Top 10 Mistakes Made by Federal Employees — Part 5: Save and Plan for a Successful Retirement

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2.13.26: 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, really appreciate you taking the time out of your busy schedule to join us, to view our content, to see what we have to say about federal benefits and retirement, because that's what we're here for. You, the federal employee who's looking for accurate information when it comes to these areas. And I highly encourage you, if you like our content today, you like our show. Go back and view all the previous episodes that we have. It is there for you. If you have questions, chances are we may have covered it. We may have already answered your question in one of our episodes, but if we did not by chance, please reach out to us. You can go to our website, Federal Retirement Show.com. Fill out one of our forms and one of our experts, if it's not me personally, will be reaching out to get you the information you're looking for and get your questions answered. We are in the middle of a series where we're talking about. The top ten mistakes made by federal employees now. Years ago, I came up with a pamphlet. I'll show you that here in a second, and just wrote about the top ten mistakes that I saw federal employees make, and hopefully how we can avoid those, those things. And we're just going back into the top ten mistakes. And by no means is this all the mistakes that I've seen over the years.

Speaker1:
But at the time, this was the top ten, and we're giving a new and fresh perspective on the top ten, as well as giving a couple bonus mistakes along the way. So let's dive into today's content and continue our discussion on the top ten mistakes made by federal employees. So as I said, I made and wrote a pamphlet years ago called The Top ten Mistakes Made by Federal Employees. And we are in the middle of that series. Today, we're going to talk about mistake number five. But if you want a copy of this, you can certainly reach out to us again. Go to the website Federal Retirement Show.com. Fill out the form. We can get you this as well as other resources and a personalized benefits and retirement review so you can get all of your questions answered. But today's we're going to talk about mistake number five. And the first one's you know there are a couple other things that we discussed. You know, never attending a retirement briefing. Uh, we talked about paying too much for fegley. We talked about TSP for the last two episodes. Now we're going to talk about neglecting to save and plan properly or well enough for retirement. And what does that mean? That means you're not taking the necessary steps, the proactive steps to plan for retirement and what this mistake or also misconception happens is people think and federal employees in general.

Speaker1:
And I've talked to tens of thousands of federal employees over my career, uh, over the past 14 years, specifically helping federal employees. And there has been some misconceptions when we're talking about how retirement works and all the income that you're going to get in retirement. And there's a misconception that you work for the government. It is a great job. You've got a lot of benefits and all these things, but you work for the government, you put in your time, you retire and the government's going to take care of you. You're going to get your pension, you're going to get Social Security, you've got your TSB and it's all going to work out. You're going to be fine. And that's not necessarily the case. And I can even see through you watching this. Some of you are shaking your head and that's correct. You have to take some steps. You have to take some action. You have to understand how this all works and how it all goes together. And you've got to put together a plan that that old cliche, that old adage, you know, failing to plan is planning to fail. And that is true when it comes to retirement. If you don't look ahead, if you don't look into the future, if you don't get a projection done, you don't see where you currently stand, then you're going to be unpleasantly surprised when it comes to retirement.

Speaker1:
And they give you the numbers, they give you the sheet, they tell you this is what we're going to pay you in retirement, and you're thinking you're going to leave and you're like, well, I can't live on that. That's not enough. Well, two options are going to happen. You can either have to keep working, or you're going to have to drastically change your lifestyle because you're not going to be making enough income in retirement. So this is a mistake that I see federal employees make. And I can alter the language of this, right. Neglecting to take advantage of the time that they have procrastinating could be another way of putting it right. That's a big, uh, problem with retirement planning. The time value of money. Uh, the how long it takes. This is a long game. It's a marathon, not a sprint. You might have heard me say on this show before. You can't cram for retirement. This isn't like, uh, studying for a test the night before. You can't cram for your retirement. It takes a dedicated and consistent effort over your entire working career. You can go back to an episode where we talked to one of our reps, Brandy person, and she said, whether you know it or not, you are planning for retirement from day one. So take advantage of all the time that you have and plan properly so neglecting to do so or procrastinating is a way in which you're going to make a mistake when it comes to your retirement.

