You Ask & Val Answers! More FAQs from Our Listeners and Clients

8.4.23: Audio automatically transcribed by Sonix

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

Val Majewski:
But welcome back to the Federal Retirement Show. I'm your host, Val Majewski, with American Benefits Exchange. And you ask and we answer. So you've seen these episodes before where we tackle frequently asked questions that you federal employees have asked us or our representatives that are across the country. And these are some of the questions that we've been seeing recently. So there's going to be a number of things that if you go back into the recordings that you need answers for, you can look at our previous installments on FAQs and see if your question has been asked. If not, submit that question to us. We want to make sure that we are getting you all the answers that you need, the issues that you're dealing with. We want to make sure we find solutions. So if you have questions, please do me a favor and reach out to us. Let us know what those questions are. We want to make sure that we give you the proper answers point you in the right direction so you can make the best decisions. If you've seen our previous episodes, you know that we talk about maximizing or optimizing your benefits and retirement situation. We want to make sure that you are set up properly. We want to make sure that you go through your working career without any hiccups and you have that confidence, that peace of mind, that sleep well at night, insurance, knowing that everything is going to be fine when you punch your ticket, when you fill out your retirement paperwork and you're out of there that you've maximized and set yourself up in the best way possible during your career.

Val Majewski:
So with that, let's dive into this episode's frequently asked questions. Question number one, now we get this a lot, but it's been happening recently because a lot of the folks who've been talking to are entering retirement. Just kind of luck of the draw. A lot of the folks are retiring within the end of this year. Sometimes, you know, it's a younger demographic, but it just seems like some of the nearing retirement federal employees have been asking us questions about Social Security. Now, this is a really tough question to answer in a short period of time, but I'm going to try to give you the most general answer that I can, because it comes in about how do I maximize my Social Security, how do I optimize this? How do I make sure I'm making the right selection? Because there are billions, if not trillions of dollars left on the table by choosing the inappropriate or the not the best Social Security option for you and your family. Now, the general idea of this question is really when should I take my Social Security? When is the right time to take it? The only way to properly answer that and to know which is the best way for you to take your Social Security and which option is going to give you the most benefits collected over the course of your lifetime is to know when you're going to pass away.

Val Majewski:
When are you going to die? Now, we don't have that crystal ball. We don't know when that's going to happen. So you have to make the best decision based on all the variables you've been given. If you're not familiar Social Security, you can elect that at age 62. You have a full Social Security retirement age, which is anywhere between age 65 and 67, depending upon your birth year. And that's full retirement age for Social Security benefits. And then the latest you can wait to receive Social Security is age 70. So what is the right strategy? Well, if you know when you're going to die, which again, is not something we have information on, but you can maximize and choose the right benefit for you, the right option, the right timing. Now, it just depends upon, again, what do you have in your Fed? Do you have longevity in your family? Maybe you want to wait a little bit longer to take Social Security. If you don't. Maybe you want to start collecting benefits sooner. You're going to work in retirement, are you going to get a job? Why? Because your Social Security benefits can be reduced if you end up making too much money in retirement prior to your full Social Security retirement age.

Val Majewski:
Now, once you hit that full Social Security retirement age, there are no reductions based on the income that you're earning. But prior to that, you may see a reduction in your benefits if you make too much money. Understand also, if you choose benefits earlier, you're like, well, I want to take Social Security when I'm first eligible. Well, there is a reduced benefit that you're going to receive compared to your full Social Security retirement age, and that's a permanent reduction. It does not bump back up once you hit that full retirement age. Now, beyond your full retirement age, you see an increase in benefits. So if you take it too soon, you're going to see a reduction of benefits compared to your full retirement age. If you wait beyond your full retirement age, even up to age 70, you're going to see an increase of about 8% per year that you wait. Now, when is the right timing for you? Well, if you had the ability to choose and you're looking at all the variables and you say all benefits collected, if I started at age 62 versus waiting until age 67 or 65, whenever you're full retirement age is or waiting till age 70. When is my break even number? When will my total benefits that I've collected? When will those lines cross? And it will benefit me by waiting longer to take.

