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FEDERAL EMPLOYEE'S
RETIREMENT PLANNING GUIDE
The Author's
Personal Post-Retirement Journal (5)
From 11/2/05 through 1/17/06
The following journal runs
from November 2, 2005 through January 2, 2006. Click
current journal entries to return to the most
recent entry.
You may have the same
questions or concerns and hopefully these entries will help you prepare for
your retirement. Visit retirement planning to get answers to many of your retirement questions. Parts of this journal may relate to
your personal situation. If you would like to comment on a journal entry,
this site in general, or to let us know what other areas you would like
covered, send an e-mail to ddamp@aol.com.
You will find other articles of mine online at Monster.com.
PREPARATION is
the key to a successful retirement and this site is
devoted to guiding you through the federal
retirement maze and includes information on benefits, general retirement
issues, and easy-to-use estate planning techniques. It was designed to help you think
about the entire picture and not just your annuity and when you can leave.
There is considerably more to retirement than meets the eye and this site
will help you focus on the critical issues that we all must address at this
time in our lives.
Readers should seek professional advice
concerning their retirement and benefits and for all other areas that require
professional clarification and guidance. The author is not a benefits specialist
or financial planner and is only relaying his personal thoughts and ideas in
this forum. Readers are strongly cautioned to consult
with a professional before using any information
contained in this forum. No forum can substitute for professional retirement
benefits and planning, investment, or medical
advice. Caution is urged when using the information
contained in the articles that are posted on this site. The authors and
publisher are not engaged in rendering retirement planning, benefits,
investment, or medical advice or services. If you have a retirement planning,
benefits, investment problem or medical concern, you should consult with a qualified
professional in that area. Accordingly, the authors and publisher expressly
disclaim any liability, loss, damage, or injury caused by the contents
posted on this forum.
Click
here to go to the latest entry
November 2, 2005
Investment Options
and the FEHB Open Season
I have one small
correction to make concerning last week’s article. Judy and Vince reminded me
today that the song, “The Beat Goes On” was sung by Sonny and
Cher not the Mammas and the Poppas. If I
shut my eyes for a second I can actually see Sonny and
Cher singing this song on their evening TV variety show. I
remember it well.
If you follow my
weekly journal you know that I’m a fan of I – Bonds because they offer a
conservative and safe investment option where you can stash your cash. They seem
to always beat CD rates, sometimes by a mile. When inflation raises its ugly
head I-Bonds increase accordingly, unlike fixed rate investments. The Treasury
Department announced the new I-Bond rates November 1st and low and
behold the composite earnings rate is now 6.73%. I-Bonds that were purchased
between May 1st and October 31st of this year are earning
6.93% because the fixed rate was higher then. The rate jumped from 4.8%
last May to this exceptional rate of return. The inflation adjustment alone was
2.85%. I will add a FAQ link on
http://federaljobs.net/retire for I-Bonds if you want more information on
the subject. Basically, you can’t cash them in for one year and you are charged
a small 3 month interest penalty if you cash them in the first five years that
you own them. Long term CDs often have a 6 month to 1 year interest penalty for
early withdrawal.
I received the
following investment question from a site visitor this week:
Question:
I will retire in February, 2006. Should I change my G fund to the L Fund 2010? I
don’t anticipate using the Thrift funds now.
Reply: There are a number of options for you to consider. If you can
tolerate some risk and won't need your money for the next 5 years the
conservative L 2010 fund will help protect your investment from inflation and
offers potentially higher gains to the year 2010. The Thrift Board works
to achieve this goal by investing some of your money in all five of the Thrift
funds that are available with a large position in the G-Fund. However, you will
have market risk with the L 2010 because initially the fund is invested
in 43% G, 7% F, 27% C, 8% S, and 15% I. Between now and 2010 you may
see your fund decrease during market swings unlike the G-Fund that always goes
up. Overall, with professional TSP L fund management, between now and 2010 your
fund should increase more than if you kept it 100% in the G fund. Each quarter,
every three months, the L 2010 fund mix is changed to a progressively more
conservative mix as you get closer to the target date.
You could also
consider the Income L fund that is ultra conservative and balanced for income
with 74% in the G, 6% F, 12% C, 3% S, and 5% I fund. This mix is designed to
keep you ahead of inflation and preserve your capital.
If you don't have
stocks or other investments the Thrift plan L 2010 is a good conservative choice
for you to earn more on your total investment. You just have to be aware your
fund balance will vary with market swings.
