Just Got Hired? – What You Need to Know

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Speaker 1:
Welcome back to the Federal Retirement Show. I am your host, Val Majewski, with American Benefits Exchange. And as always, I really appreciate you taking the time out of your busy schedule to join us to view our content. That's what it's here for. It's for you, the federal employee, looking for accurate information when it comes to your benefits and retirement situation. And if you like today's episode, I encourage you to go back and view the 180 other ones that we have in our library. And it is all for you. So if there's a topic that you might have questions on, hey, we probably did an episode on it. There's a question you're looking to get answered. You can probably find it in there. And if you can't reach out to us, you go to our website, federal retirement show.com. You fill out the form. One of our experts across the country. If it's not me personally, we'll be reaching out to go over your situation and get you your questions answered. Now today's episode, we're talking about new hires and the title obviously being just hired, what you need to know. And it means these are the things that I wish every employee, every federal employee would be doing or looking into when you first get hired. Now, it's not a everything because for the sake of time, we're not doing a full, you know, early in your career or just got hired scenario or benefits review or workshop. But I want to give you some of the bullet points.

Speaker 1:
If you just got hired, if you're really early in your career, if you can take advantage of some of these tips and utilize it throughout your career, you'll be in a better place when it's all said and done. But unfortunately, as we're going to talk about, the government doesn't do a great job of educating and training you, the federal employee, on your benefits and retirement situation. They don't go into the details. They don't dive into those X's and O's to let you know what it is you need to do over the course of your career to retire happy, to maximize your benefits, to save money, provide better for your family, all of these things. So today I want to go over some of the bullet points. And if you're interested in learning more or getting a full review done or doing a retirement projection, and you're new in your career, even if you're older in your career, but especially if you're new, because I get this a lot of times when we're talking about benefits and retirement, uh, we talked about it when we did the top ten mistakes series, but people that hear retirement seminar, retirement review or retirement briefing think, you know what? Retirement is so far away, especially for those that just got hired, retirement so far away that I don't need to go to this thing. This is for retirees. I don't learn about my retirement down the road and you are 100% incorrect.

Speaker 1:
I'm going to tell you you're wrong. You need to be planning for this right now. So let's dive into today's content and talk about those. Hey, you just got hired. This is what you need to know. So first of all, whether you know it or not, you are planning for retirement from day one. I've said this multiple times on this show. I've had a guest come on and also talk about this. But you are planning for retirement from day one. Now, what does that encompass? It's not just your retirement income. It's not just saving money for retirement. It's how do you navigate your career, right? How do you go through this gauntlet of federal government employment and come out on the other side unscathed and happy and ready to retire the way you want with the lifestyle that you want. You've got to know all the the pieces of the puzzle. You need to know how, as I just said, to navigate your career, maximize your benefits, take advantage of everything the government gives you. Prepare properly, take action. All these things we're going to talk about today. But you are planning that that planning starts right away from day one. There's only a finite number of days that you're going to work for the federal government. You're not going to work forever. Most that I talked to are going to retire and want to retire at a certain age, a certain number of years of service.

Speaker 1:
Et cetera, et cetera, et cetera. So there's a finite number of days. Take advantage of all of those days. You don't want to get halfway through and be like, wow, I have not taken advantage of half of my career and now I'm starting. That's not the case. But to be successful or that's not the best way to be successful, that's not a good recipe for success. So if you just got hired, you're planning for retirement from day one. If you're in the middle of your career, I'm going to say to you, you are planning for retirement from day one. Have you taken advantage of all those days and how many days do you have remaining? Take advantage of the remaining days that you have of employment with the government and maximize those. Optimize them. So let's get into the first thing. Number one, educate yourself. Educate yourself. It is up to you to learn all this information because if you relied solely on the government or your agency to teach you these things, you're going to be greatly disappointed. Or if you think the only information I need to know is what the government or my agency gives me. You will also be disappointed you are not given all of the info. You're not giving the the best blueprint when you first get hired. Most of the time, and I can see the virtual head shakes as I say this, but most of the time you fill out the paperwork, you're given a couple choices.

