Episode 100! A Roundtable of Top Federal Retirement Specialists

7.26.24 EPISODE 100!: Audio automatically transcribed by Sonix

7.26.24 EPISODE 100!: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome back to the Federal Retirement Show. I am your host, Val Majewski with American Benefits Exchange. Today is episode 100 of the Federal Retirement show. We've made it. We're here. We're blessed and thankful to have been on this, uh, podcast, this radio show, this platform for as long as we have and look forward to the next 100 episodes. And really thank you to you, those federal employees that have been viewers been downloading. We've recently seen that we've had over 50,000 downloads in these first 100 episodes. So obviously the content, the information that we're putting out there is very pertinent and valuable to you all. So thank you for your viewership. Thank you for taking the time out of your schedule to join us and see the content that we put out, because it is about you. It's not about us. It's about making sure that you, the federal employee, no matter what stage of your career you are in, you have the accurate and honest information that you need so you can make the best decisions possible both now and as you progress throughout your career. So kudos to you for tuning in and with me today for our 100th episode. Are some familiar faces. Got Mr. Tim McClusky, Mr. Eric Hughes and Miss Brandy Pearson. Thank you all for joining me. Now, Tim, I'll let you introduce yourself, but tell me a little bit about how long you've been working with federal employees and, uh, you know, things you've been been seeing, been seeing lately.

Speaker2:
Uh, well, thanks, Val. Uh, and thanks for this opportunity to participate in this 100th episode. Um, I've been in the federal market almost 15 years now. Doesn't seem like it's been that long, but that just means I'm 15 years older. Um, but, you know, uh, I've been doing this right, uh, right at about 15 years, and I've really enjoyed it. But I'm beginning now to see, uh, and hear some, some interesting things. One of the questions that that people tend to, to pose to me is can I retire at this specific date? And that date is always a time when they're going to have a penalty, meaning they're looking at retiring under the age of 60? Uh, they may not, in most cases have 30 years of service or even 20 years of service. Uh, and I always ask the question, as we're scheduling the appointment, they always give me a date, they want to retire or an age. And I say, hey, are you expecting to accept the penalty? And I get that question, question, question question that pops up. So there are a lot of things that people aren't familiar with in terms of what are the rules of when I want to retire and how I want to retire. So having to go into that detail, I think is so vital so So people don't find themselves losing, uh, part of their pension just because they come out a year or two too early.

Speaker1:
And we'll we'll kick that around here in just a second. I do want to I apologize. I didn't jump the gun. I want to let Brandy and Eric, you know, introduce themselves as well. So, Brandy, do me a favor. Just introduce yourself if you don't mind. And, you know, share how long you've been working with federal employees as well.

Speaker3:
Hello, operator? Person I have been working with federal employees. Time does fly. Like almost 14 years. So, like Tim, I'm 14 years older. Um, yeah. So I've been working with them 14 years, and, um, do you want me or.

Speaker1:
No, we'll we'll kick it around. I want to make sure I jumped the gun. And I was like, Tim, man, tell us about yourself. And then here would be something I just. I want to, uh, make sure everybody had a chance to introduce them first. So, uh, Brandy's out of Memphis, Tennessee. Yes. Uh, Tim's out of Nashville. Didn't mention that. And then our our guy, the bottom right here from Houston, Texas. Glad to see you've got power there, Eric. With the hurricane that came through. Lights are on. Uh, Eric Hughes, you introduce yourself. Tell me how long you've been been working exclusively with federal employees. Thanks for having me, Val.

Speaker4:
Um, so I'm. I'm like Tim and Brandy. I've been working with federal employees for about 15 years now. Um, run into a lot of unique questions. A lot of people do not know what they don't know. And, um, you know, it's just it's just good when you get there and you sit with an employee and they don't know something, and you clear it up for them, and they now they kind of know what direction they're going in. And, um, it's just something that I know they need. And I'm glad we're here to help out so.

Speaker1:
Well, and I'm going to give everybody a chance to kind of, you know, share some stories and situations you've been working with, but you've got a lot of years of experience here. So for our 100th episode, again, just wanted to collaborate a little bit. Share, uh, just a candid, casual conversation with you, all the federal employees that are tuning in and share some of the things that we've been coming across. So Tim was just mentioning about, you know, dealing with a retirement date that would come with a penalty because we asked that a lot. I'm sure each one of us, you know, when do you plan on retiring? And they don't realize that that date that they're planning on right with planning on comes with some sort of a penalty. So, Tim, just explain what you mean by the penalty And then, you know, we'll each kind of give our comment about situations that we've seen. What penalty are you talking about when it comes to retirement dates.