FEHB Open Season is
here again and OPM offers excellent health benefits service and support for
retirees. Last week I received a comprehensive Open Season package from OPM that
is tailored to my area including a toll free number and web address that I can
go to for information and to request plan brochures. The Open Season summary
outlines exactly what you need to do to make changes and how to submit them
either on their web site or by phone. I requested 5 plan brochures for review
and am thinking about switching to Blue Cross Blue Shield’s standard plan. If
you are retired and haven’t received your information you can log on to the web
site at
www.opm.gov/retire/fehb to either download the info or review it online. You
must be retired and have a valid CSA number to log on.
While working for
the government the open season process always seemed chaotic. Each year we would
have to go begging for information and plan brochures. Just one more benefit we
retirees are able to take advantage of I suppose.
For those of you
who have procrastinated and haven’t made up your wills, living trusts, and
health directives we just received the new Quicken WillMaker Plus 2006
software in stock. This software, along with the book Plan Your Estate,
will greatly simplify the process for you. Go to
http://federaljobs.net/retire/resources.htm to review and purchase these
products. I used both prior to retiring to draft my wife’s and my wills, trusts,
health directives, and letters of instruction. I keep Plan Your Estate
and The Executor’s Guide on my reference shelf.
See you all next
week.
November 16, 2005
What to Expect From Uncle
Sam When You First Retire + Clarifications
by Dennis V. Damp
It was
this time last year when I was wondering what to expect after submitting my
retirement paperwork. You never know what may come your way and many begin to
doubt their decision. I adjusted my date three times. I was going to leave May
31 then switched it to October 30, and finally set it for December 31. We all
have second thoughts when we are faced with a major decision because so many
variables play into the equation. Before I continue, let me provide a glimpse
into what will be in store for you after leaving. This may settle your nerves a
bit.
I never
had second thoughts about my decision to retire and considered myself prepared
emotionally, financially, and physically for what is considered a major change
in anyone’s life. I launched
http://federaljobs.net/retire, my Retirement Planning Web Site, to provide
feds with the planning tools needed to focus on critical issues long before you
leave. Prior to retiring I was driven by necessity – work that is. I would get
up at 5:35 a.m. for work, commute, and put in a challenging and often exhausting
nine hour day. On weekends I frantically worked to get caught up on so many
fronts which included managing a full time publishing business. By necessity
most of us work to be good employees, spouses, parents, and of course jack of
all trades. Often, while working full time we end up compromising and/or
neglecting aspects of our lives that truly need attention.
Let me
reassure you that if you prepare, after retirement you will be the arbiter of
your fate. You will have time to assess and improve your quality of life. You
will transition from a routine driven work environment that pretty much
controlled every aspect of your life to a cornucopia of personal options that
YOU control, not others. It takes time to adjust after you leave. I’ve been
retired eleven months now and I’ve pretty much worked through most issues and
retirement has improved my daily routine, health and well being immeasurably. I
hesitate to use the word retirement because most who retire young, at age 55,
don’t stop working. I work most days in my business however I enjoy it a lot
more and I can break or vacation anytime I desire to. I stay up to watch Monday
night games without being concerned about getting up early for work the next
day, my wife and I break during the day to go on short trips, shopping, or just
go for a drive on a bright sunny day. When it snows I can pour a hot cup of
coffee, open the curtains, and marvel at nature bounty instead of dreading the
thought of commuting in the ice and snow. Life is good.
Here is the time
line of what I received from the FAA and OPM after sending in my paperwork:
1)
10/26/2004
- Sent my retirement package to the region
2) 11/3/2004 – Received "Receipt of Retirement
Application" form letter assigning a personnel specialist to my case with
contact information.
3)
12/30/2004
– Received SF Form 2801-1 "Certified Summary of Federal Service" and
SF-50-B "Notification of Personnel Action" for Retirement - Voluntary.
4)
12/31/2004–
Sent signed "Certified Summary of Federal Service" verifying my SCD date
to personnel via certified U.S. Mail.
5)
1/21/2005
– Received letter from personnel certifying my records and notifying me that the
records were forwarded to OPM for processing.
6)
1/21/2005
– Received my last FAA government check with pay stub.
7)
1/31/2005
– Received annuitant notification letter from OPM advising me that OPM has
initiated interim annuity payments. The letter listed initial payment and
deductions. I also received a letter from the Thrift Savings Plan advising me of
my options.
8)
2/2/2005
– Received first estimated annuity. It was automatically deposited into my
checking account.
9)
2/22/2005
– Received annuity statement form R138-23 from OPM that looks similar to the pay
stub I received while working.
10)
3/10/2005
– I received a letter from OPM early this week telling me that my retirement
paperwork is complete, and in approximately 4-6 weeks I will receive a booklet
titled, Your Federal Retirement Benefits. The booklet is
personalized with the retiree's specific information including related benefits.
They also sent me official copies of two forms for my records, my SF-2808
Designation of Beneficiary for my Civil Service Retirement and a copy of
SF-2821 Agency Certification of Insurance Status for my FEGLI coverage.
