Rumors and Retirement (10/1)
Fake New, False Rumors, and statements that begin with "I think" are never helpful, and in fact can create huge issues and lead to a false sense of security when it comes to something as important as retirement. I am posting an article that was originally sent to members from National President, Honorable Dr. Doris P. Sartor. Please take the time and read it to get the facts.
I've been hearing a lot of false rumors lately, which tells me it's time for another pop quiz to test your knowledge. Below are 10 statements I've heard recently from retirement specialists, financial advisers, federal employees and retirees. Some of them are true and some are false Can you tell which is which? If you get nine out of 10, that's basically a perfect score, since statements three and four are specific to either the Civil Service Retirement System or the Federal Employees Retirement System.)
1. If you continue to be employed, once you reach age 70, you no longer have to pay the FICA Social Security tax.
2. If you are 65 and covered by the Federal Employees Health Benefits Program through your own or your spouse's current employment (or any insurance through your spouse's current employment), you should enroll in Medicare Part A, but can delay enrollment in Part B without penalty until you or your spouse retires. You will have an eight month special enrollment period following your or your spouse's retirement.
3. For CSRS (and CSRS Offset) retirees, on Jan. 1, 2019, you will receive the 2018 cost of living adjustment to your retirement benefit. If you retired on any date from Dec. 4, 2017 to Jan. 3, 2018, you will receive 11/12 of the 2018 COLA adjustment.
4. For FERS retirees, on Jan. 1, you will be paid your December FERS retirement benefit. In order to receive the full COLA for 2018, you need to have been retired since November 2017 and be at your minimum retirement age or older. (There is an exception for special groups, such as law enforcement officers).
5. It never makes sense for a federal retiree (or survivor annuitant) who has FEHBP coverage to enroll in Medicare Part C (Medicare Advantage) or Medicare Part D (prescription drug coverage).
6. Next year the Thrift Savings Plan will implement new provisions that will provide more flexibility when withdrawing your retirement savings. Retirees who have already taken a partial withdrawal from the TSP will be able to request multiple partial withdrawals from their account even if they are receiving a series of monthly payments.
7. Once you have purchased a life annuity from the TSP, you can change the dollar amount of the payments on an annual basis. If the interest rate increases in the future, your annuity payments will be increased to reflect the higher rate.
8. If you marry after retirement, you can elect a survivor annuity for your new spouse within two years of the date of marriage. You will have an actuarial reduction to your retirement benefit based on your age and the date of your retirement or the date that the last survivor election reduction ended, in addition to the regular survivor election reduction.
9. In order for a surviving spouse to be covered under your FEHBP coverage, they must be covered for five years prior to your death.
10. You may file for Social Security benefits based on your spouse's work record while delaying your own Social Security benefit to age 70 in order to take advantage of substantial delayed retirement credits if you were born on or before Jan. 1, 1954.
Answers:
1. False. If you're employed in a position subject to FICA tax, your age is not a factor. The Social Security tax rate is 6.2 percent each for the employee and employer, unchanged from 2018. The Social Security wage base limit is $132,900 for 2019.
2. True. Medicare Part A has no monthly premium for most individuals and the only reason for an employee not to enroll is if you want to continue to contribute to a health savings account with a high deductible health plan.
3. True. The first COLA will be prorated based on how many months you were retired during the previous year. The January CSRS retirement payment is the payment for the month of December. If you retired on any date after Dec. 3, 2017 to Jan. 3, 2018, your retirement didn't officially commence until January 2018, which means you were only retired for 11 months before December 2018. Your retirement benefit payable on Jan. 1, 2019 will be adjusted by 11/12 of the 2018 COLA. Likewise, if you retired on Sept. 30, 2018, you will only have been retired for two months before Dec. 1, 2018, therefore you will be entitled to 2/12 of the 2018 COLA. (The COLA for 2018 was announced this week as 2.8 percent)
4. False. The first COLA for most FERS retirees won't occur until after retirement and once they are age 62 or older. The FERS COLA is a "diet COLA" and is often delayed. As under CSRS, the amount of the COLA is determined by the percent change in the base quarter consumer price index from the previous year to the year in which the COLA is to become effective. Generally, FERS COLAs are 1 percent less than the increase in the CPI as determined under the law. However, if the CPI increase is between 2 and 3 percent the FERS COLA is 2 percent. If the increase is 2 percent or less, the FERS COLA matches the CPI increase. The COLA payable on Jan. 1, 2019 for eligible FERS retirees will be 2 percent.
5. False. The word "never" should have been your clue. There areMedicare savings programs available for beneficiaries who meet certain conditions related to income or other special needs. To learn more about these programs, contact a well-trained volunteer at your State Health Insurance Assistance Program.
