1. Federal Employee Retirement How to prepare & What are your options
Presented by
Vince Bono: Founder of Federal Employee Advocates
Carolyn Tobin: Editor of The Federal Employee
Financial Blog.
Vince can be reached at:
Carolyn Tobin can be reached at:

2. Retirement Five Important Considerations
Your Life Expectancy
When you will be eligible to retire
Will you be financially prepared to retire
When you can access your TSP money
Your financial options

3. Average Life Expectancy How many years will you need your retirement income to last?
Male 45: Years Female 45: Years
Male 50: Years Female 50: Years
Male 55: Years Female 55: Years
Male 60: Years Female 60: Years
Male 65: Years Female 65: Years
Male 70: Years Female 70: Years
Male 75: Years Female 75: Years
Your pension alone probably will not be enough for you to retire on, so you need other sources of income to last at least this many years beyond your retirement.

4. Eligibility for “Normal” Voluntary Retirement
CSRS: FERS:
Age 55 & 30 Years *MRA & 30 Years
Age 60 & 20 Years Age 60 & 20 Years
Age 62 & 5 Years Age 62 & 5 Years
*MRA & 10 Years
There’s a 5% per year reduction if you are under age 62
Ex: At age 57 your pension amount would be decreased by 25%
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*MRA is your “Minimum Retirement Age.

5. VERAs & Phased Retirement Voluntary Early Retirement
The Voluntary Early Retirement Authority allows agencies that are undergoing substantial downsizing, transfer of function, or reorganization, to temporarily lower the age and service requirements.
Both CSRS and FERS
Age 50 with 20 years
Any age with 25 years

6. Will you have enough money to retire?
Most federal employees should be able to retire and still keep their same standard of living, if their retirement income is at least 80% of their gross pre-retirement income.
For Sure you will no longer be paying payroll taxes.
Hopefully your mortgage will be paid off.
Hopefully your children have graduated college.
Maybe you will “downsize”.

7. Sources of Post-Retirement Income How do you get to 80%
CSRS or FERS-Defined Benefit Pension
Social Security-
Thrift Savings Plan-Similar to a 401K
Other Sources
IRAs
Annuities
Other accounts
Inheritance (My Favorite)

8. Social Security for CSRS
Many CSRS employees will not be entitled to Social Security
40 credits needed for coverage
CSRS Offset employees will be eligible…But
Your Social Security benefits may be reduced by The “Windfall Elimination Penalty”
Numerous Iterations-Go to OPM website and in the Search Box type in “WEP”

9. How do you get to 80% Of your Pre-Retirement Income Your Pension
CSRS FERS
20 Years: 36.25% Years: 20% or 22%
25 Years: 46.25% Years: 25% or 27.5 %
30 Years: 56.25% Years: 30% or 33%
35 Years: 66.25% Years: 35% or 38.5%
40 Years: 76.25% Years: 40% or 44%
42 Years: 80.00% Will never reach 80% )<:

10. How do you get to 80% Of your Pre-Retirement Income Social Security
Minimum Age to collect is 62 But....
There is an Earnings test until you reach your “Full Retirement Age”
The longer you wait (up until age 70), the higher your benefit will be.
If you Retire & start collecting at 62, your payments will be 25% less than if you Retired & Collected at your “Full Retirement Age”.
If you Retire & start collecting at age 70, your payments will be 32.5% more than if you Retired & Collected at “Full Retirement Age”.
All FERS are eligible-Assumes the Full Retirement Age is 66

11. How do you get to 80% Of your Pre-Retirement Income Your Interim 80% Report Card
1) Go to Slide 9 to see what your Pension % is:
If you are FERS at 30 Years = 30% or 33% + Social Security
If you are CSRS at 30 Years = 56.25% + Social Security
2) Social Security:
If you’re a higher paid FERS Federal Employee: (+or-) 20%
If you’re a Mid-Level paid FERS Federal Employee: (+or-) 25%
If you’re a lower paid FERS Federal Employee: (+or-) 30%
If you are CSRS that number could be 0%
If you are CSRS-Offset (you might have “WEP” to consider)
Add them up to see what you need to get to 80%