11)
3/12/2005
- I received my OPM retirement benefits book titled, “Your Federal Retirement
Benefits.” The letter I received last week said I would receive this in 4 to
6 weeks. It was a pleasant surprise when I opened my mail Saturday to find this
jewel.
You can review my
retirement journal’s first three months entries at
http://federaljobs.net/retire/postretire_journal1.htm. This will give you
insight into what to expect and what a retiree is thinking these first few
critical months. Visit
http://federaljobs.net/retire to evaluate and plan for your retirement.
More to come next
week!
Dennis V. Damp –
Retired FAA
November 30, 2005
TGIF - Thank God It's Any Day When You're Retired
by Dennis V. Damp
After you're retired awhile ─ maybe six months or so ─ every
day has the potential to be Friday. What a great feeling if you think about
it!!! You're not driven by the clock unless you want to be or it's simply your
nature, you have the freedom to do whatever turns you on, and thankfully, your
CSRS annuity and savings give you the where with all to enjoy life after your 9
to 5 routine fades into distant memory. The only downside to every day being
Friday is that each Friday comes around much too fast. Remember when it seemed like an eternity until you reached age 16, then 21. Now
the weeks fly by unbelievably fast, much faster than before I retired and I want
to put the brakes on because I'm on a fast track to 60. I'm not complaining,
typically time flies when you are enjoying life, having a ball, and don't
want it to stop. I suppose that's where I'm at right now, having a great time
and not wanting to change a thing. Retirement is grand.
I would like
to thank Vincent Torcivia for noticing an error in last week's article. I
clarified several issues concerning the difference between retiring on December
31st instead of January 3rd and mentioned that you only need 12 hours of sick
leave to make up 3 days if those days were needed for another month's annuity.
I looked across the sick leave chart and unfortunately my eyes must have went up
one row. You need 17 hours of sick leave to make up those three days. I truly
appreciate the feedback and comments that I receive each week and often times
the comments and replies are the foundation for next week's article.
Several readers asked about debt in general including home
mortgages. They wanted to know if it is advantageous to pay off their home
mortgage before retiring. The only good debt is no debt at all, especially in
retirement. Some people suggest keeping mortgages simply to take advantage of
the interest deduction. Sure, you get to deduct your loan interest but what you
save is far less than what you are paying out in total interest each year.
Having your home paid off makes sense for lots of reasons and the earlier you
pay it off the more you will have in retirement. If you plan to retire early
consider refinancing 30 year mortgages to 15 years. You will be surprised at how
fast your equity will accumulate. If you keep your 30 year mortgage obtain an
amortization schedule from your bank or use Quicken's loan calculator to produce
one and pay this months payment plus next months principal each and every month
until the loan is paid off. This will cut the term of your loan in half and save
tens of thousands of dollars in interest payments. The earlier you start this
the better because the loan principal payment increases and the interest payment
decreases each month as you pay down the loan. The first thing you need to do
when planning to retire is assess your expenses pre and post retirement. Go to
http://federaljobs.net/retirecosts.htm to discover where you stand now and
will stand financially after you leave.
A reader asked about investment options other than I-Bonds
and was looking for additional conservative investment options that also offered
some tax savings. If you're looking for a totally tax free investment consider
high quality municipal bonds. I prefer muni bond funds rather than individual
bonds to reduce default risk. If you want totally tax free bonds you have to buy
muni bonds that are issued by municipalities in your home state. There are a
number of high quality national and state muni funds offered by Fidelity,
Vanguard, and other companies. If you purchase a national muni fund you won't
pay federal tax, however you may have to pay state tax on the bonds in the fund
that are from other than your home state. Check out Fidelity Spartan Municipal
Income Fund (800-343-3548) that had a 10-year average annual return of 6.9% or
the Vanguard Long-Term Tax-Exempt fund (800-662-7447) with a 6.8% 10-year
average annual return. Both of these funds are national and you may end up
paying some state tax. Both companies also offer individual state funds
that you can request information for when you call. Just compare the 10-year
average annual returns to see which fund is best for you. You also want to
invest in mutual funds that are considered NO-LOAD and don't have hidden fees.
Next week I'll formally introduce our new "Federal
Employee's Health Forum," beginning in January of 2006 and hosted by
Charles Jumpeter. I'll also contribute articles from time to time. This site
will present healthful living articles
for federal employees approaching retirement, retired feds, and for anyone who
cares to improve their quality of life. There is no doubt about it, without a
healthy lifestyle and overall good health we have little to celebrate. It
doesn't matter whether you are working full time or retired. More to come next
week with a formal introduction for Chuck. Many of you already know Chuck, founder
of the East End Health
Consortium (EEHC)
in Riverhead, NY, and federal employee consultant. He
worked for Uncle Sam for many years and I'm excited about working with him on
this new forum.
