1. Retire at 80% FERS Law Enforcement Tammy Flanagan Senior Benefits Director National Institute of Transition Planning, Inc. Tammy@nitpinc.com

2. My “Hats” Tammy Flanagan – Benefits Specialist Presenter  Pre-Retirement Seminars  Mid-Career Planning  New Employee Benefit orientation  Co-Host: For Your Benefit  www.federalnewsradio.com www.federalnewsradio.com  http://www.nitpinc.com/ http://www.nitpinc.com/ Writer  www.govexec.com www.govexec.com  Weekly Column  “Retirement Planning”  Edited by Tom Shoop – Senior Editor of Government Executive Magazine  Tomorrow’s Column based on today’s presentation!

3. OPM on Supreme Court Decision 6-26-13OPM on Supreme Court Decision 6-26-13, DC – “Today’s historic decision by the Supreme Court that the Defense of Marriage Act is unconstitutional is a much welcome development in the continuing quest to ensure equal treatment under the law to all Americans. For the federal government as an employer, it will impact benefits for our married gay and lesbian employees, annuitants, and their families. “In the coming days, OPM will be working closely with the Department of Justice and other agencies to provide additional guidance for federal human resources professionals, benefits officers, and our employees and annuitants. While we recognize that our married gay and lesbian employees have already waited too long for this day, we ask for their continued patience as we take the steps necessary to review the Supreme Court’s decision and implement it. As soon as we have updates to share, they will be posted on our website.” Statement by Acting Director Elaine Kaplan on the Supreme Court Decision in United States v. Windsor

4. The percentage stems from the "replacement ratio" studies that Aon Consulting and Georgia State University have done for the last 20 years. Basically, researchers cull information from the Bureau of Labor Statistics Consumer Expenditures Survey, which details how U.S. consumers, including older households, spend their money. Where did the 80% rule come from?

5.  Retirement: 1.3% or.8%  Social Security: FICA: 6.2% Medicare: 1.45%  TSP: 5% - 10% - 20%?  Taxes Less income = less income tax Some states don’t tax retirement benefits Why 80%? These deductions stop when you retire:

6. These expenses MAY go DOWN when you retire:  Kids (food, clothing, schooling, weddings)  Mortgage  Clothing  Commuting Costs  Hired Help

7.  Kids  unemployment, emergency, grandkids  Mortgage  good old days  Clothing  are you joining a nudist camp?  Commuting Costs  are you going to stay home every day?  Hired Help  cut your own grass, paint your own walls, clean your own house  Travel, hobbies, volunteer  Healthcare and insurance These expenses MAY go UP when you retire:

8. FERS Basic Retirement Benefit Law Enforcement  20 years = 34% of high-three  25 years = 39% of high-three  30 years = 44% of high-three Non-Law Enforcement  20 years = 20% of high-three (22% at age 62+)  25 years = 25% of high-three (27.5% at age 62+)  30 years = 30% of high-three (33% at age 62+) What does it take to get to 80%?

9. What else?: FERS Supplement Approximately $40 / month / year of FERS service  20 years = $800 / month or $9,600 / year  25 years = $1,000 / month or $12,000 / year  30 years = $1,200 / month or $14,400 / year What percentage of your salary will this replace?  More for low salary  Less for higher salary  Replacement: 10 – 30%

10. Social Security  Eligible at 62  Reduced by 30%  Delayed credits  24% increase at 70  Tilted towards the low wage earner  Average benefit 2013: $1,221.22  Maximum monthly benefit 2013:  Age 66: $2,533 (Born 1947)  Age 62: $1,923 (Born 1951)  Age 70: $3,350 (Born 1943) Supplement Ends at 62, then what?

11. The United States Social Security Administration POPULAR SERVICES  new Get your Social Security Statement online  Get or replace a Social Security card  Apply online for retirement, disability or Medicare benefits  Estimate your retirement benefits  Research popular baby names  Locate a Social Security office www.socialsecurity.gov

12. What else? Retirement Savings  TSP  Other employer savings plans - 401(k), 403(b)  IRAs  Savings Accounts  Inheritance  Use It Spending  Lose It  Taxes – CPA / CFP  Promote It  Legacy planning – Estate Attorney

13. Women are more likely than men to interrupt their careers for family Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45 percent participated in a retirement plan. Women live a long time! By and large women invest more conservatively than men. http://www.dol.gov/ebsa/publications/women.html What else? Retirement Savings Women: Listen Up!

14. Use It Leave it in TSP  Low expenses  G Fund  Simplicity  Monthly withdrawal options Transfer to IRA  Multiple partial withdrawals  Many investment choices  Legacy planning options

15.  0 – 59 ½ - Be careful! 10% tax penalty Exception: Separation in the year you reach 55 Exception: Monthly payments based on life expectancy or life annuity  59 ½ - 70 ½ - No rules!  70 ½ + Complicated Rules! Lose It

16. TSP Web Site: Planning & Tools: Retirement Income Calculator TSP: Retirement Income CalculatorTSP: Retirement Income Calculator

17. Monthly Payments Balance: $500,000 Growth: 5% Dollar Amount  $3,000 / month Run Out at age 78  $2,000 / month Balance at age 100: $209,484.99 Life Expectancy MonthlyAgeBalance $1,407.6655$508,224.49 $2,208.6465$557,817.99 $2,069.3675$572,237.19 $3,095.5585$539,728.21 $3,612.9995$347,388.27 $3,166.00100$212,558.69

19. How about an annuity? Features  $500,000 purchase  Begin at 55  100% Survivor (spouse or other insurable interest)  2% Interest Rate Index  Level Payment  No Cash Refund Payments MonthlyAgeBalance $1,68355$0 $1,68365$0 $1,68375$0 $168385$0 $1,68395$0 $1683100$0

20. How about an annuity? Features  $500,000 purchase  Begin at 55  Single Life  2% Interest Rate Index  Level Payment  No Cash Refund Payments MonthlyAgeBalance $1,98055$0 $1,98065$0 $1,98075$0 $1,98085$0 $1,98095$0 $1,980100$0

21. How about an annuity? Features  $500,000 purchase  Begin at 55  50% Survivor (you or spouse)  2% Interest Rate Index  Increasing Payment  Not available for insurable interest  Cash Refund Payments MonthlySurvivorAgeBalance $1,133$56655$485,000 (approx.) $1,523$76165$340,000 (approx.) $2,047$1,02375$150,000 (approx.) $2,750$1,37585$0 $3,696$1,84895$0 $4,285$2,142100$0

22. Did we get to 80%? Retire 55 with TSP Monthly Payments  FERS Law Enforcement 30 years  FERS Supplement $14,400 / high-three $100,000  TSP Monthly payment $2,000 x 12 = $24,000 Adds up to 82.4%  44%  14.4%  24%

23. Did we get to 80%? Retire 57 with TSP Monthly Payments  FERS (regular) 30 years  FERS Supplement $14,400 / high-three $100,000  TSP Monthly payment $2,500 x 12 = $30,000 Adds up to 74.4%  30%  14.4%  30%

24. Did we get to 80%? Retire 50 to Work Part-Time  FERS Law Enforcement 20 years  FERS Supplement $9,600 (High-three $100,000)  Part-Time Job $36,400 Adds up to 80%  34%  9.6%  36.4%

25. Thank You! Questions? Tammy@nitpinc.com