#29 – Early Bird, Price Hikes, and Allocations

EarlyBird, price hikes, and allocations on today’s Fenobabble

This is Fednobabble.com, where Kevin and Cassie make federal retirement benefits understandable for humans like you. These two don’t hold back as they answer questions from the Fed Pilot workshops and webinars or from questions submitted by you at Fednobabble.com.

Welcome, everyone. It’s good to have you back once again. Let’s hit this right off the bat. Cassie this I was thinking about this question earlier and and I’ve got some answers to this, but do you recommend taking Social Security early?

I don’t recommend anything because I’m not the financial adviser. That’s about it. We’re not going to give me.

That works, right?

Yeah, that’s right. And so it depends. There’s several factors that I think people need to take into consideration, because this answer can vary for everybody.

Right. The the guy who has cancer at retirement at 62 or finds out that he has cancer shortly after retirement is going to want to take that Social Security earlier than somebody who, you know, hey, I’m going to live a long time.

I’m still working at 70 and I’m not going to take it until my actual later.

Retired later age at 70, which is the highest age that you can collect Social Security.

So I think it really it depends on, you know, not just health, but what is your financial situation look like? Where are the different buckets of money that you have coming in? Do you have to draw Social Security early just because you’ve got to make that income need? Yeah, I don’t know.

So I got yeah. You know, I was going to answer. I was going to answer. How do you recommend taking Social Security early? I was going to say no. Do I recommend it taking late. No jury recommended taking it at FERS. No, I don’t. I mean. Oh my goodness. One of the one of the advisers that I trusted network I was talking to recently, and he said there are five hundred over five hundred and fifty different strategies for Social Security.

Wow. And I’ve been saying and it’s and it’s everyone’s job to figure out which is right for them out of the five hundred and fifty eight. So you’re right. It is. I mean, it’s kind of like I was just thinking about someone saying, OK, is our solar system on the right side or the left side of the of of our galaxy?

That’s a really good question.

Well, you know, it depends on which perception you’re at or, you know, angle and what you see, what you what you’re looking at, which side you’re on. Right. It’s just like, what side is your driveway on? Well, what side of the road are you going to be coming down? Right.

Right. Yeah, exactly right.

It’s not quite that simple for Social Security, but it is for our guys who are working or now we’re helping employees figure this out. Right. And putting all of those different pieces of the puzzle together. So that way they can determine not if it’s recommended to take it early, but what age is it recommended to take it when? And I think that’s the bigger question that we need to take that employees or retirees need to take a look at is what what is that break even point in my retirement that it makes sense for me.

And if we knew if we knew when we were going to die, it would make this whole thing a lot easier.

Well, maybe our spouse already has a timeline for us.

But besides that, I know a little worried there. But besides that, you don’t know.

And so I was talking with one of the again, one of the advisors and a trusted network this week. And we’re doing a workshop together. And and I said, all right, you’re going to do you’re going to do the chat. I’m going to do the presenting on the front end. You do the chat in the background, will bring it in and be talking as well. But while I’m talking, you do the chat and he goes, so I’m answering questions.

I said, yeah, and most of them will be it depends because people are asking really specific questions like this that you don’t know until you look at someone’s situation, someone’s family life, someone’s goals, someone’s financial health, inside and outside the government.

Someone’s what you’re predisposed to all these different things. And then. You can make a good choice at that point, but not until then, so right. OK, that’s number one.

Number two, we receive a lot of emails regarding Broza, we being so this is the federal employee talking. Right?

We receive a lot of e-mails regarding somebody from HR then. Right?

And receive a lot of emails.

Let me let me see. I haven’t read this in a book. So we receive a lot of emails regarding Fedeli insurance costing a lot more than private insurance. But as we age, I don’t know of anyone who has done this. Is it really worth it on this?

So I saw this actually as a federal employee receiving, you know, just random emails that, hey, you should buy our insurance because it’s too expensive. That’s kind of how I read it.

Yes. Yes. Now that I read it all in context, then I it takes me back to the time when I was helping federal employees with their planning. I had this one gentleman in particular, which we were looking at, you know, getting that outside private coverage outside of vaguely. And he had received an email around the same time that we were talking about a similar marketing email regarding targeting Feigley and the fact that it progressively gets older as you age.

And they were trying to ultimately to sell him into a private plan.

