Federal Employees – Recent Questions Answered!

11.26.25: Audio automatically transcribed by Sonix

11.26.25: 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'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 here on the Federal Retirement Show and learn about your federal employee benefits and retirement information. That's what this show is here for. It's for the federal employee like you, who's looking for accurate information when it comes to your benefits and retirement situation. Now, before we start, I want to let you know that if you're here for the first time, we have a lot of other episodes that you can go into and dive into and view all of the content. We have over 150 of them, uh, depending on where you're viewing this on YouTube, SoundCloud, Spotify, Apple Podcasts. You can go to our website, Federal Retirement Show.com and view all the content there. Again, it is for you and we probably have a topic that you're looking for or have questions about. If for some reason we don't, please reach out to us, let us know what else we can be talking about because we want to make sure it is pertinent. It is valuable. It's something that you're interested in, something that you need to listen to. That's why we do what we do. And today's episode is going to do exactly that. It's going to be talking about your questions. And when I say your questions, these are questions that I've encountered when talking to federal employees and going over their benefits and retirement situation.

Speaker1:
And I've done that for probably thousands, if not tens of thousands of federal employees over my career working with federal employees. Talk to that many, whether it's I've done that many reviews, but I've talked in front of or talking to specifically so many federal employees in my 13 plus years of doing this that these questions come up and these are things that have happened more recently. So they are pertinent to today's discussion because these are recent questions that I've been getting asked. And we've done these episodes before where it's been listener questions, viewer questions, a situation that recently came up with a federal employee, things like that. But just I compiled these questions and say, well, these people are asking them, well, there's going to be others out there that are looking for these answers as well. And we're going to touch on a number of things. So do me a favor. Get a notepad piece of paper handy. You can write some of these things down. And again, if I do not have a question on the show or we've never talked about a topic that you're interested in learning in, reach out to us. Go to our website. Again, it's Federal Retirement Show.com fill out the form one of our experts across the country, if it's not me personally, will be reaching out to go over your benefits and retirement situation and answer your specific questions.

Speaker1:
So let's dive into today's topic, which is your recent questions. We'll tackle these one at a time, and I may not go into incredible amount of detail on each one of these things. Maybe keep it a little high level, but we can go specific if you have more that you want to hear. Or we can answer it personally. If you reach out to us, we can go over it individually. But let's go to question number one. What is the biggest? Now this is, I will say, preface this question. I get asked a lot and we've talked about this question before. So if you've seen these and this looks like a recurring question, it absolutely is because this is a question I get asked a lot. People don't know what they don't know. And that's not your fault. You just didn't get taught these things. As a federal government employee. You didn't have a full educational session when you first got hired to go over all these things. So I get asked this question a lot because people want to avoid mistakes. I know I've seen that in my work and things that I do. You know, what are mistakes that people in my position or people that do what I do, what what are the mistakes that they make, and how can I avoid that mistake? How can I be properly prepared? What are some misconceptions about what I do and things like that that are employees are asking that question.

Speaker1:
What are some mistakes that you see federal employees make in this case? What is the biggest mistake federal employees can make when it comes to planning for retirement? And I'm going to give you my kind of multi-part answer. Right. Well, the first thing is you just you don't know what it is you don't know. So if federal employees go through their career without having and I, a colleague of mine, a business relationship of mine uses the term intellectual curiosity. If federal employees go through their career without having intellectual curiosity and seeking this information, having a false sense of security because they just didn't know that they need to look up these answers. That's a huge mistake. Huge mistake. So the first thing is you don't know what you don't know. If you don't seek out information, then, you know, having that, uh, lack of understanding is never going to get improved upon. It's always going to be there. You're just you're never going to know what it is you don't know. So have the curiosity, seek out these answers to get a benefits review done to to go to a retirement training or seminar. Have that number two would be or part B of this would be to never, uh, go to a benefits or retirement seminar or get a personal benefits and retirement review done. Once you understand that that is something that you should do.

