plan your federal retirement

FAQs Related to Federal Retirement Planning

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The number of retirees receiving social security benefits has increased from 34 million to 47 million in the US. It clearly indicates how important retirement planning is. Whether you have just kick-started or are at the mid-way of your career, it is never too late to plan your retirement.

According to a study, 39% of adults start saving for their retirement in their mid-20s. Another study suggests that an average American starts saving money for their retirement at age 31. When you want to begin your retirement planning, you need to increase your awareness, especially when you are a federal employee.

What is the federal employee retirement program?

Under FERS, a federal employee is eligible to receive benefits from three sources, a basic benefit plan, social security plan, and a thrift saving plan. A basic benefit plan is the most common type of retirement plan that every employee is eligible for. A thrift saving plan is similar to a private sector 401 (k), while social security is another type of benefit that a federal employee receives based on the eligibility criteria.

What if your employment comes under fers special retirement category?

If you fall under the category of fers special retirement, your retirement age would be less than other federal employees. They may retire at age 62, but you’ll be retiring at age 57; there will be a money gap till you become eligible for receiving social security benefits. But, you are eligible for receiving special supplemental benefits. It is an extra supplemental income that bridges the money gap till you become eligible for receiving FERS benefits.

Should you calculate your retirement benefits yourself?

You can calculate your retirement benefits yourself using a federal retirement calculator. All you need to know is your high three average salaries and year of creditable service. You can put all the values in the formula to calculate your estimate. However, you can calculate your estimate much more accurately with the help of professionals. But where can you find such professionals? Find out in the next point.

Seek professional help from My Federal Retirement Help

We are federal retirement planning specialists who offer guidance so you can choose the best retirement plan to meet your and your family’s needs. We will listen to your concerns and chart out personalized plans to meet your goals. In the end, we will make sure that your checklist is covered and that you can get the most out of federal employee retirement planning.

health premiums

Federal Employees Will Pay 8.7% More Toward Health Care Premiums Next Year

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The Office of Personnel Management said increased use of health care services as the COVID-19 pandemic has waned has led to the sharpest uptick in health insurance premiums in more than a decade.

Federal employees and retirees will spend an average of 8.7% more on their health insurance premiums in 2023, a figure that marks the highest cost increase in more than a decade.

The government’s share of Federal Employees Health Benefits Program premiums will increase by an average of 6.6%, bringing the overall increase to 7.2%, according to an OPM document obtained by Government Executive. That overall premium increase is the highest the nation’s largest health insurance program has seen since costs increased 9% in 2011.

On average, federal employees enrolled in “self-only” plans will pay an additional $8.11 per bi-weekly pay period, while feds in “self plus one” insurance plans will pay $20.34 more per pay period. Federal workers enrolled in family coverage will pay an average of $20.87 more per pay period in 2023.

For the Federal Employees Dental and Vision Insurance Program, the average premium for dental plans will increase by 0.21%, while the overall average premium for vision coverage will decrease by 0.41%.

The FEHBP’s annual open season, in which federal employees can choose from a variety of national and regional insurance carriers and coverage plans, will run from Nov. 14 through Dec. 12.

OPM’s document attributed the jump in premiums to the “unprecedented volatility” in health care costs due to COVID-19, noting that the pandemic cost FEHBP about $2 billion in the testing and treatment of the disease in 2021, or roughly double what the disease cost the program in 2020, which has impacted premiums for next year. OPM also cited an increase in usage of health care services, following a period earlier in the pandemic when enrollees used fewer medical services.

The document described the overall 7.2% increase as “aligned” with increases in premiums by comparable large employers. But three of those plans’ reported increases are lower than FEHBP’s—CalPERS, which covers California government employees, projects an average 6.75% increase; a Business Group on Health survey of large employers projected a 6.5% average increase; and consulting group Aon estimated health costs will increase by around 6.5% next year. The Kaiser Family Foundation projects a 10% average increase for individual marketplace premiums, with “most rate increases falling between about 5% and 14%.”

OPM said it has worked with insurers this year to improve coverage of prenatal and postpartum health care services, as well as increase access to gender affirming care for members of the LGBTQ+ community. Insurers are also required to provide “adequate coverage” of anti-obesity medications. And four new plan options will provide assisted reproductive technology coverage, bringing the total number to 18 plans next year, and an additional plan will provide an optional benefit for discounted ART procedures.

