Should You Retire Right Now?

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Some money experts have said that 2022 is a dangerous year to retire, but what if you need to? Here are five things to consider.

SAINT LOUIS, Mo. — With inflation, rising rates, and a financial crisis, some people are worried about retiring right now.

In fact, even as more Americans receive pay raises, the rate of inflation makes increases feel more like a pay cut. According to Moody’s Analytics, the average American is spending around $460 more a month than the amount paid for the same thing last year.

A University of Michigan study predicts real disposable income per American may fall to the lowest since the Great Depression.

It’s something that a lot of potential retirees consider since their money is not only down in their retirement accounts, it’s likely those dollars aren’t going to go as far. So, many people wonder, is it worth retiring?

We asked Jeff Sachs from Sachs Financial for advice.

1. It’s not necessarily about what you have or what you make. It’s about what you save. “The first question that I ask anybody is, ‘what does it cost to be you?'” said Sachs. “‘What does it cost to maintain your lifestyle? And where does that money come from?'”

Sachs said American workers don’t have the pensions they used to have, social security doesn’t go as far, and inflation is making things more challenging. Planning ahead can make a difference.

2. A good rule of thumb is to make 80% of your current income during retirement through savings plans and social security. “You need about 80% of that because you aren’t driving to work every day,” said Sachs. “You’re not driving to work, you aren’t buying lunches, you aren’t contributing to your 401(k) and your social security and all of that. So, you need a little bit less income.” Please follow link to read more: https://bit.ly/3ujYduB

ELIGIBILITY FOR FERS RETIREMENT

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Last week I went over the retirement eligibility rules for CSRS employees. This time I’ll focus on the ones for FERS employees. Not only do they include more retirement options than those available to CSRS employees, but they also have features that are unique to FERS.

Immediate unreduced annuity
As a FERS employee, you can retire on an immediate, unreduced annuity with the following combinations of age and service:

• 62 with 5
• 60 with 20
• at your minimum retirement age (MRA) with 30
Note: MRAs range between 55 and 57, depending on your year of birth.

You can also retire at your MRA with at least 10 years of service under the MRA+10 provision. If you do that, your annuity will be reduced by 5 percent for every year (5/12 of 1 percent per month) you are under age 62 (60, if you have at least 20 years of service).
If your agency is offering early retirement under the Voluntary Early Retirement Authority (VERA), you can retire with the following combinations of age and service:

• 50 with 20
• at any age with 25

Special retirement supplement
FERS is a retirement system with three parts to it: an annuity, Social Security, and the Thrift Savings Plan. If you retire at age 60 with 20 years of service or at your MRA with 30, you’ll be entitled to a special retirement supplement. The SRS approximates the amount of Social Security benefit you earned while a FERS employee. The same is true if you retire under a VERA, but only when you reach your MRA. The SRS will continue to age 62, when you first become eligible for a Social Security benefit. We’ll look at this in more detail next week.

Cost-of-living adjustments
Unlike CSRS, your FERS annuity won’t be increased by COLAs until you reach age 62 unless you retired under disability or subject to mandatory retirement as a “special category employee,” such as a law enforcement officer or firefighter. The SRS won’t be increased at all.

Postponed and deferred annuities
If you retire under the MRA+10 provision, you can postpone the receipt of your annuity to a later date to reduce or eliminate the age penalty. If your annuity begins before age 62, you’ll be entitled to the SRS.

If you don’t meet the age and service requirements to retire when you leave but have at least 5 years of service and don’t ask for a refund of your retirement contributions, you can apply for a deferred annuity when you meet one of the following age and service combinations:

• 62 with 5
• 60 with 20
• at your MRA with 30
• at your MRA with 10, but with the same age penalty described above
Note: Deferred retirees are never entitled to the SRS.

Follow link to read more: https://bit.ly/3uhjuFg

Bill Would Give Equal COLA to Both FERS and CSRS Federal Retirees

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Senator Alex Padilla (D-CA) last month introduced legislation — the Equal COLA Act (S 4221) —that would guarantee federal retirees in the Federal Employee Retirement System (FERS) and the Civil Service Retirement System (CSRS) receive the same annual cost of living adjustment (COLA) each year. Under current law established in 1986, the following table summarizes the FERS COLA in relation to the CSRS COLA:

If the CSRS COLA is…
Up to 2.0%
2.0% to 3.0%
Above 3.0%

Then the FERS COLA is…
Same as CSRS COLA
2.0%
CSRS COLA minus 1.0%

As an example, this year while federal retirees in the CSRS program received a 5.9% COLA increase, FERS retirees received a 4.9% increase in their federal retirement annuity.

Support by NARFE
The National Active and Retired Federal Employees Association’s National President Ken Thomas endorsed the proposed legislation in this statement: Follow link to read more: https://bit.ly/39OgDMW

The TSP Board’s Nominees Have Now Been Confirmed, With One Exception

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Biden’s pick to chair the federal government’s 401(k)-style retirement savings program’s board must go through a more arduous process.
he Senate on Thursday confirmed by voice vote four of President Biden’s nominees to serve on the board of the agency that administers the federal government’s 401(k)-style retirement savings program, although one more nominee must undergo a more complicated route to his position.

With their confirmation, Leona Bridges and Stacie Olivares will replace current Federal Retirement Thrift Investment Board members Ron McCray and Bill Jasien. Michael Gerber will fill the seat vacated by former Chairman Michael Kennedy, who resigned in 2020, while current member Dana Bilyeu received another term.

The four nominees had been in limbo for the last two months because a group of Republican senators placed holds on their nominations, making it more difficult for them to proceed. Led by Sen. Marco Rubio, R-Fla., the lawmakers demanded a commitment that the nominees not revisit a controversial proposal to shift the Thrift Savings Plan’s international (I) fund to a more comprehensive market index that includes investments in Chinese corporations.