Speaker1:
Why? Because that means you're seeking information. You're getting in review. It's like I use this kind of equation here or this, this sample, uh, scenario where it's like going to the doctor, right? You go to the doctor every year, hopefully you do and get a checkup. You get a physical done. And what's the end goal of that? You want to walk out of there with your head held high. You want a pat on the back. It's like going to the dentist. Hey, no cavities. I want to go in there and I want the doctor to tell me you're doing a great job. Stay the course. Everything's looking good. See you again next year. Same thing with the Benefits and Retirement review. Uh, you want to come out of there with your head held high, a pat on the back, keep doing the things you're doing for retirement, and hopefully you get an A, right. You get a positive, you get a check mark, you get a green button. Right. Green, green thumb up, whatever it might be. You get that pat on the back that everything's working well. But what if something's wrong? Now, you'll know that there's a problem that you need to fix or a solution. So be curious. Look for this information. Find out what it is you need to know. Seek out somebody like me. Somebody that is considered an expert when it comes to benefits of retirement information.

Speaker1:
Get a review done. Find out what's going on with your situation. That way, you're 100% assured that you're heading in the right path. And if you're not, you can change the path. You can alter it, you can plan properly. But the first thing is information. You've got to learn and inquire about benefits and retirement specifically for federal employees. Find out what it is you need to know and make the proper decisions. From there. We can go on and on about this, but that's where it starts. So the biggest mistake that I see is just a lack of understanding, a lack of knowledge, a lack of intellectual curiosity didn't find out what it is you need to know. And it's just assuming having that false sense of security that everything's going to be okay. You work your 30 years or whatever your time frame is, you retire and the government's going to take care of you. Everything's going to work out just fine. You have to do the planning. You have to make decisions that are going to affect your future. So do yourself a favor and avoid this mistake by going and seeking that knowledge. Sitting down with an expert, reviewing your situation. So question number two with the OPM backlog, what does the retirement process currently look like? And this is from a federal employee recently because we're nearing towards the end of the year and they're planning on retiring at the end of the year.

Speaker1:
Very popular time for people to retire is December 31st of whatever year, because that's a very common way people want to leave at the end of the year. Um, hopefully. Or maybe they're maximizing their user lose on their annual leave. Um, they've they've maximized their, uh, sick leave for the year. So it's just a very common time that people want to retire, you know, cut ties right at the end of the year. Well, what does the retirement process look like? First of all, I generally would say get your retirement application in at least two months in advance. There is a backlog and you can look this up. Google it. How much is the backlog? How large is the backlog? What is the timing? Talk to others that have recently retired and see what they're experiencing. But I can tell you what I've seen with the backlog. Get your retirement application in at least two months in advance. If you have to use the the online application, use the new online application. Get that in okay. Make sure everything is completed properly. Get that in if you need somebody to walk you through it. Our team of experts can help walk you through the retirement application, making sure that you're answering all the questions properly, choosing the right things based on you, your family, your situation. There are some the determinations you're going to need to make, and you want to ensure that you're doing that properly.

Speaker1:
So get that in. Now, once that's in, let's say everything is perfect in on time. When you do retire at the end of this year, let's say it's December 31st. Your effective retirement date will actually be the first of the next month, which is January 1st. And typically your next paycheck or your first paycheck would be due to you the first of the following month, February 1st. Now, with the backlog and the backlog, for the entire 13 years that I've been working with federal employees, but with the current backlog, they've been putting people into what's known as interim pay. Interim pay, which is about 60 to 70% of what you should be getting paid. And that's a just an example. It could be more, it could be less, but 60 to 70% of what you should be getting paid is what you get paid right away. Now, what I've seen recently is that people aren't even getting that interim pay paycheck on time. So there's even a bigger gap before you receive some sort of money. So just follow that. Talk to people that have recently retired, see what they're experiencing. But that interim paycheck is even being delayed. I saw him recently. There was a federal employee that retired within the past year, and it took 120 days, four months until they got that first paycheck. So plan accordingly. This is talking about that that planning part or knowing what you don't know.