Speaker 1:
Fill this out, get to work. It's not really explained to you when you first get hired. It's not really, um, described in, in detail to you to understand what all these things mean, the choices that you're making, the decisions that you're checking off on these pieces of paper. So educate yourself, take the time to learn all you can about your retirement system, about the benefits that you get, the costs that are involved, the way those costs change over time. You have a situation that changes in your life. You get married, you have kids. Take the initiative, be proactive in making the changes that you need to make. And this is proactive with everything. I would say be proactive. Be aggressive when it comes to planning for retirement. Do as much as you can. Think of it that way. If you want to retire someday and have that lifestyle that you're dreaming of, a lot of people that I talk to, they dream of this, uh, commercial style, uh, you know, fairy tale movie style of retirement, you know, on a beach with a nice, cool drink, you know, dipping your toe in the water or the sand or being on a boat or a golf course. Those things cost money, right? And if you plan properly, you can have all those things and more. But if you don't, it's not guaranteed that that's going to happen. So you need to take action, be proactive, start as soon as you can.

Speaker 1:
Now, I will say, if you just got hired, awesome. You've got a very long runway to plan with. Take advantage of all those days. If you're in the middle of your career and you have not done anything yet, or you've done little. Maximize the rest of the time that you have, it's tough to play catch up completely, but you can still do something If you're very close to retirement or nearing retirement, hey, it's never too late. I will always say that it's never too early, never too late. So take the time to educate yourself. Learn as much as you can. That's what this podcast, this radio show is for, is for you, the federal employee, again, looking for information on benefits and retirement. We're putting it all out there for you. And I think we've covered a good amount of information in 180 plus episodes. So utilize the information, the the sessions, the scenarios that we've put out there for you. Learn as much as you can and then get a personal benefits and retirement review completed. I'm going to talk about that again here in just a second. So I'm jumping ahead. Save more than you think. You should save more than you think you should. A lot of federal employees that I talk to, I just put in the TSP and a lot just put into the, uh, just enough to get the matching funds 5%. So the government matches you up to 5%. Hey, I put in the 5%.

Speaker 1:
Now that's great. A mistake that I see federal employees making is not putting in up to 5%. I say the starting point is putting at least 5%. Why? Because that is maximizing the free money the government gives you with the matching funds. Then anything above and beyond that is gravy. That's that's yours that you're putting aside, above and beyond. But you're at least the bare minimum should be putting in the 5% to get the free matching. Then anything that you put above and beyond that is going towards excess. And a lot of times you need to save more than you think you should. And I've seen this with federal employees to the ones that are planning, uh, or over planning, if you will, every time they get a pay raise, if they're comfortable with their take home pay. Now, every time they get a pay raise, they increase their TSP or increase money that's going elsewhere for retirement savings. Why? Because they're comfortable with that take home pay and they're realizing they're just going to spend it anyway on stuff that probably doesn't add value to their retirement. So they say, hey, I'm going to keep my take home pay the same, and I'm going to defer more money towards my future. Next thing you know, they're up to ten, 12, 15% of their earnings going towards retirement savings. It doesn't all have to go to TSB. It can go elsewhere as well for retirement savings, but start sooner rather than later.

Speaker 1:
The sooner the better. Think about the time value of money. There's a lot of illustrations out there when we talk. Personally, I can show you one, but they've got this this illustration for so many years. I'm going to try to describe it as best I can. I saw this when I first got into the professional world about saving money and the time value of money. It shows two people starting at age 25, age 25, right? Right out of college. Let's say they get a job at age 25. The first person saves a certain amount of money for the first ten years. First ten years. It's a consistent amount of money every year for the first ten years and then stops. Ten years and stops lets that money sit and grow until age 65 with a consistent interest rate. Again, I'm trying to describe this as best we can. The next person waits ten years. So the first person started right away. Ten years of savings and stops. The next person, age 25, waits ten years until they're making more money. Then they start putting the same amount every year for the next 30 years. So each have a 40 year time horizon, 25 to 65. They're going to retire at 65. The person that started earlier. Now, all things considered, equal as far as interest rates, let's say they got the same interest rate every single year. Um, and let's say that interest rate was about 7%.

