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Are you getting the most from your CSRS and FERS benefits?
As a Federal employee, you have access to an excellent pension and benefits package. But, one size doesn’t fit all when it comes to financial strategies for you and your family. Knowing the right thing to do now for your future can sometimes be challenging. Optimizing and enhancing your benefits can help protect the financial well being of your family and enrich your life in retirement.When it comes to planning for your family’s financial future and for abundance in retirement, your situation is unique: For example, a benefit may have a cost associated with it – but, depending on variables like the relative health and longevity of you and your spouse, you may be able to utilize strategies that reduce the cost to you, while giving you more options for dispersal in retirement. There may even be a tax savings to look forward to. There are no promises, but knowing all your choices now, may help you make better financial decisions for you and your family.
Planning for retirement is more than "just allocations in the TSP”
When examining their TSP, most employees pay especially close attention to their asset allocation, and frequently fail to realize that the asset location is equally as important to their eventual outcome. Risk tolerance, time horizon, suitability, and market conditions should all be carefully considered when choosing funds, however tax strategies can have just as much impact on your net worth accumulated.
There are 3 important strategies to consider when reviewing your TSP: Asset Allocation, Asset Location & Asset Orchestration
1) Asset Allocation
The right asset allocation varies for everyone and depends on your unique time horizon and risk tolerance. Your Financial Professional can help you with asset allocation that will address your short and long term personal objectives.
2) Asset Location
Many Federal employees assume they should place all their assets directly into their TSP, and while that can be an effective approach, it's generally not wise to place all your eggs (assets) in one bucket. By placing your money in different locations or buckets (below), you can be much more flexible not only in retirement, but should you have a dire situation and need the money before you retire.
The number one fear of most employees is running out of money in retirement. If you've made the right allocations and you have your assets in the right buckets, then the final step is the orchestration -- the strategic disbursement of funds in retirement.
Your Group Life Insurance in your working years and in retirement.
Protection: does supplementing your FEGLI Benefits make sense for you?
There's no substitute for Life Insurance when it comes to protecting your loved ones. By ensuring that they’ll be provided for in the event of unexpected circumstances, you’re taking care of them no matter what. FEGLI is the Federal Employee Group Life Insurance program. It provides Federal workers a guaranteed issue life insurance option with the ability to purchase additional life insurance on themselves and on their spouse and children. If you are in good health, the private market is a great way to enhance your FEGLI protection. But, did you know you can also use life insurance strategies to build your life and create lasting assets?
The question most Federal employees ask themselves is “What other options do I have?”
Your FEGLI, like most of your federal benefits, is subsidized in your working years. This allows the cost to be kept down and more affordable to you. However, at retirement, the cost of your FEGLI rises exponentially. If you are in good health, looking into life insurance strategies in the private market may make sense, not only to protect your loved ones in retirement, but to help you build a lasting legacy.
Understanding your Disability Benefits
One of the most misunderstood and underutilized benefits for Federal Employees is their Disability Coverage. Once qualified, plan participants would receive 60% of their highest three-year average income for one year, and 40% thereafter. One thing that many people forget to factor in, is that disability income is fully taxable. Could you maintain your current lifestyle at 40% of your present pay? Now, subtract what you would pay for taxes. Unless you have other strategies in place to close the gap, it's not a pretty picture.