Monthly Archives: November 2017

Open Enrollment Season Presents a Possible Dilemma for Federal Retirees

Posted by Gary Raetz Open Enrollment Season Presents a Possible Dilemma for Federal Retirees

Fall brings pumpkin spice lattes, cool nights, the promise of holidays around the corner… and decisions about healthcare. Okay, so that last item doesn’t exactly sound like a fun time, but healthcare is definitely an issue that we all face.

Medicare is currently operating their Annual Election Period, from October 15 to December 7. Enrollment for Federal Employee Health Benefit plans, called Open Season, began on November 13 and will last until December 11. According to the Office of Personnel Management (OPM), Open Season “gives Federal employees and retirees the opportunity to evaluate their benefits, provider networks, and the 2018 rates for Federal benefits, which include FEHB, Federal dental and vision (FEDVIP), as well as elections for Flexible Spending Account (FSAFEDS) for health care and/or dependent care. Individuals have the chance to make changes to their coverage within the Open Season dates”.

If you’re a retired federal employee, it is possible that both of these enrollment periods are important to you. If you’re a current federal employee, you might want to pay attention to this issue as you plan for retirement.

You enjoy Federal Employee Health Benefits even after you retire. However, you have the opportunity to also enroll in Medicare Part B, the part of Medicare that covers treatment and services related to your health care (such as preventive care, outpatient care, and more).

There are two primary issues to consider here:

  1. Can you afford the Medicare Part B premiums? Currently, rates per person are $134 per month, or $1,608 per year. Rates can sometimes increase from one year to the next.
  2. Is Medicare Part B compatible with your FEHB plan, and to what degree?

That second issue, in particular, is a tricky one to decipher. If you’re a federal retiree and need help analyzing your budget, give us a call. Or, if you’re still planning for your retirement, we can help you consider your future healthcare needs and decide how to accommodate them in your overall retirement income plan.

Read More

Determining Your Income Needs in Retirement

Posted by Gary Raetz Determining Your Income Needs in Retirement

As a federal employee, you enjoy one of the best retirement systems in the nation. However, don’t let that fact mislead you into thinking that you don’t need to plan for retirement! Some people have made the mistake of simply assuming that they will have “enough” income, without defining what “enough” actually means.

So, how much income do you need in retirement?

This can be a difficult question to answer in a single blog. Obviously, we don’t know your individual circumstances, but you definitely need to consider three primary factors:

  • Needs – how much money do you need to live? Consider your rent or mortgage, food, bills, and so on
  • Wants – what do you want to do throughout your retirement years? ‘Do you hope to travel, pursue a particular hobby, or purchase a beachfront home?
  • Unexpected expenses – at some point, many retirees experience an increase in out-of-pocket medical expenses, or the need for long-term nursing care, or some other emergency. Can you access an insurance plan to meet those needs, or will you have money set aside in an easily accessible account? Can your budget adjust to accommodate new circumstance?

Once you can establish monthly and annual budgets, you can work backward from there, to see how your retirement benefits will stack up. Will you be able to generate enough income to meet your budget, when you account for your pension annuity payments, Social Security benefits, and withdrawals from your Thrift Savings Plan?

If it doesn’t look like you can meet your expected budget, you have several choices:

  • Bump up your TSP contribution rate
  • Cut expenses from your budget, if you’re willing or able to make sacrifices
  • Work longer, so you can potentially save more money and increase certain retirement benefits such as Social Security
  • Find a way to generate additional income in retirement

Yes, it’s a complicated web of decisions and adjustments, but we can help make the process easier for you. Give us a call, and we will help you sort through your options and decide which path is best for your situation.

Read More

Your Thrift Savings Plan Gets a Boost in 2018

Posted by Gary Raetz Your Thrift Savings Plan Gets a Boost in 2018

Throughout this fall, we’ve watched as President Trump and Congress have debated various adjustments to our tax code and the federal budget overall. While many propositions currently remain undecided, one change will definitely take place beginning in January. Contribution limits for certain tax-advantaged retirement plans have been raised.

The change affects 401(k), 403b, and yes, Thrift Savings Plans! Now you can stash an additional 500 dollars per year in your TSP, for a total contribution of $18,500 in 2018 (and every year beyond that, unless future changes take place).

If you’re age 50 or over, the catch-up contribution rule still applies. You can save another $6,000 in your TSP next year, for a total contribution of $24,500.

This is good news, for more than one reason. Saving more for your retirement is always a good idea. The increase of 500 dollars might not sound like a lot to you, but multiply that number by the number of years you will continue to work… and then consider the power of compounding interest. As you can see, that 500 dollars makes a major difference!

Also, your TSP is more than just a retirement vehicle. Since you fund the account with pre-tax dollars, you lower your overall taxable income for the year. That means you can save just a bit more on your income taxes next year.

Hopefully you’re feeling optimistic about the future of your Thrift Savings Plan, and you’re planning to increase your contributions next year. If you need help with that, or any other retirement planning issue, feel free to give us a call. We keep ourselves informed on issues related to federal employee retirement, and pass along that information to benefit you.


Read More

2018 Cost of Living Adjustment Has Been Announced by Social Security

Posted by Gary Raetz 2018 Cost of Living Adjustment Has Been Announced by Social Security

Like most federal retirees, you will enjoy the potential of three forms of income in retirement: Your annuity payments, income from money you set aside in your Thrift Savings Plan, and your Social Security benefit. Since your Social Security payments are subject to periodic adjustments (indexed to the inflation rate), you might be interested to know that beneficiaries will receive a cost of living adjustment (COLA) in 2018.

Each fall, the Social Security Administration analyzes inflation, and decides whether to issue a COLA beginning the following January. The amount of this adjustment is also tied to inflation, and can vary from one year to the next, with no COLA ever guaranteed. In fact, sometimes a COLA is not issued for the year.

In 2018, beneficiaries will receive the largest COLA in five years.

How much is this COLA? It has been set at 2 percent, which doesn’t sound like a lot. For the average beneficiary, the adjustment equals an extra 27 dollars per month, with the average benefit rising to $1,404 per month. Of course, that is only an average figure; your benefit amount is calculated based upon your earning history, and can vary significantly from the average.

Any upward adjustment in benefits is helpful. Also, keep in mind that Medicare might also raise their rates. It is possible that the Social Security COLA will serve more to compensate for a Medicare rate hike, for many retirees.

Recent years have taught us that COLAs are certainly not guaranteed to occur each year, and can sometimes be disappointingly small. Since your own cost of living can change throughout retirement, regardless of what the inflation rate reports, it is important to take saving for retirement into your own hands. Bolster your Thrift Savings Plan, taking advantage of maximum contribution limits, and work closely with a financial advisor to plan for your retirement.

Call us any time. We can help you understand your retirement benefits as a federal employee, and plan for a stable retirement.


Read More