Speaker1:
Now, why? Why is this? Because most federal employees that we talk to and this is doing again, tens of thousands, if not hundreds of thousands of federal benefits and retirement analyses over the time that we've been working specifically with federal employees, we see most federal employees, not all, not all. And hopefully you're not in this category. Most federal employees fall between 50 to 70% of their pre-retirement income in retirement. So if we're comparing pre-retirement income to post retirement income now, why is that important? Because most people that I talked to, we're talking about take home pay, right. Not gross pay, but take home pay. Most people want to take home the same amount of money in retirement that they were making right before they retired. Now, why is this important? Because you want to live the same lifestyle that you have in retirement, right? You don't want anything to change. So but when we run the analysis, when we do the projections, when we look into the future, if there's a lack of planning in place, and a lot of times there is because you don't get educated and trained on this, it's not your fault. It's just not given to you at your place of work. It's not necessarily given to you when you first get hired, but you're not given a proper education and training on how to maximize and optimize and take advantage of all the government gives you so you can plan properly for retirement, then you're going to be lacking because you've had that false sense of security.

Speaker1:
Hey, I'm just going to go through, I'm going to retire when I'm eligible and the government's going to take care of me. And that is not the case, right? That's a big misconception. And that's why we see most federal employees, when we run the analysis, are 50 to 70% of the way they're getting to their pre-retirement income. So hopefully when we run that analysis for a federal employee, when we run that projection, we look into the future. Hopefully they still have a lot of time left so we can prepare properly. You can change that. It's not a death sentence, right? It's not oh I'm stuck. That's it. 50 to 70%. I'm going to have to make some changes in retirement. No, it's never too early. It's never too late to make a plan, to properly plan to avoid this mistake. So it is important that you get a benefits and retirement analysis completed at today. We'll just say at this point in time, but do not procrastinate anymore. Do not think this is only for retirees. I don't have to get it done until I'm approaching retirement. Which which could be within five years. Three years? Two years. The year of retirement.

Speaker1:
No. Get it done now. If you just started yesterday, get it done now. Make sure you are on the right track. Because most of that I talked to, they want to be between 80 and 100% of their pre-retirement income in retirement. So that's the desire. If the desire is to be between 80 to 100%, and you realize you're only at 50 to 70%, hopefully you're not. Hopefully you are on track. But if you find out that you're at 50 to 70% or worse, well, we have time to make an adjustment. And how do you make an adjustment? You have to create a plan. You have to take action. You have to be diligent, consistent. Because planning for retirement is not a get rich quick scheme. It's not something you can just do one time and boom, the money's going to be there for you in the end. It takes a concerted, a consistent, a diligent, a dedicated effort to get you to where you want to be in retirement. So it is very important, very important. If you are thinking, am I making this mistake? Um, is this something that I'm in? Am I in the 50 to 70%? Because I certainly want to get to 80 to 100% of my retirement income. How do I find out? You have to get a benefits analysis done. You have to talk to an expert. You have to get your numbers run. You have to project into the future.

Speaker1:
You have to see where you currently stand. And if it's necessary for you to make a change, then take the time that you have and start today. Make that change. Make that alteration to what you're doing so that when you do retire, you are at worst case over plan for retirement. I've never had a single federal employee, and I've said this before on this show. I've never had a single federal employee contact me after they retire and said, Val, appreciate all your help, but man, we messed up. I don't know what happened. I have way too much money in retirement. This is wrong. This is a problem. You're not going to say that your future self is going to love you for over planning, for taking care of what they had to take care of at that time. Because when you do retire, you're still thankful that you put all these things in place, all these efforts in motion, so that when you retire, you retire how you want, when you want what the lifestyle you want. You're not making significantly less. You don't have to decrease your lifestyle. You don't have to make any major changes. The plan is exactly how you thought it would be when it comes to retirement. And that's why this is a big mistake. It's number five. Now, none of these. There's no major, uh, hierarchy or priority list when it comes to mistakes one through ten or even some of the extra ones that we're going to talk about.