National Treasury Employees Union National President Tony Reardon said in a statement Friday that although the premium increases are reportedly in line with other large employers, the spike in costs underscores the inadequacy of President Biden’s proposed 4.6% average pay raise for federal employees next year.

“These premium increases may be similar to those expected by other large employers in the private sector, but they will still cause sticker shock for federal employees,” he said. “These premium increases are yet one more data point in our argument that federal employees deserve a fair pay increase in 2023. NTEU supports legislation providing federal employees, on average, a pay increase of 5.1%, which would help them keep up with rising costs and save for retirement.”

If You Make $100,000 in Average Annual Income, Here’s What You’ll Get From Social Security at 67

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For anyone born after 1960, the Social Security Administration (SSA) determines that your normal retirement age, which is when you would be entitled to your full benefit, is 67.

But deciding whether or not you should retire at that age can be difficult. You can start receiving Social Security benefits as soon as you turn 62, but claiming early can significantly reduce your amount.

You can also wait until 70 to start taking Social Security (increasing your benefit to the highest amount possible), but perhaps you don’t want to wait that long. It depends on where you are in life from a financial perspective and how your health is doing.

Given all of these factors, it’s a good idea to figure out how much you might get when you start to claim benefits. Despite its complexity, you can break down the Social Security formula into basic parts to calculate your amount. Let’s see how much you would make if you earned about $100,000 annually (adjusted) over your career and retired at 67.

Breaking down the formula

To begin calculating your benefits, the SSA first calculates your average indexed monthly earnings (AIME), which looks at the 35 years of your work history in which you made the most money.

It looks at your nominal earnings over these 35 years and then indexes them (or adjusts them) to determine what the amounts would have been if you were making them in the present. So, essentially, the SSA would take your nominal earnings, from, say, 1982 and adjust them for wage inflation over the years to reflect what those earnings would be in 2022.

An example on the SSA website shows that nominal earnings of $13,587 in 1982 would have been equivalent to about $52,000 in 2022. But the SSA also has a wage base limit for what a retiree can get credit for. That number is $147,000 in 2022.

To finish getting the AIME, you add up your highest 35 years of annual earnings, which are now indexed to account for inflation. Then you divide by 35 to get the annual amount over that period and then divide by 12 to get the monthly amount.

Once you have your AIME, the next thing you need to do is calculate your primary insurance amount (PIA), which is your actual monthly benefit from Social Security for those receiving full benefits at the normal retirement age.

This is also not a simple calculation, but it can be done easily enough using these three steps and adding the amounts from each step. Here are the numbers for someone who turned 62 in 2022:

  • 90% of the first $1,024 of your AIME.
  • 32% of any amount between $1,024 and $6,172.
  • 15% of the leftover amount above $6,172.

What is your PIA on an annual income of $100,000?

If your highest 35 years of indexed earnings averaged out to $100,000, your AIME would be roughly $8,333.

  • 90% of $1,024 = $921.6
  • 32% of $5,148 = $1,647.36
  • 15% of $2,161 ($8,333-$6,172) = $324.15

If you add all three of these numbers together, you would arrive at a PIA of $2,893.11, which equates to about $34,717.32 of Social Security benefits per year at full retirement age. That’s not too shabby considering the maximum benefit is $4,194 per month, and that assumes you delay claiming until you are 70.

The $18,984 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $18,984 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after.

What You Need to Know About Social Security and Federal Retirement

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What is the average monthly Social Security retirement check in 2022?

$1,657, according to this Social Security fact sheet.

Sandy and her husband, Tom, were both born in 1956. Sandy began receiving a reduced Social Security benefit of $586 a month at 62. (This is 73.3 percent of the full benefit amount of $800 she would have received at her full retirement age of 66 years and 4 months). Tom is retiring this year and will receive $2,800 a month at his full retirement age—also 66 and 4 months. How much will Sandy receive after Tom retires?

She will get $1,115. This is a bit complicated, so don’t feel bad if you couldn’t figure out the answer. At full retirement age, a spouse is eligible for 50% of the full Social Security retirement benefit of their spouse or their own benefit—whichever is higher. But the fact that Sandy began collecting her own benefit at 62 affects the calculation of her spousal benefit when her husband retires.

