#20 – Divorce, Retire When, Regrets

Divorce, retirement and regrets on today’s Fenobabble.

Welcome to Fenobabble, where we make federal retirement benefits understandable for humans like you on Kevin Jones and I’m Cassie Knight we take your questions that online Fednobabble.com or from Kevin’s workshops at the Fed Pilot workshops, and we simply try and answer them and make them understandable for you, or at least bring up the concerns that you have or should be thinking about when you’re looking into those benefits.

So the first question we have for today is I had a divorce approximately five years ago and was awarded my retirement. How do I make sure it’s all coming to me?

How did divorce five years and and was and was awarded my retirement? Does that mean that this person has already retired then? Well, not necessarily if they had a if they had a divorce and they were awarded their retirement, essentially that means in their divorce decree.

Oh, yeah. Then they were awarded their pension. Yes. How much pension? I know it sounds like I’m going to assume it’s the full pension. That doesn’t mean that their former spouse is not entitled to or survivor benefit.

Right. Yep. Yeah. Because they could get a survivor benefit. And and so. So that person gets the whole thing. But but they don’t. Because if the spouse is awarded the survivor benefit, then that’s what some, you know, up to about 10 percent off of their paycheck. So they don’t get the whole thing. They get 90 percent of it. Right. So it depends on your divorce decree. Yeah, let’s see how do I make sure it’s all coming to me?

So here’s one thing that I get often from financial advisers. They submit their retirement paperwork or the application review when somebody is divorced, then they want to take a look at the divorce decree and they ask, you know, OK, how much of the pension is there? How much of the surviving spouse benefit is being awarded to the to the former spouse? And where do they send this? Yeah, OK. Because here’s the thing. If any part of the pension or survivor’s spouse benefit is awarded to your former spouse, then it needs to be submitted as soon as possible.

If you were divorced five years ago, you need to submit that paperwork today. OK, if you just went through a divorce, you need to submit that paperwork today, as soon as the divorce is finalized, is when you should be submitting that paperwork to OPM, because if you don’t and you’re at retirement age, it can delay that retirement process for a number of months before you that months before it’s finalized and possibly even a year. This is something that people don’t think about enough.

It’s like, OK, well, I’m divorced and I’ve got my degree and this is what it looks like. But there needs to be specific language in there.

They’re depending on how it’s written, there may need to be other forms for OPM, and you definitely want to make sure that you have time to get that taken care of. OK. I have the address to submit that and maybe we can, you know, put that up or or we’ll put that in the show somewhere on our website. We’ll do that. OK, that’s great. Yeah.

And again, yeah, this is a great example again of why you should be why every federal employee should be working with a financial adviser from the beginning, because again, when they’re going to say, oh, by the way, did you know you have to do this and you need to catch this and make it really easy instead of, you know, we find people, federal employees. Oh, I have to submit my divorce paperwork. What? OK, well, where do I send it to?

Well, I don’t know. Well, how do you find out? And they waste so much time and effort trying to figure out just where to send it to and all the stuff where, you know, again, one of the advisors and ah, just a network would just say, there you go. Oh, by the way, you need to do it. Here you go. Do that. And and it’s one of the things I talk about in the in the workshop is that there are a few things you have to know about your retirement.

First is where you are right now, the next. And financially health wise, family wise, the next is where you want to go. And then the critical piece of this is to draw a straight line from where you are to where you want to go. And that straight line is your plan. You do not want that plan to go up and down and back and forth and all over the place, because that gets really, really frustrating. If you have someone who can just help point you straight along, then you can just move on without getting frustrated.

Wait, wait. I thought it worked like this. No, it doesn’t work like that. Well, it does. It well, it does in that situation, but it doesn’t. No. Make a nice easy line at.

I want I want to add to that a little bit, too, because OPM and the agencies are whoever you work with for different things, whether it’s buying back service or just trying to get information on your service time, like they can make it go up or down.