Speaker1:
So just understand this is not a hierarchical structure, right. Mistake number one is not the worst and ten is not the least. It's there. They're all the same. Let's try to avoid all of these mistakes. So if you're thinking am I planning properly? Um. Have I made a plan? Do I know where you. Where I currently stand? Do I need to make any changes? It's very important. Like I said, get your benefit and retirement review performed. See where you currently stand, how you're projecting as you get closer to retirement. Even if you just got hired yesterday. Find out what this looks like and see if you need to make any changes or alterations to what you're doing for your ultimate retirement plan. So if you took anything from this and I've said it multiple times, I highly encourage you to go to our website, Federal Retirement Show.com reach out to us. We'll give you that complimentary benefits and retirement review. Send you a few reports so you can tangibly see what your numbers look like and how you're trending. As you get closer to retirement, ensure that you're on the right track and then you can get checkups along the way. It's not a one and done deal. You have to consistently get a checkup. It's like going to the doctor. You don't go and get one physical, you're in good health and you never go again.

Speaker1:
You get checked on every single year. Make sure you're on the right track. Same thing here. Get your checkup. Ensure that you've got a good plan in place. If you need to make any changes, make them and then consistently review that to see if there's any further changes or alterations that you need to make. So that way this is not a mistake for you. You've eliminated this mistake. This is actually going to be a positive. You've you've properly planned or even over planned for your retirement. So I really appreciate you taking the time again out of your calendar, out of your day to view this, go back as I said earlier and view our previous content. There's a lot there for you. And do me a favor. Do me a favor. Do not keep us a secret. If you like what you see, you like what you hear. Share this podcast with a friend. The federal retirement show needs to go out to other federal employees, as many federal employees as we possibly can. We want to reach all of the federal employees in the US and all those that are stationed abroad. So thank you for your dedication to doing that. We really appreciate it. Thank you in advance. So again, my name is Val Majewski with American Benefits Exchange. You've been watching the federal retirement show and I look forward to seeing you on a future episode.

Speaker2:
Well, it being the beginning of 2026, here it is tax season once again. And this year is going to be pretty different for a lot of Americans. Joining me to talk more about that is Mark Steber. He's chief tax officer of Jackson Hewitt Tax Service. Hey there Mark how are you.

Speaker3:
Hey Matt. Very excited. Very exciting time. Here it is. Tax season go. Time to get those tax refunds.

Speaker2:
That's right I mean you you are always the most excited when tax season comes around. Um and I that's why I always love talking to you around tax time because you're very passionate about it. You know the ins and the outs. And speaking of which, share those ins and outs with us this time around. What are some of those big changes that we're seeing for tax filing season this year?

Speaker3:
Well, like taxes are don't like taxes. 300 billion with a B dollars are getting ready to move into the pockets of taxpayers. And those people that file early and file correctly will get more than their fair share of the 300 billion, and that's about 100 million Americans. So paying attention to your taxes, you know, it's a good job in 2025 is going to be one for the record books of good news for taxpayers. We had a big tax legislative legislative change back there in the summer, which put a whole bunch of new stuff which can be confusing, intimidating, and daunting, but new stuff that can put more money in your pocket. So you say excited. I say it's getting ready to be the giving cash to taxpayers time. And that's always a good thing. So I'll start off with a few of the big things that people have probably seen, but get into a little bit of the specifics. There's a new deduction if you get money through tips, if you're earning money through tips. And that's a lot of people think if you're a Starbucks worker, your bartender, your food service hospital. It list goes on and on. A new deduction up to $25,000 of deductible tips that are not taxable this year. That's a that's a big one and a new one. Overtime. If you earn overtime in your job and a lot of people have overtime and you can get a deduction of up to $12,500 of qualified overtime deduction on your tax return.

Speaker3:
Not taxable. The big one though for seniors this year, there's a new $6,000 per person tax deduction if you're simply 65 or older. On December 31st, 2025, you get a brand new $6,000 per person deduction. And that's not to be confused with the prior senior taxpayer deduction or the larger standard deduction available for seniors. This is a new new new senior deduction 6000, intended to help offset some of the tax liability on Social Security, which is where some of the confusion is. You do not have to be drawing or even eligible for Social Security. You just have to be 65. And if you bought a car, 20 million people buy a car every year. You borrowed money. There's a brand new deduction of up to $10,000 on automobile loan interest expense. And again, you don't have to itemize. You just have to have qualified, manufactured and assembled in the in the assembled in the United States. And you get that deduction. And there's a host of others. They raise the state and local threshold of 40,000. If you if you have that in you itemize. And several states do have that higher standard deduction, higher child credit higher refundable credit. You know there's a lot of other stuff. But those big four including that new senior deduction, those will put more money in the pockets of taxpayers. There's just no question.