6. True. As long as you have a balance of at least $200 or more in your TSP account, you will be able to take advantage of more flexible withdrawal options that will become available in about September 2019. The Securities and Exchange commission, along with the TSP, recently presented an informative webinarthat outlines these changes.
7. False. The TSP annuity is not the same as a TSP monthly payment. A monthly payment is one of the other full withdrawal options that you have when you leave federal service. If you have chosen an annuity, you can't change either the annuity option or your choice of joint annuitant after the TSP has purchased the annuity for you.
8. True. Retirees who marry can change their survivor election and their FEHBP election to cover their new spouse. For more information, see my previous columns, More Things to Consider When Making Your Annuity Election and 5 Things You Can Change After You Retire.
9. False. In order for a surviving spouse to retain coverage under your FEHBP plan, they need to be covered on the date of your death and they have to be entitled to a full or partial survivor benefit (or a death in service benefit).
10. True. Although the option of filing an application restricted to spousal Social Security benefits is disappearing, it is still available to those born on or before Jan. 1, 1954.
How did you do on the quiz?
To learn more about pre-retirement and retirement training opportunities, please visit my website.
Fake New, False Rumors, and statements that begin with "I think" are never helpful, and in fact can create huge issues and lead to a false sense of security when it comes to something as important as retirement. I am posting an article that was originally sent to members from National President, Honorable Dr. Doris P. Sartor. Please take the time and read it to get the facts.
I've been hearing a lot of false rumors lately, which tells me it's time for another pop quiz to test your knowledge. Below are 10 statements I've heard recently from retirement specialists, financial advisers, federal employees and retirees. Some of them are true and some are false Can you tell which is which? If you get nine out of 10, that's basically a perfect score, since statements three and four are specific to either the Civil Service Retirement System or the Federal Employees Retirement System.)
1. If you continue to be employed, once you reach age 70, you no longer have to pay the FICA Social Security tax.
2. If you are 65 and covered by the Federal Employees Health Benefits Program through your own or your spouse's current employment (or any insurance through your spouse's current employment), you should enroll in Medicare Part A, but can delay enrollment in Part B without penalty until you or your spouse retires. You will have an eight month special enrollment period following your or your spouse's retirement.
3. For CSRS (and CSRS Offset) retirees, on Jan. 1, 2019, you will receive the 2018 cost of living adjustment to your retirement benefit. If you retired on any date from Dec. 4, 2017 to Jan. 3, 2018, you will receive 11/12 of the 2018 COLA adjustment.
4. For FERS retirees, on Jan. 1, you will be paid your December FERS retirement benefit. In order to receive the full COLA for 2018, you need to have been retired since November 2017 and be at your minimum retirement age or older. (There is an exception for special groups, such as law enforcement officers).
5. It never makes sense for a federal retiree (or survivor annuitant) who has FEHBP coverage to enroll in Medicare Part C (Medicare Advantage) or Medicare Part D (prescription drug coverage).
6. Next year the Thrift Savings Plan will implement new provisions that will provide more flexibility when withdrawing your retirement savings. Retirees who have already taken a partial withdrawal from the TSP will be able to request multiple partial withdrawals from their account even if they are receiving a series of monthly payments.
7. Once you have purchased a life annuity from the TSP, you can change the dollar amount of the payments on an annual basis. If the interest rate increases in the future, your annuity payments will be increased to reflect the higher rate.
8. If you marry after retirement, you can elect a survivor annuity for your new spouse within two years of the date of marriage. You will have an actuarial reduction to your retirement benefit based on your age and the date of your retirement or the date that the last survivor election reduction ended, in addition to the regular survivor election reduction.
9. In order for a surviving spouse to be covered under your FEHBP coverage, they must be covered for five years prior to your death.
10. You may file for Social Security benefits based on your spouse's work record while delaying your own Social Security benefit to age 70 in order to take advantage of substantial delayed retirement credits if you were born on or before Jan. 1, 1954.
Answers:
1. False. If you're employed in a position subject to FICA tax, your age is not a factor. The Social Security tax rate is 6.2 percent each for the employee and employer, unchanged from 2018. The Social Security wage base limit is $132,900 for 2019.
2. True. Medicare Part A has no monthly premium for most individuals and the only reason for an employee not to enroll is if you want to continue to contribute to a health savings account with a high deductible health plan.