December 7, 2005
The Realities of Retirement – Is It Your
Time To Exit? by Dennis V. Damp (FAA Retired)
Tom Shoop, Executive Editor of
Government Executive, wrote an excellent article titled “Do the
Retirement Wave” in their December issue. Mr. Shoop reported that, “the
‘Great Retirement Exodus’ has become the Y2K problem of the new millennium:
It is a ‘crisis’ far worse in the fevered imaginations of its proponents than in
reality.” For several years now OPM and others in government have reported that
half of the federal workforce is or will shortly be eligible for either regular
or early retirement and that a “human capital crisis” is looming. I
referred to these statistics many times in my writings. The fact of the matter
is that not many take advantage of early retirement in the public or private
sector for a number of real and imagined concerns.
I was one of the “Boomer” statistics, born in 1949, age 55 with 35 years
and 7 months service and made the decision to cut the cord and go on to other
things last December. Those of you who have followed my retirement journal
entries for the past 18 months know my journey well. I hear from many federal
employees every week and most simply fear the unknown, are very apprehensive,
and in 90% of the cases unprepared to leave. Many put off making the decision
until other factors in their life make the decision for them – typically, poor
health, inability to keep up with new technology, reorganization and downsizing
initiatives, and other factors.
It has always amazed me that many of us will spend months researching and
planning a vacation, sometimes years. Some of my friends spend hours each week
digesting the sports page and know every statistics about their fantasy football
teams, but in both cases spend little to no time researching and planning for
retirement. I’ve reported that you have to be emotionally, physically, and
financially prepared before signing on the dotted line and
submitting your retirement papers. I started planning for retirement over a
decade before I left and the sooner you start planning and saving the sooner you
will be able to leave. The good news is that it’s never too late to start, it
just takes a little incentive on your part and some reliable
resources for you to get your plan off the ground and running. You can’t or
at least shouldn’t leave retirement to chance, it’s far too important to take it
as it comes. I would much rather enter retirement on my terms – and I did.
The facts mentioned in Mr. Shoop’s article are indisputable, almost half of the
federal workforce is eligible for either regular or early retirement. Retirement
isn’t for everyone and I for one will never really retire. Sure. I retired from
the federal sector but I have other coals in the fire and have had them
smoldering for years. All a part of my plan. Now that I’m retired the fire is
stoked , the steam is up, and things are going well all around and this gets
back to my point – you have to be emotionally, physically, and financially
prepared and there is no time like the present to start the planning
process. If you are one of the million or so feds who are on the fence I suggest
visiting my retirement planning site at
http://federaljobs.net/retire, If you do nothing else but read the
introduction and download and complete the Retirement Cost Analysis spreadsheet
you will be well on your way to knowing what to expect financially in
retirement. The spreadsheet lists both pre and post retirement income and
expenses with a column for your survivor. There is and easy to follow sample
displayed on this site with explanation and guidance.
When I was considering retirement the only way I was able to get personal
insight on what to expect was to call friends that retired. That’s why I
developed this site and posted my retirement journal online. The fear of the
unknown is one of the primary factors people put off retirement. I am hopeful
that my retirement journal and the site in general will help ease your concerns
and help you make the decision that is right for you.
One more thing before I close for this week. I would like to officially announce
our new "Federal Employee's Health Forum"
coming this January and hosted by Charles
Jumpeter. I'll also contribute articles from time to time. This site will
present healthful living articles for federal employees approaching retirement,
retired feds, and for anyone who cares to improve their quality of life. Chuck
founded the East End Health Consortium (EEHC) in Riverhead, NY, and he is
federal employee consultant. He worked for Uncle Sam for many years and I'm
excited about working with him on this new forum. You can visit the forum pages
at
http://federaljobs.net/retire/health.htm for introductions and contributor
biographical information. Chuck will begin his series with articles on nutrition
basics and continue on with specific topics on heart health, diabetes, menopause
and other related topics. I will focus on issues that I am intimately familiar
with such as glaucoma, arrhythmia, related subjects, and physical fitness
interests. We hope you will find the site informative and helpful.
Dennis V. Damp
Federal Aviation Administration (Retired)
December
21, 2005
Simplify Your Life & Turn on
Autopilot
I received a number of
messages from soon to be retired feds thanking me for making them aware of the
difference between their “Retirement Date”
and “Date of Final Separation.” That was a big one for me and
even though I lost out, I was glad that I was able to help others avoid this trap. For those of you just tuning in I suggest going back to my
journal posting dated December 12 that explains
this critical issue in detail.