Speaker1:
You might need an emergency savings. You might need more money to bridge that gap from when you separate on, let's say, December 31st to when you get that first paycheck and then when you start getting that first paycheck, it may not be the full amount. At least now it's not the full amount. It's that interim paycheck. And what does not come in the interim paycheck is if you're owed the first supplement that won't come until the interim paycheck. It'll come when you get the full paycheck whenever they figure that out. Now, typically, people are in interim pay for 3 to 6 months, the longest that I've seen there. That was 12 months. And that was a federal employee that a unique circumstance, unique situation. And it just took OPM a lot longer to figure it all out to pay him the full paycheck. So a couple of things here. Get your retirement paperwork in early. Do not expect that retirement check to come on time if it does, great. Generally speaking, you're going to be an interim pay to start, which is 60 to 70% of what you should be getting paid while you're an interim pay status. If you were to do the first supplement, it is not going to come during that time. If it does, let me know. I want to change up what I'm telling federal employees, but just from the experience I've seen recently, it is not coming during the interim pay process.

Speaker1:
And when they do, uh, figure everything out, you get the full pay, they should back pay you everything that you're owed. But it doesn't mean you still don't have bills to pay while you're getting paid less money, you're not getting paid at all. So understand that part of the process, right? And the timing of everything. If things have changed, if your situation is unique, if if you've gotten paid right away, let me know. Let our team know. I want to update this for other federal employees, but that's generally how that process goes. So hopefully that answer your question. You have more questions about that. Let us know. Question number three and this comes up we talked about Medicare and how Medicare works together with your federal employee health benefits. But I've been getting asked a lot with retirees and people that are are even even if they're turning 65 while they're working. Uh, but definitely retirees. Do I need to elect part B of Medicare when I retire? Now, there's a couple things in here. Okay, a couple things in there that I'm going to say are are kind of different. First, let's talk about just a general in general federal employee versus some specific agencies. I will say specifically, if you are a postal employee and you want to keep the postal health benefits in retirement, because we switched that over recently, right? They switched from just a regular to the postal health benefits.

Speaker1:
Um, if you want to continue your postal health benefits in retirement, they're requiring you to. Yes. You have to get Medicare Part B in retirement to keep that. That's number one. Number two is if you're using Tricare in retirement, let's say former military, you're not using FB, Tricare. Tricare is is making you take your part B of Medicare in order to continue that. Now, if you're not in these circumstances where the the agency or the type of health insurance is making you take part B, the general answer is no, you do not have to take part B of Medicare in retirement. Or once you turn age 65. Now the the thing is you will get part A, or you should probably just elect part A, start it right when you first turn 65. That's something you've been paying into your entire working career. Some people say, yes, part A is free. It's not necessarily free. You've just been paying into it up until that point. Once you turn 65, there's no longer a premium or anything you need to pay for part A or when you separate from service, you're no longer paying into the Medicare portion of your, uh, payment out of your paycheck. Right? So you get part A when you turn 65. There's no reason why you shouldn't elect that. You should take it right away. Part B is something that you have to elect and you're not required to do it.

Speaker1:
Now, what does part a cover? Part A of Medicare covers hospital stays. Hospital stays. Part B is doctors and specialists. Um, your fhrb will continue to act as your fhrb, whether you're working or you're not. So if you're happy with that coverage and you don't need any additional coverage, maybe you don't have to elect part B now, why wouldn't you do it? Because there's a premium for part B, okay. Part B comes at an additional cost. Part A you've been paying for your entire career. You get that there's no more premium payments for part B, you have to pay more for it. And in 2026 it's going to be over $200 per month for that. And if you make too much money in retirement, unfortunately you're going to end up paying more for part B than just the $200. And that's a conversation we can have separately. But you don't have to elect it unless you're some of those circumstances I mentioned earlier. You don't have to elect it now. What will it do if you do elect it? It should solidify your overall health plan and you should not have any out of pocket costs going forward because your part A and part B of Medicare and retirement will be your primary, your FB will be your secondary. Fb also comes with a prescription drug coverage. So chances are you're not going to need any supplemental prescription drug coverage.

