End of Federal Career? What You Need to Know

End of Federal Career_ What You Need to Know.mp3: Audio automatically transcribed by Sonix

End of Federal Career_ What You Need to Know.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski with American Benefits Exchange. And as always, I really appreciate you taking the time out of your busy schedule to join us to view our content. That's what it's there for. It's for you, the federal employee, that's looking for accurate information when it comes to your benefits and retirement situation. And a few episodes back. Well, first of all, let me say this. We've got over 180 episodes for you to view content of. So if you like this, if you get something out of it, go and view all of our other episodes. There's so much information. Chances are, if you have a question, we may have answered it already through one of our previous episodes. If for some reason we have not answered your question, or you have something unique or specific that you want us to cover, reach out to us. Go to our website, www.federalretirement.com. You can fill out the form there. Submit your questions. One of our experts across the country. If it's not me personally, we'll be reaching out to you to discuss your situation and get you the information that you need. So we did an episode a few ago, and we're talking about those that were newly hired. If you were just hired, what do you need to know? Are you new in your career? What do you need to know? And we're doing the opposite of this. And, you know, with the time that we have, we can't cover every single thing, but we just want to share with you the things that we think are important for those that are nearing the end of their career.

Speaker 1:
So for those that are nearing retirement, looking to call it quits, hang it up, um, and, and walk out the door, satisfied with your career and retire the way you want. What is it that you need to know as we're going forward? And we're going to cover a number of those things today. But as I said, we're by no means covering everything that a pre retiree or, or soon to be retiree should know. And that's why I really highly encourage you to go to our website, fill out that form at federal retirement Dot com. So you can get a pre retirement or nearing retirement evaluation of benefits and retirement review and see exactly where you stand. We'll touch on some of that as we go. But let's dive into today's content and talk about those that are at the end of their career and what they need to know. So you're you've worked long enough, you're going to retire, you're going to call it quits. And you think, hey, I've got it all taken care of. I've got it all figured out. Um, this is the day I want to leave. But now I'm telling you what you need to know as you prepare for that. So if you are younger in your career and you're thinking, okay, I watch the new in your career, early in the career, I'm a new hire.

Speaker 1:
Uh, I watched that episode. I saw the information. What do I need to know about nearing retirement? Or if you're already there, if you're within a few years from retirement, or maybe it's going to be at the end of this year or something, what do you need to know? It's important. This statement, it is never too late. I said it in the early. For those that are new hired early in your career, it's never too early to start because you're starting from day one. But the opposite is true for those that are nearing retirement. It is never too late to plan properly for retirement. In fact, you know what? I've only got a few months left or a few years left. You can still learn something. I'm not saying we can fix everything, but you can still learn something and make sure that you know as much as possible and know all the variables, know all the the the end results. Before you get to retirement, continue to educate yourself. And I said this again, this is a repeat of the early in your career, but do not rely solely on the government for your information, when it comes to benefits and retirement, because there are things that are missed. They don't do a great job of educating and training you on this stuff. That's why we have a job. That's why our company, American Benefits Exchange, that's why we do what we do.

Speaker 1:
That's why we specialize in federal employees. That's why this show exists. Be proactive. Be proactive. It is up to you to learn this stuff, not the government to educate you. It's up to you to take the time and effort to educate yourself and understand. Now, as you're entering retirement, you know, what are my benefits? What continues? What stops? What are the calculations when it comes to pension, social security, the first supplement, TSP, survivor benefit, all of the things. What are the calculations, what percentages, what are those? And what are the options that I have in retirement that you have in retirement? What are your choices that you're going to make when you're filling out your paperwork? Or what are the outside choices that you can implement in order to enhance your retirement situation? Know all the variables. Do not rely on the government. Be proactive. Know all the changes, all the variables, all the things. When it comes to your retirement, remember the five year rule, okay, we're not we're not going to cover everything. But these these are some of the important things. As you near retirement when it comes to your federal employee health benefits and your family, your federal employee group, life insurance, a five year rule exists in order for you to keep those benefits in retirement, you need to at least have them for five consecutive years prior to retirement. Now, there's some some caveats there. If you're a spouse of also a federal employee and you've been on their health insurance, we can talk about that an individual basis that still counts towards the five year rule if you're on another federal employee health plan, but there's a five year rule, meaning you have to be on the FB and Fegley for five consecutive years prior to retirement in order to keep those things in retirement.

