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TAMMY FLANAGAN – FEDERAL BENEFITS SPECIALIST

P R E S E N T E R

Webinars and Seminars

www.nitpinc.com

http://www.fers-route-to-retirement.com/webinar

/ • Pre-Retirement

• Mid-Career

• New Employee

Radio Co-Host: For Your Benefit

www.federalnewsradio.com

W R I T E R

www.narfe.orgFeature Columnist

Webinar Presenter

www.govexec.com

Weekly Column “Retirement Planning”

Retirement Readiness Webinar on June 16th!Send me an email for the link!

Salary

FERS/CSRS

Social Security

TSP

50% 75% 100% 125%

COMMON SENSE PLANNING FOR RETIREMENT

Income Replacement

Expenses

Tax PlanningFuture What-If

Scenarios

Retirement

THESE EXPENSES MAY GO DOWN WHEN YOU RETIRE:

Kids (food, clothing, schooling, weddings)

MortgageProfessional Clothing Commuting Costs Hired Help

THESE EXPENSES MAY GO UP WHEN YOU RETIRE:

Kids (unemployment, emergency, grandkids)

Retirement Relocation“Resort” Clothing Travel Costs Hired HelpHealthcare

CSRS Deductions

Not deducted from retirement:

Salary$65,000

Salary $100,000

Salary $150,000

CSRS 7.5% (LEO/CSRS)7% (CSRS)

$4,875or $4,550

$7,500 or

$7,000

$11,250 or

$10,500

Medicare 1.45% $942.50 $1,450 $2,175

TSP Up to: $18,000Plus: $6,000(Catch-Up for

50+)

$9,750 $15,000 $22,500

Total (15% TSP and LEO) $15,567.50 $23,950 $35,925

You are living on ____% of your gross income

76.1%$49,432.5

0

76.1%$76,05

0

76.1%$114,07

5

FERS Deductions

Not deducted from retirement:

Salary $65,000

Salary $100,000

Salary $150,000

FERS 1.3% (LEO/FERS).8% (FERS)

$845or $520

$1,300 or $800

$1,950 or $1,200

FICA 6.2% (up to $118,500)

$4,030 $6,200 $7,347

Medicare 1.45% $942.50 $1,450 $2,175

TSP Up to: $18,000Plus: $6,000(Catch-Up for

50+)

$9,750 $15,000 $22,500

Total (15% TSP and LEO) $15,567.50 $23,950 $33,972

You are living on ____% of your gross income

76.1%$49,432.

50

76.1%$76,050

77.4%$116,02

8

RETIREMENT INCOME

Thrift Savings Plan

Social Security

CSRS or FERS Retirement

Benefit

FERS RETIREMENT BENEFIT

FERS Law EnforcementHigh-Three Average Salary

Length of Service =

20 years: 34%

25 years: 39%

30 years: 44%

FERS RETIREMENT BENEFIT

FERS Non-Law Enforcement

High-Three Average Salary

Length of Service =

20 years: 20% - 22%

25 years: 25% – 27.5%

30 years: 30% - 33%

REDUCTIONS TO CSRS/FERS RETIREMENT

Survivor • 10%

reduction• 5%

reduction

Unpaid Deposits• Temporary

Service• Refunded

Service• Military

Service Deposit

Work Schedule• Part-Time• Intermittent• WAE

FERS SUPPLEMENT (CSRS: N/A)

Reti

rem

en

t

Socia

l S

ecu

rity

Approximately $40 - $50 / month for every year

under FERS

Social Security

Retirement%

replacement

Pre-Retirem

ent Wages

SOCIAL SECURITY

SOCIAL SECURITY: REDUCTIONS AND DELAYED CREDITS

Age 62$1,500*

• Reduced Benefit

• 70% - 80% depending on year of birth

Full Retirement

Age

$2,000*• 100%• age 65 –

67 depending on year of birth

Age 70$2,640*

• Increase 8% / year

• up to 132% of full benefit

*Benefit amount between age 62 and age 70 could result in more than $1,000 / month difference!

SOCIAL SECURITY CLAIMING STRATEGIES

• Live Long• Save More• Other

Resources• Work Longer

Delay

• Health Issues

• Retire Early• Eligible

Children

Sooner

• Married• File and

Suspend• Restrict

ApplicationStrategy

Retirement Earnings Test Exempt Amounts:

2015

Under full retirement age (62 – FRA)

NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit.

$15,720/yr.($1,310/mo.)

The year an individual reaches full retirement age (65 – 67)

$41,880/yr.($3,490/mo.)NOTE: Applies only to earnings for months prior to

attaining full retirement age.

One dollar in benefits will be withheld for every $3 in earnings above the limit.

There is no limit on earnings beginning the month an individual attains full retirement age.

May I suggest that you consider this for a future topic.

Some federal employees (I am in a law enforcement position) have the opportunity to retire at a young age. This would allow us to take our annuity and benefits, collect the supplement without concern for the earnings penalty and start a second career. Retiring early allows ample time to find and start a second career and even eventually retire in that career. It could provide a time of learning, renewal, and recharging. Clearly there are financial decisions and life style decisions that go into that process, but I believe it is an interesting topic up for debate and comment.

For my personal situation, I will find myself eligible to retire when I turn 50. It would seem to me that one is more marketable at 50 then at 57. The supplement would help make up any difference in salary (which I know there will be) from my current position to any new position and allow me almost 7 years in a new career to earn additional income before the supplement is earnings tested.

Maybe a title like.... Second Careers. Are they Worth it?

RETIRE AT AGE 50 / 25 YEARS LEO / HI-3 $100,000

Total Retirement: 62% replacement$39,000 + $15,000 + $8771.88 =

$62,771.88 FERS LEO:

39% x $100,000 = $39,000

Supplement: $1,250 / month

or $15,000 / year

Social Security: Later

TSP: $300,000

$730.99 / month or $8,771.88 /

year

RETIRE AT AGE 57 / 32 YEARS LEO / HI-3 $100,000

Total Retirement: 88% replacement$46,000 + $19,200 + $22,944 = $88,144

FERS LEO:46% x $100,000 =

$46,000Supplement:

$1,600 / month or

$19,200 / year

Social Security: Later

TSP*: $640,000

$1,912 / month or $22,944 / year

*Assumes TSP contribution of 15% of pay with 6% growth

SOCIAL SECURITY CLAIMING STRATEGIESAge 60

(widow) or 62

(retirement) -full

retirement age

• Widow’s Benefit• Higher of your own

reduced or reduced spousal benefit

Full Benefit

Age

• Restrict application to 50% of spouse (or former spouse)

Age 70

• File for delayed credits

EXAMPLE: RESTRICTED APPLICATION

Age 60 (widow) or 62 (retirement) -

full retirement

age

• $0… either still working or using other resources

Full Benefit

Age

• Restrict application to 50% of spouse (or former spouse)

• $1,500

Age 70

• File for delayed credits

• $3,000

EXAMPLE: EARLY RETIREMENT / WIDOWED LATER

62 file for reduced benefit

• $1,800

Full Benefit

Age

• Continue reduced benefit

Later…Widowed –

100% of spouse• $3,200

EXAMPLE: YOUNG WIDOW / DELAY YOUR BENEFIT

Age 60 (widow)

• $1,800

Full Benefit Age

• Continue widow’s

Age 70Delayed Credits

• $3,200

Bonus: Don’t forget about taxes!

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