to fishermen finding their way back home in times gone by.

The best way to see how Venetians live is walking around the city.  You will find Piazzas with benches and fountains sprinkled around the city giving you a chance to rest and admire the architecture while looking at your city map.  But if you’re daring, just use your instincts to determine your next strada to travel down.  If you like to know exactly where you are then Venice can be a challenge.  No matter how much time you plan to spend walking you will need a map of Venice to explore, if for no other reason than the comfort of knowing you have a tool to find your way back to your hotel if you find yourself feeling hopelessly lost.  I had 3 different maps and the most accurate one I found I purchased from the Vaporetto station.  Ask your concierge for a map, it was almost as good as the one I purchased.

Gondolas can take you to a specific location but they are generally just for the fun of seeing Venice as it was traveled in days past.  You’ll find Gondolas throughout the city, but they are generally concentrated in tourist areas such as Piazza San Marco.  The cost is dependent on the number of passengers and the length of the trip.  I recommend taking a bottle of wine, some cheese and bread and really enjoy the experience.  Most Gondoliers do not sing but do have recorded music, but there are a few who will sing for their passengers.  If you want to ride a Gondola but you have a tight travel budget you will find areas along the Grand Canal where the only way to cross over is by Gondola.  The crossing via Gondola costs less than one Euro per person in these areas.

You can also use a Water Taxi for transportation, but it is very expensive.  The Taxi driver will come to the hotel and pick up your bags if you are checking out, or take them to your hotel if you are arriving.  The taxis are clean and can hold more than 6 passengers if you are traveling with several friends.  Your hotel concierge can advise you of the approximate cost if you want the convenience of traveling by taxi.

Some cost saving tips if you plan to travel to Venice

The Marco Polo airport is on the mainland just across the sea from Venice.  You can take a public bus to Venice for 6 Euros.  It stops at the Pizzale Roma, a hub for arriving in the city by taxi, car or bus.  From Pizzale Roma you can catch a Vaporetto to get to your hotel.  You can also get a Water Taxi from the Airport to Venice, but on a budget the bus and Vaporetto will cost 12.50 Euros per person.

If you are spending a few days in Venice before boarding a cruise ship you can take a Vaporetto to Pizzale Roma and then catch the complimentary shuttle to the cruise ship terminal.  You may have to spend some time walking about to find the shuttle, but locals will be glad to point you in the right direction.

Breakfast American style is a luxury and it may not live up to your expectations.  After one attempt at enjoying an omelet I decided to eat like a local.  A Cappuccino and a pastry or breakfast sandwich was less than 5 Euros per person, delicious and filling at any of the snack bars scattered near hotels.  We also found the pizza by the slice snack bars were a great way to grab a quick and delicious lunch while exploring the city.  But when dinner comes, find yourself a nice café near a canal, preferably recommended by a local, and enjoy some wine and Italian cuisine.  Save room for dessert.

Nancy Holston

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

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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FEHB Insurance Company Dispute Resolution

Posted on Tuesday, 16th November 2010 by

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For 25 years I have had moderate to severe asthma, often sending me to the emergency room wheezing and hacking.  Four years ago I began using an amazing new drug that controlled my symptoms, allowed me to back off the steroid medications, and kept me from those late night visits to the ER.  However, since I have only had the HMO insurance provider for the past three years, they had no past history of those prior, frequent ER visits, and my Federal Employee Health Benefits (FEHB) insurance provider recently decided there was not adequate justification of my need for the prescription.  The FEHB provider refused to cover this medication – even though it was prescribed by their own HMO doctor — and the insurance company required that I use the same medication I used 15 years ago, which did not adequately control my symptoms. This old drug is significantly cheaper.

Regardless of whether a private sector for profit company or a future government entity such as Medicare controls our health care needs there will be coverage limits and treatment conflicts that will need our personal intervention.

There is really no debate that America has the best health care facilities and the best educated doctors, but do we have the best health care available?  I know my doctor must be frustrated that her professional medical opinion was undermined by an insurance company clerk reading the procedures manual.  This happens across the board today because we have finite resources and Medicare must make these same determinations. We may have to provide proof to whomever must justify needed treatments and medications so it is best to be prepared and know what steps to take in your personal situation

What can you do if you find yourself in a dispute with your FEHB insurance company?

1.      Understand that YOU are the master of your own health.  Research the medications and medical options available and understand what is best for your health and why.  Keep copies of your medical records, recording past treatments and dates.

2.      Call the insurance company’s customer service center to understand the reason for any denied claim.  If possible, try to work through the insurance company’s process, providing them the information they are requiring.

3.      Request reconsideration of a denied claim from OPM by following the directions at: http://www.opm.gov/insure/health/planinfo/consumers/index.asp

4.      Consider selecting a new insurance provider during open season.  This may mean you have to change physicians or hospitals.  Do your research to make sure the new insurance company will cover your needs.  For information about the insurance providers available in your area see: http://www.opm.gov/insure/health/planinfo/index.asp

I resolved my dispute by following the procedures listed above. I wrote a lengthy letter to my doctor about my medical history and called the insurance company for a copy of their denial letter so I could submit it to OPM for reconsideration.  The next time I went to the pharmacy, I found they had approved the Rx.

This is not the first time I encountered this situation.  Not long ago my father went to the doctor because he was having breathing problems and spitting up blood.  Since he was a long-time smoker we all feared the worse.  However, when the x-ray came back negative, the physician began treating the symptoms of a bronchial infection.  As the symptoms continued and worsened, they tried other treatments to address the symptoms.  Eleven months later, the doctor finally had enough justification to order costly CT and MRI exams.  The tests confirmed my father had stage III-B lung cancer.  He only lived another six months after that diagnosis.

After the tumultuous health care debate over the last two years, there are sure to be many changes and much confusion on the part of health care providers, insurance companies, and patients alike. Whatever you think of the changes it is important that you understand your treatment options, advocate for needed treatments and medications, and take the time to understand your insurance benefits. It is also important to carefully review any claims or reimbursements from your health insurance provider.

FEHB Open season this year runs from November 8th through December 15th. If you aren’t receiving the care through your plan that you deserve investigate other options.

Linda Duncan

While the publisher and author have used their best efforts in providing retirement and benefits information, they make no representations or warranties with respect to the accuracy or completeness of the content of this article and they specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. The advice and strategies contained herein may not be suitable for your situation. You should consult with a financial professional where appropriate.

Visit http://federalretirement.net often to learn more about retirement options, benefits, and estate planning issues and I suggest signing up to receive my FREE monthly benefits newsletter.

Visit our other informative sites

http://federaljobs.net (Federal Career & Job Center)
http://searchfedjobs.com (Federal, State, & Private Sector Job Search)
http://federalretirement.net (FREE Retirement Planning Guide)
http://federalretirement.net/jobs.htm (Retiree Job Opportunities)
http://fedcareer.info (Career Development Center)
http://postofficejobs.info (Postal Career Center)
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)

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