Speaker2:
So you know, many times when people think of retiring, they just have this this age in their mind, uh, which I think is always great to have a target date. Uh, but sometimes that target date may come with some drawback. And in this case, the drawback is if they don't have enough years of service. So for example, you can have ten years and retire at the minimum retirement age depending on your date of birth between 55 and 57. But people assume, okay, if I'm 57, I can retire. And the truth is, yes, you can, but there is a penalty if you are not at least age 60 with 20 years of service, or at least a 62 with five years of service, or 30 years of service at your minimum retirement age. And that's going to be based on your date of birth. So that could be between 55 and 57. Then you will have a penalty. Now how does a penalty work? I'll just give you a brief example. If you have 17 years of service and you're 57, you are eligible to retire. You're at the minimum retirement age. You have at least ten years of service, but you're not 60. So every year that you retire under the age of 62, there is a 5% penalty for each year under the age of 62. So 57, 58, 59, 60, 61, 62. That's five years, 5% per year. So you will lose 25% of your pension for the rest of your life. And when I bring that up to people, they're like, ah, not sure that's what I want to do. Then there are a few that say, I don't care. Yeah. You know, so it really depends on the situation and the circumstance. But you need to know that information on the front end so you don't sign that paperwork. You're excited to leave and realize you just lost a good portion of your pension for life.

Speaker1:
Yeah, I usually ask this question and Eric, Randy, tell me if you kind of do it the same way, but I'll ask and just say, what do you want me to run your retirement estimate for when you're first eligible or when you're first eligible for full retirement? And that'll get the conversation. Well, what do you mean, full retirement? Well, yeah. I don't want you to see a reduction or be penalized. I can show you what that looks like. And it's not something we normally recommend. I've really not recommended it unless somebody has their dream job lined up or they hit the lottery. But people don't realize, yeah, that minimum retirement age, you know, comes with comes with some negatives or some penalties if they, you know, don't have the amount of years or things like that. It's kind of eye opening, right? People think they're going to be taken care of and don't realize stuff can be taken away from them. So have you guys seen that Eric Brandy about, you know, looking to retire early and then finding out, oh, maybe I can't retire as early as I thought.

Speaker4:
So my opinion on it is, uh, you know, the pinch is already smaller than what you think it's going to be at first off. Right? So if you're making 100,000 a year and you only have ten years of service, or you, um, or you're at your minimum retirement age with 30 years of service or ten years or 15 years of service, and you're going to get a penalty on maybe $15,000 a year. It's going to really hurt. You know, you've got to really, um, you really got to start playing and you really got to know these things, like Tim was saying. Because if if you're getting a 15% penalty and you're already only getting 20,000 a year and you're used to making 100,000 a year, it's going to really hurt, then you're going to pay taxes on top of that. So I mean, you just got you really got to think about it. And one thing I like to do is I'll show my clients not only okay, what they're going to get with the supplement and, uh, early retirement, but what happens when you max it out at 62? Because it's really a big difference from maxing out at 62 and making a couple extra thousand a month, or, excuse me, a couple extra thousand a year versus retired early and paying penalties like Tim was saying. So you see it, right? It's just guidance.

Speaker3:
Absolutely. I see I don't see as much of the early retirement penalty as I see, um, people being at minimum retirement age, like you say, and then they don't have the years of service. And so they're thinking, well, I can retire at minimum retirement age, but they don't have the years of service, so then they're going to incur that early retirement penalty. So let's see it with, you know, like being younger or whatever. Um, a lot that I really help people with is understanding just the difference between age 60 and 62. I can't tell you how many people I have come to me sit in front of me that are 60.5 or 61, and they've got literally a year and a half or a year or six months away from that 62 mark. And I start talking to them about the difference in how their retirement will look if they just work six more months, so that I run into more than I'd run into. The early retirement penalty is just people by the time they're 60, like, oh, I'm just ready to be gone. I cannot do this another day. And then I say, well, you know, there's 2 or 3 or even $500 extra a month. Make a difference in your budget. Well, yeah it does. I cannot tell you how many people that I have talked to every 3 to 6 months, from the age of 60 to 62, to just share them on, but to get to that 62 mark, to be able to retire with a little bit more retired.

Speaker1:
I did this, I said, look, I'm not forcing you to work till 62. I'm not telling you, you have to, but I'm going to show you the difference between the two and, you know, 60 to 62. Okay, that's two years. But in your point, if it's one or less than one year and they don't, they didn't realize, you know, Eric said, you don't know what you don't know as a federal employee, if you didn't realize that getting to 62 and having at least 20 years of service gets you a little bit of extra bump in your pension while waiting those two more years, what's it going to do for you? Chances are your high three is going to go up in those two years. You're going to add two more years of service to your calculation, and you're going to get a higher, a little bit higher payout factor when it comes to your pension calculation. So all positive things plus more money's going into your TSP. And you're going to be waiting now until the Social Security eligible. So you're not going to make a little bit less in that first supplement during that time. So I said I'm not forcing people, but there's a lot of positives by waiting until age 62. So yeah, I've had both conversations where people are like, I know I'm eligible to retire at this time, and they don't realize there's a penalty, or they didn't realize the benefit of waiting just a little bit longer to get to age 62. That's huge. I like that. Eric, I'll pass it over to you. So what are some of the things you've seen in conversation that Tim was talking about? The penalty with the retirement age? What are some of the things you've seen recently with federal employees, questions you're getting asked, or just some big issues that you've been running across?