Speaker2:
Yeah there you go. And and of course a lot of new stuff there that you just mentioned and and more. So how can folks really, uh, be prepared and prepare those documents, get organized to file this year?

Speaker3:
Well, you start off by saying, I'm excited. I hope other people are excited about going and getting some of that $300 billion. That starts with not dreading tax day, not waiting till April 15th, but getting a plan to be organized. And that starts right now. Those tax documents are coming in even as we speak. W-2 1099 you know, retirement distributions, Social Security statements and all the rest. You need to have a very simple plan to start being organized around those. The brown envelope and the the household works, the shoebox works. But whatever works for you. But start accumulating those documents because it's critical you be accurate. Also, know that not everything comes in the mail anymore. Some things come through electronic transmission. So if you're waiting on a document and it hasn't come, check your email, check your spam folder. Because if it hasn't come by January 31st, the deadline for those types of things. Hope is not a strategy. You need to take some action, and you don't need to wait on that because you might have questions from your tax pro on this and other things, and you don't want to wait up to the last minute. So get a plan for organization that includes the envelope or whatever it is to collect your documents. Start to locate your tax professional. That's not an easy task these days. You want somebody trusted, trained, experienced, Brandon. That'll be here when you have questions later. Not some of the pop up people that might not have your best interest. So find your tax docs, find your tax pro, and then get a plan on your calendar to get it done. And go get that money and start that process and start planning for next year.

Speaker2:
Yeah. And of course, you know, working with a tax pro I think for, for most people it sounds like this time around, or at least at least for more people maybe than in years past, it's pretty important to do that because you might miss something, especially with all of these sort of wholesale tax law changes that we're seeing this year. You might miss some of those new, uh, credits or deductions or things like that that could really benefit you come tax time.

Speaker3:
Yeah. And here's an important point on that. I know I sound like I'm pedaling pro tax prep, but I've seen more mistakes by people who pay false attention to some mistaken understanding or Uncle Bob's tax tip because he watched Tick Tock or whatever. But the reality is simply this. And this is what your listeners need to know. If you leave off one of these many benefits that I talked about and a myriad of others that we didn't talk about that are time tested and in place. If you leave it off, the IRS does not say, oh, hey, Matt, here's 5000 more dollars. You leave it off. It stays off forever until you go and fix it, or somebody finds it and fixes it. But the point is, if you hurry through this and you wait till the last minute and you leave off that new senior deduction, 6000 or 12,000 if you're married, the IRS is not just simply going to mail you 3000 more dollars and say, oh, you left off the senior deduction, Matt. Too bad we caught that for you. That's not how it works. Leave it off. It stays off. And if you're not prepared to put in the legwork to learn about it, to answer the questions correctly or to do it properly, you can cost yourself more than enough money to pay a tax professional to help you, if not this year in some other year. So it always makes sense. And the more complicated, the more sense. But this year, just due to the changes, it's probably a good idea to get some help.

Speaker2:
Yeah, I think so as well. Well, Mark, just about time for us to wrap up here. But anything else that you wanted to touch on that we haven't mentioned here? Or maybe you know, some resources for folks online.

Speaker3:
I'll give you two final points in a quick moment. Uh, $300 billion in refunds are coming. 100 million people that will draw in some bad people. Bad practices, bad promises. So pay attention when somebody offers you something too good to be true, whether it's a deduction or a credit or they won't sign it. It's what your mama always said. If it sounds too good to be true, it's probably not true. Use a trusted tax helper and do a little work on that. And if you need more information, our website at Jackson Hewitt Comm, where they use Jackson Hewitt or not, a lot of information on their calculators, tax tips, frequently asked questions, how to find an office. Just put your zip code in the box, but use a trusted professional this year and every year and go to Jackson Hewitt Comm just to get your questions answered or to debunk uncle Bob at the table.

Speaker2:
Uncle Bob and his tax tips. Sometimes they, uh, are just kind of out of out of thin air and just don't make sense. So, yeah, make sure that you debunk uncle Bob. Mark Steber with Jackson Hewitt. He's chief tax officer there. Mark, thanks so much. Really do appreciate it.

Speaker3:
Thank you Matt. Go get that money. It's not automatic.

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