Speaker 1:
Now. Fegley basic, what are your options when you do retire now? Well, let me go to the health insurance first. Fb you can keep the same plan that you have when you retire. There's no active federal employee plans and then retired federal employee plans. They're they're the same. So you can keep your same plan and you keep paying the same amount as an active federal employee in retirement. So just understand that part. You can keep the same plan. When it comes to Fegley, there are choices. You know, the basic option. There's three different ones that you can choose from as far as how much you can keep of your basic. The most popular, in my experience is the 75% reduction option. Why is this? Because it's the only option that will be free in retirement. Then the optional coverages of Fegli. You can continue those as well, but you have cost increases along the way. So just understand the way your fhlbb and fegley will work with you in retirement. And if you want to keep those, you have to have them for at least five consecutive years prior to retirement. So which direction should you go in for survivor benefits? This is something to plan ahead because it's a big decision.

Speaker 1:
We've talked about survivor benefits plenty of times, but this is essentially an irrevocable choice. And you want to ensure that you make the right decision. If you want to know more detail about the survivor benefits, we've done numerous episodes on the SBP, the survivor benefit plan. Go and educate yourself using our previous episodes because we don't have enough time today to cover all of it. But you essentially, if you're a Fers employee, you've got three choices. You can leave 50% of your pension to your spouse if you die first, 25%, or you can leave nothing 0%. What is what is impacted by that? What are the consequences of each decision? We can discuss that a little bit more on a personal basis, but what are the costs of it because there is a cost for that benefit. You can't just say, I want to leave my spouse 50%. It's not going to cost me anything. It costs you something. The 50% option will reduce your pension by 10%, and the 25% option will reduce your pension by 5%. So you got to weigh the cost versus the benefits. Is it beneficial? Does my spouse need this? Does my spouse absolutely need the health insurance? Because that is tied into this decision. So we can talk on an individual basis, but understand all that goes into this. And you want to make sure that you're choosing the right option because it's essentially an irrevocable choice.

Speaker 1:
The last thing is are there better options available? Yes, there could be. There's only what you know about may only be from what the government tells you or what the government has available, there could be better options out there. Recently helped a federal employee with this, and we found a better option, a better way to provide a benefit for our spouse at a more cost effective rate. So there are other things that you need to know that go into this decision of reevaluate your plan to pay off debt. So part of the plan that we had before for the younger crowd was, do you have a plan to be as close to debt free, if not completely debt free by the time you get to retirement? Why would that help? Because those extra payments that you're paying to debt would not be coming out of your take home dollars in retirement. This is less of a money going out the door. You'll be able to keep more of what's coming in. So if you've done that, if you're nearing retirement, how is that plan working for you? Do you need to adjust anything? Make any changes to that plan in order to become debt free or as close to debt free as possible when you retire. Has anything new occurred or do you anticipate anything occurring that will change your plan? Like, are you going to have to get a new car because yours broke down, or you're going to have to take out a loan to pay for medical bills or unforeseen circumstances, you know, accidents at the home or something.

Speaker 1:
You know, we've recently in our family, we've had some things going on with our house. We've had a lot of repairs and bills and things that are coming in, you know, things that you don't plan for. So are there anything on your table or in the horizon that are going to, you know, alter that debt plan, create more debt, maybe that you can now take into consideration when, when creating this, get out of debt or as close to debt free as possible when you get to retirement. So reevaluate and see if you need to make any changes or adjustments. Uh, get an updated retirement income estimate. Now, whether you've gotten one of the past or not, it's very important to get an updated estimate as you near or enter retirement. That way, you see in plain English and black and white, all the numbers when it comes to your retirement income, projected retirement income, and you can do it before tax, after tax, whatever. But as long as you have a good handle of what you're going to be receiving, there won't be any surprises. Talk to a lot of federal employees over the years, and they assumed assumed they knew what they were going to get. And when they got that check, it wasn't as high as they were hoping, and they were kind of blindsided by it.

