University of Missouri Federal
Employee’s
Pre-Retirement Workshop -Presented by:
© 2016 Financial Workshops, LLC
DISCLAIMER
In the preparation of this workshop, efforts have
been made to present current and correct
information.
Nonetheless, tax, benefits, and legislation often
change and inadvertent errors can occur. The
information contained in this presentation is
intended to afford general guidance and is not a
substitute for professional financial, legal, tax, or
investment advice.
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
Utilizing the Thrift Savings Plan
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Investment Fundamentals
TSP Contributions
Employee Contributions
Up to $18,000 in 2016
Investment & the TSP
(IRC section 402 (g) elective deferral limit)
Agency Automatic 1% Contributions*
Agency Matching Contributions*
Up to 5%
“Catch-up” contributions
Up to $6,000 in 2016
Must be at least 50 years old in the year
catch-up contributions are made (IRC section
414 (v))
* FERS employees only
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Investment Fundamentals
TSP Contributions
No Agency
match for
CSRS
employees.
© 2016 Financial Workshops, LLC
Investment & the TSP
Investment Fundamentals
Investment & the TSP
FERS Government Matching Contributions
If employee
contributes:
Government will
contribute
Total Contribution
0%
1%
1%
1%
1 + 1 = 2%
3%
2%
2 + 1 = 3%
5%
3%
3 + 1 = 4%
7%
4%
4 + .5 = 4.5%
8.5%
5%
4 + 1 = 5%
10%
6% +
5%
11% + excess
Investment
& Fundamentals
the TSP
Investment
Investment & the TSP
Financial Savings Principles
Factors to consider in saving for retirement:
Always contribute the MAXIMUM
amount allowed within your budget
Resist the temptation to use money
from your Thrift Savings Plan prior to
retirement
Loss of compounding
Loss of return opportunities
Potential adverse tax consequences
Can restrict future participation
By not maximizing, you lose out on
potentially THOUSANDS OF DOLLARS
that could be invested for your
retirement
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Investment Fundamentals
Investment & the TSP
Investment Choices
G Fund
C Fund
F Fund
S Fund
I Fund
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Average rate of return
(as of December 2015)
Investment Fundamentals
Nominal vs. Real Rate of Return: 1961-2010
12.00%
10.00%
11.10%
8.88%
6.96%
8.00%
5.87%
6.00%
Gross ROR
5.56%
5.27%
4.21%
4.00%
After Taxes
After Taxes & Inflation
2.55%
1.20%
2.00%
0.00%
Stocks
Bonds
© 2016 Financial Workshops, LLC
T-Bills
Assumes a 20% Tax Rate
and 3.1% Inflation
Investment Fundamentals
Distribution Options
Investment & the TSP
1. Receive your account in a single payment
Roll the money over into some other
retirement-eligible investment fund (anytime
after age 59½)
2. Receive the account in a series of monthly
payments
Based on your life expectancy or a specific
dollar amount
3. Have TSP buy an annuity for you (life income
stream)
Single life
Joint life with spouse
Joint life with someone other than spouse
4. A combination of Options 1-3 (mixed withdrawal)
5. Leave the money in the account
Until later of age 701/2 or retirement, then
must choose one of the options
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Investment Fundamentals
Distribution Options
Investment & the TSP
Lump Sum or Partial Distribution
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Investment Fundamentals
Distribution Options
Investment & the TSP
Roll-over (transfer) to an eligible retirement
account
(Non-taxable event)
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Investment Fundamentals
Investment & the TSP
Distribution Options
Does Rolling-Over the TSP account make sense?
(Roll-over IRA)
Expanded investment options.
More withdrawal options
(non-systematic)
Single retirement account
makes monitoring easier
An IRA has estate planning
opportunities
© 2016 Financial Workshops, LLC
(TSP account)
Low expenses
No 10% early withdrawal penalty
if retiring at age 55-59 ½
Protection from creditors.
No RMD at age 70 ½ as a
Federal employee
Non-spousal beneficiaries can
transfer TSP assets to a Roth IRA
Investment Fundamentals
Distribution Options
Asset classes available:
U.S. Equity
Global Equity
Emerging Markets
U.S. Fixed Income
Global Fixed Income
Commodities
Real Estate
Specialty
© 2016 Financial Workshops, LLC
Investment & the TSP
Should I roll-over
my TSP?
