Five Things Federal Retirees Wished They Knew Before They Retired Tammy Flanagan

The Big Five Do you know... 1.How much of your income you will replace? 2.The importance of a survivor annuity (if married)? 3.Retirement is a taxable event? 4.The importance of retirement savings? 5.Retirement can be the happiest years of your life?

I wish I knew how to determine if I will have enough replacement income Will your spending change? Will you need more income? Can you live on less income?

How to do a “net to net” comparison FERS Retirement: ●FERS Basic Annuity (Pension, Retirement Benefit) ●Social Security (FERS Supplement) ●Thrift Savings Plan (Retirement Savings)

Turning on your retirement: Retirement Stage One: FERS (or CSRS) FERS Supplement Second Career Spouse still working Later on: FERS (or CSRS) Social Security Thrift Savings Plan Military Reserve Retirement Spouse’s retirement

Start with your leave and earnings statement Biweekly Leave and Earnings Statement X 26 = Annual/ 12 = Monthly Federal Tax State Tax FICA Tax CSRS or FERS etc. Total Withholdings Gross Salary (before withholdings) Net Salary $0.00

Step Two: Request a CSRS or FERS retirement estimate

Step Two: Estimate Reductions CSRS or FERS unreduced retirement$0.00 ●Part-time proration-$0.00 ●Age reduction (for MRA + 10 or CSRS Early Retirement)-$0.00 ●Unpaid deposit (CSRS)-$0.00 ●Survivor election-$0.00 ●Unpaid Redeposit (CSRS)-$0.00 ●Alternative Annuity (life threatening illness)-$0.00 ●CSRS Offset-$0.00 ●Former Spouse-$0.00

Step Two: Estimate withholdings CSRS or FERS reduced retirement+$0.00 FERS Supplement+$0.00 ●Federal Tax-$0.00 ●State Tax-$0.00 ●FEHB-$0.00 ●FEGLI-$0.00 ●FEDVIP (Dental/Vision)-$0.00 ●FLTCIP-$0.00 Net CSRS or FERS retirement:$0.00

Social Security Personal Benefits Statement:

Monthly Benefit$0.00 Federal Tax*-$0.00 State Tax**-$0.00 Medicare Part B-$0.00 Net Social Security Benefit$0.00 * Individual return/income more than $34,000 or joint return/income more than $44,000, up to 85% of your benefits may be taxable. **13 states that tax Social Security: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.

Project Thrift Savings Plan Balance

4% of $100 = $4 4% of $1,000 = $40 4% of $10,000 = $400 4% of $100,000 = $4,000 4% of $1,000,000 = $40,000 Compounding

YearG FundF FundC FundS FundI Fund %4.40%15.79%15.3%26.32% %7.09%5.54%5.49%11.43% %5.45%(36.99%)(38.42%)(42.43%) %5.99%26.68%34.85%30.04% %6.71%15.06%29.06%7.94% %7.89%2.11%(3.38%)(11.81%) %4.29%16.07%18.57%18.62% %(1.68%)32.45%38.35%22.13% %6.73%13.78%7.8%(5.27%) %0.91%1.46%(2.92%)(0.51%) Last 12 months2.02%6.41%4.07%(5.00%)(9.81%)

Project Thrift Savings Plan Distribution Retirement Income Calculator About TSP Monthly Payments and Life Annuities If you want monthly income from your TSP account when you separate from Federal service, you have two options: TSP monthly payments and a life annuity This calculator will help you decide whether receiving monthly income is right for you by comparing the available options and features that might meet your needs.

Step Two: Estimate TSP Monthly Distribution Monthly TSP Payment$0.00 Federal Tax-$0.00 State Tax*-$0.00 Net Monthly TSP Payment:+$0.00 *The TSP will not withhold state income tax, but that does not mean that you don’t have to pay it!

