Avoid Overpaying for Benefits with These Important Tips

8.25.23: Audio automatically transcribed by Sonix

8.25.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Val Majewski:
Well, welcome back to the Federal Retirement show. I'm your host, Val Majewski, with American Benefits Exchange. And with me today is Eric Hughes. He is president and CEO of American Benefits Specialists. There are a regional organization with American Benefits Exchange. And Eric and I have known each other for almost ten years now. And he's an expert in the federal marketplace, handles and deals with federal employees just like you. And it's regarding their benefits and retirement situation, finding solutions to put federal employees in a better place than they were yesterday and just making sure you're set up right when it comes to your benefits and retirement information. So, so glad to have him on the show today. Learn from him and his expertise and his experience with working with folks just like you. So, Eric, thank you for joining us. Appreciate coming on the federal retirement show. You're welcome. Well, you know, as I said, we've known each other for about ten years now. And your expertise in the federal space, you know, is awesome. I love what you're doing and how you're helping federal employees and want to dive right into what you all do and how you do it. But right off the bat, you know, we talk about the needs that federal employees have. There's a lot of issues that people are dealing with. And in your opinion, you know, what are the the top two let's just say top two, because the list can be pretty long, but let's say top two things that federal employees really need assistance with. What are the top two issues that you've been handling lately with federal employees?

Eric Hughes:
I think the first thing that federal employees need to do once they become an employee with the federal government is learn about their retirement, learn about their fers, learn about their TSP, learn about their Social Security, learn about the different legs that are going to pay them at retirement. Because if you wait ten, 15, 20 years before you learn these things, it's going to be an eye opener for you, right? So if you're, say, 60 years old with 20 years of service, you're going to get 20% of your income as your salary. Right. And you may not know that. Or if you're you know, if you're 62 years old and only have five years of service, you get 5% of your salary for the rest of your life as a pension. And that can be some very big eye openers for employees, especially because a lot of them think they're going to get a lot more. And, um, you know, it's not a lot of money. Five even 20% is not a lot. So they've got to take advantage of their TSP and they've got to know it's there. Right? So some employees will come in and they won't even know they get a match. They won't know that, you know, this is available to them and HR is not telling that. And you know, honestly, TSP is not telling that, telling them that as well. Um, but. So when they do that, they we we definitely got to get to them and educate them on their retirement benefits because it's important. And what they don't know, they don't know. Right. And a lot of times they get a lot of misinformation. Well, you'll see that they think something's one way when it's really not. And so it's very important to to really connect with these employees and teach them about their benefits, because if you don't know it, you get closer to retirement and now you're in a position you may not want yourself to be in. Right. Well, saying.

Val Majewski:
Hey, the word's getting out better employees are calling you as we're talking. Right? So that the phones are hot. They're ringing. Well, that's the thing. I hear that a lot with employees I talk to. You know, they say when they first got hired, they filled out some paperwork. They may have gotten a little bit of information, very little. But then they're left to figure this stuff out for themselves. Right. They can go to different different places, but they have to dig this information out where, you know, when you sit down with them, you try to give them the hard facts. You just want to give them the education, the training. Right. And open their eyes to these things. Am I correct?

Eric Hughes:
Definitely. We only need to know a few things, right? We just need to know, you know, their age, how long they've worked there, and then how much do they make. Right. And we can really figure out almost everything from that. Now, if they have a paycheck stub and they can give us a few different codes off their paycheck stub, we can answer a little bit more information. But yes, it's very important, um, because see it all the time, you see employees that, you know, never contributed to because they didn't know that they were going to get a 5% match, right? Um, or they, you know, never saved in the or didn't save as much as they could because, you know, they thought their picture was going to be everything, right? Or, um, they never tried to build any tax free money for retirement. Right? So then they, you know, there's a lot of different roadblocks that they're going to run into that we could prepare them for to, you know, put them in the right position. And the sooner we get to them, the better. Right? So.