Speaker4:
One big issue that I run across a lot is employees that are in their 60s getting close to 70, and they still have option B with their fate. Right. So they get paid bi weekly. So, you know, 500 a month may not look like 500 a month on a paycheck, on a bi weekly paycheck. You know, a couple hundred dollars coming out of her paycheck doesn't actually look like the actual number, right? So they don't really see it, and they start having hundreds and hundreds and even thousands of dollars go away into this group term life insurance that eventually they're going to be priced out on. And and it's going to take away from their pension where, you know, if they had ten years to go until retirement, if they took that extra 500 a month they were spending on that, maybe got a term policy that would never go up in cost for half the price, and then took the other half of the money and put it towards their retirement. You know, they could have a lot more say. Right. So it's little things like that that when you look at your paycheck, if you're not aware of it, you don't have a specialist like myself or Brandi or Tim or both to help you out. Um, you can really miss that. And, you know, and people, they, they really don't like it when they see that. Right? Because it's, it's sometimes they absolutely need the benefit because their health is bad. But 95% of the time they really, you know, it's one of those coverages that is too expensive. You don't want to pay 500 or $1000 a month for a term coverage. That's only for $100,000 or $500,000, right? So, um, that's one thing. There's a lot of other things, but I think that's one big major thing that you're seeing that's taken away from their retirement. It's taken away from, you know, them getting a better life insurance plan in place, um, a lot of different things.

Speaker1:
So a couple of things there that that come to mind. Right. It's first, our job is to try to help maximize what the federal employee is going to have in retirement and minimize what's going out the door. I minimize what's going out as far as benefits or paying too much for those benefits. Or we even talk about debts that that's something I'll chat with here in a second or chat about here in a second. But if they don't realize that because why they don't look at their pay stub, you know, or they don't, they can't decipher all the codes and things that are on their pay stub, That's a big thing that if you're out there, you're a federal employee. Make sure you're talking to an expert that understands how to read your pay stub, no matter which agency you work for. If you're with the Postal Service, if you're with DoD, if you're with the IRS, Social Security, you work for USDA. You know, make sure you're talking to somebody that knows and how how to read and understands all the codes and the language that's on your pay stub because they can help you decipher this, because most people today just look at their bank account like, oh, I got deposited every two weeks. My, uh, my income. I'm good. It didn't realize that there's a cost. There's a deduction that went up because they hit the 60 year milestone, right. They turned age 60 and that cost for option B Eric, as you're saying more than doubled. And then it's going to increase again at 65 or 70. And it's going to continue to go up if they keep it into retirement. And that's going to be a big detriment. And their paycheck in retirement because they're paying too much for something that they're eventually going to cancel.

Speaker1:
Now, I did have one federal employee. I had one federal retiree in my history, and this is just one of the thousands of federal employees that I've talked to over the past, you know, 12 years. You guys are veterans compared to me. I'm a newbie. I'm only I'm only 12 years working exclusively with federal employees, but one that was adamant that they wanted to keep option B in retirement and didn't want to switch because it was a government plan and they trusted the government. They liked the government. They've had it their entire career, and I couldn't talk them out of the fact that he was paying hundreds of dollars more than he had to for for this life insurance coverage, and it was going to continue to go up because it goes up until you hit age 80. So it was just interesting that I've only had one that was adamant, no matter how much I put the numbers on, paper stuck with it. But everybody else has seen and has noticed. Oh yeah, this is not something I want to continue to pay cost increases for. This is something that I want to save some money and working that extra money go that they save, go into their bank account can go into their TSP, can go into other retirement savings. I mean, that's one of the top ten mistakes that we have. We have this pamphlet you have, you all have seen it. The top ten mistakes made by federal employees. And really, how to avoid those mistakes is paying way too much perfectly. Option B you know, Tim Brando, you gotta Begley option B story something that something to add to that.

Speaker2:
Yeah, I believe Brent.

Speaker3:
Um, I don't really have a story. I think it's just a shame that we get to. I see a lot of retirees. That's my clientele, is that I deal with a lot of people at retirement, and the biggest downfall for them is just that by the time they come to see me, nine times out of ten, they've got a health issue going on. They're paying all this money like Eric was talking about 4 or $500 a month for their option B, and we can't even get them into something else that's feasible and good for their family. So it's really more disheartening than anything to sit with someone that it's like, if I was able to have talked to you ten years ago or longer, or you had talked to someone else, that we could have gotten you out of that. I just think it's so very important that they know that there is there does come a time and place where you've got to get out of that. It's not something you're going to carry with you forever.

