Three Irreversible Mistakes FERS Route to Retirement Special Event. Misunderstanding Eligibility Rules. Relying on your Agency's Estimate

Transcription

1 Three Irreversible Mistakes FERS Route to Retirement Special Event Session One Misunderstanding Eligibility Rules Session Two Relying on your Agency's Estimate Session Three Errors on Retirement Application Three Irreversible Retirement Mistakes: Part 1: Misunderstanding Eligibility Rules Housekeeping Items Check your speakers for audio: If you are having trouble hearing via computer speakers, check to see if they are muted. Reduce your speaker volume if you hear an echo or feedback Available on demand for 6 Months Questions can be typed in at any time! 1

2 Disclosures This webinar is designed to be broad in nature and give you information for helping you plan your retirement. This does not give individual advice. Shilanski & Assoc., Inc. Securities are offered through Summit Brokerage Services Inc., Member FINRA/SIPC. Shilanski & Assoc., is not affiliated with Summit Brokerage Services, Inc. Shilanski & Associates Inc. is not hired by or represent the Government in any way. About Your Instructors Micah Shilanski Tammy Flanagan 2

3 Setting Your Retirement Goals Financially ready? Mentally prepared? Is your spouse ready for you to retire? When are you eligible? Estimate your retirement benefits! Cover expenses and allow for the unexpected? Income Expenses Age and Service = Eligible Age 1. FERS Immediate / Optional Retirement MRA Service Reduced Immediate or Postponed Optional Retirement MRA Voluntary Early Retirement Authority (VERA) or Discontinued Service Retirement (DSR) 50 Any Age Disability Retirement Any Age 18 months 5. Deferred Retirement / Unreduced (Separated before MRA) MRA Deferred / Reduced (Separated before MRA) MRA 10 3

4 Minimum Retirement Age Year of Birth MRA Year of Birth MRA Before and 2 months and 2 months and 4 months and 4 months and 6 months and 6 months and 8 months and 8 months and 10 months and 10 months Will you be eligible to retire on your MRA? Can you afford to retire at the time you are eligible? Age and Service = Eligible Age 1. FERS Immediate / Optional Retirement MRA Reduced Immediate or Postponed Optional Retirement 3. Voluntary Early Retirement Authority (VERA) or Discontinued Service Retirement (DSR) Service 30 5 MRA Any Age 4. Disability Retirement Any Age 18 months 5. Deferred Retirement (Based on service at the time of separation) MRA Deferred / Reduced MRA

5 Law Enforcement Firefighters Congressional Service Overseas service for DIA, CIA and NSA Non-appropriated Fund Service Note About Special Groups Three Parts of FERS.8% Contribution* 1% x Hi-3 x service 1.1% Age service FERS 6.2% FICA tax up to $117,000 (14) High Salary / Low Replacement Low Salary/ Higher Replacement SSA 0 $17,500 contribution + Agency Automatic and Matching + Catch-Up $5,500 Variety of withdrawal options TSP *FERS-RAE contribute 3.1% and FERS-FRAE contribute 4.4% 5

6 50% of your salary? 70% of your salary? 110% of your salary Maximum CSRS benefit = 80% There is no maximum FERS benefit! Taxes? Downsizing? Second career? What do you need? Example: Full Career Age: 57 Service: 37 years High-Three Average Salary: $60,000 Total retirement income: $45,740 / year or $3,811 / month or about 75% of pre-retirement salary. FERS Social Security Supplement Thrift Savings Plan 37 x 1% x $60,000 = $22,0 Years/months x 1% x High-three 37 x $35 = $1,295 x 12 = $15,540 Supplement is a bridge between retirement and Social Security. $0,000 x 4%? = $8,000? Option for monthly payment or life annuity 6

7 FERS Supplement Estimating the Value The supplement is approximately $35 - $40 / month for every year of FERS civilian service Retirement Income Timeline 7

8 Example: Second Career Age: 62 Service: 15 years High-Three Average Salary: $60,000 Total retirement income: FERS retirement + Social Security + TSP + other income? FERS Social Security Thrift Savings Plan 15 x 1% x $60,000 = $9,000 Years/months x 1% x High-three Average 14 monthly benefit: $1,294 x 12 = $15,528 $0,000 x 4%? = $8,000? Option for monthly payment or life annuity Example: MRA + 10 Age: 57 Service: years High-Three Average Salary: $60,000 FERS benefit reduced by 5% each year under 62* Option to postpone to age 60 to avoid reduction* FERS* Social Security Thrift Savings Plan x 1% x $60,000 = $12,000 Years/months x 1% x High-three No supplement / Social Security payable at 62 Immediate or delayed withdrawal options available *Options: Immediate Reduced or Postponed 8

9 Example: Long Career / Later Retirement Age: 70 Service: 40 years High-Three Average Salary: $60,000 Total retirement income: $64,800 / year or $5,400 / month Over 100% of pre-retirement salary. FERS Social Security Thrift Savings Plan 40 x 1.1% x $60,000 = $26,400 Years/months x 1% x High-three 32% delayed credits payable: $2,0 x 12 = $26,400 RMD approximately: $12,000 / year ($0,000 balance) Example: YOU! Age: Service: High-Three Average Salary: $ Total retirement income: $ / year or $ / month % of pre-retirement salary. FERS x 1% (1.1%) x $ = $ Years/months x 1% x High-three Social Security $ / year or $ /mo. Thrift Savings Plan Monthly Payment of $ based on estimated balance of $ 9

10 Online Calculator To-Do List Determine when you are eligible to retire Request a retirement estimate from a retirement specialist in human resources more than 5 years from retirement, use online retirement estimator - EBIS, FHR Navigator, etc.) Sign up on to see your Social Security statement Project your TSP balance and withdrawal options at 10

11 Questions? DURING THIS TIME WE WILL ANSWER AS MANY OF YOUR QUESTIONS AS POSSIBLE! 11