You mean and more expensive as you age. Right. Is that what you meant, older as you age? I’m like, well, yeah, I mean, that’s more expensive. I just want to make sure. Yeah, that’s what happens. Cassie. Yeah. Sorry. Go ahead. Go ahead.

Yeah. That’s what I get for getting not enough sleep but OK. So yes it’s cost for my point to that was I was like well yeah. Didn’t you look at the report. I mean I showed you in the report that costs and so we were able to kind of branch out from there and, you know, have that deeper dive into that conversation because he was like, oh, well, you know, this is what I received. And I’m like he’s like, isn’t that kind of the same thing that you’re doing?

And I was like, well, somewhat. But they are specifically just looking at one benefit that you are getting. We’re looking at the whole piece of the pie and kind of what that looks like, making sure that we’re we’re connecting all those dots and that we’re coordinating that care together. And I think that’s why, you know, I’m so passionate about this, is because it really irks me when advisers are just after that one quick sale.

And that’s one thing I love about our trusted advisers and our network is they are doing the full service planning. We’re making sure that they’re not after that quick sale. And because you can’t just look at your life insurance, right? Yes. FEGLI is your is going to cost more as you get older. It’s what we call on the private part, private side as a five year term policy, because as you get older every five years, that premium increases and in fact, it almost doubles at 55 and age 60.

And depending on the options that you have chosen or what coverage you’ve elected for family, it can get really expensive.

Right. And a lot of times, if they have more coverage of FEGLI Insurance, by the time their premiums stop increasing at age 80, they’re paid more into the policy, into the family program. Then they have the actual coverage that they have. That’s right. Sometimes that happens sooner.

Sometimes it happens later. Again, it depends on some of these income and and all of those different factors to that specific person. But I really do feel like the earlier somebody can look into this and look into private insurance because you’re not going to know your own numbers until you actually branch out.

Right. And one of the things that I say in the book workshop was that is that I know that was a lot.

Sorry. I know you’re spot on, though, really? Because one of the things that I say in the workshop is, is it’s sort of some some people think, OK, there’s the government insurance, which is FEGLI, and then there’s private life insurance. But they don’t realize is that FEGLI is private life insurance in a government wrapper. Right. And in fact, so it’s MetLife, just one plan of MetLife where MetLife has hundreds of solutions. There’s the government is only giving them one solution of MetLife where they could have hundreds.

And it’s not only I don’t want to say it’s not any cheaper because it it it might be, but it’s a lot of times it’s really not so. But it may be the only thing that they can get. So I’m not saying that it’s good or bad. We just have to be educated on what actually is FEGLI. When do the prices go up? Look at it, like you said, in a holistic approach rather than just life insurance.

No. Well, let’s talk about life insurance and also long term care and also TSP and also your pension and your security in light of all of that and then make a decision. You can’t just say, oh, I want to go get it. I mean, you can, but it’s not typically the best when it’s not.

In fact, I had another client who we were looking at replacing their FEGLI coverage, but going through the underwriting process, we found out he was not insurable.

So thankfully, don’t cancel anything. We didn’t change anything with FEGLI and he had some really strong coverage with the options that he had chosen. So I said, hey, look, you need to keep this because you’re already there. They don’t do a medical examination unless you try and convert it over to permanent coverage. I said, but right now, this is your best option, you know, because the just the way that we were looking at the coverage he needed at the time and everything else, it just wasn’t going to be worth it for him.

Sure. Yep.

So. Sometimes those are just what what has to be right. Right. And that’s why we always say if you are looking at private insurance, too, don’t cancel your coverage.

Yes, please.

You don’t know what those different plans are going to entail, what those underwriters are going to say. And, you know, maybe one company isn’t going to be the right one. Maybe you have to look at a couple of different companies. But in the meantime, you don’t want to cancel your coverage or decrease your coverage. Right.

And not when you don’t have the option to increase it or get more coverage later. Because if you do that, you could ultimately, you know, not have that coverage in place when you need it most or when your spouse needs it most or whoever your beneficiary is, because it you know, you couldn’t find coverage elsewhere. So you’ve got to be careful with with the insurance on. If you are looking elsewhere, you know, keep what you have until you have that policy in place and you’ve paid for it and you’ve signed on the dotted line.

Yep.

One quick story. I had someone who who was doing who said, OK, I’m going to go get coverage. I mean, private insurance, private life insurance.

And she so she came to our class, learned about and said, well, I’m going to I’m going to go check it out. She checked it out. I said, OK, this is best for me. I’m going to go do this.

