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Retirement

Congressional Democrats Propose an 8.7% Pay Raise for Feds in 2024

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The annually introduced bill would provide a 4.7% across-the-board increase in basic pay and an average 4% increase to locality pay.

Democrats in both chambers of Congress on Thursday introduced legislation that would provide federal employees with an average 8.7% pay raise in 2024.

The Federal Adjustment of Income Rates Act, introduced by Rep. Gerry Connolly, D-Va., in the House and Sen. Brian Schatz, D-Hawaii, in the Senate, would increase federal workers’ basic pay by 4.7% across the board next year, and provide an average 4% increase in locality pay.

The introduction of the FAIR Act has been an annual endeavor in recent years; last year, the bill proposed a 5.1% pay increase, split between a 4.1% across-the-board basic pay raise and a 1% average increase in locality pay. Although the bill is rarely acted upon, it could serve as an important marker as lawmakers and the Biden administration debate spending levels for fiscal 2024 as House Republicans demand cuts to government spending.

Connolly described the measure as a way to restore “years of lost wage increases” over the last decade due to government shutdowns, hiring and pay freezes and sequestration-related furloughs.

“For years now, federal employees have risked their health and safety working on the frontlines of this pandemic,” Connolly said. “They were subjected to the Trump administration’s cruel personal attacks, unsafe work environments, pay freezes, government shutdowns, sequestration cuts, furloughs and mindless across-the-board hiring freezes. Still, our federal workforce serves with dedication and distinction every day. Federal employees are our government’s single greatest asset, and they deserve better.”

The bill’s introduction drew swift support from unions and other federal employee groups.

“The 8.7% increase listed in the FAIR Act is not a pay raise,” said Randy Erwin, national president of the National Federation of Federal Employees. “It is a minimum increase needed to offset the dwindling checking accounts of public servants, and it is critical to recruiting and retaining the best possible workforce.”

American Federation of Government Employees National President Everett Kelley said that a sizeable pay increase is particularly important as the government tries to recruit new workers during a tight labor market.

“The latest report of the Federal Salary Council shows that federal worker pay lags behind the private sector by over 23%—making it difficult for agencies to recruit, hire and retain top talent and hurting the quality of services Americans receive,” he said. “The 8.7% pay increase included in the FAIR Act will not only reward federal employees’ hard work and help them keep pace with inflation, but it will also help government agencies remain competitive and deliver high-quality services to the American public.”

And William Shackelford, president of the National Active and Retired Federal Employees Association, echoed that sentiment.

“The FAIR Act proposes a strong pay raise to counteract a tightening labor market and increasing private-sector pay, rising costs of living and an impending federal retirement wave,” he said. “A strong pay increase in 2023 is critical to the recruitment and retention of an effective federal workforce, and we’re thankful to have Congressman Connolly’s support for this effort.”

So how would this raise affect your High 3 average going into retirement?  Let us run a Full Benefits Analysis Retirement Review for you so you can help plan and maximize your retirement.  Contact Us today to get YOUR Review!

No Time Like the Present: Retirement and Estate Planning in Your 20s and 30s

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When you’re young, saving for retirement may be the last thing on your mind. Yet, the financial choices you make in your 20s and 30s will dictate how well-off you are decades from now, and delaying retirement and estate planning until you’re older can be a decision you live to regret. Here’s how to start preparing so you’re ready for your golden years.

Money Management: Budgeting and Handling Debt

Living within your means is a habit best formed early in life, and it becomes even more critical when you’re earning a regular paycheck that must cover expenditures like rent, auto loans, insurance, and utility bills. To ensure you’ll meet your obligations, start by tracking your income and expenses; if the latter exceeds the former, you’ll need to either cut unnecessary spending or find a way to generate more earnings. Use your tracking to create a monthly budget, and then stick to it to avoid overspending.

If you’ve used credit wisely up to now, and you don’t carry any revolving debt, keep it that way. If not, add a line in your budget for paying down your cards so you don’t waste money on interest charges. Pay as much as you can above the minimum requirements, and remit payments on time to avoid fees and build your credit history.

Money Maximization: Saving and Investing

Once you have built a budget and are following it, you may be tempted to splurge with any extra cash. Although you shouldn’t live a life of hermetic deprivation, focusing on saving rather than spending will always have a better outcome long term. That’s because interest compounds, or builds on itself, so free money is added to what you’ve saved.

Speaking of free money, if your job offers a 401(k) plan, join it. It will make it effortless to build your savings, and if your employer provides matching contributions, then company money will be added to your plan every payday.

Buying a home is also a smart investment, as house values generally increase over time. Down the road, you can use your home’s equity as a source of liquidity when needed. When you’re ready to purchase, use a helpful online house appraisal to assess the asking price so you avoid overpaying and benefit fully from any appreciation.