Val Majewski:
Well, I tell people all the time, yeah, it's never too early and it's never too late. You mentioned, hey, what if you're if you're a 60 year old with 20 years of service, you still need to know this information because there's there could be some time left. And definitely if you first got hired yesterday, like if you if you just got hired yesterday, you need to know this information because the sooner you can figure this stuff out, the better you can plan for that day when you leave. Yeah, right. So how many times have you heard this? Hey, I wish I would have talked to you when I first got hired. Or I wish I would have talked to you five, ten, 15 years ago. I'm sure you get that a lot.

Eric Hughes:
Every day. Every day. You know, I mean, some people are happy that they did work 30 something years and they they maxed out their or they saved a lot. But then you got other people that may cry and you're appointed because they didn't know they're only getting 5000 a year from their pension and they make a hundred thousand a year. Right. So you get all different types of emotions from from employees. Well, if we can step in, at least help you, at least guide you the rest of the way, you'll be in a lot better position. I mean, with, you know, with the Covid situation and pretty much shutting down and moving off campus, it's hard to get in touch with them. You know, even when you do get in touch with them, there's always certain things that they can do, you know. So it really takes, you know, sitting down with somebody like myself or Val or or someone, a specialist that knows exactly what's going on and what changes have occurred. And, you know, and you know what's there for you.

Val Majewski:
So and I say this a lot. I'm sure you just kind of mentioned it. But I tell people sincerely, I say, look, treat me like your personal HR department. If you have questions, you want answers. I may not know every single thing, but I tell you I know a whole lot. So use me like your personal HR department. You know, federal employees I'm sure to you call you and be like, Hey, Eric, I'm dealing with this. I'm dealing with that. Do you know anything about this? I mean, you use similar language. You tell them they call me day or night. I can help you with whatever you need.

Eric Hughes:
Yeah, definitely. I mean, and there's hundreds and hundreds of employees that are reaching out to us every week, Right? So, um, and they need help. And not just for them, but maybe for their spouse or their family members, right? So, um, you know, it's just something that you really need to know, but it's something that they do not spend enough time on at the beginning when you get hired, right? So you just want to make sure you're in the right position. You also want to make sure that in regards to some of the other benefits, you're not paying too much. Right? That's one big thing we see with employees is that, you know, 60 to 65 year olds may have a five times their salary, life insurance that they're paying $600 a month for. But it's only, you know, $250 per pay. So they really don't see that, you know, and they need somebody like ourselves to go in and point that stuff out for them.

Val Majewski:
Well, it's it's funny you mentioned that, too, because your your website has a calculator on it so people can see exactly what they're paying for their family option be definitely tell. Probably what that website is. I want to make sure we get it correct.

Eric Hughes:
So it's WW dot ambe apple Mary boys specialists with an s.com so um Amb specialist.com you can go there like Val said we do have a phegley calculator where you can actually pull up your phegley numbers and see how expensive your options get over time. And then there's a printable version of it where you can print it or even email it to yourself. So take advantage of that. If you haven't, if you want to know how much coverage you have, it's just an easy way to find out.

Val Majewski:
Yeah, just knowing those costs. That's you're talking about education being the number one issue. And that's part of that's just education in one particular part of their benefits. But it can save them tens of thousands of dollars by knowing this over the course of their career. And there's not many federal employees that I've talked to that don't want to save an extra $10,000 or, you know, unnecessarily pay tens of thousands of dollars more than they should for a similar benefit. So that's just that's just one area of that education.

Eric Hughes:
Yeah. And that's it. You know, you don't you don't want to spend an extra $12,000 on some life insurance coverage that, uh, that you could possibly get, get it elsewhere cheaper and then save another $10,000. Right. Right. Towards your retirement. You know, a lot of people are not really in the best position at retirement already as it is. So if you're spending any unnecessary cost, I mean, it can argue, right? So. Exactly. Yeah. You definitely need to sit down with somebody and learn, you know, how everything works from your life insurance to your health insurance to your. To your pension. To everything you know. Because if you don't know, you're going to mean it really could put you in a bad position and really be a big eye opener.