Speaker1:
In addition to that, just understand this is an election, right? Everybody's different. So I can't make a blanket statement whether it's beneficial to get part B or not. But I'm just saying you are not forced to unless you're in those circumstances I mentioned earlier, and it will be an election. Now when you let's say you're retired, you turn 65 and you do not elect part B right away. You do not like part B right away. Like your health is great. You don't go to the doctor much. You don't need an additional health cost or a premium cost for your health benefits. And you decide not to take part B of Medicare. And somewhere down the road, situation change and you're like, ooh, I want part B now. Now I need it. You can still get it, but there's going to be an additional surcharge, an additional penalty applied to the premium for part B for all the years that you did not take part B, so just understand that now. Not the worst thing in the world. They're not shutting you out of getting part B, you're just going to be having an extra penalty or an extra fee added on to your part B premium as a result of not taking it right away when you were first eligible. Additional questions on that, please let me know. But a great question that we've been getting asked by our federal employee clients.

Speaker1:
Next question. Should I try to pay off all my debt prior to retirement? I've met a lot of federal employees, and this question comes in a number of forms. So I'm summarizing what these federal employees are asking. But I normally and generally when reviewing somebody's situation I will ask them about their debt situation. Why? Because this factors into money that's coming out of their paycheck in retirement and a lot of circumstances, a lot of cases, federal employees will be making less money in retirement, either because that's all that they've provided for themselves or they didn't plan properly, or that's maybe all they think they need. Um, you know, 70, 80% of their pre-retirement income or something, because that's what they've heard somewhere, and they're carrying this debt, or they didn't have a plan to pay off all this debt before retirement. And a lot of times people will still have a car payment, credit cards, student loans, home equity lines of credit or home equity loans, um, mortgages, all of these things that they're carrying with them in retirement. And those bills have expenses, have costs that are coming out and they they're making less money. So now this is eating away of the the supplemental or extra income that they're going to have to spend on living expenses. And it may put them in a weird situation. So I normally tell federal employees this is just general guidance. If you can plan to be debt free as possible, if not completely debt free, by the time you get to retirement.

Speaker1:
That way, that's not a burden. That's not something that's going to be a factor in your happiness in retirement. It's not going to be dragging you down as far as your your retirement income, it's not going to be something you're going to leave to your loved ones. If something happens to you in retirement, you're going to say, hey, I've paid off all my debt. I've paid off all the things that I owe, and now my money is my money. In retirement, it's not going to a debtor. It's not paying an interest on a loan or a payment or whatever it might be. Okay, that's the plan. And if you could do that, great. That's my general guidance. Should I is the question should you. I would say yes if you can. Why not? It's a great plan to have not only preparing for enough income and retirement, but preparing to pay off all the debts and things that you owe prior to retirement. Recently, the next question comes from a recent conversation I've had with a federal employee, somebody that is applying for disability retirement from the government. So remember, disability retirement is different than getting a VA disability payment. Um, if you're a former military or having a disability insurance policy, if you're out of work for a little bit of time, this disability retirement. Right. So this is saying, hey, we've exhausted all other options.

Speaker1:
You're you're disabled in a way that prevents you from doing your job. And the government agency that you work for is unable to accommodate you and put you in something similar, and you're still unable to perform that work, and you have no other solution but to apply for disability retirement. And there's a couple things that you're going to have to do, right. You're going to have to fill out the retirement forms. Now I will say, let's say that we've determined now that you're eligible, right. The government has exhausted all the other options. You've got no other place to go. You're going to qualify most likely for disability retirement. Now you're going to apply for it. You're going to fill out the regular retirement forms. You're going to fill out the disability retirement forms, the 3112 A and C. So A is going to be your statement of disability. The C is going to be the physician's statement. The other the other forms within that the government's going to fill out. Or you're going to have your your management or your agency. Fill out their part of this stating yes, you know this is their statement saying you are disabled and and it's not guaranteed that you're going to get approved. That's the other thing. Even if it looks like a open and shut case, it's not guaranteed that you're going to get approved. You also have to apply for Social Security disability at the same time.