Speaker 1:
That's what the people look at averages of 7%, eight, ten, whatever it could be, let's say 7%. The person that started earlier, even though they only put in for ten years, the time value of money and the power of compounding interest ends up having more than the person who started later and put in for 30 years. So the time value of money in this example, and there's a lot of illustrations that you can see with this. But the idea, the concept, the teach here, the lesson is start early, save what you can go above and beyond if you can, and you can always increase that as you get pay raises and things like that down the road. But the earlier you start, the better off you're going to be down the road. Again, that's the time value of money. And the power of compounding interest helps helps, and it's going to make you or make it easier for you to have what you want to have in retirement because you started early. Again, I will say it's never too early, it's never too late, but you're going to have more the earlier you start. So once you do start that, remain consistent, be consistent. There's there's things that I like, right? Doing, doing something over and over and over again. And you develop a habit. You develop a diligence, endurance, consistency. It's a discipline. If you can be disciplined in this, you are going to love yourself down the road.

Speaker 1:
Your future self is going to love the fact that man, I am so glad that the 25 year old version of me, 30 year old version of me, whatever it is, decided to put this extra money for my future. For our future. And now we have the. Can you believe that? It took. It's been. It feels like it's gone by that fast. And now I've got all this money just because of the power of compounding interest. This is awesome. It's going to go by quick, guys. If you're if you're just hired, it's going to go by quick. You're going to be looking back. It's like when you watch your kids grow up, when you watch your kids get their license, go to college, you're like, man, that went by fast. Feels like it was only yesterday that I was changing diapers. Now they're driving off for their freshman year of college. It goes by quick. Same can be said about your career. So the earlier you start and remain consistent and diligent and dedicated and disciplined to setting aside extra money, you're going to love yourself for it in the future. So understand the need for this and why we're going to be doing it, uh, is because it's going to be there closer or quicker than you think, and you're going to need more money than you think. So you should save more than you should. I say this to get life insurance while young and healthy. So thankfully, option B, if you're not educated and trained on it, we have plenty of episodes on it.

Speaker 1:
You can get up to five times your salary in additional life insurance. Sounds great. It's very cheap when you're young in your career, but it will get more expensive as you get older. And if you use private life insurance and you're young and healthy, number one, your rates are going to be less. You can build a comprehensive plan for you, your family, your future family. If you're not married and build that plan for, for very, very, very cheap. Compared to the rising cost of option B, it can be comprehensive made exactly for you and your family. Excuse me and your situation, but you can also lock it in in a much cheaper rate because you're very healthy and young. So building that comprehensive plan, a lot of people don't see the value of life insurance it is part of, or should be part of everybody's financial plan as a protection, as something that can grow with you as a cost saving measure. All of these things, in order to protect your family, your loved ones, your estate, your retirement, all of it. So if you, if you, uh, think, hey, I don't know how much I need for life insurance or do I need life insurance? We can quantify that with you as well. We can go through, we've got, um, a simple formula to see what is suitable for you. Why should you get life insurance number one.

Speaker 1:
And what are the things that you need to be prepared to cover in case something happens. Life insurance. A lot of people look at it like, man, you hear about life insurance. It sounds like a four letter word. It's not. It's a very useful tool. And it should be a tool and a part of everybody's plan in some way, shape or form. Now, everybody does not need the same things, which is why we need to quantify it. We need to go through the questions and see what it is you need to protect, but it is a great way to protect not only your family, but protect your your loved ones with income. Protect the debts and things that you that you owe. Provide legacy for pennies on the dollar, and the younger you are, the healthier you are, the cheaper that's going to be. And you can lock it in now and it can remain that way forever depending on the type of plan that you have. So I highly recommend looking into, uh, life insurance planning, getting a quantitative analysis done of what your life insurance need is and putting together a very comprehensive plan so that all those needs are covered both today and in the future. So it's a combination deal. It's not just temporary. It's something that we can put together for the long term. And I want to go back real quick. I did mess up. I didn't mention killing multiple birds with one stone.