Money Protection: Insurance and Estate Planning

Once you’ve committed to saving and investing for retirement, take steps to ensure you’ll hold onto that money until you or your loved ones need it. Always carry health insurance coverage, as medical debt can quickly deplete your savings. Having a life or disability insurance policy will also help preserve what you’ve accumulated if you die or become unable to work.

Although estate planning may sound silly when you’re beginning to save for the future, if you die without a will, your money may not go where you wish. By creating a complete estate plan when you’re young and then updating it when you marry, buy a home, have children or go through other life changes, you’ll rest assured that your assets won’t end up in the wrong hands.

No one ever says they wish they’d waited longer to be smart with their finances. By focusing on managing, maximizing, and protecting your money in your 20s and 30s, which may include taking advantage of your home equity or utilizing your 401(k) plan, you’ll set yourself and your loved ones up for a stronger financial future.

My Federal Retirement Help can assist you as you begin planning for your upcoming retirement. This way, you won’t have to spend your golden years worrying about your finances. Contact us today by calling 254-870-5959 Ext. 700 or texting 254-301-6571.

OPM Will Suspend Long Term Care Insurance Applications as a Sizeable Premium Increase Looms

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The deadline to apply for the program before a two-year suspension is Dec. 19, but officials want applicants to go in with “eyes wide open” that rates will likely increase substantially.

The Office of Personnel Management plans to suspend applications for the Federal Long Term Care Insurance Program for two years beginning Dec. 19, in anticipation of a sizeable rate hike.

OPM announced the unusual measure last month in the Federal Register, and noted that federal workers who submit their applications by the deadline will still be considered for enrollment. FLTCIP was created in 2002 and assists with health care costs for participants who need help with daily personal functions, or who have a severe cognitive illness, and covers home care, nursing home or assisted living benefits.

“OPM is suspending applications for coverage in FLTCIP to allow OPM and the FLTCIP carrier to assess the benefit offerings and establish sustainable premium rates that reasonably and equitably reflect the cost of the benefits provided,” the agency wrote.

The program will continue to operate normally for current enrollees, although they will not be able to apply to increase their coverage. There are currently around 267,000 federal workers and retirees participating in the insurance plan, and OPM typically receives only a few thousand applications to enroll per year.

The decision to suspend applications for the program came after John Hancock Life and Health Insurance Co., the contractor that administers the program, informed OPM that it is likely that there will a premium increase sometime next year.

In recent years, the long term care insurance market has been plagued by large premium increases, in part because people have been living longer and in part because long term interest rates have been at historic lows since the aftermath of the 2008 financial crisis. The Federal Long Term Care Insurance Program last saw premiums increase by an average of 83% in 2016.

John Hatton, staff vice president of policy and programs for the National Active and Retired Federal Employees Association, said it is likely that OPM will examine whether there is anything they can do administratively to improve the stability of the program or propose legislation to alter the program.

“Reading the tea leaves, instituting a suspension of applications shows that there’s a lack of faith or trust that it’s designed in a way that can be sustainable,” he said. “The first premium increase was around 25%, the second was as high as 125% [in some cases], and 83% on average. These premiums were quoted with the intention of staying stable for the lifetime of the coverage, which is someone’s life. And it’s not just federal workers’. They were just not priced correctly to begin with.”

After the previous round of premium hikes, OPM instituted “FLTCIP 3.0,” which allows current enrollees to adjust their coverage downward in order to reduce the impact of rising premiums. Even with that change, Hatton said OPM likely made the right decision by suspending applications.

“If you can’t accurately quote someone what the cost will be for a product, it shouldn’t be open ended,” he said. “That said, the reason these premiums are going up is costs are very high, and people have to figure out how to plan for long term care costs, and there’s no public option aside from Medicaid, which only provides catastrophic coverage if you’re completely impoverished yourself.”

Ultimately, Hatton said he thinks that OPM will wind up having to request legislation from Congress to make the changes needed to stabilize the program.

“OPM, for their part, has done—within the structure of the program, I think—what they can do,” he said. “They hired an independent actuary to look at the assumptions and make sure that they’re right, they hired a consultant to look at various options, and we’ll see where that goes and what flexibility they have in the statute or whether they’ll need Congress to provide some flexibilities. But at the end of the day, the options that would emerge are going to be ones that are maybe tied more to affordability and certainty, but also less coverage.”

We can also show you a better alternative to Long Term Care insurance using certain riders on our Income Annuity Products.  Why pay for something you may or may not ever use?  Contact us today to learn more.

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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.

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.

Whole Life Insurance: What You Need to Know About It

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We all want to protect our loved ones from the uncertainties of life. So, we take a life insurance policy for our family. Many people go with While Life Insurance policies to take advantage of unique features, including consistent, level premiums for life, the ability to accumulate cash value, and living benefits. Do you also want to get the same for your loved ones? Read further to learn more.