3. True. The first COLA will be prorated based on how many months you were retired during the previous year. The January CSRS retirement payment is the payment for the month of December. If you retired on any date after Dec. 3, 2017 to Jan. 3, 2018, your retirement didn't officially commence until January 2018, which means you were only retired for 11 months before December 2018. Your retirement benefit payable on Jan. 1, 2019 will be adjusted by 11/12 of the 2018 COLA. Likewise, if you retired on Sept. 30, 2018, you will only have been retired for two months before Dec. 1, 2018, therefore you will be entitled to 2/12 of the 2018 COLA. (The COLA for 2018 was announced this week as 2.8 percent)
4. False. The first COLA for most FERS retirees won't occur until after retirement and once they are age 62 or older. The FERS COLA is a "diet COLA" and is often delayed. As under CSRS, the amount of the COLA is determined by the percent change in the base quarter consumer price index from the previous year to the year in which the COLA is to become effective. Generally, FERS COLAs are 1 percent less than the increase in the CPI as determined under the law. However, if the CPI increase is between 2 and 3 percent the FERS COLA is 2 percent. If the increase is 2 percent or less, the FERS COLA matches the CPI increase. The COLA payable on Jan. 1, 2019 for eligible FERS retirees will be 2 percent.
5. False. The word "never" should have been your clue. There areMedicare savings programs available for beneficiaries who meet certain conditions related to income or other special needs. To learn more about these programs, contact a well-trained volunteer at your State Health Insurance Assistance Program.
6. True. As long as you have a balance of at least $200 or more in your TSP account, you will be able to take advantage of more flexible withdrawal options that will become available in about September 2019. The Securities and Exchange commission, along with the TSP, recently presented an informative webinarthat outlines these changes.
7. False. The TSP annuity is not the same as a TSP monthly payment. A monthly payment is one of the other full withdrawal options that you have when you leave federal service. If you have chosen an annuity, you can't change either the annuity option or your choice of joint annuitant after the TSP has purchased the annuity for you.
8. True. Retirees who marry can change their survivor election and their FEHBP election to cover their new spouse. For more information, see my previous columns, More Things to Consider When Making Your Annuity Election and 5 Things You Can Change After You Retire.
9. False. In order for a surviving spouse to retain coverage under your FEHBP plan, they need to be covered on the date of your death and they have to be entitled to a full or partial survivor benefit (or a death in service benefit).
10. True. Although the option of filing an application restricted to spousal Social Security benefits is disappearing, it is still available to those born on or before Jan. 1, 1954.
How did you do on the quiz?
To learn more about pre-retirement and retirement training opportunities, please visit my website.
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Taking Responsibility For Your Career
Taking Responsibility for our careers is every BIG member’s individual responsibility. Along with skills self-assessment and core competencies, government employees should also take the time to complete an Individual Development Plan (IDP), which is "...is a tool to assist employees in career and personal development. Its primary purpose is to help employees reach short and long-term career goals, as well as improve current job performance. An IDP is not a performance evaluation tool or a one-time activity. It should be looked at like a partnership between the employee and the supervisor. It involves preparation and continuous feedback...Many Federal agencies require their employees to complete an IDP, annually." (OPM)
Listed below are links to additional information highlighting the importance of developing IDPs.
Jesse Sharpe, BIG National First Vice-President, and U.S. Department of Education Chapter President
Taking Responsibility for our careers is every BIG member’s individual responsibility. Along with skills self-assessment and core competencies, government employees should also take the time to complete an Individual Development Plan (IDP), which is "...is a tool to assist employees in career and personal development. Its primary purpose is to help employees reach short and long-term career goals, as well as improve current job performance. An IDP is not a performance evaluation tool or a one-time activity. It should be looked at like a partnership between the employee and the supervisor. It involves preparation and continuous feedback...Many Federal agencies require their employees to complete an IDP, annually." (OPM)
Listed below are links to additional information highlighting the importance of developing IDPs.
- "Using IDPs to Leverage Strengths", Don Jacobson
- Career Planning Module, U.S. Fish and Wildlife Service
- Creating an IDP Individual Development Planning Worksheet (PDF file), U.S. Department of Commerce
- "My Career, My Responsibility," Denise Carter, Principle Deputy Director of OM, U.S. Department of Education.
- "What's in Your Toolbox,"
Jesse Sharpe, BIG National First Vice-President, and U.S. Department of Education Chapter President
What’s in YOUR toolbox? (Part I)
While attending my agency’s Diversity and Inclusion Council meeting, Principal Deputy Assistant Secretary of Office of Management (OM), and Council Co-Chair, Denise Carter, made the analogy of federal employees treating their careers as they should their homes. Just as home maintenance and improvement are required, the same goes for the attention made to federal employee career development. The image painted by Deputy Assistant Secretary was so vivid that I mentally started writing this article before leaving the meeting.
As the saying goes, “A picture is worth a thousand words.” Let’s imagine, then, that our current career development program is our dream house. Envision that we are standing outside taking pictures of our major financial and personal achievements and proudly uploading them to Facebook. The utilities inside the house are brand new, the windows are energy efficient, built-in wireless networking for movie and music are streaming throughout the house, the central AC keeps the house cool in the summer and warm in the winter. We even have a walk-in Jacuzzi! Having paid good money for our new house, we are proud to call it home.