TSP
Yes/2
Yes/1
No
Yes/2
No
No
No
No
Roll-over IRA
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Investment Fundamentals
Investment & the TSP
Distribution Options
Monthly payments based on life expectancy (see IRS tables)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7…
Year 6
Year 7…
Specific dollar amount (subject to minimum payment)
Year 1
Year 2
Year 3
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Year 4
Year 5
Investment Fundamentals
Investment & the TSP
Annuity
Purchase an Annuity:
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Investment Fundamentals
Investment & the TSP
Annuity
Single Life annuity
Joint Life annuity (insurable interest
clause)
100% survivor (Payments continue
level)
(Joint annuitant >10 younger not
eligible*)
50% survivor (Payment cut in-half)
Level & increasing payment options
Cash refund
Ten-year certain
*Former spouse payable under
court order
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
Table III (Uniform Lifetime) – Required Minimum Distributions
(For use by: Unmarried Owners,
Married Owners Whose Spouses Are Not More Than 10 Years Younger, and
Married Owners Whose Spouses Are Not the Sole Beneficiaries of their IRAs)
Age
Distribution Period
Age
Distribution Period
Age
Distribution Period
70
27.4
86
14.1
102
5.5
71
26.5
87
13.4
103
5.2
72
25.6
88
12.7
104
4.9
73
24.7
89
12.0
105
4.5
74
23.8
90
11.4
106
4.2
75
22.9
91
10.8
107
3.9
76
22.0
92
10.2
108
3.7
77
21.2
93
9.6
109
3.4
78
20.3
94
9.1
110
3.1
79
19.5
95
8.6
111
2.9
80
18.7
96
8.1
112
2.6
81
17.9
97
7.6
113
2.4
82
17.1
98
7.1
114
2.1
83
16.3
99
6.7
115 & over
1.9
84
15.5
100
6.3
Investment Fundamentals
Investment & the TSP
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
Withdrawal
Rate*
3%
Recommended
Risky Zone
100/0
Stock / Bond Mix
80/20
60/40
40/60
15/85
5/95
99%
99%
99%
99%
99%
99%
4
92
94
97
98
99
99
5
81
83
83
80
69
42
6
66
65
61
43
14
1
7
48
43
33
12
0
0
Withdrawal
More Likely Rates and a 25-Year Retirement
Less Likely
© 2016 Financial Workshops, LLC
Investment Fundamentals
All factors to Consider:
Investment & the TSP
Age and life expectancy
Risk tolerance levels
Rate of return goals
Liquidity requirements
Investment alternatives
Income needs
Dollar amount needed
When it will be needed
How long it will have to last (life
expectancy)
Will I still be able to maintain my
lifestyle?
What kind of benefits can I provide for
my family upon my death?
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
TSP
Began to
offer
Roth
401K
in 2012
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Investment Fundamentals
Investment & the TSP
A Roth 401k feature will combine:
All of the benefits of TSP
retirement savings
with
After-tax benefits of a Roth
Savings Plan.
Note: you will not get the benefits of a
tax-deferred savings (an upfront tax
deduction), but your Roth savings will
grow tax-free (subject to distribution
requirements).
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
You will pay no Federal taxes when
you withdraw your Roth 401k as
long as:
You are at least
age 59 ½
and
have been making
contributions for at
least 5 years
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
Maximum Contributions = IRS
elective deferral limits
2016
$18,000
+ “catch-up”
contributions for those
who are eligible
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
Is the TSP Roth 401(k) right for me?
Will you be in a higher tax
bracket when you retire than
you are now?
Do you want to diversify tax risk
in the face of uncertain future
tax rules?
Do you have a long time to save
and will benefit from tax-free
compounded earnings?
© 2016 Financial Workshops, LLC
Investment Fundamentals
Investment & the TSP
Utilizing the Thrift Savings Plan
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Retirement Planning
Types of
Retirement
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How many would
consider retiring if
you could replace
your paycheck the
day after you
separated from
service?
© 2016 Financial Workshops, LLC
Retirement Planning
Key Retirement & Investment Challenges
Longevity
Inflation rates
Market volatility
Excessive withdrawal
rates
Healthcare costs
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Retirement Planning
The Statistics of Longevity
Male
Age 65
Female
Age 65
Couple
(Both Age 65)
Age
85
90
92
50% chance of
living beyond 85
Age
85
88
85
94
90
90
100
25% chance of
living beyond 94
92
95
At least one
person has a
50% chance of
living beyond 92
Source: Annuity 2000 Mortality Table, American Society of Actuaries. Figures assume you are in good health.