Speaker1:
Agree? I agree with that. I mean, yeah, the younger the younger you can get. I have not seen a scenario now. Sorry, Joe, I have not seen a scenario. Maybe you guys can change my mind on this where somebody was healthy enough for life insurance at any age, whether they're 25 or 55, where we could not save them money over a period of 20 or 30 years by getting them out of the increasing cost of option B, and looking at a private life insurance plan for a rate that is not going to increase. Over the same time, there has not been as long as you're eligible for coverage, you are going to save money over time compared to your option B. I mean, that's just that's just a fact. And if you don't believe it, just check out the calculations. We'll show you the numbers. If you have option B, it's something that you need to look into. If you're listening to this, uh, for the same coverage, you can get a better value, more bang for your dollar, and save yourself tens of thousands of dollars over your career by looking at a private plan, rather than sticking with the group plan. Tim, what were you gonna say?

Speaker2:
Well, you know, I agree with both of these guys, but, um, it's interesting that we're talking about this now because I had an appointment earlier today, this morning, and the the young lady is 59 and she's paying $132, um, a month, uh, like $61 a pay period for about 340,000. I said, you know, that that that's really not bad. The caveat, though, is when you turn 60, it's over $300 a month. And I said, now, now they're not going to send you, but notice in the mail to say that your coverage is going up. What's going to happen is you're going to notice a drop in your paycheck and nobody looks at the fegli code. Everybody's looking at their hours and overtime. And what did HR do wrong? Nobody did anything wrong. You just have this five year term that continues to go up. And I've run into people and tried to cover them, and they could not get the coverage because they have health challenges. And so you got to have those tough conversations and really look at what is the best thing for you to do, particularly if you're younger and you're listening to this, go ahead and jump on the bandwagon. It's always good to overlap your insurance group. Insurance is cheap when you're young on purpose because the probability is you're going to live. Now things happen, but the probability is you're going to live. That's why it's cheap. But when you really, really need it, the cost goes up. So if you have something that you can jump into that's cost effective while you're younger and allow it to overlap. So when the coverage is too expensive, you can let it go, but you're now still paying for a price of something that you took out when you were much younger. That's planning. That's managing your risk before you become a risk. Uh, long before it happened.

Speaker1:
Well, people always look at that and they say, well, uh, if they're younger, they're like, well, why wouldn't I just wait until it gets too expensive and then I'll change, right? It's very cheap now, Tim. Like you're saying, it's group coverage. It's very cheap. Why wouldn't I just wait till 4550 when it starts to get expensive and then look? Well, number one, I can't guarantee your health at age 45 or 50. You're in good health now. And two, the cost is going to be higher when you're 45 or 50 or beyond that. So two things are working against you. But if you lock it in now, even if it's a little more expensive today than what you're paying through fegli, you will still save money over time compared to the rising costs. So when you look at cost over time, and if I just said, would you rather pay X amount over the next 20 years or Y about. And if Y is cheaper, why wouldn't you go with that? Even if it's seems like it's a little more expensive today? And then on the the same token, you know, I do this. I say this joke all the time, Tim, you've heard me say it when we're giving presentations, but I'm like, look, yeah, you're not going to get a birthday card, RPM or the opposite. Fegley. Congratulations on turning 60. You made it, you know. Happy happy birthday. Just want to let you know that the cost of your option B has more than doubled. Yeah. Heck of a birthday present again. Happy birthday. Welcome to the 60 year old club.

Speaker1:
It's not going to come. And if you do have that letter, I tell everybody, send it to me. I want to keep it for our records. I'm going to put it on our website, but it just comes right out of your paycheck. And if you set this up when you first got hired with vaguely option B or any of the optional coverages, if you have not made any changes, it is exactly the same as it was when you set it up from day one. So it's important that you have somebody like us read your pay stub to you, decipher all the codes, explain it all to you so you know exactly what you have. Here's another on the on the flip side of that, guys, I've had people tell me they have five times their salary option B, and they have basic only and they think they're covered for all this amount. And I said, I'm sorry, but if you're not paying for it, the government doesn't give you much for free. They're certainly not going to give you five times your salary and life insurance without you paying for it. So if we look at the pay stub and find out you're not paying for it, you might have had a false sense of security thinking you were covered all this time, and you just have essentially one multiple of your salary with basic only. So understand what's in your pay stub, how much it's costing, how much that cost is going to change over time. Very very important. Okay, Randy.

Speaker4:
No other thing.

Speaker1:
Okay. Go ahead.