Add it up! SUMMARY Net CSRS or FERS retirement: +$0.00 Net Social Security benefit (or spousal/widow's benefit) +$0.00 Net TSP monthly benefit +$0.00 Other retirement income +$0.00 Total Retirement Income $0.00 Net Salary (monthly) -$0.00 Difference Between Net Salary & Net Retirement Income +/ - $0.00

I I I wish I knew the value of the survivor benefit election! Dual federal couple Private sector married to federal retiree Financially dependent spouse

Dual Federal Couple: No Survivor Benefit FERS SpouseOther FERS Spouse Net FERS Retirement:+$3, $2, Social Security Benefit+$2, $1, TSP Monthly Benefit+$2, $1, Total Income$7,600.00$6, Combined Income $13,700.00

Dual Federal Couple: No Survivor Benefit FERS Spouse Other FERS Spouse FERS Spouse Dies Net FERS Retirement:+$3, $2,800.00$2, Social Security Benefit+$2, $1,700.00$2, TSP Monthly Benefit+$2, $1,600.00$4, Total Income$7,600.00$6,100.00$9, Combined Income $13, $4,700.00

Dual Federal Couple: With Survivor Benefit FERS SpouseOther FERS Spouse Net FERS Retirement:+$2, $2, Social Security Benefit+$2, $1, TSP Monthly Benefit+$2, $1, Total Income$7,300.00$5, Combined Income $13,120.00

Dual Federal Couple: With Survivor Benefit FERS Spouse Other FERS Spouse FERS Spouse Dies Net FERS Retirement:+$2, $2, $2, $1, Social Security Benefit+$2, $1,700.00$2, TSP Monthly Benefit+$2, $1,600.00$4, Total Income$7,300.00$5,820.00$10, Combined Income $13, $2,620.00

Private Sector Spouse / Federal Spouse “How much will losing my FERS benefit affect you financially?” Survivor Annuity = FEHB Partial 5% reduction to FERS = 25% survivor annuity Full 10% reduction to FERS = 50% survivor annuity Higher Social Security benefit payable

Financially Dependent Spouse Evaluate life insurance coverage Elect maximum FERS/CSRS survivor annuity Social Security widow’s benefit Contact information for: Office of Personnel Management Federal Employees Group Life Insurance Federal Employees Health Benefits Program Thrift Savings Plan Social Security

I I I wish I knew how much important it was to save for my retirement! Save more Work longer Live on less

Save More Net Salary: $7,199 Net FERS Retirement: $3,039 FERS Supplement: $960 TSP Income: ($1,200,000) $3,200 Total Net Retirement: $7,199 Retire Early

Save Less Net Salary: $7,199 Net FERS Retirement: $3,039 FERS Supplement: $960 TSP Income: ($800,000) $2,133 Total Net Retirement: $6,132 Need $1,067 by delaying retirement or working second career Work Longer

Spend Less Live on Less

I I I wish I knew how much income tax I would have to pay on my retirement! CSRS or FERS Social Security TSP Federal Income Tax State Income Tax

CSRS and FERS Retirement Contributions IRS Publication 721 State tax Annual State Tax Roundup TIP: Do a “dummy” tax return

Social Security Retirement Only 13 states tax Social Security: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia. Individual combined income is more than $34,000, up to 85 percent of your benefits may be taxable. Joint combined income is more than $44,000, up to 85 percent of your benefits may be taxable.

Taxes and the TSP Single Payment20%You may increase amount, not decrease Monthly Payments lasting less than 10 years Monthly Payments lasting 10 years +Married with 3 Increase or decrease on withdrawal request form Monthly Payments based on life expectancy ●TSP only withholds federal tax ●State tax must be paid by estimated tax payments or from other benefits ●TSP reports to state of residence 1099-R

I I I wish I knew how much I would love my retirement! Family time Travel Freedom

1. Create a predictable paycheck 2. Stick with what you know 3. Find four hobbies 4. Rent later in life 5. Keep your kids at arms length 5 Secrets to a Happy Retirement

Ernie J. Zelinski: “Retirement does not have to mean the end of life-in fact it can mean a whole new beginning to the life you never had time to explore. The key to enjoying an active and satisfying retirement is dependent on much more than just having adequate financial resources. It means paying attention to all aspects of life, including leisure activities, creative pursuits, physical and mental well-being, and solid social support.”

I wish I knew how much I would enjoy being retired!