Furthermore, some Whole Life Policies come under a special category. This means that you receive dividends through these policies, while getting cash value. Keep in mind that you get this benefit only, if you go through mutual life insurance companies. If you want to know more about it, look for a federal professional for federal employee retirement help.

If we talk more about mutual life insurance companies, stockholders or private equity companies don’t own them. Policyholders own these companies. Moreover, we are here to explore the main features of a Whole Life policy and make sure it is right for you.

health premiums

Permanent Coverage

Whole life insurance is nothing but permanent life insurance. It has some varying features compared to term life insurance. This insurance policy has been designed to protect you through your lifespan. Whether you die today after buying the policy or 50 years later, your loved ones will receive the benefits. After all, hire a consultant if you are planning your retirement and need any help with federal retirement.

Build Cash Value

While you take benefit of consistent premiums, your Whole Life insurance collects cash value for you in the form of dividends. Mutual life insurance companies help you make the most out of your policy. As a policy owner, you receive an equitable portion of the company’s surplus each year as a dividend. If you want federal employee retirement helphire a federal consultant. 

Consistent Premiums

Whole Life premiums work as per your age and will not vary throughout your life. In comparison with FEGLI, FEGLI will become greater in cost by over 650% by the time you retire. After all, many federal employees want to reduce their coverage to maintain the deduction at retirement. For this, it is good to have Whole Life insurance that compensates the risk with guaranteed premiums. To get help with federal retirementlook for a federal consultant near you.

Simplified Issue

As a federal professional, you can take advantage of this policy with simplified issue guidelines. This means that you will not need to undergo any health exams, bloodwork, or other requirements. That’s all.

USPS Converted 63,000 Non-Career Employees to Permanent Jobs Over the Last Year

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he U.S. Postal Service has converted 63,000 part-time or non-permanent workers into career positions, with leadership saying it has helped stabilize the workforce after years of escalating turnover.

USPS has struggled for years with high turnover rates—particularly within its non-career workforce—leading postal management to identify new strategies to keep them on as it aims to grow its rolls. The conversions have also helped the Postal Service address employee availability issues during the COVID-19 pandemic, the agency said in a report marking the one-year anniversary of the unveiling of Postmaster General Louis DeJoy’s 10-year business plan.

The Postal Service has since 2010 increasingly relied on non-career workers, such as postal support employees and mailhandler assistants, as a cheaper alternative to reduce labor costs as part of efforts to keep pace with shrinking mail revenue. Non-career employees generally receive a less generous benefits package and lower pay than their permanent, full-time counterparts. The agency’s non-career staff grew by more than 60% between 2010 and 2017. At least some of the conversions were promised as part of collective bargaining negotiations.

The USPS inspector general has for years highlighted the problems with the Postal Service’s growing reliance on non-career workers. It found in a 2016 report, for example, that turnover the agency’s unionized, career workforce turns over every year was 1.2%, while in 2014 the non-career workforce had a 29% quit rate. By 2016, the turnover rate for non-career employees had climbed to 43%.

DeJoy previously laid out plans to reduce turnover by focusing on better options for non-career employees, highlighting the issue in testimony to Congress and in his 10-year plan. The trend marks a departure from the first months of DeJoy’s tenure, when the postmaster general led an effort to slash tens of thousands of non-union jobs by offering early retirement incentives and layoffs. USPS has since gone on a hiring spree and DeJoy has speculated he may add up to 100,000 positions compared to when he took over to meet growing package demand.

The Postal Service ended 2021 with nearly 517,000 career employees, its highest total since 2012. The non-career workforce has remained fairly steady in recent years at 136,000.

USPS boasted that it has committed more than $6 billion in core infrastructure over the last year, part of DeJoy’s promise to invest at least $40 billion by 2031. About half of the obligated total has gone toward the Postal Service’s controversial contract for new delivery vehicles, only about 20% of which are so far electric. Other investments have included new processing equipment, improvements to post offices and technology upgrades.

Postal management also highlighted its improvements in delivering mail on time, though it is still falling well short of its goals. It has also slowed down delivery for about 40% of First-Class mail, making it easier to hit its targets. USPS promised more changes to “optimize” its network, saying those plans are still in the works.

“These efforts—impacting all aspects of our operations and infrastructure—are being refined now and will be deployed in stages this year and in the coming years,” the Postal Service said.

USPS also again noted its “judicious” use of its new authority to raise prices above inflation, though it just this week proposed hiking its rates for the second time by nearly the fully allowable amount. Through a complicated formula derived from factors including inflation, declining mail volume and retiree costs, USPS could have raised its First-Class mail rates in July by 6.507%. It chose to raise them by 6.506%. The Postal Service has generated nearly $2 billion in annualized revenue from previous increases, the agency said.

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