Speaker4:
Brett. One other thing is if if we can reduce the cost in your your option B, and let's say get you the same amount of coverage, you may be able to take that additional money that you're saving and add maybe a short term disability that can protect your money while you're, uh, if you've ever become disabled by you while you're working or maybe a critical and cancer policy, right, a critical illness or cancer policy. But you can actually add 2 or 3 policies to this one plan that you're paying for now for that same cost, which, uh, which you may need it. So, you know, it's just just a situation we had last week and, and ended up working out for the clients. No.

Speaker1:
It's another that's another good point is federal employees, whether you all know it or not, you do not have true disability insurance. So, you know, people always ask, um, and our I've asked this question, what's your greatest asset? And people would look at, well, I've got a, you know, a house that's worth X amount. I've got cars or possessions. Your greatest asset is your ability to earn an income. Um, and if you're no longer able to do that or temporarily not able to do that, you know, what is your plan? And as a federal employee, you do have leave. You have sick leave and annual leave. But what happens when that runs out? Do you have a plan in place to cover that? And there are plans. There are policies that just like your car insurance or your homeowner's insurance, and you hope you never have to use it, but you're glad it's there in case something happens and you can get a plan in place that could replace a good portion of your income. Provide that income in case something happened to you. So yeah, you can take that extra savings and and get two plans for the price of one, you know, or make sure you've got yourself covered.

Speaker1:
Not if you die and your family is taking care of that way. But what if something happens to you and you don't die and now you can't work for an extended period of time? You want to make sure you have a plan in place. There are so many things that the federal employees you know don't know about, because it's just not part of their regular, you know, vernacular, right? It's not something that they were educated about when they first got hired. That's not your fault as a federal employee. But that's why we come in to share with you what you do know or what you need to know. Because as Eric said again, you don't know what you don't know, and we want to fill in the blanks. So I appreciate that. Eric. Uh, Brandi, what are some of the things you've seen recently or situations that that may have come up, um, you'd like to share with us?

Speaker3:
Oh, gosh, now I'm thinking I never thought.

Speaker4:
I mean.

Speaker3:
You put me on the spot. I'm always running into a lot of different kind of situations because not having enough money in retirement.

Speaker1:
Yeah. Of course. Yeah.

Speaker3:
Not meet with me soon enough. And they did not talk to me about how to make sure they had enough money in retirement. So I have sat down with many people, um, and well, that's happened over the years, but I've sat down with many people where we sit down and we start looking at numbers and they just don't have enough money. And then the biggest one that I always run into when they don't have enough money as well, let me pull my money from my TSP and pay off my house so I can get rid of my mortgage. And oh, we'd be on here for a whole nother hour. Not talking about that, about how that's the worst thing you can do for yourself. So those are the things that I have run into, probably likely is not having enough money in retirement because they did not plan well, because they did not know, um, because they assumed that their benefit package was a better benefit package than it is. Um, and then number two, wanting to take that thrift savings plan and start paying off bills.

Speaker1:
Well, that's so the first thing. Not having enough money. I mean, that's that we we talked about having a false sense of security. If you work for the government, I, I say this in the presentations I give and then Tim, I'll pass it to you for a second, but I you know, you don't put your 30 years in as a federal employee. You get your gold watch and you're out. The government's going to take care of you for life. Uh, you've got a plan for this. You know, the government's only going to give you so much from your pension and Social Security, and a lot of times, tsp's left to carry the bulk of the weight when it comes to retirement income. And people haven't saved enough, yet to make up that gap. And they're going to either have to work longer or be forced to live a lesser lifestyle in retirement than what did you work all that time for it to? To live a retirement that you don't like or you don't want or it's not desirable. Everybody's got this dream of retirement. And if it doesn't, it doesn't just happen automatically, right? It doesn't just poof out of nowhere just come into existence.

Speaker1:
You have to plan properly and plan for a long time ahead. It's not. It's not something. I just had this conversation today with a federal employee. Uh, talking about retirement is not something you can cram for, like a test. This isn't high school. You can't do this at the last minute and just say, oh, I'm going to dump a bunch of money in and everything's going to be good. No, this takes time. Takes, uh, coordinated effort. It takes planning, it takes intention. And if you do it, the sooner you do it, the happier you're going to be. And I've yet to meet a federal employee who has come up to me and said, Val, we've made a mistake. I have way too much money in retirement. It's never going to happen. Your future self is going to love you for the planning you've done today. Now, Tim, I know in your presentations you share the example of, uh, a federal employee that thought they were ready for retirement and you had to give him some bad news. So you want to tell that story?