For illustrative purposes only.
© 2016 Financial Workshops, LLC
100
25% chance of
living beyond 92
50% chance of
living beyond 88
Age
95
97
100
At least one
person has a
25% chance of
living beyond 97
Retirement Planning
Retirement Income (Purchasing
Power)
LONGEVITY and THE RETIREMENT IMPERATIVE:
$3,500
Creating a rising stream of income
$3,000
$3,119
$2,500
$2,000
$1,500
$1,000
$500
$306
$0
1
3
5
7 9 11 13 15 17 19 21 23 25 27 29
Years of Retirement (Longevity)
Loss of Purchasing Power
Maintaining Purchasing Power
4% Inflation
© 2016 Financial Workshops, LLC
Retirement Planning
7.00%
6.00%
As measured by the Consumer Price Index
5.00%
4.00%
3.00%
2.00%
1.00%
© 2016 Financial Workshops, LLC
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
-1.00%
1990
0.00%
Retirement Planning
© 2016 Financial Workshops, LLC
Retirement Planning
Cash Flow Needs During Retirement
The Basics
Living expenses
Long term health care costs
The Reasons for
Retirement
Vacations and travel
Volunteering
Charitable work/donations
A second “career”
© 2016 Financial Workshops, LLC
Retirement Planning
Reduced
Expenses
Expenses May Shift
Retirement savings
Payroll taxes
Commuting costs
Clothing/dry cleaning
Increased
Expenses
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Health care
Travel
Entertainment
Hobbies
Retirement Planning
Expenses May Shift
Things that could cause
income to rise in retirement
Cost of living adjustments (COLA’s)
Rising values of retirement
investments
Eligibility for Military or other
public pensions
Sending spouse back to work
© 2016 Financial Workshops, LLC
Retirement Planning
Three Major Sources of
Retirement Income
Employer Sponsored Plans
Social Security
Personal Savings & Investments
© 2016 Financial Workshops, LLC
Retirement Planning
Employer Sponsored Retirement Programs
Retirement Annuity/Pension
Defined Benefit
Requirements for participation and eligibility
Monthly benefits determined by formula
Risk on employer
Defined Contribution
Funds set aside by/for employee
Benefits determined by actual funds in the
account
Depends on amount of contributions and rate
of return
Risk on employee
© 2016 Financial Workshops, LLC
Retirement Planning
Income Sources - FERS
Dual Defined Benefit and Defined
Contribution Plan
DB:
FERS Annuity
0.8% of Basic Pay
3.1% for employees hired
after 12/31/2012
+
+
DB:
Social Security
Benefits
6.2% of pay
DC:
Thrift Savings
Plan
Up to $18,000* of pay
(2016)
© 2016 Financial Workshops, LLC
Retirement Planning
Income Sources - CSRS
Single Defined Benefit Retirement System
DB:
CSRS Annuity
7.0% of pay
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+
1987:
Thrift Savings
Plan Option
Added
Retirement Planning
Income Sources – CSRS Offset
Dual Defined Benefit Retirement System
DB:
CSRS Annuity
7.0% of pay
+
+
DB: CSRS Offset
CSRS Annuity
.8% of pay
Social Security
Benefits
6.2% OASDI
© 2016 Financial Workshops, LLC
1987:
Thrift Savings
Plan Option
Added
Retirement Planning
Retirement Eligibility
Unreduced Benefits
Age 62 and 5 years creditable service
Age 60 and 20 years creditable service
MRA and 30 years creditable service
MRA and 10 years creditable service
Postpone benefit receipt until age 62 (age
60 with 20 years of service) to avoid 5% per
year annuity reduction
Employees contribute .8% of basic pay
(3.1% for employees hired after December
31, 2012)
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Retirement Planning
Retirement Eligibility
Unreduced Benefits
Age 55 and 30 years of credible service
Age 60 and 20 years of credible service
Age 62 and 5 years of credible service
Employees contribute 7% of basic pay
Also: Unused sick
leave credit
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Retirement Planning
Credit for Unused Sick Leave
Full credit for unused hours, no limit.
However, any hours that do not add up to a
full month are discarded.
