Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

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...

Social Security: To Delay or Not to Delay?

Federal retirees under both the Civil Service Retirement System and the Federal Employees Retirement System earn a government pension and have the opportunity to accrue investment income in the Thrift Savings Plan. Nevertheless, Social Security can still be a significant part of a federal employee’s retirement package.

The Social Security Administration reports that in 2015, over 59 million Americans received almost $870 billion in Social Security benefits. Social Security is the major source of income for most of the elderly in the United States.

According to SSA:

  • Nine out of ten people age 65 and older receive Social Security benefits.
  • Social Security represents 39 percent of the income of the elderly.
  • Among elderly Social Security beneficiaries, 53 percent of married couples and 74 percent of unmarried persons receive half or more of their income from Social Security.

The decision to claim a Social Security retirement benefit can be as simple as logging into Social Security's website and filing online about three months before you would like to receive your first payment. Or, it can be a lot more complicated. Here are some reasons why:

  • Your benefit is permanently reduced by 20 percent to 30 percent (depending on your...

Buying a Bigger Retirement Benefit

Last week, we looked at the importance of service credit in the federal retirement planning process. This week, let’s dig deeper into the issue of service credit deposits and redeposits.

In general, such deposits come into play in cases where you have performed federal service without having retirement deductions withheld from your pay, or have received a refund of your retirement deductions. You can pay the money back into the Civil Service Retirement System or the Federal Employees Retirement System. But there is some federal service that is not creditable and a deposit cannot be paid.

To learn more, you can start by reviewing the following resources:

If you determine that you are eligible to pay a military or civilian service credit deposit or redeposit, it is important to determine if it will be worth your while to do so. All deposits are optional; some are clearly worth paying while others might be a “six of one or half a dozen of the other” situation.

Here are some...

Are You Getting the Credit You Deserve?

In my experience, among the most confusing topics for federal employees planning for retirement is the issue of service credit and service credit deposits.

This is an important topic because service credit plays a very important role under both the Civil Service Retirement System and the Federal Employees Retirement System. The dollar amount of your basic retirement benefit is determined by the total years and months of creditable service (and unused sick leave) that you have on the date of your retirement from federal service. This, along with your high-three average salary, is used to calculate your basic retirement annuity.

Some employees are not aware that they haven’t received credit for certain periods of service until they are about to retire. Since your creditable service determines when you are eligible to retire as well as the amount of your benefit, you can quickly see why it is important to understand if you have any issues early on in your career.

Here are some of the most common service credit situations that can interfere with the calculation (and sometimes the eligibility requirements) for CSRS and FERS:

  • Civilian federal service that was not subject to CSRS or FERS retirement withholding. This...

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