Val Majewski:
Social Security. It's usually around age 78.5. Generally speaking, a rough estimate. So if you plan on living beyond that, well, maybe it's more beneficial to wait. The problem is you're not going to be collecting anything during that time while you're waiting. So if you retire early at age 60 or 62 prior to your full retirement age and you want to wait, well, you're just not going to get those benefits during that time. Now, here's the problem that I see, though, with most federal employees I talk to. Most do not have the luxury of waiting because they absolutely 100% need this as one of their main retirement income sources. So if you don't like the Social Security benefit that you're getting, a lot of folks that I talk to will continue to work until they get to that level that they like. We want to put you in a position where you have options, right, that you're not relying on Social Security to be a main income source. You've prepared properly so that Social Security money can be a bonus. It can be extra money that you're not going to rely on, and you have options to choose when you're going to get it. So reach out to us. We can talk to you individually about when Social Security payments will be right for you or how to maximize your Social Security and get the most benefit out of it.

Val Majewski:
Question number two. Can I keep my fegli insurance in retirement? Well, there's a number of things in here. Yes, you can keep your basic and all of the options in retirement. Now, basic, this is something that you're going to like. Your continuation of basic fegli is going to be an election that you make when you fill out your retirement paperwork. There are four options. You can cancel fegli altogether. Not normally something I see. You can take the 75% reduction, the 50% reduction or the no reduction option. There's different cost structures involved with each. The most common option that I see federal employees take is the 75% reduction, because this offers some sort of free benefit in retirement. We can go over that individually and then all the optional coverages option A, B and C, you can keep those in retirement. Just understand that you're going to have to continue to pay the cost increases over time. For both option B and C, Option A actually does give you some sort of free benefit. We can go over that individually, but you can keep as little or as much of your phegley as you want in retirement. You just have to continue to pay the costs and make sure you're choosing the right option.

Val Majewski:
When it comes to what the government gives you on your retirement pay for. Yes, you can keep your family insurance in retirement. Is there going to be beneficial for you? That's up to you. And if you can stomach the costs and if you like the options, if you like the coverage provided, you can certainly keep that. We want to make sure you understand all the things that result as a after that choice is made because of the cost increases that you're going to experience in retirement. Kind of a two part question here. I've got two slides, but I get this a lot. Recently I've seen this with the younger crowd. So if you are in the younger crowd. Right. We just talked about Social Security and can you keep your family in retirement? That's more for the older crowd, people that are nearing retirement. But for the younger crowd, this is a beneficial question. I get this a lot, and I want to reiterate the importance. In my answer to follow, but I do not need. This is more of a statement than a question. I do not need to attend a benefits and retirement seminar or get an analysis performed. Since I'm so young and so far from retirement. When we position these things, a lot of people say they hear the word retirement seminar or benefits and retirement seminar or educational training.

Val Majewski:
And that's what we specialize in. But just because the word retirement is in, it does not mean that it does not apply to the younger crowd. It 100% does. If you are a younger person or just starting out as a federal government employee, we encourage you whether you're the first day on the job or you're in the middle of your career, do yourself a favor and attend a benefits and retirement briefing. An educational training session. Why? Because you're going to know all that the government has to offer. How to maximize or optimize your situation, Make sure you're taking advantage of what the government gives you along the way. And you want to make sure that when you get to the finish line, you're not going to just say, Hey, I'm retiring, what do you give me? You're going to have a great understanding of how all of that is calculated, how to prepare for it, how to project it as you're working. The last thing you'd want to do is get to the end of your career, put in your 30 years or whatever number you're trying to get to say, Hey, I'm out of here, I'm retired. I then come to find out there are so many things you could have been taking advantage of over the course of your career and didn't. Or you get to the end and you say, That's it, That's all I'm going to get.