Social Security will use Sandy’s full benefit amount that would have been payable at her full retirement age, based on her own work record (not the amount she has been receiving since she was 62). That amount will be subtracted from 50%of her husband’s amount. Sandy’s full benefit would be $871 (it has grown from the initial amount of $800 by cost-of-living adjustments since 2018), so Social Security would subtract $871 from 50% of her husband’s full benefit amount of $2,800, or $1,400. The resulting sum of $529 would be added to her current benefit of $586, and her new benefit amount would be $1,115 per month. If Sandy had waited until her full retirement age to apply for Social Security, then she would have received the higher of her own full benefit amount or 50% of Tom’s, which would have been $1,400 a month.

How much can you earn in 2022 if you are under your full retirement age without reducing your Social Security benefit?

$19,560. If you’re under your full retirement age for the entire year, Social Security will deduct $1 from your benefit for every $2 you earn above the annual limit. Here’s more information about how work affects your Social Security benefit.

What are the conditions under which you can receive a Social Security benefit based on your former spouse’s work record?

If you were married for 10 years or more, are not currently remarried, and are not receiving a pension from work not covered by Social Security. A former spouse who meets the requirements to receive a Social Security benefit is treated basically the same as a current spouse. This entitlement does not affect the former spouse’s own Social Security benefit or his or her new family’s. If the spouse is receiving a Civil Service Retirement System retirement benefit, then he or she will be affected by the dreaded Government Pension Offset, which will reduce the spousal benefit by two-thirds of the CSRS retirement. This will eliminate the benefit entirely in many cases. Read more in this Social Security publication: What Every Woman Should Know.

Among beneficiaries 65 and older, what percentage rely on Social Security for more than 90 percent of their income?

For men the answer is 12%, and for women it’s 15%. It’s also interesting to note that 37% of men and 42% of  women rely on Social Security for 50% or more of their income.

What is the full Social Security retirement age?

The earliest you can start receiving Social Security retirement benefits is 62, but the benefit is permanently reduced for applying early. Your full retirement age is between 65 and 67, depending on your year of birth.

What can you do to increase the amount of your Social Security check?

Here are some of your options:

  • Delay receiving payment until you turn 70
  • Claim a benefit on your spouse’s work record
  • Continue working past 62

Social Security was never meant to be your only source of retirement income. Knowing this, how should you plan your retirement?

Here are some steps you could take:

  • Learn to live on less now
  • Make saving mandatory and automatic
  • Plan for being single, even if you’re not
  • Be realistic about when you can afford to retire

Always remember that the modern federal retirement has three key elements: a government retirement benefit, Social Security and personal savings, especially through the Thrift Savings Plan. Learning how to balance and maximize these elements is the key to a comfortable retirement.

Postal Employees Voice Major Concerns as USPS Begins Implementing Its Delivery Consolidation Plan

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The U.S. Postal Service is standing up the first of the new plants across the country that will process mail for larger geographic areas, causing employees to fear the mailing agency will relocate or consolidate jobs throughout the workforce.

As promised in his 10-year plan to allow USPS to break even, Postmaster General Louis DeJoy has identified an initial 10 previously closed plants to reopen for consolidated mail and package sorting before the pieces go out for final delivery. Postal management began this week notifying employee groups of the sites, located primarily on the East Coast and in the Midwest. Those organizations reacted with significant consternation, saying USPS has failed to keep them in the loop or answer questions regarding the fallout for the workforce.

Most post offices around the country operate as delivery units, meaning mail carriers go to them to pick up mail and packages for their routes before bringing them to homes and businesses. DeJoy has repeatedly decried this model, saying it is inefficient and can lead to as many as dozens of such units in one metropolitan area. Instead, he is looking to open “sorting and delivery centers” around the country, as well as larger mega-centers, that can take on more work in less space. Letter carriers will have to travel farther to take mail to its final destination, but DeJoy said it will save costs on the contracted trucks that USPS hires to bring mail between various facilities.

“It just goes right out,” DeJoy said last week of mail at the new centers. “It’s going to save 100% of the trucking costs.”

What do You need to Know About Special Retirement Supplement?

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Do you know about the FERS supplement? An important retirement benefit plan for individuals who retire before the age of 62, it is also called the Special retirement supplement or SRS. Many individuals retiring before 62 are not aware of FERS benefits and thus couldn’t make a wise decision.

