Plan and Track Your Retirement Focus on Federally Employed Women

Statistics on Women 1/3 who reach 65 can expect to reach 90 Only 1/3 over 65 are married Survive their husbands by 15 years (Average) Half over age 75 live alone At age 85, there are twice as many as men Whether you are currently married, single, widowed or divorced, plan on being single at some point in your life.

Benefit Issues Specific to Women 1.CSRS or FERS 2.Social Security 3.TSP 4.Insurance

Other Retirement Issues Financial Planning Estate Planning Life After Retirement Health Issues

1. CSRS and FERS Eligibility for Retirement / Comfortable Retirement Computation of benefit Service Credit Issues Electing a Survivor’s Benefit

6 CSRS Minimum Age and Service Requirements Option AgeService Immediate Early50 Any age DisabilityAny age5 Deferred625 Special provisions5020

7 FERS Minimum Age and Service Requirements OptionAgeService Immediate Reduced MRA MRA Early50 Any age DisabilityAny age18 months Deferred Reduced MRA MRA Special provisions50 Any age 20 25

8 High 3 Retirement Benefit Formula Length of Service

CSRS Computation Years/months - 2 x = % of High-three average Example: High-three $60,000 / 33 years 6 months service = x 2 = = 63.25% x $60,000 = $37,950 / year or $3,162.50/month

CSRS Law Enforcement Computation 20 years = 50% of High-three average Additional Service= 2% / year Example: High-three $60,000 / 33 years 6 months service 20 years = 50% x $60,000 = $30, years x 2% = 27% x $60,000 = $16,200 $30,000 + $16,200 = $46,200 / year or $3,850 / month

FERS Computation Years/months x 1% (or 1.1%) of High-three average Example: High-three $60,000 / 33 years 6 months service 33.5 x 1% x $60,000 = $20,100 / year or $1,675 / month Remember SSA and TSP: Example: Social Security (or Supplement) = $1,200 / month TSP: Balance = $300,000 / monthly payment $1,200 / month Total Retirement Income: $4,075 / month

FERS Law Enforcement Computation 20 years = 34% of High-three average Additional Service= 1% / year Example: High-three $60,000 / 33 years 6 months service 20 years = 34% x $60,000 = $20, years x 1% = 13.5% x $60,000 = $8,100 $20,400 + $8,100 = $28,500 / year or $2,375 / month + SSA and TSP

13 Credit Unused Sick Leave Add to length of service Use for benefit computation No limit on the amount FERS 50% until 2014

Value of Unused Sick Leave 2087 hours = 1 year 522 hours = 3 months FERS = 1% per year CSRS = 2% per year Example: High-Three = $80,000 / 2087 hours FERS = $800/year ($66.67/month) CSRS = $1,600/year ($133.33/month)

15 Creditable Service Service Computation Date Retirement Leave LWOP Intermittent/WAE Part-Time Deposits ▫ Non-Deduction Service ▫ Refunded Retirement Contributions ▫ Military Service

Understand Your SF-50 Notification of Personnel Action Block 4: Effective DateBlock 5-B: Nature of Action Block 30: Retirement PlanBlock 32: Work Schedule

CSRS or FERS: Part-Time Work Schedule Counts as full time for eligibility Pro-rated in the computation Can make up by working longer F/T credit if performed before 4/7/86 under CSRS

Part-Time Example 20 Years of Service High-Three Average Salary $65,000 CSRS Full-Time 20 – 2 x = 36.25% x $65000 = $23,562 FERS Full-Time 20 x 1% = 20% (or 22% if over age 62) x $65,000 = $13000 What if 5 years of the 20 were on a 32 /hour schedule?

Part-Time Example 39,653 (part-time hours) / 41,740 (full-time hours) = 95% CSRSFERS 95% x $23562 = $22,383 = $1,179/year less Work 10 months longer to make up the difference 95% x $13,000 = $12,350 $650 / year less Work 1 year longer to make up the difference The real question: How much money do you need to retire?