Note: unused sick leave cannot be used in
computing high-3 salary or for meeting the
minimum length of service for retirement
eligibility
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Retirement Planning
Minimum Retirement Age
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If you were born
Your MRA
Before 1948
1948
1949
1950
1951
1952
1953 to 1964
1965
1966
1967
1968
1969
After 1969
55 Years
55 Years, and 2 months
55 Years, and 4 months
55 Years, and 6 months
55 Years, and 8 months
55 Years, and 10 months
56 Years
56 Years, and 2 months
56 Years, and 4 months
56 Years, and 6 months
56 Years, and 8 months
56 Years, and 10 months
57 Years
Retirement Planning
FERS Basic Annuity Calculation
Unreduced Annuity
If retiring before age 62:
1.0% x high 3 average salary x years
of service
If at least age 62 and at least
20 years of service:
1.1% x high 3 average salary x years
of service
© 2016 Financial Workshops, LLC
Retirement Planning
FERS Basic Annuity Calculation
EXAMPLE
Step One
Age 57
30 years of service
High-3 = $60,000
1.0% x 30 years = 30%
Step Two
30% x $60,000 = $18,000/year*
If at Age 62, 30 years of service, High-3 =
$60,000
1.1% x 30 years (33%) =
$19,800/year
*No Cola until age 62
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Retirement Planning
CSRS General Retirement Formula
Unreduced Annuity
3 Steps:
1.5% x high 3 average salary x years
of service (up to 5)
1.75% x high 3 average salary x years
of service (6-10)
Plus: 2.0% of high 3 average salary x
all service (over 10 years)
© 2016 Financial Workshops, LLC
Retirement Planning
CSRS General Retirement Formula
EXAMPLE
Step One
Age 55
30 years of service
High-3 = $60,000
1.5% x $60,000 x 5 years = $4,500
Step Two
(16.25%)
1.75% x $60,000 x 5 years = $5,250
Step Two
(40%)
2.0% x $60,000 x 20 years = $24,000
Total Annual Annuity = $33,750
$33,750/$60,000 = 56.25% income replacement
© 2016 Financial Workshops, LLC
Retirement Planning
CSRS General Retirement Formula
Annuity generally capped at
80% of high 3 average salary
Exception for lengthy service
due to sick leave credit.
Early retirement penalty:
2%/year
© 2016 Financial Workshops, LLC
Retirement Planning
FERS Basic Annuity Calculation
MRA + 10 Immediate Annuity
(Reduced Annuity)
Imposes a 5% annuity reduction for
each year the worker is under age 62
(age 60 if worker has 20 years of
service)
© 2016 Financial Workshops, LLC
Retirement Planning
FERS Basic Annuity Calculation
Example: FERS Basic Annuity
Age: 60/62
Years Service: 30/32
High 3 Avg.: $60,000
COLA: 3%
Life expectancy: Age 90
© 2016 Financial Workshops, LLC
Retire at age
60 with 30
years
Retire at age
62 with 32
years
Annual Annuity at
Retirement
$18,000
$21,120
Annual Annuity at
Death
$43,691
$48,321
Total Lifetime Payments
Received
$856,357
$906,701
Retirement Planning
Credit for Unused Sick Leave
50% credit for unused sick leave
Prior to 12/31/13
100% credit for unused sick leave
Effective 1/1/14
Cannot be used to establish title to an annuity
Cannot be used in the
computation of average salary
© 2016 Financial Workshops, LLC
Retirement Planning
Retiring Prior to Age 62
Eligibility
One full calendar year of FERS service
Retire with entitlement to an immediate
annuity under one of the following criteria:
At or after the minimum retirement age (MRA)
with 30 years of service
At age 60 with 20 years of service
At or after the MRA under involuntary or early
voluntary retirement (age 50 with 20 years of
service or any age with 25 years of service) if the
agency is undergoing reorganization, reductionin-force, or transfer of function
© 2016 Financial Workshops, LLC
Retirement Planning
Retiring Prior to Age 62
Eligibility
One full calendar year of FERS service
Retire with entitlement to an immediate
annuity under one of the following criteria:
Under special provisions for law enforcement
officers, firefighters, air traffic controllers, or
military reserve technicians
At or after the MRA under early retirement
provisions for Senior Executive Service
At or after the MRA for Members of Congress
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Retirement Planning
Retiring Prior to Age 62
Ineligible Employees
Employees retiring under disability or
the MRA + 10 provision
Employees retiring at age 62 or
separating with eligibility only for
deferred retirement
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Retirement Planning
Retiring Prior to Age 62
Supplement Calculation
Step 1: Estimate the full career
Social Security Benefit as if the
employee were age 62.
