Special Retirement Supplement (SRS)

How does the Special Retirement Supplement (SRS) fore FERS employees work? Also erroneously known as the Social Security Supplement, or Gap Insurance.

24

#24 – Burning SL, Still There?, Army Reserve

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Burning sick leave, still there? And Army reserve 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.


Hi everyone. I am Kevin Jones and I’m Cassie Knight and we’re going to answer some questions on today’s Fenobabble. So the first question is, if I burn my sick leave on an hourly basis, how many hours am I looking at? Forty eight or fifty four? I don’t want to go over and risk losing a full month by missing the mark.


OK, well, if that wasn’t confusing enough, let’s let’s break this down just a little bit. I think what this person is trying to get at is the 30 days that you so you can use your look, leave whatever that is sick, leave sick leave in your calculation for your pension. So let’s say let’s say you have again forty five days of sick leave and you have you can use 30 of that in and use it into the calculations of the 14 days or you lose.


So when this person says, what am I looking at. Forty eight or fifty four.


I don’t know because that’s you personally and we don’t know what your situation is, but whatever it is, you know, take 30 of that and move it over into the months column really. And and use the extra left over. Now what people don’t want to do is accidentally take too many hours and have it take off a whole month because that’s what it will do.


Right. So now there is the sick leave chart and it’s based on two thousand eighty seven hours per year. Right. Excuse me.


And that equals one whole year that will be added to somebody is a pension, essentially, if they have that many sick leave hours built up. So if you burn your sick leave on an hourly basis, how many hours are you looking at for what are you looking at? That’s how many hours you burn or that’s how many hours you need to have to to qualify for a full month. Like, I don’t know how many hours this person is starting with, so I don’t know how many hours they need to burn.


Right. Um, you know, a risk losing a full month by missing the mark. If you’re concerned about that, then make sure you have an extra day or two of sick leave to where you know that you’re going to be solid even if you don’t or. Yeah, even if you don’t. Even if you retire. Excuse me. And you know, you’d rather lose out on a day or two that a full month. You want to make sure it sounds like this person is really concerned not having that full month.


They don’t want to lose twenty eight days or twenty nine days. We want to make sure that that full 30 days goes over into the pension amount. And so if that’s the case, be over by a day or two. But I can’t really do the math on what you’re looking to burn forty or fifty for it because I don’t know what your how much you’re starting out with. So I don’t know how much you need to burn. Yep.


And that’s something that when you when any federal employee meets with one of our advisors in a trusted network, they could just figure that out. And that’s another one. Let me just figure this out for you. OK, done. Here you go. Kind of.


Yeah, because they’re submitting all of that information to me to where I know what they’re sick leave is how many, you know, what their retirement service computationally is. So that way we can know exactly how many hours or how many days sorry that they’re going to have with that retirement and then how many sick leave hours they need to have on top of that to make that thirty day mark happen.


So if you you know, if you’re coming or getting in touch really with one of our trusted advisers, then we’re going to be able to help you figure that out. But unfortunately, I can’t do that right now.


Yeah, and what you don’t want to do is, is if you do it by yourself, there’s always the chance of saying, oh, I accidentally went in the next month, which takes off money from your pension for the rest of your life. And it has a compounding effect. So obviously you don’t want to do that. OK, next one is the gap. You meant if I retire before 62, still in place, so in Cassie in the last the last episode of the episode before that, we talked about all the different names for Survivor benefit.


I’m not Survivor Benefits Special Retirement Supplement.


You’re putting up with a new word. I know. Yes, I am. I just like making up names right now. So there’s a gap payment. There’s gap insurance, there’s Social Security supplemental, Social Security offset. This is really special.


Retirement supplement.


Yes, that is the correct name. Special retirement supplement. It is from the federal government. It is not a Social Security benefit in a strictly a first employee’s benefit from the federal government. If you retire prior to 62, they will give you a certain amount based on your estimated benefit at 62 with Social Security and how many years, full years of service that you’ve had. And they’ll divide that up and find out what that amount will be for your special retirement supplement, OK?


And I can understand why people get this confused, because in the formula, it pulls over Social Security, the Social Security amount that you get at sixty two. So it makes sense to people.


And it’s also subject to the earnings test. Right.


That’s very similar to Social Security. Right. Right. The government has kind of adopted that earnings test from Social Security and they use it for this benefit. So it’s a very confusing benefit, especially when people don’t realize that Social Security supplement, which is what I hear most commonly, is something that is actually a Social Security benefit for disabled people and things like that. There is a supplement income for folks. And so they don’t realize that, though, when they’re talking about the special retirement supplement.