Val Majewski:
Well, I can't live on that. Well, you either have to drastically reduce your lifestyle or continue to work. So we want you to be as prepared as possible. What prepares you knowledge and understanding? It's not rocket science, what the government gives you, but you still need to understand what it is, how to navigate through your career and maximize your situation. You hear me? Use that term a lot. Maximize because the government gives you some options, gives you ways to prepare yourself, but they don't tell you on how to do that. That's why have a job. That's why this channel exists. That's why this podcast exists. So you can get the information you're looking for. So whether you're first day on the job or it's your last day tomorrow. It's ideal if you have not gone to a benefits briefing. A training session to learn about all this stuff. I highly recommend you do it as soon as possible or request a one on one session through our website. Why? Because you're going to gain this understanding, this knowledge so you can pick the right choices. You can make the right decisions over the course of your career and hopefully be over prepared when it comes to your time to retire. So please do not let time get in your way. Thinking retirement is so far away that I don't need to do this.

Val Majewski:
No. Sign up today. Make sure that you're getting a full understanding so you are as prepared as possible. When that day comes, you're going to walk out with your head held high knowing that you have over prepared for that moment. As a retired vet, will my military pension and VA disability payment affect my Fers pension? We get this. I've got this a little bit more recently, but if you retired military, you've you're collecting a military pension and chances are you're getting a VA disability benefit. Understand that those payments that you're getting will not affect your ability to earn a first pension. It will not affect your fers amount. This is a pretty simple answer, but it's something that we've been getting recently. If you're a retired veteran, you're collecting the military pension, you're also collecting a VA disability benefit. Understand that it will not affect your eligibility to retire as a Fers employee. It will not affect your first pension. You will get your full first pension. You will keep your full disability, assuming you are still disabled and you will collect your full military pension. So that's a way in which you can collect a ton of benefit. Maximize that. You're now you're going to get to retirement systems. So it will not affect that payment. Last question. What is interim pay? Now, you may have seen this or you may have heard it from people that have recently retired.

Val Majewski:
Ask your colleagues if they're in interim pay. But what this is, is when you first retire. Opm has not completely figured out what they're going to pay you yet in your pension once you retire. If you've gone through our previous videos, you may know that the timing of things when you do retire, you're going to wait about a month until you start seeing a paycheck. But once you get that paycheck, it's not going to be the full amount that you're expecting. You're going to be in what's known as interim pay. Opm will pay you about 60 to 80% of what they should be paying you while you're in interim pay status. And that usually takes about 3 to 6 months, sometimes longer, sometimes shorter, but 3 to 6 months for you to get out of interim pay and you'll get your full payment on a monthly basis and understand that OPM will back pay you anything that you should have been getting while in interim pay status. But. It doesn't mean that you don't have bills to pay. It doesn't mean you still don't have cost of living to take care of. So you're going to be getting less money than you expect once you do retire, because you'll start off in interim pay status. And generally speaking, 60 to 80%, generally speaking, again, 3 to 6 months until you're in full pay or there they figured out your exact amount and they're going to make up all that extra money.

Val Majewski:
But initially you got to make sure you've got some reserves set up so you don't get caught off guard by making less money initially in retirement, if you have questions about interim pay, please reach out to us. Now, I know that was quick. I know those were questions that maybe you had, maybe you didn't have, Right. Or you're like, Shoot, I wish you would have answered this one. Please send that to us. Send us your questions. Let us know what information you need so we can add that to our next installment of FAQs and get your question answered, which will help out others That may be asking the same thing. Appreciate you again joining us for this episode. Please go back and watch our previous episodes, our previous videos, to find out all that you need to know regarding your federal employee benefits, your retirement information. So I'm going to use the word once again that you can maximize your situation, be set up properly, so you can go through your working career with confidence and retire the way you want when you want. Again, my name is Val Majewski with American Benefits Exchange. This has been the Federal Retirement Show. Thank you for watching and we'll see you on a future episode.

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