Leave It or Roll It?

• By Tammy Flanagan
• September 26, 2013
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This week, the question of whether it is better to leave your money in the Thrift Savings Plan at retirement or transfer it to an Individual Retirement Arrangement came up for me three times: twice I was asked it at my seminars, and then my husband said it came up at lunch with his co-workers. That’s a strong indication this is a worthy subject for a column.

But first, a disclaimer: I’m a benefits specialist, not a financial adviser, so my thoughts on this subject are from a benefits point of view.

To begin assessing what to do with the money you’ve put away in the TSP throughout your career, you first need to determine what you need it to do for you. Do you need immediate monthly income? Do you want to continue to save money for future use? Do you want to leave money behind as an inheritance for your spouse or children?

Most federal employees will have at least three sources of retirement income: a government retirement benefit (through either the Civil Service Retirement System or the Federal Employees Retirement System), Social Security retirement, and retirement savings. The latter category includes TSP funds, other ...

Retirement 101: Start Planning Now

• By Tammy Flanagan
• September 20, 2013
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This week, I had the pleasure of teaching a class for federal employees who have worked in government for less than five years to help them prepare for their retirement. This is when employees should learn about how their retirement benefits are designed to work.

My Uncle Steve, who I have mentioned in past columns, was a federal employee covered by the Civil Service Retirement System. When he retired in 1978, the only planning he did was to complete his retirement application 30 days before his 55^th birthday. He was happily retired for 34-plus years with little preparation, other than spending the majority of his career in the federal government. Those were the good old days. Today, the majority of federal employees are covered by the Federal Employees Retirement System, which requires them to coordinate three separate benefits: the FERS basic annuity, Social Security and the Thrift Savings Plan. The TSP is not a benefit that can wait until 30 days prior to retirement to attend to.

A number of the employees in my class weren’t aware that they even had a basic retirement benefit in addition to Social Security and Thrift Savings Plan. It’s also important ...

Social Security: What’s In It for You?

• By Tammy Flanagan
• September 13, 2013
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It’s back to school time again, except for those who have finished their studies and are moving on to the world of work. My youngest son just finished the final requirement for his college degree by completing a summer internship. Now he’s looking for his first paying job in his chosen career field. As one of his parents, I can only say, “Woo-hoo!”

As people begin working full time, many are shocked to find out how much of their salary they won’t be taking home. In particular, they may not be aware that Social Security and Medicare taxes will take 6.2 percent and 1.45 percent of each paycheck. To help them understand how the system works, the Social Security Administration offers a series of webinars online.

I recently watched one called Social Security 101: What’s In It for Me?  This version was recorded in 2011. There’s also a newer one, with updated information but fewer Q&A’s.

I always learn something new from watching these presentations. For example, this time I found out that:

• By 2035 more than 20 percent of the population will be over 65. There are more than 80 ...

A New Tool from the TSP

• By Tammy Flanagan
• September 6, 2013
• comments

Estimating your retirement income has become a lot easier thanks to a new calculator available on the Thrift Savings Plan web site. The Retirement Income Calculator makes it easy to compare a monthly payment option to a life annuity as methods of generating a monthly stream of income from your TSP investments to supplement your federal retirement benefit and Social Security benefits.

There are six steps to getting to your results from the tool.

Introduction

This screen provides links to general information about the differences between selecting a monthly payment directly from your TSP account versus purchasing a life annuity. There are also a few basic examples available to show how these options might play out in a variety of scenarios.

Retirement Income

Here, you can choose how much of your TSP balance you would like to use to produce a monthly income payment. The choice is not all or nothing. You may elect to receive a one-time partial distribution of your TSP and use the remainder to receive a monthly payout and/or a life annuity.

For example, you might decide to withdraw $75,000 of your TSP to spend immediately and use a portion to reinvest in an ...

How Does Your Retirement Stack Up Against a Former President’s?

• By Tammy Flanagan
• August 30, 2013
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Seeing President Obama standing with former presidents Jimmy Carter and Bill Clinton on Wednesday at the rally commemorating the 1963 March on Washington made me think back on the many great events in the history of our country. But I also thought of the future, and for me that always raises the subject of retirement.

As it turns out, there’s a connection here. Earlier this year, the Congressional Research Service issued a report called Former Presidents: Pensions, Office Allowances, and Other Federal Benefits. Now, if you have your own retirement numbers handy, you can see how your benefits stack up against those that former presidents receive.

For 55 years, since the passage of the Former Presidents Act, our former leaders have received pensions and other benefits. The law resulted from the perception that Harry Truman had endured financial difficulties after he left office, with an income based heavily on the sale of his father’s farm and proceeds from the publication of his memoirs.

That problem seems to have gone away. According to CRS, no current former president has claimed publicly to have significant financial concerns. Recent presidents, such as Clinton and George W. Bush, seem to generate a ...