Yes ─ as you
can see from the title my background is in aviation and therefore my reference
to “autopilot.” It’s a great principal that if applied to everyday activities
can free up and simplify your life before and after you retire. Now is a good
time to take actions to reduce stress, streamline frustrating activities, and
put parts of your life on autopilot.
I signed up for
online banking about 6 years ago and when I knew I was going to retire last year
I added all of my bills to their online payment service. Then I initiated
automatic monthly payments on the 5th of each month for any fixed
loan, cell phone, and cable bill payments. I elected to make the payments on the
5th of each month because OPM electronically transfers your annuity
check to your account on the 1st of each month. If
you elect to pay estimated utility payments you can add them as well. However,
you have to check the bills from time to time to see if the estimated payments
have increased. I can pay my
bills online in less than 15 minutes and you save postage costs. You can also
access your accounts from your computer when traveling. My bank offers this
service for free. You can also add your money market accounts and CDs to the
online service and check your balances day or night and initiate fund transfers
between accounts without ever going to the local branch office. One word of
caution. Some - if not all banks - have a 4 day bill payment window. If you
initiated payment on the 4th of the month, it won’t post for 4 days
or in this case on the 8th. Make sure you pay credit card bills
timely to avoid late charges when using this system.
Many are
hesitant to sign up for online banking due to security concerns. Today banks
offer extensive fraud protection and all use online code encryption to protect
your accounts. The key is to check your monthly statements when they come in and
your online balances when doing your bills each month. If you notice a problem with your balance or an unauthorized
payment simply notify your bank immediately and they will investigate.
Another good
thing to do is set up a simple filing system for next years taxes. I use a
standard accordion file and use the following categories:
·
W2s & 1099Rs
·
Stocks/Mutual Fund
1099 DIV Forms / Capital Gains
·
1099 INT (Bank & CD
Interest Forms)
·
Tax Payments (Real
Estate / Local / School / Estimated Payments / Etc)
·
Home Costs (1098
Interest Payments – Home Improvements)
·
Business (Car Log /
Reports / etc)
·
Donations (Red Cross,
United Way,
Church, etc)
·
Other
This will help
you determine if you can itemize deductions next year. If you have everything in
one place it will make this task much easier. I also use Turbo Tax by
Intuit to complete my federal and state taxes and the
folder system makes completing taxes so much easier. Turbo Tax is very easy to
use and I highly recommend it. Turbo Tax allows you to import basic data from
previous years so you will never have to reenter your SSNs or other personal
data after doing it the first time. This software allows you to complete
separate tax returns for the entire family and my adult children do their taxes
on my system each year.
The first of
the year is also the time to update your estate plans or start one if you
neglected this task in the past. Visit
http://federaljobs.net/retire to review what you need to do to draft your
plan. I used the software “WillMaker Plus” and the book titled “Plan
Your Estate” to complete our estate plan including wills, living trusts, and
health directives. Visit our resource section at
http://federaljobs.net/retire/resources.htm for more information and
discount pricing on these products.
This will be our last article for 2005. See you all again the
first week of January and the best to you and yours this holiday season.
Dennis V. Damp
Retired FAA
January 2,
2006
One Year and Counting
& Our New Health Awareness Forum Launch
Yes, I know it’s hard to believe - I’ve
been retired a full year!!! And what a year it's been. There were ups and downs
but overall it was a very good year. For those just joining my ranks you have
much to look forward to and for those planning their exit you have much to do to
make sure you are physically, emotionally, and financially prepared when you
leave.
OPM continues to amaze and pleasantly surprise me. Their retirement support
center provides exceptional service. Late last month I received a “Notice of
Annuity Adjustment” detailing my 2006 COLA increase. It lists your increased
annuity, allotments, FEGLI, FEHB, and federal tax withholding. I received a 3.8%
increase, not the full 4.1% because I left a day too early as described in a
previous article. OPM also sent a reply to my COLA question. If you call OPM and
give them your CSA number they send an official letter answering your question.
Now I’m waiting for my 1099R. Retirees get a 1099R instead of a W2 form at the
end of the year. I’ll actually get a W2 from the FAA for my leave payment and a
1099R this year.
The new year is a great time to review and implement ways to re-energize,
maintain, and improve our health. To that end we are launching a new weekly
“Health Awareness Forum” at
http://federaljobs.net/retire/health.htm hosted by Chuck Jumpeter, a well
known government consultant and founder of the East End Health Consortium (EEHC)
in Riverhead, NY. His first article titled “A
S.M.A.R.T Start” is an insightful article that can help all of us focus
on our goals for this new year, including planning goals for those approaching
retirement. I encourage all of you to read his new column and visit often. I am
also contributing articles from time to time on different subjects. Chuck
welcomes your comments and questions and you can send him questions direct using
the forum’s site submission forms. He is a wealth of information and many in the
FAA know him well.