Step 2: Calculate civilian service
creditable under FERS, rounded to
nearest full year
Note: Military service is included
only if performed during leave from
civilian service after FERS coverage
began.
Step 3: Divide the years of FERS
service by 40 to obtain a fraction.
Step 4: Multiply the career Social
Security Benefit by the fraction
determined in Step 3.
© 2016 Financial Workshops, LLC
$1,000/month
30 years
30 ÷ 40 = .75
.75 x $1,000 =
$750/month FERS
Supplement
Retirement Planning
Retiring Prior to Age 62
Supplement is subject to Social Security
earnings limitations
Annuity Supplement
Limit applies only to income from wages
Must report earnings to OPM for each year
eligible to receive supplement
In 2016, earnings limit = $15,720
Retirees exceeding this amount:
$1 in supplement benefits will be
withheld for every $2 earned above
the limit
Example:
Earn $20,000 and receive
$12,000 annual supplement
benefits
© 2016 Financial Workshops, LLC
$20,000 - $15,720 = $4,280
$4,280/$2 = $2,140
$12,000 - $2,140 = $9,860
Retirement Planning
COLA
Amount of increase depends upon the
change in the average Consumer Price
Index for Urban Wage Earners and
Clerical Workers (CPI-W) for the third
quarter of each year over the third
quarter average CPI-W index of the
previous year.
If it increases by 3% or more,
COLA = CPI-W minus 1%
If it increases by 2% to 3%,
COLA = 2%
If it increases by 2% or less,
COLA = CPI-W
© 2016 Financial Workshops, LLC
Retirement Planning
COLA
Benefits Eligible for COLAs:
Retirement benefits payable to
retirees age 62 and older
Survivor benefits
Disability retirement benefits
Certain special service (LEO, ATC, FF)
retirees age 50 with at least 25 years
of service
Special CIA employees
© 2016 Financial Workshops, LLC
Retirement Planning
COLA
Percentage of increase determined by
average Consumer Price Index for
Urban Wage Earners (CPI-W) for Q-3
over Q-3 average of the previous year.
A COLA* is paid to all CSRS retirees,
regardless of the age at which they
retire, and to their survivors.
*Subject to final approval
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Retirement Planning
Events that may cause adjustments in
income:
Age and years of service
combinations
Social Security Eligibility (age 62 or
later)
Earned income above certain levels
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Retirement Planning
Events that may cause adjustments in
income:
Government Pension Offset
Windfall Elimination Provision
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Retirement Planning
Government Pension Offset
Applies if you worked for a federal, state, or
local government where you did not pay
Social Security taxes
Offset reduces the amount of your Social
Security spousal or survivor benefits by 2/3
of the amount of your non-Social Security
annuity
Example
Your monthly CSRS annuity = $1,200
Social Security spousal or survivor annuity =
$900
$1,200 x 2/3 = $800
$900 - $800 = $100Amount you will receive
from Social Security.
© 2016 Financial Workshops, LLC
Retirement Planning
Windfall Elimination Provision (WEP)
Applies if you will receive a pension from a
job where you didn’t pay Social Security
taxes (CSRS) and you also have enough
Social Security credits to be eligible for
retirement or disability benefits
Applies to workers who reach 62 or
become eligible for a monthly pension
based in whole or in part on work not
covered by Social Security
Results in use of modified formula to
calculate your personal Social Security
benefit (Up to a 50% reduction, subject to
“substantial earnings” test)
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Retirement Planning
Substantial Earnings Test
The Windfall Elimination Provision does not
apply if:
You are a federal worker first hired after December
31, 1983; (FERS Employee)
You were employed on December 31, 1983, by a
nonprofit organization that did not withhold Social
Security taxes from your pay at first, but then began
withholding Social Security taxes from your pay;
Your only pension is based on railroad employment;
You have 30 or more years of substantial earnings
under Social Security.