12. When You Can Access Your TSP money
When you leave federal service
Retirement
Quitting government service
At 59 ½ if still working
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There may be early withdrawal penalties:
If you retire and withdraw the money before the year in which you turn 55
If you quit before retiring and withdraw the money before you reach 59 ½

13. How You Can Take Your TSP money
Single payment
No more than two total
One is allowed at 59 ½ if still working
Series of monthly payments
Can change amount annually
Can’t stop
Can change to one final payment

14. What Can You Do With Your TSP Money
Purchase a single premium immediate annuity
You have no choice as to the company.
This is risky because if you need money for an emergency, you have no access to it.
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Transfer or rollover with the company of your choice
Direct transfer avoids withholding

15. Alternative TSP Investment Choices
Nobody can deny that the TSP Funds over time have performed pretty well. But what happens if you want to retire within the next 10 years and another occurs. Then what?
On January 1st of 2008 many federal employees who planned on retiring that year are still working today because they had their TSP money invested in the C Fund, S Fund, L Funds or I Fund and suffered massive loses in their TSP value.
Neither Vince Bono, Carolyn Tobin, Federal Employee Advocates, or Federal Employee Blog sell any form of investments, annuities or insurance products

16. The 2008 “Meltdown” The C Fund Lost 36.99% The S Fund Lost 38.32%
The I Fund Lost 42.43%
If after taking those loses in 2008 you put your money in the G Fund in 2008, you are still nowhere close to just breaking even. In fact you are still years away from that!
Fixed Indexed Annuities Lost Nothing!

17. Fixed Indexed Annuities
A fixed Indexed Annuity allows you to participate in the upside of the stock market without any risk whatsoever to your Principal. The first annuity in the United States was “invented” by the Presbyterian Church in the early 1700s. Ben Franklin, utilized annuities to help fund the American Revolution and the rapid growth of both Philadelphia and Boston. Annuities are so popular that Ben Bernanke, the former head of the Federal Reserve, once disclosed that his major financial assets were vested in two annuities.

18. How Does Your TSP Earn Money
BlackRock Institutional Trust Company, N.A. manages the C, S, & I Funds. “These Funds are invested in order to replicate the risk and return of their benchmark stock market index”.
They are not managed to Maximize Gains or Minimize Losses, which is why in 2008, those funds failed you.
For example The C Fund's objective is to match the performance of the S&P 500.
That’s why in 2008, it lost 37% of your money.

19. How Does Your TSP Earn Money
The S Fund's objective is to match the performance of Small to Medium-Sized Companies that are in the “Dow Jones U.S . Completion TSM Index”.
That’s why in 2008, it lost 38.32% of your money.
The I Fund's objective is to match the performance of the “Morgan Stanley Capital International EAFE Index”.
That’s why in 2008, it lost 43.43% of your money.

20. How an annuity earns money Participate in the upside of the market, without any of the risk
Similar to your TSP, the performance of a Fixed Index Annuity is tied to a stock market index. The most common “Crediting Method” is the S&P 500, but most companies offer numerous other options for you to choose from, such as the Dow Jones Industrial Average and the NASDAQ, Unlike your TSP, if the chosen crediting method in your Fixed Indexed Annuity goes down, you don’t lose money. Best yet, all prior gains are Locked-In. So say in 2015 you earned 9% in your Fixed Indexed Annuity and in 2016 the stock market crashed, that 9% can never be lost nor can any other prior gain in that annuity be lost!

21. Access to your Funds When your annuity contract expires, you can:
Take the money in one lump sum.
Receive a guaranteed Lifetime Income.
Do combination of both #1 and #2
Roll the money into another Annuity