Reductions and Withholdings Reductions: ▫ Age ▫ Unpaid Deposit (CSRS) ▫ Survivor Election ▫ Redeposit (CSRS) ▫ Alternative Annuity ▫ CSRS Offset Withholdings: ▫ Insurance: FEHB, FEGLI, FEDVIP, FLTCIP ▫ Taxes: Federal and State (if applicable)

CSRS or FERS Retirement Election 1.Maximum Survivor Annuity for Spouse 2.Partial Survivor Annuity for Spouse 3.No Survivor Annuity 4.Insurable Interest Survivor Annuity 5.Election for Former Spouse Which one will you choose?

Maximum Survivor Annuity for Spouse CSRSExample Almost 10% reduction to your retirement: Survivor receives 55% of unreduced retirement increased annually by COLA and paid for life of survivor Retirement = $50,000 / year Reduction = $4,730 Reduced Annuity = $45,270 Survivor Annuity = $27,500

Maximum Survivor Annuity for Spouse FERSExample 10% reduction to your retirement: Survivor receives 50% of unreduced retirement increased annually by COLA and paid for life of survivor Retirement = $25,000 / year Reduction = $2,500 Reduced Annuity = $22,500 Survivor Annuity = $12,500

Married Couple JillJack CSRS = $50,000 ▫ Reduced for SBP: $45,270 FERS Retirement: $25,000 ▫ Reduced for SBP: $22,500 Social Security: $20,000 Retirement Savings (TSP, 401k): $700,000 Total income while both are living: $45,270 + $22,500 + $20,000 = $87,770 + Savings Jill (widowed): $50,000 + $12,500 = $62,500 + Savings Jack (widowed): $25,000 + $20,000 + $27,500 = $72,500 + Savings

2. Social Security More than 25% of older women rely on Social Security for nearly all of their family income. In 2010, Social Security kept 38% of older women out of poverty.

2. Social Security - CSRS Qualified for Your Own Social Security? ▫ Beware of Windfall Elimination Provision Counting on your husband’s Social Security? ▫ Think again: Government Pension Offset CSRS Offset employees are exempt from the GPO

Social Security Strategy JillJack $2,000 / month FRA (66) Receive spousal benefit = $1,200 /month (50% of Jack) Receive Delayed Credits on her account at 70 = $2,640 Receive widows benefits at age 84 = $3,168 $2,400 / month FRA (66) File and Suspend at age 66 Delayed Credits at age 70 = $3,168 / month

William Meyer, Social Security Solutions

3. TSP Maximize matching Diversify Slow and Steady Wins the Race $1,277 /year (price of $3.50 coffee) = $107,164 in 30 years $2,555/year (price of take-out lunch) = $214,413 in 30 years Based on a 6% annual rate of return

. Information in this chart assumes an annual salary of $40,000, employee and agency contributions of 5% each, and a 6% average annual rate of return.

TSP Withdrawal Options One-Time Partial Withdrawal – TSP-77 Full-Withdrawal – TSP-70 ▫ Single Payment ▫ Monthly Payments  Specific Dollar Amount  Life Expectancy Computation ▫ Life Annuity

35 TSP Withdrawal Option: Specific Dollar Amount / Monthly Payments An account balance of $500,000 earning 6% will provide payments for 30 years Payment: $3,000

Amount from your account used for monthly payments $500,000 At age60 At an assumed annual earnings rate of6.00% Age 60:$ 1,653.44Age 61:$ 1, Age 62:$ 1,844.71Age 63:$ 1, Age 64:$ 2,056.52Age 65:$ 2, Age 66:$ 2,279.22Age 67:$ 2, Age 68:$ 2,522.43Age 69:$ 2, Age 70:$ 1,729.08Age 71:$ 1, Age 72:$ 1,938.02Age 73:$ 2, Age 74:$ 2,171.31Age 75:$ 2, Age 76:$ 2,431.50Age 77:$ 2, Age 78:$ 2,708.52Age 79:$ 2, Age 80:$ 2,997.83Age 81:$ 3, Age 82:$ 3,312.49Age 83:$ 3, Monthly Payment