Speaker1:
And that's an approval, a separate approval process. I've seen where people got approved for disability retirement for the government, but got declined when it came to Social Security disability. So just understand that there is a little bit of a process here now with the normal forms for disability retirement from the government. When you're filling out the regular retirement forms, you're filling out all the same regular forms that you would fill out if you were retiring. You know, once you hit the age and service requirements, then on top of that, there's the disability retirement forms and the different statements that need to be made in there. Now, disability retirement will continue until age 62, Generally till age 62. Then it'll switch over to your regular calculated retirement and Social Security. Disability will continue until age 62 until you're eligible for Social Security. Now, for some reason, if you're 62 or older already and filing for disability retirement, you will not need to file for Social Security disability because you should be eligible for regular Social Security. Right. So that's the general process. Now there's different circumstances and everybody's is different. Everybody's situation is unique. So if you have other questions about disability or disability retirement, um, and the whole process, let me and our team know again, go to our website, Federal Retirement Show.com fill out the form and we can go over that with you and answer your further questions.

Speaker1:
Now this question, we get a lot again in different ways when it comes to TSP and generating income for it, because TSP is one of your three retirement income sources as a Firs employee. So to read the question, it comes in a lot of different ways, but let's read the question. I need my PSP to produce an income for me in retirement. What is the best way to do that? I need my income from TSB, or I need TSB to generate a lifetime income from me in retirement. What is the best way to do that? And I've had people ask what should I do? What are my options? How do I do that? Because as a traditional Fers employee, you have a three part retirement income plan. That's how it was designed. It's your first pension, your first annuity, your Social Security benefit. It's actually, um, you know, an insurance benefit, right? It's a claim payment, typically from Social Security. Now you have TSB and you can turn that into a lifetime income. There's a lot of ways in which you can get income from TSB. First you can tell TSB to pay you your monthly payments. Right. You can determine how much comes out and how much they're going to give you. I'm not a huge fan of this because the money can run out. The money is still invested in TSB, which can help grow it, but it can also lose the money if the market turns or your investments.

Speaker1:
Go south with NTSB so your payments can last less. There's just too much fluctuation there I like guarantees. Um, there's the life expectancy payment in there, but also that's not guaranteed. The only way that you can get a lifetime guaranteed payment from TSB is by taking what's known as the MetLife annuity. And you've heard us talk about this before, and I've answered this question in different ways, just not exactly in this way, but MetLife, uh, income from TSB, the MetLife annuity from TSB is the only way that you can get a guaranteed lifetime payment from TSB. Now there are problems with it. What the reason why it's called the MetLife annuity is because TSB will go to an insurance company, MetLife, the same company that administers your Fegli program, and they buy for you what's known as a spia a single premium immediate annuity. And what they do there, that means you take your bag of money or whatever money you want to turn into income, and you give it to MetLife. You have to give it. You give it up. You make a trade, you they take your bag of money or whatever money you give them, and in return, they're going to send you a check for the rest of your life. You no longer have any ownership access, liquidity to that money. You've given it up. You've made a trade. It's irrevocable.

Speaker1:
Once you make that decision, you can't take it back. What they'll do, though, is they're going to get pay you a check for the rest of your life. So no access to the money they gave you, but they're going to get a check for the rest of your life. And if you choose that maximum payment, the one that they advertise on your annual statement, if you look at your annual statement, that column in blue on the right hand side, there should be a big, bold number, especially as you're getting close to retirement. The biggest, boldest, uh, numbers letters on that page are going to be what they would pay you from TSB if you took that lifetime income. And the problem is they don't tell you that this is the maximum single life income. And if you die tomorrow, the rest of the money they get to keep, that's the nature of the way that deal works. It's an irrevocable choice. And if you take that max deal, you died tomorrow or shortly thereafter, they keep the rest of the money. That may not be the best way to do it. And so the question is what is the best way to do that? There are a lot of different options out there, and there are some which will allow you to get that lifetime income without having to give up ownership. Access liquidity to your money. You're still in control of it. And if something were to happen to you too soon, they don't keep the money.