I answered several questions last week concerning other things to consider when
setting your retirement date. John asked:
“Dennis, aren't there offsetting
effects here? The COLA is one effect but, working an extra pay period
results in a higher high-3, it seems to me. Is the high-3 adjusted by pay
period? If yes, then...”
REPLY:
Yes, there are several factors to consider including the fact that if you
need those three days to make up another month towards your annuity you need
to consider that. Working an extra pay period will have little effect on
your high three unless those days add another month towards your annuity
calculation. For example, if you work another pay period and lets assume you
earn $2500 gross per pay. This additional $2500 will replace the earliest 2
week period three years ago. Back three years you may have been making lets
say 9% less or $2275. Therefore your effective gain is $2500 - $2275 or $225
towards your high three calculation. Then you have to take your annuity
percentage times this $225 and if you worked say 30 years your CSRS annuity
will be about 58% of your high three. Take .58 times $225 and you would have
gained $130.50 a year more.
Working another 2 weeks will not get you another month's annuity unless you
had 15 days over your accumulated SCD date including your sick leave days
over a full month. Read the following journal entries. They may be helpful.
December 12th, November 23, and November 9th entries:
http://federaljobs.net/retire/journal.htm
You have a good point and you are looking at this like you should - FROM
EVERY ANGLE.
For those who have been following my journal entries you are aware that I
started to do some of the cooking when I first retired. My goal was to give my
wife of 36 years a break from what she has done so well all of these years. It
didn’t turn out very well and I pretty much stopped after several months. Well,
I finally found a cook book that even I can understand titled “Fix-It and
Forget It: Feasting With your Slow Cooker.” The recipes are easy to
follow and I’ve used the book a number of times recently. I try to cook at least
once a week and of course we eat out several times a week as well. The recipes
are so easy to follow and you don’t have to know much about cooking to make a
good tasting meal. For example, I’m making New Years day dinner and all I’ll do
is take 8 boneless pork chops and lay them in the bottom of our six quart crock
pot. Then I cut a large sweet onion and put it on top of the chops with a little
pepper. Then you dump a 2 pound bag of sauerkraut over the chops and turn the
crock pot on low for 6 hours. About an hour before their done I put in a pound
of hotdogs. My wife still makes the mashed potatoes but I at least will make the
main dish. You will find this recipe on page 155. There, that’s my recipe for
the week. It takes all of 10 minutes to prepare. I made beef stew last week and
it also came out great. Most recipe books are way to fancy and recommend odd
spices and use terms like zest, layer, and puree that I don’t understand.
This is the time of year for resolutions and there are lots of good ones for
those approaching retirement and for retirees alike. I recommend taking the time
this year to evaluate where you are and where you will be financially when you
leave government. I developed a simple and easy to use spreadsheet with a free
downloadable copy at
http://federaljobs.net/retire/retirecosts.htm, click on the "Pre and
Post Retirement Analysis" menu selection. It is also advisable to list
all of your assets and start a basic estate plan. EVERYONE needs a basic
estate plan considering your annuity and the assets and stuff that you
accumulated your entire life. A probate avoidance spreadsheet is also available
with samples at
http://federaljobs.net/retire/probate.htm, click on "Asset Allocation."
I update my plan each year at tax time. It's never too late or too early to
start the process. I use "Willmaker
Plus software" and the book titled
“Plan Your Estate” to draft me and my
wife’s wills, health directives, and living trusts. You will find these
resources on sale at
http://federaljobs.net/retire/resources.htm, "The
Executor's Guide; Settling a Loved One's Estate or Trust." is
another good resource written in plain English to help you read a will, transfer
property, wrap up trusts, handle probate, work with relatives, and make sense of
it all. I have a copy in my bookcase next to
"Plan Your Estate" and I direct my heirs in my estate plan to those
resources for clarifications and guidance. This book has been a lifesaver for
baby boomers who must settle their parents and other estates.
Happy New Year everyone. More to come next week. The best to you and yours this
holiday season.
Dennis V. Damp (Retired FAA)
January 10, 2006
One Year Later, The Thrift L Funds, NARFE,
& 2006 Pay Calendar
I’m finally settling into a normal routine one full year
after retiring from government service. It takes awhile to get accustomed to
your new priorities and schedule. When I first left, I felt like I had to get
out of the house and my home office daily. I was so accustomed to getting up
early, going to work with the FAA, and on weekends running to get caught up with
everything. All of the running around knocked me off my feet — just did too much
too soon. Now I’ve settled down and don’t feel that urge to get up and out every
day. I’ve maintained my exercise routine throughout the year and extended my
walks to 2 miles every other day instead of a mile and a half every day and
continue to practice pilates and work out with light weights. Recently, Chuck
Jumpeter, our new Health Forum contributor, recommended
a vitamin and mineral supplement regimen that has given me more energy to handle
all of the additional activities that you encounter in retirement.