Speaker 1:
They had this number that they imagined in their head. They didn't get a proper estimate done, and they didn't have the accurate numbers, and they assumed it was going to be higher than it was. And it caused a problem because they've already filed their paperwork and they're already retiring. And by the time they found out, they were already collecting and like, oh, I might have to get another job. And there's things that they didn't plan for. They could have just gotten an updated estimate from their pension, from Social Security, if they're going to use TSP for income for TSP, and make sure that when they retire, they're going to have the income that they need, want or desire, and they're not going to have to be in panic mode or make any changes, or do anything else drastic or go back to work. So if you do get a projector, can you live on that projected amount? Is that gonna be enough for you? And if so, if you have a few years left until retirement, why not save the rest of the money? Try to live on that retirement income and see if you can do it. And that way, by the time you get to your retirement application, you're like, hey, I've test driven this, I know I can do it. And if you can't, well, what else can you do? What other ways can you save a little more? Try to generate more in retirement.

Speaker 1:
It's worth looking into because if you can plan for it, if you can do it, if you can live with the income that you're going to receive, then awesome. Then you know you've made it. You know you've got the right plan in place for your retirement. You're going to get the amount of income that you need. You're gonna be able to live the lifestyle that you want to live. Awesome. So test drive it. Get an updated retirement estimate that includes all of the income sources, all of them. And you may have more. It's not just pensions, social security, TSB you might have a military pension, a VA disability benefit. You might have a previous 401 K. You might have a spousal benefit from somewhere else. You never know. Add them all together. See if you can live on it. What will you utilize your TSP for? How will you utilize your TSP? What function? What purpose do you want it to serve? It's one of your three retirement income sources. You want to make sure that it's set up properly. What are all the options? What are all the choices? And you can't just go with what TSP tells you because they're only going to tell you what TSP has to offer. There's so many options out there for you inside and outside of TSP. Which one's right for you? I don't know, there's no one size fits all option. There's no way to just say this works for everybody, period. That's not the case.

Speaker 1:
Your situation is different than the person that works next to you is different than a person working halfway across the country. We need to customize that plan. Sit down, map out all the options, and you can choose which one is best for you and your family and your future. And it might be a hybrid, a combination of different things, but at least you know that you've outlined and mapped out a plan that is perfect for you and your situation. You're not doing what somebody else did just because they said it worked for them. You need to find out what works for you. The online retirement application. Get familiar with this. You can start this process at least six months. We have to be within six months of your retirement date. So for those that are retiring at the end of the year, December 31st, a very popular retirement date, you can start your online application as of the first of this month, July 1st. So you can start that, get that process in, make sure all the questions are answered properly, make sure all the proper documents are submitted, and that way your retirement application can begin its processing up so that when you do retire, hopefully Opm's got most of it figured out. I say hopefully, because you see there is a backlog. There's there are issues with and delays with getting payments, but that's just part of the process. It's something that we have to deal with. But ensure your HR department has created your account.

Speaker 1:
It's it's retire.opm.gov. You'll create an account, your your HR department typically will do that for you using your personal email address. That way you can access it because you're not going to have access to your work email address once you retire. But make sure that they've created that account. They've set that up. That will then allow you to fill out your retirement paperwork. It is fairly simple and easy to utilize. There's instructions involved. There's experts like me that can help you walk or help walk you through it and get through that retirement application. You can do it, but we can help guide you with that and, and just walk you through the steps and explain things, you know, be prepared for delays. Uh, typically, you know, OPM is, does, is taking a little bit of time to process applications. The backlog luckily has been going down, but still seeing about 3 to 6 months of for federal employees to start getting their full pension check. So you get that interim payment when you first retire. And that's going to be generally 50 to 70%, sometimes higher, sometimes lower, 50 to 70% of what you should get, but 3 to 6 months until you get your full check and you get that back payment that they were owing you. But expect delays. Prepare for that. So utilize the retirement application online again, retired.opm.gov. You can hit start application and go through that and just go through the process fairly simple.