Speaker 1:
And I want to clarify what that means if you saw it on the screen. So there's a lot of a lot of ways that life insurance can help you. Number one is a death benefit. Yes. And it can cover all the things I just mentioned and provide income for your family. If something were to happen to you, a legacy, a lump sum, tax free. It can provide coverage for for debts or obligations, but it can also help with other types of planning. And it can also help in the retirement planning side. It can, as we're going to talk about in another slide coming up, helping out with your debt situation. Um, there there are plans out there. Life insurance. The function of it is more than just a death benefit. And if you set it up properly, it can kill multiple birds with one stone, meaning saving money for retirement, providing that protection for your family, covering your debts, um, providing a legacy gift, all these things can be in a big comprehensive plan. So that's what I mean by killing multiple birds with one stone. Um, create a plan to pay off your debt and control future debt. So what does that mean for the younger folks you just got hired? You might now just maybe just getting married. You just got the mortgage. You just got a new car, or you're having a family. You've got to get the minivan, the SUV, something different, the upgrade.

Speaker 1:
And you're taking on this extra debt or you're you're adding on to you got the house and you got the home equity line of credit, um, that you're, you're utilizing to do repairs or things like that. And you've got this debt, maybe credit cards are going up. Do you have a proper plan to get yourself out of debt in a timely fashion? Now while you're young, people can say, oh yeah, I can, I can support that payment or I can take on this payment and I'm making enough money. Great. But the idea is pay off that debt sooner rather than later. Why? Because the sooner you pay off the debts. And if you have a proper plan to do so, it's going to be less interest that you're ultimately going to pay over time. Those new debt payments that you're taking on are going to stop once you pay it off, because now there's no more debt. So you keep that money, that's more money in your pocket that you can then put towards retirement. And if you if you set up your plan properly when the need arises down the road to get a new car, or to have to do some things where you'd normally take a personal loan, a car loan, or go to somebody for money, you are in a position where you can control your own debt, and we can talk about that more on an individual basis. So if you're interested in learning how to take control of your debt, pay it off in a fraction of the time, and then now be in control of future debt.

Speaker 1:
I'd love to run the scenarios for you and have our team do so, because there's some awesome ways in which you can do it. And we talked about killing multiple birds with one stone. There's even ways you can do it utilizing life insurance. So taking control of your debt, paying off your debt, having a plan to do so earlier in your career rather than later. That way it doesn't become a burden for you in retirement. The the other thing we want to talk about is consulting with an expert that specializes in the federal market, in the federal market. This all boils down to if you're going to get advice, where are you going to get it from? I just told you that if you rely solely on the government or your agency, you're going to be greatly disappointed. You're gonna be missing out. You've got to talk to a person who is knowledgeable in federal benefits and retirement information. There are a lot of them that say they can do it, but if you ask them simple questions like, how do I calculate my pension? What is all included in my high three? Can you tell me how Fhlbb works in retirement? If they don't know the answers to these simple questions, chances are they're not an expert and they do not spend the bulk of their time working just with federal employees, as our folks do.

Speaker 1:
So make sure that you're talking to an expert. Test them out. Because if you once you realize they are an expert, this avoids confusion and misinformation. You don't want somebody to guess at what they're telling you or think they know what they're talking about, and they give you the wrong piece of advice that derails a plan that you had going well for retirement. And next thing you know, you're playing catch up once you find out the truth. Talk to an expert. Test them out in this. Ask them some questions that only an expert would know. You get clear answers that way and you get clear guidance. Somebody that knows what a federal employee is, is thinking, is talking about is working on doing for their future retirement. And you can get a clear path towards that too, to make sure that you're doing the right things. It's also somebody to lean on throughout your career. What I mean by that is when we talk to federal employees and we do a benefits and retirement analysis, I'm telling all of my clients, I say, look, you're not getting rid of me that quickly. If we do a review and we go through all the benefits and we make sure that you have a clear plan in place and it's all good, we don't just say, okay, you've got it from here. We're doing checkups every year. Um, I'm reaching out periodically to, to ensure that your questions are being answered.