Right. Right. But the adviser and our trusted network can keep you on that straight line path. So even though you might get thrown off, they’ll help you get right back on the path to make sure that you are getting where you need to go smoothly. And you’re not like being off track. And then what do I do now? Because the agency is telling me I can’t buy back my military reserve time. Yeah. So I must not be able to.

Yep. And then you find out years later. Wait, I can because you’re that is exactly that I can. And now I’ve accrued interest. Over all of these all of these years, because originally I was told one thing which was not true. Yep, not trying to negate a charm or the age of eight, but there’s just false information out there. And you want to army with the correct information if you have any problems with that, or we’re helping us get the information black and white from OPM and say, hey, take this back here.

This is what you need to do to get the employee back on that straight path and helping them on that journey. So as quick as possible.

Yeah, you know this. And I know we’re spending a lot of time on this one. So we’re going to have to make the next two. But I do want to throw in one more example of this. I was just talking with an adviser this week.

What they have a federal employee who came to them, they’ve been working with them for a while. Well, that federal employee got a notice from H.R. that they have thousands of dollars that they have to pay into Feigley back pay because they didn’t take it out of the paycheck for a number of years. And they’re like, what, are you kidding me? And so they had to work through that whole thing and it it turned out good for them. But that’s another example of how hard OPM may come back and say, no, we’re going to switch things.

And the adviser can say, no, we’re going to put you back on the right path even if they throw you off. And it was that way, unfortunately. Fortunately, in this way, H.R. or OPM or whomever they were working with was wrong and they’re able to fix it. But if you don’t know how to fix it, you would just take it at face value, saying, oh, no, I owed thousands of dollars. How do I get out of this?

I can’t. Oh, well. And people do that all the time and they pay those thousands of dollars not knowing that they never needed to. So I’m sorry. I thought that was an excellent example of what you can get into here.

You know, with option C for family is great. That’s a great example. Another example of what people don’t realize they can get that refund. Yeah. And that can be huge. I mean, that’s an even if that’s a few thousand dollars, something is better than nothing. Yes. Is. All right. Let’s go on to the second question.

OK, we’re going to make these quick. Yeah, so can’t hold on, I can’t really see that. Are you seeing a little thing on that screen to. I am I don’t know why they in OK, we’re we’re just going to have to pretend it’s not there. OK, there we go. Yeah, OK. When I retired, retired the day after my sixtieth birthday with 20 years or do I have to finish out the month or pay period.

Hmm. OK. So you can retire. OK, you can retire the day after your sixtieth birthday with 20 years. Absolutely. Whether or not you should is another question. Bingo. OK, and it depends on if your seats are surfers, OK, if you are a Fer’s employee, you want to retire the last day of the month if possible, because that means your pension is going to begin accruing the first of the following month. So say I’m retiring January 30 first, then my pension begins accruing on February 1st.

However, if I retire January 15th, my pension doesn’t start accruing until February 1st. So I lose two weeks of either pay or pension accrual. OK, so people would say if your first day of the month is the best time to retire.

Yeah, if you’re looking at it as an example, you know, the end of the month, for example, my my birthday is February 4th.

So if I retired on February 5th, my pension doesn’t begin accruing until March 1st.

So I basically missed out on a full month’s pay, either as a federal employee or as a retiree. So, yeah, it depends if if I’m itching to get out at 60 and 20, which is the eligibility. Right. If I’m itching to get out and I’m financially OK, then fine, I’m going to get out because I can’t mentally stand it anymore. But if I want to be paid as much as possible, then I’m going to wait till the last day of the month.

I’m going to wait till the twenty eighth. Twenty nine. Yeah, and this is also something that people can coordinate with their annual leave because that gets paid out. So if you know that you’re not going to necessarily need the Annual leave or other expenses and you want to leave the day after your sixtieth birthday and you know, your birthday is on the or the second of the month, and you go on to go out on the on the third and do that and just use the Annual leave payout for that month, depending on how much you can get or save up for your Annual leave, because different agencies have different maxed amounts for for that accrual.

But you know that there’s different ways to get this figured out if you want to leave the day after your 16th birthday. I have to, absolutely, because I can’t stand it anymore.

