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Retire at 80% FERS Law Enforcement. Tammy Flanagan Senior Benefits Director National Institute of Transition Planning, Inc. [email protected] My “Hats” Tammy Flanagan – Benefits Specialist. Writer. www.govexec.com Weekly Column “Retirement Planning”

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Retire at 80 fers law enforcement

Retire at 80%FERS Law Enforcement

Tammy Flanagan

Senior Benefits Director

National Institute of Transition Planning, Inc.

[email protected]


My hats tammy flanagan benefits specialist
My “Hats”Tammy Flanagan – Benefits Specialist

Writer

www.govexec.com

Weekly Column

“Retirement Planning”

Edited by Tom Shoop – Senior Editor of Government Executive Magazine

Tomorrow’s Column based on today’s presentation!

Presenter

  • Pre-Retirement Seminars

  • Mid-Career Planning

  • New Employee Benefit orientation

  • Co-Host: For Your Benefit

  • www.federalnewsradio.com

  • http://www.nitpinc.com/


Statement by acting director elaine kaplan on the supreme court decision in united states v windsor
Statement by Acting Director Elaine Kaplan on the Supreme Court Decision in United States v. Windsor

OPM on Supreme Court Decision 6-26-13, DC – “Today’s historic decision by the Supreme Court that the Defense of Marriage Act is unconstitutional is a much welcome development in the continuing quest to ensure equal treatment under the law to all Americans. For the federal government as an employer, it will impact benefits for our married gay and lesbian employees, annuitants, and their families.

“In the coming days, OPM will be working closely with the Department of Justice and other agencies to provide additional guidance for federal human resources professionals, benefits officers, and our employees and annuitants. While we recognize that our married gay and lesbian employees have already waited too long for this day, we ask for their continued patience as we take the steps necessary to review the Supreme Court’s decision and implement it. As soon as we have updates to share, they will be posted on our website.”


Where did the 80 rule come from
Where did the 80% rule come from? Court Decision in United States v. Windsor

The percentage stems from the "replacement ratio" studies that Aon Consulting and Georgia State University have done for the last 20 years.

Basically, researchers cull information from the Bureau of Labor Statistics Consumer Expenditures Survey, which details how U.S. consumers, including older households, spend their money.


Why 80 these deductions stop when you retire
Why Court Decision in United States v. Windsor80%? These deductions stop when you retire:

  • Retirement: 1.3% or .8%

  • Social Security:

    • FICA: 6.2%

    • Medicare: 1.45%

  • TSP: 5% - 10% - 20%?

  • Taxes

    • Less income = less income tax

    • Some states don’t tax retirement benefits


These expenses may go down when you retire
These expenses MAY go DOWN when you retire Court Decision in United States v. Windsor:

  • Kids (food, clothing, schooling, weddings)

  • Mortgage

  • Clothing

  • Commuting Costs

  • Hired Help


These expenses may go up when you retire
These expenses MAY go UP when you retire Court Decision in United States v. Windsor:

  • Kids

    • unemployment, emergency, grandkids

  • Mortgage

    • good old days

  • Clothing

    • are you joining a nudist camp?

  • Commuting Costs

    • are you going to stay home every day?

  • Hired Help

    • cut your own grass, paint your own walls, clean your own house

  • Travel, hobbies, volunteer

  • Healthcare and insurance


What does it take to get to 80
What does it take to get to 80%? Court Decision in United States v. Windsor

FERS Basic Retirement Benefit

Law Enforcement

20 years = 34% of high-three

25 years = 39% of high-three

30 years = 44% of high-three

Non-Law Enforcement

20 years = 20% of high-three (22% at age 62+)

25 years = 25% of high-three (27.5% at age 62+)

30 years = 30% of high-three (33% at age 62+)


What else fers supplement
What else?: FERS Supplement Court Decision in United States v. Windsor

Approximately $40 / month / year of FERS service

  • 20 years = $800 / month or $9,600 / year

  • 25 years = $1,000 / month or $12,000 / year

  • 30 years = $1,200 / month or $14,400 / year

What percentage of your salary will this replace?