Speaker1:
It would be paid out to your named beneficiary or beneficiaries. You have flexibility, access, ownership, control and you can still collect the lifetime income. That's not done with NTSB, that's done outside of TSB. But if you're interested in those options, you got to look out and reach out to us. You can go to our website, fill out the form, we'll be in touch. We can walk you through those steps and show you some different options. So what is the best way? It depends on your situation. I will say that I can't make a blanket statement. Um, even though I'm just describing a better situation, for some, it may not be the best situation for all. So that's why we have to take a deep dive into your personal Situation. Answer your specific questions. Uh, go over your specific circumstances to determine what the best solution is for you and your family. But is it the best way? In my opinion? No, it is not the best way to get it directly from TSP. There's better ways outside. Again, which one's right for you? We have to determine that. So based on conversations I'm having with federal employees recently, those were your questions. Right. If you have specific questions, you're like, those are my questions. I have other questions that are yet to be answered. Reach out to us, drop us a line.

Speaker1:
Shoot us an email. Fill out the form on our website. We can definitely answer more questions on the federal retirement show and questions that specifically relate to your situation. As I mentioned earlier, we are on YouTube, Spotify, SoundCloud, Apple Podcasts. Our website has everything. Um, I appreciate you being a listener of the show or a watcher of the show. If you view this content and you like it, be sure to be notified when a new episode comes out. And do me a favor, this is my last thing I'm going to leave you with. Share this show with a colleague of yours. Okay, we're out here for federal employees. We want to give information that's going to help you make the best decisions going forward. Tell a colleague it's almost like refer a friend. The more people that you can tell, the better the more federal employees that we're going to impact. I hear from federal employees who are stationed all over the world, not just domestically here in the US, Korea, Japan, Germany. Um, talk to so many of you. And I'm just elated to hear that there are so many avid and continual or consistent listeners of the federal retirement show, and I'd like to grow that audience. So share this with a friend. Share the content. Tell them about the Federal Retirement Show. I really appreciate your referral in advance, so thank you for that. Again. My name is Val Majewski with American Benefits Exchange. You've been watching the federal retirement show. Look forward to seeing you on a future episode.

Speaker2:
When most of us think about retirement, what comes to mind is dollar signs. How much we've saved, how much we'll spend. But there's another factor that may matter just as much. Where to retire. I'm Jim Teraoka for the retirement radio network powered by Amara Life. A recent study done by CNBC gives the American Retirement System a C-plus grade professor and director of Pension Research Council for the Wharton School of Business, Olivia S Mitchell, weighs in.

Speaker3:
Every country's retirement system is a product of the path that it grew on.

Speaker2:
Between the cost of living, individual state tax laws and possible Social Security insolvency. It's as important as ever to choose the right location of where you'll spend your golden years. But where to go? According to a comprehensive WalletHub report, the states that make your retirement dollars stretch without sacrificing care, comfort, or community tell an intriguing story at the top of the list. Florida. It's no surprise the Sunshine State boasts no state income tax and generous funding per senior through programs like the Older Americans Act. Don't forget the miles of shoreline, golf courses and lifestyle perks that many retirees dream of. But Florida isn't the only shining star in Minnesota. Access to world class healthcare facilities and home health services helps it land at number two on the list. Colorado, Wyoming and South Dakota come in at three, four, and five, respectively, all offering low cost of living and a slow pace of life amid big skies and wide open spaces. Let's not forget the affordability and low crime. So as you look toward the golden sunset or help someone you love, plan for it, consider this. Do you want tax relief, medical peace of mind, or scenic freedom? Pick your priority. Weigh it against your budget and let the data guide you. Because when it comes to retirement, the best place to live isn't just where you can afford, it's where you can thrive. For the retirement radio network powered by Ampere Life. I'm Jim.

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