Val Majewski:
Well, there's there's that false sense of security. Hey, I work for the government. The government is going to take care of me. I put in my time, my 30 years. I'm going to get my gold watch and I'm going to be out of there. And and it's not the case. They have to do some work. They have to educate themselves, empower themselves so they can do it. And yeah, you don't want them to come to the end and say, Oh man, I wish I would have known, you know, like or you just said, Hey, I get it every day where people are telling me that I wish I would have talked to them, you know, five, ten, 15 years earlier. So, yeah, we don't want to we want to get rid of that that comfort zone of, hey, I work for the government. It's all taken care of. That's definitely not the case.

Eric Hughes:
Yeah, we and we do see a lot of that with, with the market as well with TSB. Right. So a lot of times, you know, in 2008 when clients were about to retire and the market crashed and they lost a lot of money, you know, they last year. Yeah. And they couldn't retire. And even last year they lost 10%. Right. Or even more. We've seen clients lose even more through TSB just because they didn't know they had an option to lock in their gains or they didn't know they had an option to get guarantees. Right. So, um, you know, anything can help, You know, if we can give you information that can help you with, with your future, I mean, just it's worth it. I mean, it's a free consultation. You sit down with us, you find out where you're. Where you're missing. Missing out. Right. Or find out where you're, you know, you could be benefiting from and and you're not. Right. There's a lot of benefit that you're entitled to that you may not even be aware of. Right. So that's a.

Val Majewski:
Well, okay. So that was like I said at the beginning, I'm going to go back to it and said, what are your top two things? So number one, education. I agree with you. That is huge, huge problem that we're trying to solve is is giving them the knowledge, the training, the education, the empowerment to make the best decisions. So going to number two, what would you say kind of your of your top two? The second thing is that federal employees really need to know about when it comes to, you know, their entire situation?

Eric Hughes:
Well, I think I think they really need to take a bigger dive into GSP. Right. And what options are out there for you? Because with the withdrawal options changing all the time. Right. We had a modernization act that went into effect in 2019 that changed a lot of the withdrawal options. So what what your options were before 2019 are still maybe not the same now. And you got to learn or learn what your options are so you know what's best for you, right? So somebody may need an income for life, but they don't know how to do that. Right. Or somebody may just want to take their money out gradually and well, you need to know how to do that as well. Right? So, um, then if, you know, if like right now the market's almost at the highest it's ever been, you know, you need to know if you want to get out, you know, what's the safe way to get out and lock in your gains and actually realize what you've done over the past 12 years. Right? So, you know, GSP is a is a real big factor when it comes to retirement. And I really think everybody should take a bigger dive into what are the funds. Right? You can actually go to our website as well and see what the different funds are.

Eric Hughes:
That G Fund s fund seafront. L i. F Right. So you really want to find out what your funds are and then what's the best suitable for you, right? Because what's best for you is not the same for the next person. And what we find a lot is, uh, employees go to their best friends at work to find out how to invest in their TSB or what to do with their TSB. And a lot of times they make bad decisions that cost them thousands and thousands of dollars where they didn't have to do that. Right? So, um, it is very important, like I said, and this ties into education as well, because you've got to definitely dive in and learn everything, all the different ins and outs of what. Everything in retirement. But if you don't have a good TSB and you haven't saved enough in TSB or you haven't protected your account and the market crashes or it turns around on us and it happens right before retirement, it can be detrimental to your retirement, right? You're going to be playing catch the next five, maybe even ten years where you didn't have to. So this getting two things at the right time or learn things before, you know, learning your options before you need them. Really? Yeah.

Val Majewski:
I'm here to your point with TSB, you know that that is a big deal because for most and a lot of federal employees, I should say I talk to, they're relying on TSB to be a major part of their retirement income story. You know, the you mentioned before you worked 30 years, you're going to get about 30% of your high three. Social Security is going to give you part of that, maybe 15, 20%, maybe 25. So now you're at, you know, 50, 55% of your pre-retirement income. Well, TSB is going to make up a big chunk of that in a lot of cases, Maybe not for some that are fortunate to live without their TSB as an income, but how do you best turn your TSB into a retirement income producing asset for you there? There's not just one size fits all. Eric Right. I mean, there's, there's a lot of different ways and you need to dive deep into their situation to learn about it, to find the right solution. I mean, you had tell me about that, a little bit about diving in and you're really getting to know TSB and what they want to accomplish with their. Tsb. Well, first.