Speaker 1:
You can always reach out to me or members of our team or our reps across the country, because that's what we're here for. We want to ensure that you get the right information, as I said, so you can make the right decisions. You have a plan that's properly set up and as your situation changes, as you get pay raises, as you, uh, add to your family, as your timeline changes, whatever it might be, you need somebody, a consultant, an expert that you can reach out to on a consistent basis, a continual basis and get the right answers, get clear answers, accurate answers. So that's what we're here for. That's what we want to help out with. So if you're not talking to somebody that's an expert, you're talking to a buddy who kind of knows, or you're talking to a CPA or financial person that kind of knows, do yourself a favor and talk to an expert that specializes in federal employees and does the bulk of their work, if not all of their work, specifically in the federal market. So that's a starting point for those that are just hired or early in their career. It is by no means everything, but I think the next step would be to get a benefits and retirement analysis completed. That means you go to our website, federal retirement show.com, fill out the form. We will be in touch and we will create several different reports for you.

Speaker 1:
You will see exactly where you currently stand and you'll see how you're trending as you get closer to retirement. If you're on track, great. If you're off track, sorry, but we have some time to make some changes. We've got to remedy the situation. We've got to prescribe a solution so that you can get to where you want to be. It's all here for you and I, and I said it earlier, if you like this episode and you want to learn more because I'm telling you to educate yourself, go view all of our other content. There are so many episodes that we put together covering a variety of topics, answering questions coming from federal employees. We love doing what we do, and we just want to continue to do this and put out more information for you. But I highly encourage you to go back and visit it. So fill out the form on our website, view all the other content that we have. You can watch it on a variety of different, um, you know, elements or channels, whatever. It's on YouTube, SoundCloud, Spotify, um. Apple podcasts. You can go to our website. Like I said, there's many, many different ways you can get this information. So I really do thank you for taking the time out of your schedule to view this episode, this content. Um, again, my name is Val Majewski with American Benefits Exchange. You've been watching the federal retirement show and look forward to seeing you on a future session.

Speaker 2:
For generations, retirement was seen as the finish line. But for a growing number of Americans, retirement isn't ending careers anymore. It's simply becoming an intermission. I'm Jim Tabaka for the Retirement Radio Network powered by Amera live. According to the center for Retirement Research at Boston College, approximately 39% of working age U.S. households are at risk of facing a lower standard of living in retirement, causing a cascade of retirees people returning to the workforce after months or even years away. For many older Americans, the motivation is financial inflation continues, pressuring household budgets, with recent studies showing nearly 70% of retirees who return to work concluding money is the primary reason. Cbs news Mark Strassmann breaks down some current day key financial retirement figures.

Speaker 3:
The national average for one person to live comfortably in retirement roughly $967,000 in savings. Every retirement scenario is different, but that's $74,000 a year for the average American worker to live out his retirement.

Speaker 2:
But finances only tell part of the story. Many retirees discover they miss the structure, purpose, and social connection that work provided. After decades of solving problems, mentoring coworkers, and staying mentally engaged, full time leisure can feel surprisingly isolating. And unlike previous generations, today's retirees are healthier and more active well into their 70s and beyond. In other words, the career arc is evolving, with some embracing phased retirement, shifting into part time schedules or consulting roles with former employers. Others are launching entirely new businesses. Turning decades of experience into second careers, and remote work has opened doors that barely existed ten years ago, allowing retirees to work flexible hours from virtually anywhere. But if you're someone who still believes in the traditional retirement setup, CBS News Jill Schlesinger says there are rules to abide by.

Speaker 4:
Everyone needs a plan first. Figure out when it's best to claim Social Security next, fund an emergency reserve still working, set aside 6 to 12 months worth of living expenses and keep that reserve in a safe, easily accessible, interest bearing account.

Speaker 2:
The traditional thinking of retirement stopping work completely at 65th May be beginning to fade. For some Americans, retirement is no longer about stepping away forever. It's about having the freedom to decide what comes next for the retirement radio network powered by Emperor Life. I'm Jim Teraoka.

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