Speaker 1:
And I will reiterate this. No matter what stage you are in your career, uh, last thing we'll talk about is just consult with an expert that specializes in federal benefits. Somebody that knows this, that's in this every day, like us at American Benefits Exchange, you just want to get accurate and honest information. You want to get clear answers, avoid confusion. And it's somebody that can walk along the steps with you not just before retirement, but even into retirement. There are questions I get all the time from clients of mine that have retired years and years ago. Hey, what's this all about? Or what's going on with this? What do you think about that? Can you help me with this? Absolutely. It's not a it's not a one and done. Hey, you're retired, you know, take a hike. I don't want to talk to you again. No, you're a if you're a client of ours, you're a client for life. And we're able to assist not just pre-retirement, but into retirement and ensure that everything is going smoothly. So those are the, the main things that I would say. I would talk to a, a person that is nearing or entering retirement and just what you need to know, some of the things to be concerned about, some of the things to look into and just check off your boxes here to get to retirement the easiest way possible without any headaches, without any confusion, without any misinformation, without missing anything.

Speaker 1:
And if you are in this position, even if I'll just say again, if you're new at this or you're in the middle of your career, at the end of your career, reach out to us and federal retirement show.com, fill out the form, get a personal retirement and benefits estimate done, get an evaluation done, see where you stand. And that way you can ensure you're on the right track. And you can avoid a lot of this last minute headache by trying to find everything out. Uh, at the 11th hour. The earlier you can know this stuff, start as early as possible, the better. And if it's if it's later in your career, it's never too late to start planning. You may think I'm too far gone. I'll reiterate again. It's never too late to start the planning. Talk to us today. So again, I really appreciate you taking the time out of your schedule to join us to view our content. If you did like this, go watch all of our other episodes. There's a ton of them. If you did like it. Also, please share the federal retirement show with a colleague. We want to reach more federal employees, so if you can pass this along, pay it forward, send the federal retirement show to a colleague of yours or two of your team. We'd really appreciate it. Again, my name is Val Majewski with American Benefits Exchange. I really appreciate you taking the time, and I look forward to seeing you on a future episode.

Speaker 2:
With news headlines about recessions flipping from imminent to unlikely almost weekly. A lot of individuals are left wondering, how do I prepare my money for whatever 2026 throws at us? I'm here for the Retirement Radio network powered by Emerald Life. Recession talk is back for 2026. Not screaming from every headline, but lingering in the background with odds that aren't zero. And honestly, that's okay. The good news you don't need a crystal ball. You just need to be prepared. Her money.com CEO Jean Chatzky outlines the signs to watch for when a recession is looming.

Speaker 3:
Keep an eye on unemployment. We'll look at consumer spending. Consumers often lose confidence. The tricky part about a recession is that we could be in one already and not know it.

Speaker 2:
Financial experts say the first step to being prepared is surprisingly simple. Get clear on what you actually need, not what fear is telling you. Start by building or topping off an emergency fund that covers 3 to 6 months of living expenses. Perhaps consider a high yield savings or money market account so your safety net is actually growing. Next, pick a budgeting system you'll stick with, whether that's the old school envelope method, a spreadsheet, or even an app. And finally, how to configure your financial portfolio and investment strategy in uncertain times. Cnn's senior business writer Jeanne Shehadeh explains a key component.

Speaker 4:
You want to be really diversified in your portfolio, meaning between stocks and bonds, between sectors of the economy. You can't predict what's going to do well and what's not going to do well. A diversified portfolio where you have some stocks, some bonds, they will perform differently.

Speaker 2:
Whether it's covering the basics, making easy cuts, redirecting that money to high interest debt. The people who come through economic uncertainty best aren't the ones who panic. They're the ones who plan calmly, live a little bit below their means, and keep investing anyway. A well-built budget doesn't just protect you from a recession, it gives you freedom no matter what the economy might do. Small steps now. Big piece of mind later for the retirement radio network powered by a mare life. I'm Jim Teraoka.

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