Speaker2:
Yeah. I'll never forget it. And in fact, um, I was in an in Birmingham and I went to go see this gentleman, and he was truly excited about retirement. I mean, he I think I saw him around November. He said, Tim, I'm coming out in April. I said, you got that senioritis feeling. He was excited. And so I said, this was pre-COVID. I said with he and his wife, and after about 45 minutes, I told her, man, you're gonna have to work about ten more years. And when I tell this story, I just pause for effect because I know everybody's thinking is that is that me? Because what happens is when people think about retiring, they plan for retirement in the last six months. And when I say plan, I mean, he went on about his retirement truck, you know, that the one with all the bells and whistles and everybody that gets the retirement vehicle gets the top of the line. That's your retirement car right. So it's the best one. And so nobody thinks about the fact that okay, now you're paying more money for a vehicle and your income drops 30, 40, 50%, but you just incurred a new debt, which is exactly what he did.

Speaker2:
Uh, took out a home equity line of credit, redid the kitchen for his wife, did hardwood floors. I mean, made them. I'm not happy until I came. And mama was upset with him. But what we had to end up doing was spend the next 30 45 minutes figuring out how to eliminate the debt just so he could afford to retire within 5 or 6 years. So the idea is, is I'm really tell people the truth. One thing about us is we're giving you your numbers. We don't give you hypothetical numbers. And the great thing is numbers don't have emotions. They don't lie. The numbers are what they are. Now, you may not like them, and you may still decide. Well, I'm going to retire. That's okay. That's your decision. The beauty is, we're able to give you the truth, and you ultimately are able to make a decision based on informed having informed the information. Um, and so you really want to ensure that when you think about retiring, you're not thinking about it based on emotion. You never make a financial decision based on how you just feel, but what the facts and allow those facts to guide you into wisdom and making proper decisions.

Speaker1:
I could imagine the look on his face when he's excited to see what his retirement is going to look like. And you said, yeah, it's all figured out. Um, you can retire in ten more years. So I'm just.

Speaker2:
Mad.

Speaker1:
That the countdown is on ten more years. And he's just like, jaw drop moment. I'm not saying it's not a mic drop for you because you don't want that. You don't want to have that distinction on there, but you want to just say, look, this is it's not impossible. We can shorten that time frame. But yeah, we've got a plan properly. Eric, your thoughts on, uh, not having enough money in retirement?

Speaker4:
Oh, well, you see it all the time, right? You run into people that that are ready to retire, ready to get out. Like Tim said, they they still got 10 or 15 more years to work, right? Hopefully only a couple more years. But, uh, one good thing about right now and at this time is if you're retiring, the market is the highest it has ever been right now. Right? Meaning your TSP money right now is the highest it has ever been. It's never been this high. Right? So if you're over 59.5 thanks to the modernization act that was introduced in 2019, I believe September 2019, you can now plan and prepare yourself to lock in your gains, protect your gains, protect your money, and then lock it in at the highest it's ever been. I mean, because you want to do what you want to buy low and what sell high?

Speaker1:
All right.

Speaker4:
You have that opportunity right now at the highest the market has ever been. So if you don't know you have these options, you don't know the modernization went into effect to help you. Then you definitely want to explore those options and find out what's best for you. Because if you can lock it in now and never go below what you have, retirement can be a lot better than experiencing another 2008 where it takes you till 2015 to catch back up, right? So if you're a retirement and you're ready to retire and the market crashes before the end of the year or next year, you don't want to be playing catch up holding the bag saying, well, I could have locked in last year, I wish I would have. Right. So that's something that's there for you, and that's something that a lot of people don't know and a lot of people aren't aware of. So, um, it can help you keep your nest egg and, and if you don't have enough money, obviously, you know, it's you got a plan, right? It's, it's it's something that we're going to help with.

Speaker1:
So that's that's where I'll kind of wrap us up then around that thought. And I know Brandon, you said, hey, people taking out money from their TSP to use it to pay off debt and things like that. Then there's a big tax implication that can come in there. Uh, without going into all the crazy details, right, there are better things that people can do with their TSP to set themselves up for success in retirement. And those are some of the conversations I've had recently with federal employees. On top of the stuff we've already mentioned, it's really what are your goals and what are the things that you want to accomplish with your TSP? And a lot of people have told me that, you know, there's one of two things. Either they have to utilize it for income, because as Tim and Brandi just talking about not having enough money in retirement, well, what's left to make up the the missing part of your retirement income, your TSP. There are ways that you can guarantee your TSP income, but then if people don't want it for income, what I've I've heard more often is no, I don't think I'm going to need it, but I want to let it sit and grow. And when you lay it all out, uh, you know, seeing how volatile things are and and how, uh, you know, awesome. The market has performed recently, and we are at all time highs.