© 2016 Financial Workshops, LLC
Retirement Planning
FERS Survivor Annuity Option
Election is a fixed percentage of the
unreduced annuity
25% or 50% option
25% election – 5% of unreduced
annuity
50% election – 10% of unreduced
annuity
Insurable Interest Party may be named
Cost based on the age difference
ranging from 10% to 40%
© 2016 Financial Workshops, LLC
Retirement Planning
EXAMPLE:
FERS Survivor Annuity Option
Age 60
Retirement Benefit:
$1,500 / month
Years of service: 30
High 3 Average: $60,000
Annuities “pop up” to
the unreduced
amount if the
designated annuity
beneficiary predeceases the retiree.
50% Option
25% Option
Survivor Benefit: $750
/ month
Survivor Benefit: $375
/ month
Cost: $150 / month
Cost: $75 / month
+ Social Security Benefit*
*Survivor eligible for the greater of either their own
benefit or the deceased spouses benefit
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Retirement Planning
CSRS Survivor Annuity Option
Minimum to 55% of unreduced
annuity election
Election may be a percentage or
dollar amount
Cost: 2.5% of first $3600, plus 10% of
the amount over $3600 used as a
base
Benefit continues to survivor for life,
unless remarriage prior to age 55
© 2016 Financial Workshops, LLC
Retirement Planning
EXAMPLE:
CSRS Survivor Annuity Option
Age 60
Years of service: 30
High 3 Average: $60,000
Annuities “pop up” to
the unreduced
amount if the
designated annuity
beneficiary predeceases the retiree.
© 2016 Financial Workshops, LLC
Retirement Benefit:
$2,813 / month
Survivor Benefit:
$1,546/ month
Cost: $274/ month
Retirement Planning
© 2016 Financial Workshops, LLC
Retirement Planning
Retired Military Service
Cannot receive credit in your
civilian annuity unless:
Waive retired pay
Retired military pay awarded:
Service-connected disability
incurred in combat
Service-connected disability
caused by instrumentality of
war in line of duty
Under Provisions of 10
U.S.C., Chapter 67
© 2016 Financial Workshops, LLC
Retirement Planning
Three Major Sources of
Retirement Income
Employer Sponsored Plans
Social Security
Personal Savings & Investments
© 2016 Financial Workshops, LLC
Retirement Planning
Social Security
Four Aspects of Social
Security Benefits
O
A
S
D
I
Old Age
Survivors (Spouse Only)
Survivors (Others)
Disability
© 2016 Financial Workshops, LLC
Retirement Planning
Social Security
Eligibility
Retirement
40 quarters of coverage
2016: $1,220 earned equals
one credit/quarter
Age (62 to 67) Early to Full
Retirement Age
Cost – 7.65%
6.20% OASDI
1.45% Medicare
© 2016 Financial Workshops, LLC
Breakeven
Points
Age
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
Age 62
$1,125.00
Age 66
$1,500.00
Age 70
$1,980.00 (monthly
(monthly benefit)
(monthly benefit)
benefit)
$0.00
$13,500.00
$27,000.00
$40,500.00
$54,000.00
$67,500.00
$81,000.00
$94,500.00
$108,000.00
$121,500.00
$135,000.00
$148,500.00
$162,000.00
$175,500.00
$189,000.00
$202,500.00
$216,000.00
$229,500.00
$243,000.00
$256,500.00
$270,000.00
$283,500.00
$0.00
$18,000.00
$36,000.00
$54,000.00
$72,000.00
$90,000.00
$108,000.00
$126,000.00
$144,000.00
$162,000.00
$180,000.00
$198,000.00
$216,000.00
$234,000.00
$252,000.00
$270,000.00
$288,000.00
$306,000.00
$0.00
$23,760.00
$47,520.00
$71,280.00
$95,040.00
$118,800.00
$142,560.00
$166,320.00
$190,080.00
$213,840.00
$237,600.00
$261,360.00
$285,120.00
$308,880.00
Calculations
are based on
a person
born in 1951
Retirement Planning
Social Security
Earnings Limitations
Applies if you retire prior to full retirement age and
continue working
Social Security benefit will be reduced $1 for each
$2 you earn above $15,720 (2016)
Example:
Earn $20,000 and receive $12,000 annual Social Security benefits
$20,000 - $15,720 = $4,280
$4,280/$2 = $2,140
$12,000 - $2,140 = $9,860
For Special Category Employees, earnings test applies when employee
reaches minimum retirement age
© 2016 Financial Workshops, LLC
Retirement Planning
Social Security
Taxability of Social Security Benefits
Single
50%$25,000–$34,000