The day before she was going to go sign, she had a little bit of a heart attack, not a massive heart attack, but a little heart attack. It precluded her from getting any more life insurance. And now the only thing she could have had was family and she did not cancel it. Thankfully, she kept it. And so she she was still OK. She was going to she’s going to be paying more, but she waited just one day too long.

Had she gone the day before, she would have been fine, and that’s why we say, go figure this out now, do not wait every I mean, I don’t care for 20 years from retirement. Figure this stuff out now. So, OK, if SRS to this podcast’s.

Yeah. Go and and look into this and get a hold of somebody. If you don’t have a financial advisor or insurance professional that understands the federal benefit, please let us know. Sign up on our contact. We’ll be able to get you in touch with somebody in our trusted network who can help you get that information.

It’s free to know right now. Sales pitch. Exactly. It’s simply just you your numbers, because you can’t do any sort of planning or any sort of further action until you know where you stand right now with your benefits. Yes. And they have you and they’ve agreed to do two free consultations, getting your your numbers and making sure that you understand what you have generally before you can do any of the other retirement planning.

So, you know, definitely worth it to look into.

That’s what I’m going to say. Absolutely. Yes. Yes, yes, we do. We do hundreds of them every month. And so anyway. Well, I’ll just stop there. OK, next question.

Next question. Are there any settings on TSP allocation now?

Yes, but depending on what he obviously this is a very vague question, but I thought this would be a good opportunity to just quickly talk about what are the settings and what kind of what kind of things can they set in their TSP.

You want to cover some of that? So there’s a lot of things that they can do within their TSP that ultimately the employees in control of that, right. So initially when somebody signs up, then the TSP does have a certain allocation and contribution that they’ve set up. But it depends on when you were hired. Right.

That will depend on what they automatically put in place for you if you haven’t done any further, anything further with your TSP. Right. So I can’t tell you the answer is yes. They have settings to automatically do allocations to the TSP. But what those settings are change every few years. And so I don’t know what his set up for you.

That’s what I can say. But take ownership of your TSP, please take a hold of that. Look into it. And and you know, there are certain contributions that you I feel that you should be doing. But again, I’m not a professional. I can’t tell you what you I can’t recommend what to do to you or in your TSP plan and for one key, but the government matches five percent and free money is free money.

So I would take that if you can take it. Yeah.

You know, Cassie, I think correct me if I’m wrong on this, but I think that there are three different allocations that can be made and we can call in allocations is kind of a general word. No, the first one is how much money do you put in? How much are you allocating to the TSP? The second one is how much do you allocate to the five funds, the GFC, S.A. and then the next one is how much do you allocate to ROTH versus traditional?

I know and it’s odd because when I do the workshops, I get questions like so I can add to the ROTH for my right is is it in there? Can I go ahead and do that. I’m like, yeah, it’s been there all along. Maybe you just haven’t seen it. But it’s, it’s there, it’s right in front of you and you haven’t seen it. So I think those are probably the three, you know, if we call it allocations that most people would be talking about.

Yeah.

I was going to ask you if you could actually elaborate a little bit more on that, because I remember when the first workshop that I attended that you were hosting live. Yeah, I had brought my husband to. Yep. And I love him.

And he had taken some advice, though, from his uncle, who was XRX employee, and he was first and his uncle told him, be in the G fund.

That’s the safest thing. Right. And you were trying to guide anybody to anything. You were just simply giving them the information about the TSP. And he we do this thing in the class, in any class that we take together, we make notes to each other. And he was like, what? Questionmark.

What do you mean that the the, you know, C and S fund were like the highest over the G fund for earning just like I don’t know how many years. Like, yeah, they had some really bad years, but for the most part, like he was just like mind blown, like I need to do something different because I’m younger. I have more years in service like all of this difference.

And so finally he let me take it over for a month or so.

But it was just like he didn’t understand what it was about the TSP, and therefore he just went for the safe bet. He took that water cooler talk and he just ran with it. Right. He didn’t it wasn’t until he was actually informed that he can make better decisions for himself. Right. Which I think that’s what people need to do.

Yeah. Which is why we do this so everyone can be informed and do it. OK, I hate to say, but we’re out of time. I’d say that’s alright. Five, four, three, two, one. Thanks Cassie. Talk to everyone next time. Hope you gained a lot in this Cassie next time. All right.

Well we’re getting there right.

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