And we get we get those people in the workshops that I can’t do this anymore. I want out. OK, I get it. I remember a scenario where I was working with an employee and he did not care that he was going to get a 30 perc ent decrease almost for an MRA+10 scenario because he wanted to go out as soon as he is Emori. He said, I just mentally cannot handle it anymore. I want out. I think he was like fifty six and some change.

And he said, That’s it, I’m done. I said, well, this is going to be your penalty. And he said, OK, well that’s all right.

You know, there are a whole bunch of different reasons why that may just have been the right decision for him. And it’s hard for us to judge that. Right.

So, yeah, OK, I was born in 62 and my city is nine of eighty eight. Does this mean I should have retired or could have retired in twenty eighteen. I was born I was born in sixty two and I said is eight. Well then if we do the math that’s 30 years. At that’s 30 years then, so I guess, you know, if they have 30 years, I guess it really depends on how many years they worked as a federal employee.

If they have the 30 years, then. Yeah, and and isn’t that interesting that let’s say let’s assume that they’ve had 30 years. Right. They have the 30 years and 30 years. They now in twenty 20 realize they could have retired two years ago.

And again, that’s another thing we see all the time, what I could have retired, what I’ve been working for. What.

Yeah. Yeah, so they were born in 62, they would be 58 this year, assuming that their birthday was prior to November, right. And so they would be 50, they would have the age requirement. They’ve obviously met the minimum retirement age because that is anywhere between fifty five and fifty seven. And for nineteen sixty two, definitely you’re over your MRI. And so you’re you’re age 50. You’ve met the age requirement. If you started in September of eighty eight, then obviously you have thirty years by twenty eighteen and so you’re the MRA with the years.

Absolutely. You can retire or could have retired in twenty eighteen. And this is just one of those scenarios where people don’t realize what they could do. With that, with their with their or her and what it’s like for a very good example of. You know, if someone is somebody who if they would have had the knowledge, yep, five years ago, would they still be in service? Right.

And when we say this is why we just urge people as as possible.

Yep. Does this does this mean I could have retired? Well, again, let’s look at this in a couple of different lights, could have eligibility wise. Yes. Could you have money wise? Hmm. Depends. Could you have family wise or health wise? I mean, there are a number of ways to look at this, that eligibility isn’t the only wise that we need to look at when and you or could you have retired?

There are a number of other factors as well. And again, you’re right. This is why you need to figure this out sooner rather than later. You need to be looking forward to and know that this is when I can retire rather than, you know, because what if let’s say two thousand at the same at the end of 2018, you think, oh, I can’t retire, but I really want to, I need to medically or whatever it is.

And you’re stressing about this and you don’t even know that you could have you can’t retire. Go ahead, do it. But you’re freaking out that you can’t.

So again that’s why we say go to Fednobabble.com, go to Fednobabble.com and sign up for the retirement report that Cassie will put together. But we will put you in touch with one of our trust, one of our advisors that we have on our trusted network. They’re going to reach out to you, get the information from you. Cassie is going to do the report, and then our advisor will walk you through the whole thing and show you, OK, this is when you can retire.

This is when you can’t on each of those wises.

I don’t know what other way to put that, but in each of those type of scenarios and I mean and it’s no cost, no obligation, no sales pitch. It’s just to give you information. You got to know about it. So please go do that.

Yep. And then outline exactly what you should or shouldn’t do like it. Could you have retired. Sure. But is that a good decision or not? You know, and they’re going to they’re going to tell you exactly why or why not and what other information you need to consider when looking at whatever situation or whatever questions you have for them. So, again, no cost or obligation. Don’t forget to like, share, subscribe. You know, send this to your friends and let them know that we’re here for you guys and we we just want to encourage you guys to do due diligence with your benefits and really make them the most advantageous for you.

Yeah, make them work for you. Do not do not just take the default the government gives you make them work for you. All right. Thank you for watching, everyone.

We appreciate it. And we will see you next time.