One valuable lesson I’ve leaned this year— one of many— is that it truly pays to
write your personal goals down before you retire. Prior to leaving, I set both
personal and business goals and didn’t look at them again until this month. I
was amazed to discover that I accomplished 95% of my original goals. The fact of
the matter is that I accomplished them almost unconsciously throughout the year.
Once you put pen to paper it stays with you and your subconscious keeps you on
track..
The Thrift L 2020 Fund
Several months ago I reviewed the Thrift L funds and advised readers that I was
going to split my Thrift fund between the G and L 2020 funds at the start of the
new year. I initiated the transfer at 11:40 am on January 3, 2006 and the next
morning my account reflected the new mix. It normally takes up to two days for
the change to take effect.
My intent is to conservatively improve my Thrift account gain over time and
secondly to track the performance of the new L funds against the Gold Standard
of funds - the G Fund for my readers. I’ll post monthly results on this site. A
reader asked why I switched my Thrift Plan to 100% G fund when I retired and I
replied in an earlier article that investment advisors suggest that your
investment in stocks should be limited to a factor of 100 minus your age. For me
that equals 44% in stocks and 56% in cash equivalents such as Certificates of
Deposits, money market and checking accounts, Treasury Bills, Notes and Bonds,
including the G Fund and Savings Bonds. That formula or investment mix doesn’t
necessarily apply to federal CSRS retirees because we receive a fixed monthly
benefit that is adjusted annually for inflation. I actually use a factor of 110
to adjust my investment mix and at the age of 56 I try to keep 54% in stocks and
mutual funds.
The L2020 fund mix is currently 27% G-Fund, 8% F Fund, 34% C Fund, 12% S Fund,
and 19% I Fund and your mix is adjusted to these percentages daily. The fund mix
changes each quarter progressively to a more conservative mix as you approach
the year 2020. The L 2020 Fund is designed for those who will need to withdraw
their funds beginning in 2015 through 2024. There is an excellent dynamic
presentation on http://tsp.gov that shows the mix
changes for each quarter to 2024. The L 2020 fund mix ends up in the year 2020
at 74% G, 6% F, 12% C, 3% S, and 5% I. For those who are drawing money from
their account now or may need their Thrift funds in the near future consider
either the L Income fund or keep everything in the G Fund. The L Income Fund is
a very conservative mix designed to keep your account ahead of inflation. The
Thrift Funds are very attractive due to their very low expense ratios of .05 to
.06% annually. Most comparable private sector mutual funds charge anywhere from
3 to 20 times or more for the same fund type.
The National Active and Retired Federal Employees Association (NARFE)
I joined NARFE last month. This organization represents over 350,000 federal
employees, retirees, and survivor annuitants and it’s primary mission is to
protect your retirement benefits. It only costs $25 a year to join and less with
the specials they offer. Members receive full access to their web site at
http://www.narfe.org, a very informative
monthly magazine, and you can connect to a large network of active feds and
retirees through their local and regional groups. January’s magazine includes
excellent articles on Medicare B options, crediting military service for CSRS
retirement, and other helpful information. I provide more information on NARFE
as I explore their many member benefits.
2006 Pay Calendars and Schedules
I received a request to post the new 2006 Pay Calendar on our web site. You can
download the Excel 2006 Pay Calendar at
http://federaljobs.net/fed.htm. You can save the calendar to your computer
and then add a shortcut to your desktop for quick reference. It is in color and
easy to use. We also updated the new 2006 GS Pay schedules including all
locality pay areas at http://federaljobs.net.
Just click on “Pay Schedules” on the main menu.
I replied to a half dozen or more excellent questions last week and will compile
them for next weeks article. Thanks again for visiting
http://federaljobs.net/retire. See you next week.
Dennis V. Damp (Retired FAA)
January 17, 2006
Where There is a Will
There is a Way
I was asked this week how my life changed
personally after one year of retirement. The person asking this wasn’t sure he
had enough to do to keep him active in retirement. My life changed a lot in some
ways and in others my life has remained pretty much the same. I wouldn’t have
retired at 55 if I hadn’t had many things on my plate to keep me busy and my
business keeps me working a full 40 hours a week. This is a huge change from
before retirement where I worked 70 to 80 hours a week and 365 days a year
working for Uncle Sam and running a full time business.
I’ve always been an early riser and get up at 7:00 a.m., about an hour or so
before my wife. I feed and let the dog out, rid up down stares, make the morning
coffee and do the dishes, eat breakfast then go to my home office and work 8
hours on and off throughout the day. Every other day I walk 2 miles outside in
good weather or at the local mall in the winter and do Pilates and light weights
the days I don’t walk. My business gets me out of the office for short periods
most days. Sounds pretty mundane, however, it is far less stressful and I can
pretty much break when I want to do other things such as hobbies and going on
short trips with my wife. I also now have time to be involved with other
activities and recently was elected President of our home owners association.