And it’s a very, very confusing in this name, it’s thrown around with so many different variations and people gap payment, right? I mean, it could be viewed as a gap payment because it’s for employees who are under 62 and it only lasts until you’re age 62 when you are eligible for Social Security. Even if you don’t begin drawing Social Security, it only lasts until you’re 60 to it. So it fills that gap of time before Social Security is is eligible to be drawn.


And so I can understand how people come up with the name. But the real name is Special Retirement Supplement.


What do you even know?


It’s still in place if you’re on it before age sixty two and you retire, however, only on an immediate full pension. Right.


And I’ll go out on a MRA+10 basis. You’re not going to receive the special retirement supplement. I want to make sure we’re really clear on that. It does depend on the type of retirement you have on whether or not you’re going to be eligible for this benefit.


So is it still in place overall? The answer is yes. But again, remember, it depends on how you retire. But it also can depend maybe possibly in some future point if Congress decides to take it away and they’re always looking at trying to figure out should we take it away or should we leave it? So that’s one thing that I hear a lot in the workshops is that people are worried, OK, is it still going to be there?


And the answer is it’s there. Now, until it’s not so mean, we don’t we don’t know.


It’s kind of like the high three to high five. Right. People are concerned about that being an issue as well. Exactly. That is seems to be constantly on the House floor for them to discuss it. Really, when it gets passed, we will let you know.


OK, we’ll make note of that for now. We’re dealing with what is current and in place as of today, because that’s the best information we have. So many of these benefits are constantly on the House floor and being discussed about being changed or withdrawn or what have you. And until that actually happens, so we have nothing to go on. We can’t tell you when that will be or what that’s going to look like. And so until then, we’re going to go with what we know and what’s in place today.


And the funny thing about this, and we get to discussions like this all the time about in the workshops, is that, well, if it’s not going to be there, I would plan differently. Well, that’s true. But you can’t let us stop you from planning. You still have to plan, assuming that it’s going to be there and then maybe make, you know, an alternative. If it’s not, then what do we do? And those are the concessions we have to make as we’re planning all those.


OK, what if situations OK, what if it’s not there? Well, then we’ll do this. What if FEHB changes or what if Medicare changes, or what of the TSP changes, or are all these the high three, like you mentioned? Because the high five? We have to be careful with that.


Yeah. What if Social Security is not there by the time all of these all of these are very valid concerns. And that’s why our advisors that we have in our trusted network are experienced in answering those questions. They make sure that, you know, whatever scenario plays out or whatever what if scenario plays out is accounted for when they do that financial plan with you, whether it’s to make sure that you have more tax free income or whatever your goal or situation is, they’re going to help you make sure that you’re covered with all of these different buckets and all of these different benefits and make sure that they’re working together as a well oiled machine and to get you to where you need where you need to be.


And if something happens, if something breaks somewhere, how are we going to fix that situation? And they really distill that down. So all of these are very great questions and very valid concerns and just know that an adviser should be able to answer them for you if they’re not helping you plan. Right. Let us know. We’ll get you in touch with somebody who is versed in the federal benefits and understands exactly how to coordinate them with outside planning.


Yep.


And also mention that along with that Cassie that things will go wrong. Things things will go not as planned. It’s going to happen. And so we may if we’re trying to do this ourselves, I may be focusing on, well, what if Social Security goes away and trying to plan for that when it’s possible that it work, when it’s probably most likely Social Security won’t go away? Now, I’m not saying that that will or won’t or possibilities on that, but there are certain things that we may think are big.


Well, for example, one I remember one lady was really worried about high three to high five, and she said, I’ve got to retire before they make it high five. And I said, wait a minute. Do you for most federal employees, if they change from high through to high five, there’s going to be such a small difference that you’re not going to notice the difference, number one. And number two, the chance of it happening are very small.


So I wouldn’t I wouldn’t be your whole when you’re going to retire off of that, it’s easy for us to place undue burden or emphasis on one situation or one benefit when we should really kind of back off and have a more balanced approach. And that’s what an adviser does help us, helps us balance that much more than we would our own, because we have those emotions that that get in the way. Absolutely.


So say they don’t take Social Security away. What happens if they increase taxes instead? Because. Right, right. There’s all of these different. What do you think about.


Oh, yeah, yeah, yeah, yeah.


I mean, we help people or not we but our advisors help people with those situations and know exactly how to counteract those what if scenarios and make sure that you’re set up. So no matter what happens, you’re still set to meet your goals. Yep.


Perfect. OK, last question. How does the Army Reserve pension play into all this?


I’m going to let you take this away Cassie you go for it with the question that you don’t get very often in your workshops about active duty service.


