1. the balancing act of retirement planning
Retirement benefits specialist
Maximizing your federal retirement benefits
Tammy Flanagan
Replacing 80% of your gross income in retirement: If your major expenses in retirement are covered such as your mortgage (unless you are strategically keeping your mortgage for a write off)and you have long term care insurance and retiree medical from your company to cover the increased health care costs, you may not need 80% of your gross income in retirement. You may need to replace a much lower percentage of your income. The 80% rule is based on the assumption that you want to replace close to your current income in retirement. With 401(k) contributions and payroll taxes cutting into your take home pay, 80% of your gross is about what you might be taking home now. However, if your major expenses are covered and you have a plan in case health care costs rise, you may actually require much less.
Waiting as long as possible to take Social Security income: Experts will explain that once you reach your normal Social Security age, for each year you wait to receive your benefit, you receive around 8% more per year so it is better to delay your Social Security benefit (if you don’t need it of course). (You can calculate your estimated Social Security benefit here.) The argument is that if you wait to take your Social Security benefit at age 70 instead of at age 66, you’ll have a 32% higher benefit (8% higher each year) and will break even between age 80 and 81. The problem of course is that if you pass away earlier than expected, you never did break even but there is another “bird in the hand” factor that many people don’t think about. If you take the benefit at age 66, you can reinvest those funds and add a beneficiary so when you pass away they go to a loved one instead of to no one. Granted, it’s not easy to get 8% interest especially since most people tend to be more risk averse as they get older. Still, it’s not impossible to get 8% in a balanced mutual fund or a low volatility dividend focused ETF. Some people may want to take their Social Security benefit earlier than later either to enjoy now or to reinvest and enjoy later.

2. Tammy Flanagan – Federal Benefits Specialist
Presenter
Writer
Webinars and Seminars
retirement.com/webinar/
Pre-Retirement
Mid-Career
New Employee
Co-Host: For Your Benefit
Feature Columnist
Webinar Presenter
Weekly Column
“Retirement Planning”

3. Salary
FERS/CSRS
Social Security
TSP

4. How Much do You Need?
50%
75%
100%
125%

5. Common sense planning for retirement
Income Replacement
Expenses
Tax Planning
Future What-If Scenarios

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

7. These expenses MAY go up when you retire:
Kids (unemployment, emergency, grandkids)
Retirement Relocation
“Resort” Clothing
Travel Costs
Hired Help
Healthcare

8. CSRS Deductions
Not deducted from retirement:
Salary
$65,000
Salary $100,000
Salary $150,000
CSRS
7.5% (LEO/CSRS)
7% (CSRS)
$4,875
or $4,550
$7,500
or $7,000
$11,250
or $10,500
Medicare
1.45%
$942.50
$1,450
$2,175
TSP
Up to: $18,000
Plus: $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%
$49,432.50
$76,050
$114,075

9. You are living on ____% of your gross income 76.1% $49,432.50 $76,050
FERS Deductions
Not deducted from retirement:
Salary $65,000
Salary $100,000
Salary $150,000
FERS
1.3% (LEO/FERS)
.8% (FERS)
$845
or $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: $18,000
Plus: $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
$76,050
77.4%
$116,028

10. CSRS or FERS Retirement Benefit
Retirement income
Thrift Savings Plan
Social Security
CSRS or FERS Retirement Benefit

11. FERS retirement benefit
FERS Law Enforcement
High-Three Average Salary
Length of Service =
20 years: 34%
25 years: 39%
30 years: 44%

12. 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%

13. CSRS retirement benefit
CSRS Non-Law Enforcement
High-Three Average Salary
Length of Service =
20 years: %
25 years: %
30 years: %
40 years: %

14. 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

15. FERS Supplement (CSRS: N/A)
Social Security
Retirement
Approximately $40 - $50 /
month for every year
under FERS

16. Social Security Retirement
% replacement
Pre-Retirement Wages

17. 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!

18. 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 Application
Strategy

19. 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.

20. Social security claiming strategies
Age 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

21. 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

22. 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

23. Example: Young widow / delay your benefit
Age 60 (widow)
$1,800
Full Benefit Age
Continue widow’s
Age 70
Delayed Credits
$3,200

24. FEHBP & Medicare narfe Magazine: May 2014
Medicare:
The $1,258 Question Nov. 13, 2014
Health Insurance Questions and Answers March 6, 2014
The Big Health Insurance Question Feb. 28, 2014
65 and Still Working May 31, 2013
FEHB and Medicare Oct. 25, 2012
Medicare Choices Dec. 9, 2011

25. Medicare
Part A—Hospitalization Part B—Doctors services, outpatient care Part C—Medicare Advantage Plans Part D—Prescription drug coverage
Tax Equity and Fiscal Responsibility Act 1982

26. Enrollment in Medicare
TTY
Enrollment in Medicare
Initial Enrollment
3 months either side of age 65
Special Enrollment
Within 8 months of retirement
General Enrollment
January – March / coverage July
10% penalty per year

27. Medicare Premiums Part A Part B
Free
Paid by HIT – Hospital Insurance Tax: 1.45%
Part B
$ (2014 and 2015) / month / person
$85,000 or less adjusted gross – single
$170,000 or less adjusted gross - married
Or more…
$146.90, $209.80, $272.70, $335.70

28. Medicare Part A and FEHB
Primary payer – Medicare
Secondary payer – FEBP
Hospital Charge
Medicare Pays
2015
FEHBP Pays
Up to 60 days
All but $1,260
$1,260
61st through 90th day
All but $315/day
$315/day
60 reserve days (once during a lifetime)
All but $630/day
$630/day
Additional days $0
All charges

29. Fee-For-Service FEHBP Plans
Self Only
Self and Family
GEHA Standard
$106.26
$241.65
SAMBA
$131.71
$300.81
APWU
$140.12
$316.83
NALC
$166.70
$337.35
BC/BS Standard
$197.23
$462.17
MHBP Standard
$200.74
$489.21
GEHA High
$204.21
$488.00

30. Health Maintenance Organizations
Self Only
Self and Family
Aetna Direct
$113.78
$256.98
Kaiser High
Kaiser Standard
$168.85
$98.33
$423.15
$226.14
M.D. IPA
UnitedHealthcare
$243.84
$132.34
$599.58
$294.45
CareFirst Blue Choice
$161.55
$232.66
$376.15
$536.12
Innovation
$130.50
$305.75

31. Are there plans designed for Medicare?

32. What does Medicare do better?
Skilled Nursing Care
2015 Blue Cross® and Blue Shield® Service Benefit Plan
Note: If you do not have Medicare Part A, we do
not provide benefits for skilled nursing facility
care.

33. Finding Medicare Doctors
Physician Compare
Medicare Physician Compare

35. Address
The Big Three
Retirement Services Online at OPM: or call
Plan Participation, then Account Management at or call TSP
Log into My Social Security Account at or call SSA

36. Next session: Common mistakes
Understanding Risk
Do you need an advisor?
Withdrawal options for TSP
Bonus:
Don’t forget about taxes!