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Advice on how to prepare for life after government.
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Taxes: Past, Present and Future

Generally, I keep this column limited to the basics of federal retirement benefits, but sometimes I like to dig a little deeper. This week, my inspiration comes from the following comment on my May 1 column, The 4 Keys to Boosting Your Savings:

May I suggest a similar column illustrating historical tax rates? I realize that with the deficit and expanding demands of our government services because of the exponentially growing public demand and deteriorating infrastructure, taxes can only go up.

That made me curious, so I looked online and found historical rates dating back to 1913 listed in nominal and inflation-adjusted (2013) dollars. For example, in 1948 there was a 91 percent tax bracket, applying to income that exceeded $1,905,344 (in 2013 dollars). But income between $95,267 and $114,321 (in 2013 dollars) was taxed at a marginal rate of 38 percent. The lowest tax rate that year was 20 percent, applying to the first $19,053 of income.

In 1937, tax rates went as high as 79 percent, but income between $95,664 and $127,552 (in 2013 dollars) was taxed at the marginal rate of only 10 percent. That leads me to conclude that ...

Retirement Readiness: How Do You Stack Up?

Last week marked the debut of our Retirement Readiness Assessment, a new tool aimed at helping federal managers and employees get a better handle on where they are in the retirement planning process.

The assessment poses a series of questions on topics ranging from the Thrift Savings Plan to paperwork issues and Social Security. It then issues a rating of the taker’s retirement readiness.

Since we launched the tool, more than 10,000 people have taken the assessment in either its desktop or mobile version. Now the preliminary results are in. Here’s how those who have completed the assessment stack up:

  • Just Getting Started (those needing some help understanding the basics of benefits available to them): 4 percent
  • Beyond the Beginning (those who have started to do their homework, but need some additional guidance): 18 percent
  • On Your Way (those who are on a path to a secure retirement, and just need to take some key steps before they leave): 38 percent
  • Retirement Ready (those who have their ducks in a row and just need to set a date): 40 percent

The early returns show that a significant percentage of the initial assessment takers are paying attention to ...

Test Your Retirement Readiness

Are you really ready to retire? If that question has been on your mind lately, you’re certainly not alone. Thousands of federal employees at all stages of their careers are contemplating where they stand in the retirement planning process.

To help you gain a better understanding of how you’re doing, we’ve developed a new Retirement Readiness Assessment. It asks you a series of questions on everything from annuities to the Thrift Savings Plan to medical benefits.

Based on your responses to the questions, you’ll get a report on your status:  Retirement Ready, On Your Way, Beyond the Beginning, or Just Getting Started. You’ll also get a few tips on next steps in the planning process.

Are you ready to take the assessment? Let’s get started.

Take the Retirement Readiness Assessment

Take Charge of Your Retirement

In 1985, I began a new position at FBI headquarters in Washington as a retirement counselor. This position laid the groundwork and provided the training for my future career as a retirement specialist that I continue today. My official title was Employee Relations Specialist-Employee Benefits, and my duties included communicating laws, policies and regulations regarding retirement matters to FBI employees and providing innovative planning and techniques to help guide them as they planned for retirement.

This week I received the following email that made me reflect on the role of a retirement counselor:

I plan to retire Jan. 3, 2015. The general question is where do I go to discuss retirement issues prior to putting in my retirement papers? I've heard that someone would be assigned as a counselor once they receive my paper work at HR, but I would like some info prior to submitting the papers.

Here’s my response:

Your agency should provide you with retirement counseling both before and after you submit your retirement application. Prior to submitting your application, you should be able to contact your HR office with general questions and you should be provided with a retirement estimate for a single date ...

The 4 Keys to Boosting Your Savings

Some of you may not believe this, but I still find federal employees who think they’re limited to contributing 10 percent of their salary to the Thrift Savings Plan. I suppose I shouldn’t be surprised, given that 22 percent of federal employees under 45 don’t even save 5 percent of their salary in the TSP and that there used to be limits on TSP contributions.

For the record, the percentage limits were lifted eight years ago. Now there’s only the elective deferral limit the IRS places on all tax-deferred savings plans. That limit is $17,500 for 2014. Employees who turn 50 in 2014 can also make catch-up contributions of an additional $5,500. And this doesn’t count the agency automatic and matching contributions for those under the Federal Employees Retirement System.

Of course, not everyone can afford to max out their TSP, but there do seem to be some common themes among those who have been accumulated substantial wealth in their TSP accounts. Here are the four things I learned when I asked people with big balances about their strategies. It might surprise you that there is nothing magical or lucky about these approaches ...