Strategic Planning Your Roadmap To Retirement Bliss 2019

Strategic Planning… Your Roadmap To Retirement Bliss 2019 South Carolina Federal Employees Presented By: John Mashburn Federal Benefit Specialist

Who is Federal Benefits Experts? • FBE specializes in educating and training federal employees on their benefits • We offer solid solutions to any issues within your benefit structure • We walk you through complicated processes like retirement. • Attend national, regional, and local events and organize classes.

You Don’t Know What You Don’t Know

You Don’t Know What You Don’t Know Most Common Mistake: Federal employees NOT properly understanding their pension system, the benefits provided, and the supplemental options that are available to them, to use now and in the future.

Here to Inform, Diagnose, & Assist

What Are We Going To Cover Today? • FEGLI • Federal Retirement Systems • Survivor Benefits • Federal Employee Retirement Income - Three Tiers • Financial Landmines

Federal Employee Group Life Insurance (FEGLI) Basic Overview

Federal Employee Group Life Insurance (FEGLI) • Group Plan • Everyone is lumped together: healthy/sick; smoker/non-smoker; etc. • Administered by Met. Life • Under contract with OPM

FEGLI - Basic • Free of charge for postal employees.

FEGLI - Basic Employee has four options in retirement: • Cancel coverage • Retain 25% of coverage • Retain 50% of coverage • Retain the full amount

FEGLI - Option A In Retirement • Coverage reduces at age 65 or retirement, whichever is later. Premiums cease at same point • Final coverage amount is $2, 500 $10, 000 $2, 500

FEGLI - Option B • Premiums increase every 5 years beginning at age 35 • Costs and coverage increase with salary increases

Federal Retirement Systems Basic Overview 1 st Tier of Retirement Income

Federal Retirement Systems • Civil Service Retirement System (CSRS) • CSRS Offset • Federal Employee Retirement System (FERS) • FERS-RAE • FERS-FRAE

CSRS • Employees first hired prior to 1984 • Not covered under Social Security • CSRS Employees contribute 7% toward their retirement • Eligible to contribute to TSP and not receive matching

CSRS - Retirement Requirements In order to retire as a CSRS employee with full benefits, you must meet one of the following criteria: • Age 55 with 30 years of service • Age 60 with 20 years of service • Age 62 with 5 years of service

FERS • Employees first hired after December st 31 , 1983 • Automatically covered under Social Security • If hired prior to 2013 a FERS Employee contributes. 8% toward their retirement • Eligible to contribute to TSP and receive up to 5% matching

FERS - Retirement Requirements In order to retire as a FERS employee with full benefits, you must meet one of the following criteria: • Age 60 with 20 years of service • Age 62 with 5 years of service • Minimum Retirement Age (MRA) with 30 yrs

FERS- Retirement Calculation How much can you take out of FERS in retirement?

Federal Survivor Benefits Basic Overview

Federal Survivor Benefits • CSRS & FERS Options • Benefits Provided • Costs Involved

Federal Survivor Benefits & FEHB It is important to note that the federal employee must at least elect the minimum survivor benefit at retirement in order for their spouse to keep the government health insurance if the employee predeceases the spouse.

Social Security Basic Overview 2 nd Tier of Retirement Income

Social Security Overview • Also known as Old Age Survivor & Disability Insurance • Funded by FICA & SECA Taxes • Social Security has always been primarily a retirement, disability, & spousal insurance policy for low wage workers and a very poor retirement plan for higher salaried workers

FERS - Retirement Supplement • Available to Federal Employees who retire prior to the age of 62 with full benefits • The FERS Annuity Supplement represents what a federal employee would receive for their FERS civilian service from the Social Security Administration (SSA) and is calculated as if they were eligible to receive SSA benefits on the day they retired • The supplement continues until they are eligible to receive SSA benefits

Thrift Savings Plan (TSP) Program Overview 3 rd Tier of Retirement Income

TSP Overview • Government’s version of a 401(k) • Established by Congress in the Federal Employees' Retirement System Act of 1986 • CSRS zero matching • FERS receive matching funds up to 5% • Maximum Annual Contribution - $18, 500 • Catch-Up Contribution Max - $6, 000 • Contributions into the plan can be allocated into six different fund options

TSP Overview • Great for ACCUMULATION • 5% matching • Investment choices depending upon risk tolerance • Not so awesome when it comes to DISTRIBUTION • Met. Life Annuity • Fixed Payments • Lump Sum

TSP Options • Take control of your TSP funds while working (when eligible) or when retired: • Age-Based In-Service Withdrawal Option • Full or Partial Withdrawal in Retirement • Transfer a portion or all of your TSP funds into your own IRA

Supplemental Retirement Income Options Your Roadmap to Retirement Bliss

Supplemental Retirement Income Options • Do you need to save more for the future? • How much are you looking to save each pay period or month? • How long are you looking to save for? Time until retirement? • What are your ultimate goals for these funds? • What is your tolerance for risk? • Are you concerned about your tax liabilities in retirement? • Have you planned for the things that can derail your retirement plan?

Smart Money Investment Order • Taxable Money • Tax-Deferred Money • Tax-Free Money • Free Money

Tax Categories After-tax IN TAX-FREE Tax-free OUT (if certain requirements are met) 3 Tax Categories of Financial Vehicles After-tax IN TAXABLE May be taxable each year TAX-DEFERRED Taxable OUT Before-tax IN or After-tax IN

Smart Money Investment Order • Taxable Money - Managed Accounts • Tax-Deferred Money • Tax-Free Money • Free Money - TSP, Tax-Deferred Annuity - Roth TSP, Roth IRA, Life Insurance - 5% Matching in TSP

Financial Landmines …And How to Avoid Them

Financial Landmines

Financial Landmines 1 Lack of Planning • How much money do I need in retirement? • When do I plan on retiring? • How will the money get there? • Old Cliche - “Failing to plan is planning to fail”

Financial Landmines 2 Procrastination • Time can have a huge effect on your savings • It is never too early or too late to start, but you need to start • Why do people wait?

Financial Landmines 3 The Inertia Factor • An object at rest stays at rest. An object in motion stays in motion. • If you do what you have always done, you will get what you’ve always got • Get up and do it!

Financial Landmines 4 Acting Like The Future Will Never Arrive • True belief requires action • It is NEVER too late to start • Start now, it will be here faster than you think

What’s The Next Step? Get A Personalized Benefits Review • Fill Out The Personal Information Sheet • Write Down Any Questions / Concerns • Expect A Personal Follow Up Call / Email

Thank You!

Contact Me John Mashburn Federal Benefit Specialist Federal Benefit Experts 843. 455. 3312 john@fedbenefitexperts. com