Speaker1:
There's no precedent for this. You know what what which direction or things are going to go, um, where it's going to be in the future. And we really have, have no idea. I wish I had that crystal ball. I'd be telling a totally different, uh, talk today on this webinar if I had the crystal ball to tell everybody what's going to happen. But as Eric said, you know, we can protect that money. We can look at locking in gains we can help people with with their TSP and make sure that they're taking risk off the table. Because I've talked to a lot of federal employees who are retiring within a year or two or even before the end of this year, and they're still keeping the bulk, if not all, of their their strategy in the Csny funds the stock funds, which come with a high amount of risk, and we can help take some of that, if not all of that risk off the table for those that are nearing reentering retirement. So the conversation I've been having, if I'm kind of summing up my point here, is that the conversation with federal employees is about eliminating risk as you near or enter retirement. You know, and what is your overall risk tolerance? And then designing a plan to match that risk tolerance because they may not realize that they're taking 100% risk by keeping money in the CS and I as a near or enter retirement when they might be risk averse.

Speaker1:
They may not want to lose any money, but they just, you know, we have a short memory, right? We forget that 2008 happened. We forget that the end of 2019 happened or that, um, you know, the market, what happened with Covid, um, and the fluctuation that we saw so rapidly, we forget because things have been really, really good recently and people get emotional and they ride that, uh, roller coaster. And right now it's going up, up, up, up, up. But what happens? The roller coaster can can nosedive really quick and pick up, uh, speed. I'm not saying that's going to happen, and I certainly don't wish that upon anybody, but. But what if you can take some of that risk off the table completely, completely and not have a worry in your mind, not have any doubt. Go to sleep and put your head on the pillow and sleep well at night, knowing that you cannot lose anything because you've put a plan in place that matches your desires, your risk tolerance. So I know you all have, uh, probably a number of comments and, you know, let whoever wants to chime in first. But I think those are the conversations I've been having revolve around risk tolerance and taking any unnecessary risk off the table completely as they near or enter retirement. Whoever wants to chime in first, please comment.

Speaker3:
We're all paused. Um.

Speaker1:
Everybody so polite nobody wants to talk over. I kind of let you. I just let you arm wrestle, and nobody wanted to take it, so I like it. We're all. We're all nice and polite. I like it, but go ahead, Brady.

Speaker3:
All eyes. We all like each other. Um, the you know, the biggest thing that, you know, like you just said, Val is taking that risk away. Even if they're a person that was willing to take the risk. All those years, they, um, have worked all the way I look at it is they've worked all those years to save this. They want to conserve it. They need to conserve it. Um, don't take it and pay off debts because then it's gone. And then, of course, taking it and conserving it and putting it into something where you can still earn decent interest, nice interest rates on your money without having to worry and, you know, and lose sleep at night over what you're going to lose. And I talked to many, many people that over the years have been totally willing to be in 100% the C fund or 100% the S fund, or split between the two, and then they get to retirement and they are ready to make that change because they understand. And then I get some that are not they want to keep risking it.

Speaker3:
And those are the ones that I really talk to about. Let's talk about what would happen if you were to lose all of it. Um, and you know, so and then last but not least, to throw in just to the ones that want to take it all out and get rid of it. The way I look at it is like you're still living. Are you telling me that for the rest of your life, you're not going to create any more debt, or you're not going to need a nest egg to fall back on, and you do the whole purpose that you put all of this money into place for all of these years that you've worked, is because it is supposed to serve a purpose, to serve you for the rest of your lifetime. If you take and do something silly with it, like keep it invested in risk, you may lose it all or take it all out and spend it on bills or whatever. Travel, buy a new car, whatever you're going to do now, you have nothing to fall back on.

Speaker1:
I agree. Great points.

Speaker4:
Yeah. I mean, what if you could? What if you could, um, protect everything, lock it in now and then, possibly live off the interest for the rest of your life without touching the principal? I mean, there's options out there that you can do that. I mean, we have, you know, we talked to clients last year about the same thing. You know, the market's so high right now. And it it's at the highest it's ever been. What do we do. You know do we lock it in now and play it safe. Or do we stay in the market and ride this roller coaster where a lot of the clients locked it in now last year. And even though the market's still continue to go up, they still made ten, 11, 12, 13, 14, 15% last year in the same safe vehicles. Right. So just because you're locking in doesn't mean you're going to lose your returns the next year, because you can still make returns. Yeah.

Speaker1:
People people equate safety to the G fund. Right. And we have that conversation. I say the only safety you understand right now is the G fund, and rightfully so. You didn't put any money in there. Why? Because you understand that it's not paying out much, right? Two, 2.5% on average over the past ten years. Not very attractive with NTSB to keep money safe, but that's not all of the safe options that are available. You know, and like Eric said, there are plans out there. Brandi said. You saw the ability to earn a very solid interest rate while having the same G fund like protection. We've talked about this before on different episodes, but if these are conversations that you all are having, I'm having and then other federal employees that are listening have those questions too, about, you know, I like the way things are going, but their their attitude would change if there's a sharp redirection, um, in the market and things go in the other way. Right. The people's attitudes about the CDs and the I change when they see a negative in front of that annual return. So right now things look great. We have a short memory, we forget. But you know, like Eric said, what if you can lock in your gains and have a solid interest that is better than and sometimes two, three, four times as much as what the G fund returns on an annual basis? Tim, what are your thoughts?

