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Advice on how to prepare for life after government.
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Sometimes, Your Benefit Really Is Too Small

I love it when a story has a happy ending, don’t you? Some of you may remember last year I wrote about a widow named Janet who was the surviving spouse of a Civil Service Retirement System-Offset retiree. Janet suspected she was being shortchanged by a significant amount in her CSRS survivor annuity.

It all started last June when Janet wrote to me requesting help. Here is an excerpt from that email:

My husband passed away January 15, 2015. He was a CSRS Offset annuitant who retired in January 2014. My CSRS survivor annuity was supposed to be $3,649/month (55% of my husband’s unreduced monthly annuity of $6,531.72, plus 1.6% COLA for 2015). Because he was covered under the CSRS Offset retirement plan, OPM told me that my survivor annuity would be reduced by an offset of $1,107.80/month. I applied for Social Security Survivor benefits, and was awarded $396.10/month as a widow. This amount was small because I have my own Social Security benefit of $1,816.10. The widow’s benefit amount was based on my husband’s work record, which resulted in a higher Social Security...

Getting the Best Deal on Life Insurance

Last week, we looked at the options available under the Federal Employees Group Life Insurance program. Now let’s see how the plan stacks up against other alternatives.

Federal employees are required to pay two-thirds of the premium rate for basic FEGLI coverage, while employers in the private sector generally cover the full cost of their employees’ basic coverage. Everyone covered by FEGLI pays the same premium regardless of their health status, unlike individual coverage where premiums generally depend on the health of the person being insured. As a result, if relatively healthier federal employees compare FEGLI to private individual coverage, FEGLI could appear more costly.

Basic FEGLI and Option B (which covers your life for one to five multiples of your annual basic pay) will automatically increase in value as your pay goes up, regardless of your age or pre-existing health conditions. Option B and Option C (covering the lives of your spouse and eligible children) can be increased when there is a life event such as marriage, divorce, birth,  adoption of a child or death of a family member, without proof of insurability. Option C can be used to cover someone who may not be able to acquire...

The Other Open Season This Year

Earlier this year, I wrote about a rare event coming up this fall: an open season for the Federal Employees Group Life Insurance program. FEGLI is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, as well as many of their family members. During the open season, employees can increase their life insurance without having a qualifying life event or needing to prove insurability.

If you’re getting close to retirement, you should know that in order to maintain any added coverage in retirement, the coverage must remain in effect for at least five years prior to your retirement date and you must be eligible for an immediate (as opposed to deferred) retirement.

Let’s look at some of your FEGLI options, and how they move with you into retirement.

Basic

Most employees have been enrolled in Basic FEGLI since the day they were hired (unless they waived this coverage). It is valued at your current salary (including locality pay) rounded up to the next $1,000, plus $2,000. Every time you receive a promotion, step increase or other pay adjustment, the amount of basic life insurance goes up automatically. The...

What If...?

Last week, I told a cautionary tale about the costs of long term care and the Federal Long Term Care Insurance Program.

The column drew a lot of response. Some of you wanted to know more about the possibility of self-insuring against the need for long-term care. According to an article in Kiplinger’s Personal Finance, you need very deep pockets to self-insure. You can compromise by buying a policy that combines life insurance and long-term-care coverage, or pairs annuities and long-term care.

Some folks assume their family members will provide long term care, if needed. But keep in mind that may be asking a lot of them. According to the Family Caregiver Alliance, only 30 percent of caregivers provide care for less than a year, and 24 percent provide it for more than five years. Many caregivers of adults are themselves growing older. To me, these statistics are one of the best arguments for buying at least a minimal amount long term care insurance.

Readers also asked about alternatives to the FLTCIP. Long term care insurance is an expensive and long-lasting commitment. It is important to shop around and consider all options when making this type of purchase. FLTCIP...

Why You Should Care About the Long Term

If you purchased federal long term care insurance before Aug. 1, 2015, it’s time to brace yourself for another increase to premiums this summer. You may recall that in 2009, premiums rose up to 25 percent for some enrollees in the Federal Long Term Care Insurance Program. Then, those who enrolled on Aug. 1, 2015 or later faced higher premiums than those who had enrolled earlier.

The FLTCIP was created in 2000 and is offered to federal and Postal Service employees and annuitants, active and retired members of the uniformed services, certain other eligible groups, and their qualified relatives. It is the largest employer-sponsored group long term care insurance program in the country, with more than 273,000 enrollees.

What are the odds of needing this type of insurance? According to a Health and Human Services Department website, here are the latest statistics:

  • Someone turning 65 today has almost a 70 percent chance of needing some type of long-term care services and support in their remaining years.
  • Women need care longer (3.7 years) than men (2.2 years).
  • One-third of today’s 65 year-olds may never need long-term care support, but 20 percent will need it for longer...