Special retirement supplement offers various benefits, such as it bridges the money gap if you retire before age 62 as you don’t receive social security until you reach age 62. But, not all federal employees are eligible for a special retirement supplement.

Who gets FERS special retirement benefits?

Federal workers younger than age 62 eligible for an unreduced federal employee retirement system are also eligible for temporary extra benefit, i.e., FERS annuity supplement. Firefighters, air traffic controllers, and law enforcement officers who retire under special provisions and FERS retirees who retire at age 60 with a minimum of 30 years of service are also eligible. If you are a firefighter planning your retirement, learn about FERS’s special supplement.

Rule for eligibility

1) If the employee has at least one calendar year of service at the time of retirement

2) Individuals retiring at or after reaching MRA with at least 30 years of service

3) individuals retiring at age 60 with at least 20 years of service

So, if you are eligible for FERS special retirement supplement, estimate it with the help of the below-mentioned formula.

 

 

How to estimate FERS special retirement supplement?

Get your annual social security statement handy to estimate your supplement amount. You also need to know how many years of creditable service you would have at the time of your retirement. Now, you can use the formula.

Years of creditable service/40 * your age 62 social security benefit = your estimated FERS supplement. Calculating FERS supplement benefits is an extremely time-consuming and complex task; take the help of a consultant from My Federal Retirement Help.

We are a team specialized in designing a comprehensive financial plan considering all aspects related to pre-retirement and retirement. We make integrated financial plans tailored to your specific goals and your family’s needs.

Reduction in FERS Supplement

FERS supplement is treated as social security income, so if you take the supplement before the full social security retirement age, your supplement can be subjected to taxes and reductions. Also, if you take a part-time job after retiring from federal service, your supplement may get reduced. Contact an expert to get more clarity on this.

My Federal Retirement Help is a team of planners and advisors who can help federal employees get into the next stage in their life by assisting them with a retirement plan, paperwork, and its submission to OPM.

TSP Preps for Its Transition to a New Service Provider

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Officials at the federal government’s 401(k)-style retirement savings program on Tuesday outlined the disruptions—and new features—participants will see as the Thrift Savings Plan transitions to a new recordkeeping service provider this weekend.

At the monthly meeting of the Federal Retirement Thrift Investment Board, which administers the TSP, project manager Tanner Nohe said the agency is on track to bring the public facing portions of the project, which was internally called Converge, online by June 1. Currently, most transactions are unavailable to participants, and there will be a full blackout period from the close of business on Thursday until the new system comes online.

Nohe said that while some aspects of TSP services will remain unchanged, like the tsp.gov web address and the phone number for the Thriftline customer service center, that’s where the similarities end. Beginning in June, TSP participants will have access to long awaited and requested features like a mobile app, a virtual agent to help users and answer questions.

Additionally, changes to the TSP website will enable participants to make loan repayments after they leave federal service, sign documents electronically, while participants who invested in the TSP both as members of the military and as civilian federal workers will be able to see their all of their account information from the same login, where before now they had to log into two separate tsp.gov accounts.

The TSP’s mobile app, which will be available on both Apple and Android operating systems, will feature most of the same functions as the desktop website, including the new virtual assistant, the ability to make distributions and withdrawals and change how funds are invested and make interfund transfers. And participants will be able to sign and submit forms electronically, as well as upload an image of a check to roll over funds from a traditional 401(k) into the TSP.

Additionally, the TSP is adjusting a number of its terms to track with the terminology used more commonly throughout the 401(k) industry.

Once the new services are live, participants will be required to create a new account on tsp.gov, which then will work on both the website and the mobile app. The new login process will be streamlined and feature greater security, Nohe said.

But Tee Ramos, the TSP’s director of participant services, warned there could be hiccups during the transition. The agency is expecting higher than normal call volume on the Thriftline, and has staffed up at its call center to accommodate those who need assistance.

“There will be some delays in the first week, and we’re doing everything we can to support participants,” he said. “But expect much higher call volume in the days before we go live, and know that we appreciate your patience.”

If anyone is needing assistance with making some changes within there TSP Accounts, or have considered other investment ideas with their Thrift Savings Plan, we do assist all Federal Employees in this area.  You can contact us for assistance or read some testimonials from other Federal employees we have helped as well.