Fast-forward 10 to 15 years. We find ourselves leaning against the tree in our front yard wondering how much a new roof is going to cost. Leaves and debris clog the gutter that’s pulling away from the house, and the crabgrass has taken over the lawn. Mentally, we guesstimate the cost of fixing the refrigerator’s icemaker, the dripping bathroom faucet, and the annoying running toilet that makes it hard to sleep at night. Since we didn’t invest in a home owner’s warranty, we doubt that we can afford the much-needed repairs to the central AC that always seems to break down during our annual Fourth of July cookout. Replacing our once energy-efficient windows, which are now fogging up, and the sump pump in the basement that tends to flood after a heavy rain are now out of the question. Oh, and as if we could forget—in our hand is a county citation for the out-of-control high grass and persistent weeds. What happened to our dream home?
During those 10 to 15 years, while raising our families and enjoying slight bumps in salary, we neglected our proud home and it started falling apart around us. In fact, the house next door, with the pristine lawn, just sold for three times its original purchase price. If we were to place our “dream house” on the market, with all the work that’s needed, we may barely break even. Get the picture?
The horrific image of our dream home in disrepair is one that we can immediately visualize. And, so, too, goes our neglected career. Let’s say we are seeking a promotion in grade or applying for a senior position. The question becomes: Have we complacently settled into our routine of “home-to-work and work-to-home” and neglected the upkeep of our career? All too often, this is the case, which provides an answer to the frustrating question of why we are frequently and continuously passed over for promotions.
With career development being very much like maintenance on our home, some career improvements can be made with virtual hammers, while others might require knocking down virtual walls, expanding rooms, and applying a fresh coat of paint.
Blacks In Government (BIG) members, let’s not wait to receive that county citation to clean up our property. In the same respect, neither should we depend on our agency to send us to BIG’s National Training Institute (NTI). As homeowners, we must invest in ourselves, and to do that we must become familiar with what’s in our toolbox.
While attending my agency’s Diversity and Inclusion Council meeting, Principal Deputy Assistant Secretary of Office of Management (OM), and Council Co-Chair, Denise Carter, made the analogy of federal employees treating their careers as they should their homes. Just as home maintenance and improvement are required, the same goes for the attention made to federal employee career development. The image painted by Deputy Assistant Secretary was so vivid that I mentally started writing this article before leaving the meeting.
As the saying goes, “A picture is worth a thousand words.” Let’s imagine, then, that our current career development program is our dream house. Envision that we are standing outside taking pictures of our major financial and personal achievements and proudly uploading them to Facebook. The utilities inside the house are brand new, the windows are energy efficient, built-in wireless networking for movie and music are streaming throughout the house, the central AC keeps the house cool in the summer and warm in the winter. We even have a walk-in Jacuzzi! Having paid good money for our new house, we are proud to call it home.
Fast-forward 10 to 15 years. We find ourselves leaning against the tree in our front yard wondering how much a new roof is going to cost. Leaves and debris clog the gutter that’s pulling away from the house, and the crabgrass has taken over the lawn. Mentally, we guesstimate the cost of fixing the refrigerator’s icemaker, the dripping bathroom faucet, and the annoying running toilet that makes it hard to sleep at night. Since we didn’t invest in a home owner’s warranty, we doubt that we can afford the much-needed repairs to the central AC that always seems to break down during our annual Fourth of July cookout. Replacing our once energy-efficient windows, which are now fogging up, and the sump pump in the basement that tends to flood after a heavy rain are now out of the question. Oh, and as if we could forget—in our hand is a county citation for the out-of-control high grass and persistent weeds. What happened to our dream home?
During those 10 to 15 years, while raising our families and enjoying slight bumps in salary, we neglected our proud home and it started falling apart around us. In fact, the house next door, with the pristine lawn, just sold for three times its original purchase price. If we were to place our “dream house” on the market, with all the work that’s needed, we may barely break even. Get the picture?
The horrific image of our dream home in disrepair is one that we can immediately visualize. And, so, too, goes our neglected career. Let’s say we are seeking a promotion in grade or applying for a senior position. The question becomes: Have we complacently settled into our routine of “home-to-work and work-to-home” and neglected the upkeep of our career? All too often, this is the case, which provides an answer to the frustrating question of why we are frequently and continuously passed over for promotions.
With career development being very much like maintenance on our home, some career improvements can be made with virtual hammers, while others might require knocking down virtual walls, expanding rooms, and applying a fresh coat of paint.
Blacks In Government (BIG) members, let’s not wait to receive that county citation to clean up our property. In the same respect, neither should we depend on our agency to send us to BIG’s National Training Institute (NTI). As homeowners, we must invest in ourselves, and to do that we must become familiar with what’s in our toolbox.