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

Taking Stock of Your TSP

Have you peeked at your Thrift Savings Plan balance lately? It’s been a rocky time in the financial markets over the past few months, so you may be seeing a lot of red ink and feeling a little uneasy.

At times like this, you may need to step back and take a broader look at managing your retirement savings. Saving for retirement is a long-term process. I’m not a financial adviser, but since the TSP is one of your federal retirement benefits, it pays to understand the investment performance aspect of this important piece of your overall retirement plan.

In the recent past, the overall picture in the TSP core funds hasn’t been great. Here are the returns of the five core TSP funds over the past 12 months (numbers in parentheses indicate negative returns):

  • G Fund: 2.91%
  • F Fund: 0.15%
  • C Fund: (4.41%)
  • S Fund: (9.26%)
  • I Fund: (13.43%)

Not a pretty picture. But the long-term view is better. Here’s what $100 invested in these funds at their inception would be worth at the end of 2018:

  • G Fund since Jan. 1, 1987: $474
  • F Fund since Jan. 1, 1987...

What the Shutdown Means for Your Retirement

Due to the ongoing partial government shutdown, more than 300,000 federal employees are currently on furlough without a guarantee of back pay. An additional 500,000 are working but facing delayed paychecks.

Because the end of the year is a popular time to retire, some employees may have spent their last days on the job in a furlough status, and may be in the dark as to how their retirement processing is coming along. This information is also very important for people who are planning to retire or who are simply wondering about their benefits while waiting out the furlough period.

The Office of Personnel Management has posted guidance on shutdown furloughs and their effect on federal benefits. It contains insights from the 2013 government shutdown. (Of course, there’s no guarantee the current furlough will have the same end result as that one.)

Here are some highlights of the guidance:

  • For retirement planning, a furlough period in a non-pay status is treated as a period of leave without pay. Employees receive credit for leave without pay periods up to six months in a calendar year without impacting their service credit for retirement or their high-three average salary.
  • If...

If You’re Confused About Survivor Benefits, You’re Not Alone

I recently received the following email from a reader that made me realize there may be some confusion regarding the various survivor benefits payable from federal employee retirement benefits:

I would appreciate your advice on the following question: If I take out a joint annuity with 50 percent survivors benefit and if my dear wife of 41 years dies, then I, the primary beneficiary, lose half of my annuity? I have read a lot of your articles over the years and I don't think I have ever heard that mentioned when it came to factors to consider when purchasing an annuity. If I have read this wrong, which I truly hope so, please let me know.

Like retirement benefits, survivor benefits based on the career of a federal employee come in various shapes and sizes. A survivor annuity refers to a recurring payment that is generally paid for the life of the survivor on monthly basis. Various benefits are payable upon the death of a federal employee and there are “elections” that must be made to provide for survivors at the time of retirement. (I covered the topic of death benefits that are payable upon the death of a...

Why Retirement Processing Takes So Long

The busiest time of the year for retirement claims processing at the Office of Personnel Management is fast approaching. At the end of November, OPM had an inventory of 19,162 unprocessed retirement applications. This will most likely significantly increase over the next few months, because many federal employees plan their retirements at the end of the year in order to maximize their lump sum payout of unused annual leave.

The spike in end-of-leave-year retirements presents a number of challenges for retirement processing. According to a recent OPM inspector general report, the timely processing of initial retirement payments remains a challenge for the agency. OPM’s 2018-2022 strategic plan sets a target of achieving an average case processing time of 60 days or less. The agency’s Retirement Services unit appears to have met that goal in fiscal 2018, with an average of 59 days. But its claims backlog as of September was 17,628, more than 4.5 percent higher than at the same time a year ago.

According to the IG report, the steps Retirement Services is taking to address delays in processing include:

  • Continue to integrate improvements for correspondence and claims processing.
  • Enhance reporting tools to monitor...

Last-Minute Shopping Tips for Open Season

Are you a procrastinator like me? If so, you may be waiting until the last minute to review your open season options under the Federal Employees Health Benefits Program, Federal Employees Dental and Vision Insurance Program. And if you’re a current employee, you should be thinking about your annual flexible spending account allotments for health and dependent care.

The order of business during open season should be to first select your health plan, then add dental or vision supplemental coverage if needed. The icing on the cake is to select the amount to allocate to an FSA account.

If you’re confused about choosing the best health plan for you and your family, consider the following tips that might help you determine if you should switch to a different plan.

Use the OPM Plan Comparison tool and the Consumer’s Checkbook Guide to Health Plans for Federal Employees. They’re a good first step to help you narrow down the plans available in your zip code and see the monthly premiums, catastrophic limits, out of pocket expenses for deductibles, copayments and coinsurance—and generally assess how the plans stack up against each other.

Narrow down your choices to three...