I don’t think I would have enjoyed retirement as much if I didn’t have a routine
that I enjoy and that keeps me occupied and involved. I also took over some
house hold chores to give my wife of 36 years a break. I wash the dishes for all
meals most days, cook a little, make lunch from time to time, and try to help
out more around the house. We do things that we couldn’t prior to retirement.
Last week it was sunny and 60 degrees in Pittsburgh. A rarity for this time of
year. Mary and I went on a short trip to Ohio in the middle of the week. Didn’t
do much, but just getting away when you have the urge is satisfying to say the
least.
The long and short of it is if you have the will to retire you will find a way
to make it work. If I didn’t have my business I would be totally involved with
one of my many hobbies, traveling more, or maybe taking cooking classes. The
world is your oyster and whatever turns you on can become a full time avocation.
The key is to at least have an inkling of what those avocations may be when you
leave.
I replied to many retirement questions the last few weeks. Here are some
highlights from my replies:
Question
Is the high three calculated from base GS pay with or without locality
pay?
Reply
Your high 3 includes your locality pay. This is covered on
http://federaljobs.net/retire/annuity.htm just click on the "CSRS -
Annuity Calculations" on the main menu listed on this page. There are
many things to consider when planning to retire and this site will help you
prepare. I retired from government service last year and compiled the
information on
http://federaljobs.net/retire from my personal research and experience.
Question
I am asking on behalf of my deaf cousin, a CSRS annuitant, who is going to
be 65 years old and needs to join Medicare. We have been unable to get a
concrete answer on how to pay her monthly Medicare premiums. I assumed since
her Health Insurance premiums were deducted from her annuity, her Medicare
premiums could be deducted as well. OPM Retirement Services referred me to
Medicare. Medicare referred me to Social Security. Social Security referred
me to OPM. Help!
Reply
Thanks for visiting our Federal Employee's Retirement Planning site. I asked
a friend of mine who recently turned 65 what he discovered when he signed
up.
Steve said, "I was told I could have my Part B Medicare payments taken
from either my Federal Retirement or my Social Security payments. Most
people have it taken from the Social Security payment which is where I have
mine."
Steve had the required quarters to collect Social Security so he had it
taken from his social security check. You can also have OPM pay it as he
stated. You can go online for your cousin to set up allotments for her
annuity at
www.servicesonline.opm.gov or call them at 1-888-767-6738. They
also have a TDD number for the deaf that she can call to set this up at
1-800-878-5707. Your cousin must give them her CSA number when she contacts
them and they will also ask her other information to confirm she is the
annuitant. Her CSA number is listed on the statements she receives from OPM
and on her original benefits booklet that she received shortly after she
retired.
Note: If a reader is currently having their Part B payments taken out
of their annuity I would appreciate an email if you have time. I would like
to know the process you used to set up the allotment and how soon it took
effect after you initiated the request either through the OPM web site or
via a phone request. My email address is
ddamp@aol.com.
Question
If I work full-time for an employer other than the federal government after
retiring from federal service at age 60 with 20 years of creditable service,
may I still draw my FERS annuity even while I am working?
Reply that I obtained from OPM
Yes! Refer below for some general information if you decide to go
back to work with the government.
You and your agency must notify OPM in writing if you are re-employed by the
Federal government. Your annuity will continue while you work if your
retirement was based on a voluntary separation. Your salary will be reduced
by the amount of annuity you receive. The following web site will provide
additional information about reemployment.
http://www.opm.gov/fers_election/facts/ri83-12.htm
The law (5 USC 8433) requires the reduction of your civilian pay by the
amount of your annuity when a Federal civilian retiree (who retired
voluntarily) is re-employed by a Federal agency. In emergency situations or
when there is a SEVERE recruiting difficulty, the employing agency MAY
request OPM waive this reduction under procedures described in 5 CFR 553.
Getting back to the title of this article,
where there is a will there is a way, this is an excellent time of year to
either draft or update your wills and trusts. I use plural because you and your
partner both need wills and in some cases trusts. I used the software “WillMaker
Plus” software and the book titled “Plan Your
Estate” to complete our estate plan including wills, living trusts, and
health directives before I retired. For smaller estates you can also use
Nolo’s Simple Will Book, a book with a CD,
that describes the process and guides you step-by-step to complete a basic will
on your computer. Visit our resource section at
http://federaljobs.net/retire/resources.htm for more information and
discount pricing on these products.
More to come next week.
Dennis V. Damp (Retired FAA)
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