Eric Hughes:
First, you got to figure out what type of an employer, what type of person you are, what type of investor are really conservative. You want to have guarantees on your money. You know, do you want to be really aggressive? Do you want to be kind to in between where you get guarantees and stock market returns, but maybe you're limited on the returns a little bit, Right. So you got to find out. You know what? What kind of risk can you take? And then after that, you got to find out, how do I want to withdraw the money? Right? Am I the type of person that wants an income for life? I need to have the same amount of income every year guaranteed, even if the money runs out, you know. That is an option for you. Or are you the type of person that just wants to manage it yourself and kind of take it out gradually as you need it or let it sit there and grow? And a lot of people want to leave it to their beneficiaries or what's the best way to leave it to the beneficiaries where it will skip probate to? Right.

Eric Hughes:
So there's a lot of things that you want to take into consideration when it comes to what do I do with my TSP, how do I invest in my TSP? And then also how do I withdraw my TSP at retirement? Because, you know, TSP asks for withdrawal options and they may not be the withdrawal option for you. So you may have to exercise another option that you may be entitled to. So it's just, you know, like you said, everything's tailored for each person. The same plan is not going to be the be for everybody. And. You know, you can get the plan that fits you the best and you can start having a more comfortable retirement, right? Um, yeah. And then one other thing we're doing for a lot of employees is we're showing them how to become debt free at retirement and including their mortgage, right? So then that really frees up a lot of extra money for them as well. So there's just so many things that, uh, learning your options and finding out what they are, uh, will definitely put you in a better position in tomorrow than you are today.

Val Majewski:
You mentioned you mentioned being debt free. I've talked about it a couple of times on the show, so I just want to dive into that a little bit. I mean, you're talking, you know, eliminating you said even all their in their mortgage, too. So eliminating all the debt. Right. Getting that completely off the table, freeing up that cash flow. Now you can provide more for their retirement savings. You know, what are the benefits that you're seeing people get? I mean, just mentioned a couple, but anything additional when it comes to eliminating their debt, getting rid of it completely, you know, what are the benefits of doing that instead of just making those payments over time?

Eric Hughes:
Well, the the first thing is peace of mind. Their retirement. Right. Being debt free is going to relieve a lot of different stresses, stress that you have at retirement. Right. So if you can eliminate a you know, say you're paying 5 to 6000 a month on your debt, if you can eliminate that payment, that frees up 5 or $6000. Every month, right. That's what we're doing is we're showing employees how to do this without spending any extra money than they're spending now. So we're just showing you a better way, simply the way to build your own bank account. Turn yourself into your own bank and then leverage your own account to pay off all your debt. And I mean, we're showing employees how to go from 30 years I've seen it to where they paid everything off in six years or 18 years down to seven. I mean, there's just so many different. That not only say, so many different, but better ways to save your money and pay off your debt. And a lot of people don't even realize it, right? So they're spending a lot of extra money on their principles, um, their debt. And what we can do is take that extra money they're spending, turn it into their own bank, account for them and allow them to pay it off a lot faster, you know, or, or if you're saving money into that's not being matched, we can redirect some of those dollars to pay off all your debt a lot sooner and then maybe free up 4 or 5, $6,000 a month for you that you can turn around, put it back in the TSB or any other investments. Well.

Val Majewski:
Especially in a very high interest rate environment that we're currently in. You're right. I mean, what is it good to earn, you know, 5 or 6% on the positive side, if going out the door to high interest credit cards and other things is 12, 15, 20% in interest the other way. So, you know, it's kind of a balancing act of people think, well, I can handle the payment, but they don't realize how much they're paying towards interest. So you're right, getting rid of that debt in a fraction of the time not only frees up the cash flow, but it also eliminates some future interest that they would have paid to a bank or a lender or some other company wherever they borrowed money from. So yeah, I'd love that concept. We've talked about on the show before, several episodes about getting out of debt, but I love the fact that you mentioned that as as something that you're doing as well, because everybody needs it, not just federal employees, but everybody needs that kind of guidance.