85%Over $34,000
Married Filing Jointly
$32,000–$44,000
Over $44,000
50% and 85% refers to percentage of the Social Security benefit
that is reportable as income for tax filing purposes
© 2016 Financial Workshops, LLC
Retirement Planning
5 Years Before Retirement
Verify eligibility to continue Health
Benefits and Life Insurance
Coverage from OPM
Confirm your financial plan,
retirement income sources and
estimated amounts
Finalize plans to make service credit
deposits or re-deposits
Seek professional retirement
planning assistance if necessary
© 2016 Financial Workshops, LLC
Retirement Planning
Less Than 1 Year to Retirement
Choose your exact retirement date
Contact the Social Security Office
Complete an application for retirement
(www.socialsecurity.gov)
Verify service deposit will be paid prior to
retirement
Submit your application for retirement
60+ days in advance
Submit SF 2818 FEGLI election form
Submit SF 3107 (FERS)
Submit SF 2801 (CSRS)
Determine your best TSP options
© 2016 Financial Workshops, LLC
Retirement Planning
Best Dates to Retire
Calendar
Year
2016
Leave Year: Beginning
Date to Ending Date
Best Days to Retire
Best Days to Retire
CSRS/CSRS Offset Employees FERS/”Trans” FERS
Employees
1/10/2016 to 1/7/2017
Jan. 2, Apr. 2, Apr. 30, May
Apr. 30, May 28,
(26 pay periods)
28,
Oct. 1, and Oct. 29
Oct. 29 and Dec. 31
2017
1/8/2017 to 1/6/2018
(26 pay periods)
Jan. 3, Apr. 1, Apr. 29, Sept. 2, Apr. 29, Sept. 30,
Sept. 30 and Oct. 28
Oct. 28 and Dec. 31
2018
1/7/2018 to 1/5/2019
(26 pay periods)
Jan. 3, Feb. 3, Mar. 3, Mar. 31,
Mar. 31, Apr.
Apr. 28, Sept. 1 and Sept. 29 28, Sept. 29 and
Dec. 31
*TransFERS employees are employees with at least five years of CSRS service who voluntarily transferred to FERS during on the two FERS
“open seasons” held in 1987-88 and 1998. Upon retiring, these employees receive both a CSRS annuity and a FERS annuity but follow FERS
retirement eligibility rules even though they are also receiving a CSRS annuity
© 2016 Financial Workshops, LLC
Presentation Summary
Get your financial house in order.
Establish a financial game plan.
Understand all your Federal employee
benefits and learn how to use them most
effectively.
Execute estate planning documents.
It’s never too early to plan for your retirement.
Keep your emotions out of investing.
When in doubt, consult a Certified Financial
Planner® professional.
© 2016 Financial Workshops, LLC
Presentation Summary
Optimize returns by following proven
strategies
Investor behavior is the largest influencing
factor of portfolio performance
If it sound too good to be true, it likely is
© 2016 Financial Workshops, LLC
Hallier’s 10 rules for investment success:
1.
2.
3.
4.
5.
Select asset allocation based on your
ability to tolerate downside risk.
Keep your emotions separate from
investment decisions.
Keep expenses within the portfolio as
low as possible.
Maintain sustainable withdrawal rates (at
or below 5% per year)
If you have money to invest, then invest.
© 2016 Financial Workshops, LLC
Hallier’s 10 rules for investment success:
6.
Anticipate the effects of tax and
inflation.
7. Maintain adequate cash reserves.
8. Rebalance your portfolio.
9. Avoid all market timing attempts.
10. If you don’t know what you’re doing,
hire a professional. Make sure the
professional is acting as a fiduciary.
© 2016 Financial Workshops, LLC
How to apply for CSRS/FERS
You will submit Standard Form 2801 (CSRS) or
Standard Form 3107 (FERS) to apply for your annuity
benefit.
The average processing time for your application is
102 days. It is beneficial to make sure that your Official
Personnel Folder is complete when you submit your
application.
© 2016 Financial Workshops, LLC
How to contact OPM for retirement
Email: retire@opm.gov
Phone: 888-767-6738
Mailing Address:
US OPM Retirement Operations Center
PO BOX 45
Boyers, PA 16017
© 2016 Financial Workshops, LLC
University of Missouri Federal
Employee’s
Pre-Retirement Workshop -Presented by:
© 2016 Financial Workshops, LLC