Age 84:$ 3,652.81Age 85:$ 3, Age 86:$ 3,963.06Age 87:$ 4, Age 88:$ 4,281.87Age 89:$ 4, Age 90:$ 4,562.16Age 91:$ 4, Age 92:$ 4,783.05Age 93:$ 4, Age 94:$ 4,912.36Age 95:$ 4, Age 96:$ 4,926.82Age 97:$ 4, Age 98:$ 4,860.63Age 99:$ 4, Age 100:$ 4,554.34Age 101:$ 4, Age 102:$ 4,151.90Age 103:$ 3, Age 104:$ 3,514.46Age 105:$ 3, Age 106:$ 2,902.88Age 107:$ 2, Age 108:$ 2,141.64Age 109:$ 1, Age 110:$ 1,515.71Age 111:$ 1, Age 112:$ Age 113:$ Age 114:$ Age 115:$ TSP Monthly Payment Example (Continued)

Annuity options you chose Joint Life Annuity With Spouse, Increasing Payments, Cash Refund, 100% to Survivor Amount used to purchase annuity$500,000 When you are age of60 Your spouse or joint annuitant will be age % This is the estimated monthly annuity payments based on an annuity interest rate index of: 2.125% Because you chose the increasing payment option, your payments can increase each year based on the consumer price index. This increase can range anywhere from 0 to 3%. Assuming a 3% annual increase, in 10 years your monthly payment would be: $1502 annuity interest rate index$1151 Based on your election of a 100% survivor annuity, when either you or your joint annuitant dies, the monthly payments to the survivor would be the same as payments you are receiving at the time of death.

4. Insurance FEHB ▫ Federal Employees Health Benefit Program FEGLI ▫ Federal Employees Group Life Insurance FLTCIP ▫ Federal Long-Term Care Insurance Program Medicare

40 Health Insurance (FEHB) You may continue your coverage if you: Retire on an immediate annuity or postponed FERS MRA + 10 Are covered continuously for the 5 years of service immediately preceding retirement

Life Insurance: What other benefits are there? CSRS or FERS ▫ CSRS: 55% of earned CSRS annuity ▫ FERS  50% of earned FERS annuity (10 years of service)  Lump Sum Death Benefit: $30, % salary ▫ Children: around $500 / month / child Social Security ▫ Widow’s benefits? ▫ Children: 50% of your full benefit until 18 Thrift Savings Plan

42 Basic Life Coverage = Salary, rounded up, + $2,000 Cost is $0.15 per $1,000 biweekly Salary = $47,500 Coverage = $50,000 Cost is 50 x.15 = $7.50 biweekly

43 Basic FEGLI and Retirement Regular coverage until age 65 and retired After age 65 and retired: ▫ 75% reduction ▫ 50% reduction ▫ No reduction

44 Cost of Basic Coverage After Retirement Reduction at age 65 Cost before age 65 Cost on and after age 65 75%$0.325*Free 50%$0.965*$0.64* None$2.265*$1.940* *per $1,000 per month

45 Example: Cost of Basic Coverage After Retirement Retirement Election Amount after reduction Cost before age 65 Cost on and after age 65 75%$12,500$16.25Free 50%$25,000$48.25$32.00 None$50,000$113.25$97.00

46 Option A: Standard Basic coverage plus $10,000

47 Option B: Additional Basic coverage plus 1 to 5 times your annual base pay

48 Option C: Family Basic coverage plus:  $5,000 for spouse  $2,500 per dependent child Additional coverage in multiples of up to 5 times the base amount

Federal Long Term Care Insurance Program It’s always a good time to apply! Advantages of applying early: ▫ premiums are based on your age ▫ if you’re currently healthy, you avoid the risk that a future illness or condition may disqualify you from obtaining coverage at a later date Qualified relatives can apply (even if you do not) Only three plan choices – or chose a pre-packaged plan Payroll/annuity deduction available Coverage is fully portable LTC-FEDS ( ) TTY

50 How Much does Long-Term Care Insurance Cost? Inflation Option Age at Purchase Monthly Premium Maximum Lifetime Benefit Maximum Daily Benefit Benefit Period FPO 45$35.50 $219,000$2003 years 55$ $ $ % ACIO 45$ $ $ $ % ACIO 45$ $ $ $523.88

51 Medicare Part A —Hospitalization No Premium Part B —Doctors services, outpatient care $99.90 / month or more Part C —Medicare Advantage Plans Medicare Health Insurance Part D —Prescription drug coverage FEHB Coverage is credible

Retirement Readiness Checklist Have you considered… how much money you will need in retirement? how long you might be retired? the costs of insurance? the cost of Medicare? how you will handle your savings? how taxes will affect your retirement income?

Questions?