The board postponed its plans to shift the I Fund’s index in 2020, following political pressure from the Trump administration, and Kennedy resigned. Trump nominated an entire new slate of TSP board members, although they never were confirmed.

But last week, the senators agreed to lift their hold after they received a letter from the four nominees committing to be “highly skeptical” of changes to the Thrift Savings Plan that would expose participants to Chinese investments.

“We fully support the position of the acting chairman and would be highly skeptical of future recommendations to track this or any index that invests in Chinese companies, consistent with our fiduciary and statutory duties,” the nominees wrote. “[As] of now, as you know, China is the only country where the [Public Company Accounting Oversight Board] is unwelcome, so we believe we would not permit TSP funds to invest in Chinese companies knowing TSP participant and beneficiary assets could be subject to fraud, financial irregularities or other risks.”

Although the four nominees sailed through to confirmation this week, Javier Saade, Biden’s pick to be chairman of the board, must continue to wait for a vote on the Senate floor. When the Senate Homeland Security and Governmental Affairs Committee considered the TSP nominees, Saade’s nomination was deadlocked 7-7 along party lines and failed to proceed. Republicans took issue with Saade’s past social media posts denigrating GOP political leaders.

As a result, Senate Majority Leader Chuck Schumer must discharge Saade’s nomination from committee in order for him to receive a confirmation vote, a much more time-consuming process.

Citation: Erich Wagner Government Executive 6/10/22

TSP Board Scales Up Customer Service Staff After Major System Update

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The agency in charge of the Thrift Savings Plan added 185 new customer service representatives this week to try to handle record-high call volumes from participants.

The Federal Retirement Thrift Investment Board plans to add even more staff as needed. That’s after a major update to TSP’s system on June 1 caused an influx of calls from participants experiencing difficulties accessing their account data.

Many participants who tried calling ThriftLine, TSP’s customer service office, said they were on hold for a long time, some for more than six hours. On Twitter, one participant shared a phone screenshot of a third call attempt, on the line for multiple hours.

The board tweeted on June 9 that ThriftLine call volumes are “very high.” In response, FRTIB created a “current known issues” landing page to try to help participants resolve a few issues without calling customer service. Common issues include account holds and missing data on both beneficiaries and historical account information. More details about known issues are available when users log in to My Account, the board said.
Overall, 90% of participants who have tried to log in to their account have been successful, but FRTIB Director of External Affairs Kim Weaver said in an email to Federal News Network that right now, the board is focused on helping those who are struggling.

“While most participants are able to successfully navigate the system, our priority right now is resolving the issues and challenges for people having difficulty,” Weaver said. “We are committed to helping those people set up their accounts as soon as possible.”

As part of the June 1 update, the board transitioned to a new recordkeeping system, in charge of maintaining eligibility records, managing payroll data, processing transactions, issuing account statements, providing online access and offering responsive customer support to participants.
The system update requires a one-time setup process that all TSP users must complete.

Many participants reached out to Federal News Network to share concerns about the new system. Some said they cannot log in to their account. Others said once they logged in, there was missing information. Several participants, for example, said once they logged in to the new My Account, they couldn’t access financial information prior to June 1.

“The new login system has bugs, it does not recognize existing personal info, it freezes up all the time, it constantly changes required inputs and it does not allow access to existing accounts … All historical data is gone,” one participant wrote in an email to Federal News Network.
The recordkeeper transition requires moving a large amount of data and transferring account information for about 6.5 million TSP participants. Weaver said participants now have access to year-to-date employee contributions for 2022.

Some participants also said they are unable to get loans processed because of missing or inaccurate information. One participant who wants to take out a loan expressed frustrations about trying to get in touch with customer service.

“The TSP help line personnel have all been great, but the first line of help can’t do much, and can only transfer you to the loan department or their next line supervisor… we’ve had several dropped calls, which is demoralizing after hours on hold,” the TSP user wrote in an email to Federal News Network. “As it stands, the system thinks our accounts are new, so it says we can only borrow a little over half of what we’re actually allowed to borrow…we cannot get in touch with anyone in loan processing.”

Weaver said the board is aware that the issues are causing confusion and frustration. But on the back end, all data is accurate.
“Our financial and loan conversions balanced to the penny,” Weaver said. “We are continuing to monitor potential issues and are working to address them as rapidly as possible. We will be publishing additional information regarding known issues to tsp.gov and in My Account.”
For some users, certain internet browsers seem to work better than others to load the website. Participants shared online that Microsoft Edge seems to be the best browser to use, while Google Chrome and Safari don’t work as well.

“This seems to be an intermittent issue and one we have not been able to replicate at-scale in our environment. While we are continuing to troubleshoot, we’ve been advising participants to try a different browser. Our team is investigating what may be causing this issue,” Weaver said.

The goal of the new My Account interface and recordkeeper transition is to ensure the safety of participants’ investments by adding more layers of security, as well as anti-fraud protections. But Weaver said the board understands that the changes have caused challenges for some participants trying to set up accounts.

“We understand our participants’ frustration and apologize for the inconvenience. We’re working to address issues as rapidly as possible, and we appreciate their patience,” she said.

In the meantime, the board is continuing normal processes, enrollments and transactions.

“Our financial management systems are up and running. Contributions are being processed. Loans, withdrawals and mutual fund window enrollments are happening. TSP savings remain invested in the funds participants have chosen. More than 1,100 participants have rolled money into the TSP. More than 12,000 withdrawals requests have been received,” Weaver said.

Citation: Federal News Network- Drew Friedman 6/9/22