Eric Hughes:
Definitely. I mean, they were doing this on employees, their spouses, their children, right? So, um, like you said, everybody needs to get out of debt. But if we could show you a better way how to get out of debt and then also free up a lot of tax free money or even additional money for retirement, it just makes everything even better, right? So, um, you know, you can stick to the way you're doing it for the next 30 years or we can show you a better way. And then one good thing about what we do is we're going to sit down with you and show you, okay, this is your dad, but this is your actual debt with all your interest. So you actually get to see what the big picture is and what you're actually spending on on all this debt. And and if we can free it up for you or it really makes your life totally different, I mean, it turns you into a, you know, a. An investor. Now you can start taking that money to start investing in other options. So mean. It's just crazy how we're doing these. And we partnered with a company called Your Family Bank. That man, their software and their technology has really taken this to the next level. Um, really helped a lot of people, especially with my clients. That's helped out a lot and I know it's helped out everybody else as well. So.

Val Majewski:
Well, you know, I love the concept of start to finish, so we want to educate and train them on benefits. Retirement. Obviously, through that process, you're going to be pointing out some of the areas of concern and things that they need help with. Then just so happens you're an expert in being able to help federal employees with, you know, various solutions and ways in which they can make their lives better, their situation better, their retirement better. You mentioned just a couple of them. But imagine those two things. You know, for anybody watching this episode, what if you can do two things better from here, not forget about the education and training we talked about. What if you could make sure your TSP is properly set up so that your in the best possible situation going into retirement, you retire with confidence knowing your asset. And then like Eric said, what if at the same time you've eliminated all of your debt and you're completely debt free going into retirement, no more payments. You don't owe anybody an extra money and you're enriching yourself now because all that money that was going to debt is now going to you into your pocket, into your savings. So if you can only do those two things, I think you've got a great benefit from this episode. And there's so many more areas in which, you know, Eric's company, American Benefit specialist, American Benefit Specialists, can help you. But I think with those too, Eric, if people just took that advice and said, make sure your TSP is set up properly and try your best to eliminate all of your debt in a fraction of the time, especially before retirement, if they're going to be put into a much better situation.

Val Majewski:
Well, I appreciate, you know, the guidance you've given. I appreciate the you taking the time. Again, your schedule, I know, is super busy. Phones ringing. Like we said, you didn't get our employees calling you off the hook. Just trying to get help. But I just want to make sure that, you know, everybody get here's your website and your ways in which they can get in contact with you. Should they want a benefits analysis comparison, set up their TSP properly get out of debt. What's the website again? What's the best way they can get in touch with you?

Eric Hughes:
Definitely not going to our website properly is the best way to do it right at WW dot. A m. B specialist.com. Apple. Mary Boyd Specialist.com. Um, and then go on there and there's a contact link where you can put your information in. It'll send it directly to our back office and we'll get an appointment set up for you within the week. But definitely I think that would be the best way to do it. Um, you can always contact me as well. Um, I'll even give you my personal cell phone. That's (832) 248-9070. If y'all have any questions, you can contact me. And if I'm not in your state, I can get you in touch with one of our agents that are in your state. Um, but can also help you as well because I am licensed in over 15 states as well. So I think there's a lot of different things that. You need to reach out to us for, but you don't know until you actually do. So go to our website, send me a text, give me a call, call our office. All the information is on there as well, or either stop by or in Houston. You can always come by and sit down and and we'll go over that way as well. So definitely.

Val Majewski:
I appreciate you joining us on the show. You know, thank you, you know, for your friendship, partnership and business. Love the things that you guys are doing in the federal space. And, you know, hopefully we'll have you on again somewhere down the line.

Eric Hughes:
Thank you. Thanks for inviting me.

Val Majewski:
You're welcome. Well, thank you guys, for for listening to this episode of the Federal Retirement Show. Hope you gained some valuable information. Reach out to Eric and the folks at American Benefit Specialists. We'll look forward to seeing you on a future episode.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including upload many different filetypes, transcribe multiple languages, advanced search, automatic transcription software, and easily transcribe your Zoom meetings. Try Sonix for free today.