  • More for low salary

  • Less for higher salary

  • Replacement: 10 – 30%


Supplement ends at 62 then what
Supplement Ends at 62, then what? Court Decision in United States v. Windsor

Social Security

  • Eligible at 62

    • Reduced by 30%

  • Delayed credits

    • 24% increase at 70

  • Tilted towards the low wage earner

  • Average benefit 2013: $1,221.22

  • Maximum monthly benefit 2013:

    • Age 66: $2,533 (Born 1947)

    • Age 62: $1,923 (Born 1951)

    • Age 70: $3,350 (Born 1943)


Www socialsecurity gov
www.socialsecurity.gov Court Decision in United States v. Windsor

The United States Social Security Administration

POPULAR SERVICES

newGet your Social Security Statement online

Get or replace a Social Security card

Apply online for retirement, disability or Medicare benefits

Estimate your retirement benefits

Research popular baby names

Locate a Social Security office


What else retirement savings
What else? Retirement Savings Court Decision in United States v. Windsor

  • TSP

  • Other employer savings plans - 401(k), 403(b)

  • IRAs

  • Savings Accounts

  • Inheritance

  • Use It

    • Spending

  • Lose It

    • Taxes – CPA / CFP

  • Promote It

    • Legacy planning – Estate Attorney


What else retirement savings women listen up
What else Court Decision in United States v. Windsor? Retirement SavingsWomen: Listen Up!

  • Women are more likely than men to interrupt their careers for family

  • Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45 percent participated in a retirement plan.

  • Women live a long time!

  • By and large women invest more conservatively than men.

    http://www.dol.gov/ebsa/publications/women.html


Use it
Use It Court Decision in United States v. Windsor

Transfer to IRA

Multiple partial withdrawals

Many investment choices

Legacy planning options

Leave it in TSP

  • Low expenses

  • G Fund

  • Simplicity

  • Monthly withdrawal options


Lose it
Lose It Court Decision in United States v. Windsor

  • 0 – 59 ½ - Be careful! 10% tax penalty

    Exception: Separation in the year you reach 55

    Exception: Monthly payments based on life expectancy or life annuity

  • 59 ½ - 70 ½ - No rules!

  • 70 ½ + Complicated Rules!


Tsp web site planning tools retirement income calculator tsp retirement income calculator
TSP Web Site: Planning & Tools: Retirement Income Calculator TSP: Retirement Income Calculator


Monthly payments balance 500 000 growth 5
Monthly Payments Calculator Balance: $500,000 Growth: 5%

Life Expectancy

Dollar Amount

  • $3,000 / month

    Run Out at age 78

  • $2,000 / month

    Balance at age 100: $209,484.99


How about an annuity
How about an annuity? Calculator

Payments

Features

  • $500,000 purchase

  • Begin at 55

  • 100% Survivor (spouse or other insurable interest)

  • 2% Interest Rate Index

  • Level Payment

  • No Cash Refund


How about an annuity1
How about an annuity? Calculator

Payments

Features

  • $500,000 purchase

  • Begin at 55

  • Single Life

  • 2% Interest Rate Index

  • Level Payment

  • No Cash Refund


How about an annuity2
How about an annuity? Calculator

Payments

Features

  • $500,000 purchase

  • Begin at 55

  • 50% Survivor (you or spouse)

  • 2% Interest Rate Index

  • Increasing Payment

    • Not available for insurable interest

  • Cash Refund


Did we get to 80
Did we get to 80%? Calculator

Adds up to 82.4%

44%

14.4%

24%

Retire 55 with TSP Monthly Payments

  • FERS Law Enforcement 30 years

  • FERS Supplement $14,400 / high-three $100,000

  • TSP Monthly payment $2,000 x 12 = $24,000


Did we get to 801
Did we get to 80%? Calculator

Adds up to 74.4%

30%

14.4%

30%

Retire 57 with TSP Monthly Payments

  • FERS (regular) 30 years

  • FERS Supplement $14,400 / high-three $100,000

  • TSP Monthly payment $2,500 x 12 = $30,000


Did we get to 802
Did we get to 80%? Calculator

Adds up to 80%

34%

9.6%

36.4%

Retire 50 to Work Part-Time

  • FERS Law Enforcement 20 years

  • FERS Supplement $9,600 (High-three $100,000)

  • Part-Time Job $36,400


Thank you
Thank You! Calculator

Questions?

[email protected]


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