Speaker2:
You know, it's making me think about and all of you may be able to to remember this. I remember when I was 12, I would ride my bicycle and we would come down somebody's driveway into my yard, going to the backyard, and we had a ramp and we had tires, and we would jump over the ramp and go over this ditch. By the time I was 17, I just knew this probably wasn't going to be the best decision for me. That's just a risk I'm not willing to take. By the time I was 30, I didn't even walk to the ditch because I just figured I might fall in or slide. Now, in my 50s, I just look out the window when I go to my parents house. I don't even go back into the backyard anymore. As you get older, there's something you should just think. I'm just not going to. I'm not willing to take these risks because the probability of a challenge happening may be great. Consider where we are now. We got a major election coming. We got two wars going on. We don't know what's going to happen. And if you're retiring within a window of 4 or 5 years, why take a risk when there's some guarantees that are available? Now the challenge is a lot of times you don't even know those guarantees exist. And that's why you're listening to us right now. So you want to have the information so you can make the best informed decision. And look, there are opportunities where you could have an income for life much higher than what's offered from TSP. But you gotta know about the information that's actually available. And sometimes you don't even know what questions to ask. That's why us having conversations with you are beneficial so you can have informed information.

Speaker1:
I don't know about you all, but I think just to prove a point, Tim, that you should set that ramp back up.

Speaker2:
It's the part where.

Speaker4:
Get on the get on the bike.

Speaker1:
Leave the helmet off and let's see what happens. Let's see what happens.

Speaker4:
What?

Speaker1:
You're going to prove the point.

Speaker4:
You know you don't want to go.

Speaker1:
Out like.

Speaker4:
You get.

Speaker1:
Older. I mean, where there is a chance that it works out well, the chance is very slim. I'm going to say, I don't know that, but I'm not a betting man. I'm betting the the the odds in Vegas are very slim, but Tim makes it over the ditch. I'd like to find out. So let's. I think it'd be a very good illustration.

Speaker3:
Yeah. Tim, make sure that policies are paid up now.

Speaker2:
I want.

Speaker5:
To.

Speaker1:
Make sure that this ability and the life insurance are good. Make sure you just double check the beneficiaries, make sure they're right. And, you know, let's go down that hill and and see if you make it over. Yeah. I'll meet you out there. Well, look, I, I appreciate you all for what you're doing. The fact that you're willing to take the time out of your busy schedule to come on this show and help us celebrate our 100th episode. So thank you. Tim. Brandy. Eric. You know, for coming on and sharing your insight, because you've been doing this for a long time and combined, we've been doing this for over half a century, which is incredible, right? Just helping federal employees in in ways that they don't even know. And we have to, uh, be cognizant of that and just be like, look, we have an expertise that is extremely valuable to those that we serve and those that work for our government. And we can we can impart on them something that, you know, they they didn't even know that they needed to know. Right? That's why we have that saying, you don't know what you don't know as a federal employee. So really appreciate what you do. And thank you all for taking the time. Thank you.

Speaker2:
Absolutely. Thank you for having me.

Speaker4:
Well for.

Speaker1:
Those yeah. Go ahead Eric.

Speaker4:
It's good to seeing everybody again.

Speaker1:
Yeah I'm glad again glad the lights are on the hurricane. The Kirk I mean I look that was terrible. I heard everybody was out of power. So glad to see that the internet's working. The lights are on, and everything's kind of back to normal.

Speaker4:
Uh, one thing I never thought was, you know, we would be in a hurricane and we wouldn't be able to call anybody, right? Our phones wouldn't work. And that was weird, right? So, yeah, uh, hopefully they get that fixed for the next time I ride, but just be that home. And no lights and no phone. That's. It's pretty bad, right? So, uh.

Speaker1:
I'm glad again. Glad you can make it. Thanks for thanks for all again, all of your hard work. And for those that are tuning in, really appreciate you joining us for this milestone episode, episode 100 of the Federal Retirement Show. Go back and view our previous sessions. Go back and view all of the content that we have on here, because this is for you, the federal employees that are searching and looking for direction and information when it comes to your benefits and retirement, go to our website, Federal Retirement Show.com. You can request a full benefits and retirement analysis. Just fill out the form there on the website. As a result of you going through that, we can send you a copy of the book that I wrote regarding federal benefits and retirement called There's No Excuse Your Guide to Maximizing Your Federal Employee Benefits. We'd be happy to put that in your hands after the completion of your benefits review and analysis. Um, again, my name is Val Majewski with American Benefits Exchange. Thank you to Tim McCluskey, Brandi Person at Eric Hughes for joining me on today's episode 100, and look forward to seeing you on a future episode.

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