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The importance of a federal employee 'love letter'

COMMENTARY | This gesture of love and care for your beneficiaries can be a great resource after you are gone.

We often prioritize planning for the future, whether it's through retirement savings in programs like the Thrift Savings Plan or securing pension benefits. However, amid all the financial planning, there's one crucial document that many of us might overlook: the "love letter" to our beneficiaries.

What exactly is a "love letter"? It's not a romantic gesture, but rather a practical and essential document that outlines how to access all your benefits and accounts in the event of your passing. Think of it as a roadmap for your loved ones during a time of emotional and logistical stress.

Here's why having a comprehensive "love letter" is vital for federal employees:

1. Clarity Amidst Complexity: 

Federal benefits systems can be complex, especially for those unfamiliar with them. Combine that with all the other items that need to be addressed, and your beneficiaries may not know where to start or whom to contact without guidance. A detailed document provides clarity on what benefits exist, where they are located, and how to access them.

2. Protecting Your Loved Ones: 

Without clear instructions, your beneficiaries may face delays or difficulties in accessing benefits. This could create financial strain during an already challenging time. A "love letter" ensures that your loved ones can swiftly and smoothly navigate the process, alleviating unnecessary stress.

3. Maximizing Benefits: 

Certain federal benefits, such as the TSP and pension survivor benefit, have specific procedures for claiming and distribution. Providing instructions in advance can help your beneficiaries maximize these benefits and ensure they receive everything you intended for them.

So, what should you include in your federal employee "love letter"?

List benefits and accounts: 

Start by compiling a comprehensive list of all your federal benefits and accounts. This may include your TSP account, pension plan details, life insurance policies, health benefits, and any other relevant accounts.

Contact information and procedures: 

For each benefit or account, provide contact information for the respective agencies or institutions. Include specific instructions on how your beneficiaries can initiate the claims process or access funds. For example, if you're a federal employee with a TSP account, outline how your beneficiaries can claim the funds and what forms they need to submit.

Important documents location: 

Note the location of important documents, such as your will, insurance policies, and any relevant legal documents. This ensures that your beneficiaries can easily locate and access these documents when needed.

Designated beneficiaries: 

Confirm and update beneficiary designations regularly. Ensure that your "love letter" reflects the most current information regarding your chosen beneficiaries for each benefit or account.

Review and update regularly: 

Life circumstances change, and so do your benefits and accounts. Review and update your "love letter" periodically to reflect any changes in your financial situation, beneficiaries, or contact information.

A federal employee "love letter" is not just a document; it's a gesture of love and care for your beneficiaries. By taking the time to compile this essential roadmap, you can ensure that your loved ones are supported and empowered during a difficult time. Don't wait until it's too late—start drafting your "love letter" today to safeguard your legacy tomorrow.

Austin Costello is a certified financial planner with Capital Financial Planners. If you’d like help deciding if Roth TSP contributions could be beneficial to you and your beneficiaries, you can register for a complimentary check up. For topics covered in even greater depth, check out our YouTube page or sign up for our monthly newsletter.