We don’t I don’t think because a lot of people understand how that works and the bonus that they get. I very few people that I have talked to, when I bring it, if I bring it up, most people like what I’m in reserve or I wasn’t reserves. And I don’t know about this and I’m kind of surprised by that. Yeah.


OK, so let me take a deep breath here.


I love it because there is a lot going on with reserve folks, OK? And they have a huge benefit that they don’t even know about. I would say most of them don’t realize what a benefit they have just being a reservist as opposed to active duty. OK, when it comes into relation to their federal pension, I should say, I don’t know what their other benefits are. Not benefits could be of reserve active duty. But when it plays into your pension on the federal side, it can really be beneficial to be a reservist.


And here’s why. You can if you have retired from the Army Reserves or Navy Reserve, if you have retired from the Reserves Service, then you can quote unquote, double dip your pension. On the federal side, because you can collect your reserve pension and you can make a deposit for your reserve service and collect on that reserve time for both pensions.


What? That’s craziness. Let me just clarify this a little bit. Excuse me, but somebody with active duty military service, if they have bought back their service on the federal side, they waive their military pension so they will no longer receive them in a military pension. When they begin their federal pension, they reserve they receive that federal pension and military pension combined in one federal pension. But as a reservist, you still collect your fat, your reserve pension, and you can also collect that federal pension with that reserve time included and make that federal pension more robust on that side as well.


And so you have you still that’s why they call it double dipping, because you can collect your reserve pension and your federal pension and get credit for that reserve time in both pensions. That’s the bottom line.


And and how does the government allow that?


I mean, so it’s not all reserve service. And let me just make sure that we’re we’re clear on this service time that can be included for the federal side. And that’s the two weeks of the summer. And any training our deployed service. OK, so the time that cannot count is the one week in a month drill time for reservists. They cannot buy back that service, but they’ll get time for all the rest of it. OK, so pretty decent there if you know about and if you play it right.


And here’s another great example. If you know about this, if you play it right, you can score with this. And those are again, something in the in the report that you would you would catch if no one else caught it, you would catch it. Oh, look at this. You can double dip here. You bet.


We are making this note constantly back to our advisers and say, hey, look, this person’s a reservist. They haven’t made a deposit. Let you know they need to follow this process to make sure that they get credit for that service because they can double dip here. Now, I want to be clear. There is an exception. Like all rules, there are always exceptions, of course, and that’s for military reserve technicians.


If you are a military reserve technician and you are having to have that military status because of your civilian job, then that is where you will only collect the reserve pension and the federal pension because you’re already getting credit on both sides of pay. So you don’t receive the quote unquote double dipping factor, like if you were a reserve and had your federal service separate.


So you do realize that you just took a number of people on an emotional roller coaster saying, oh, I’m so excited that I dropped them flat. Well done, Cassie.


I just want to make sure that everybody understands exactly how things work. I get it. No, I, I think that’s good because it always depends. There are always exceptions to things. I don’t care what it is, there’s always an exception to different things. So to make sure that you understand what they are and what the future things are, make sure you like, subscribe, follow, get notifications, all that good stuff on on Fenobabble. Share this with your friends.


Please help them understand the benefits that you get.


Everybody let them know. Yep.


Everyone. And then Cassie, what do you do in the end.


Go to Fednobabble.com and request the report, take action, take action on your benefits and make sure that you are in control of what that financial picture looks like for you. You got it.


Great. Thanks for joining us.


And we will see you next time.


To get Cassie’s comprehensive report on your federal retirement benefits. At no cost, no obligation and no sales pitch. Go to Fednobabble.com while you’re there. Submit a question for them to answer on the show.

 

22

#22 – Compression, W2s, TRICARE

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Cassie
Compression, W2s and TRICARE 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. Welcome back to Fednobabble.com. I am Kevin Jones and I’m Cassie Knight.


Let’s go ahead and jump in to today’s questions.


What we’ve got here is, number one, there is unused sick leave remaining after running the sick leave conversion into how many hours does that convert? I work a compressed schedule five, four, nine. So I need to know how to make best use of that overage.


What say you, Kevin. So here is one of the things that I find interesting is that federal federal employees a lot of times don’t understand how complicated their benefits are. It’s just it is really, really complicated. And sometimes when it’s really, really simple, they make it really, really complicated. It’s almost the opposite. Right. That’s the no fault of their own. And I totally get why I fully get it. So for, for example, another one that I another thing that I hear all the time is Leo’s law enforcement officers that a lot of times they say, well, we get that, you know, that, you know, it’s the wrong name, but they’ll call it special retirement supplement or the Gap insurance.


Right. And it’s and it’s us. LEOs. Well, actually, it isn’t just you. It’s any could be could be any FERS employee. And so wait, wait. I’m not special that way then. And I hear that, but it’s just not me. And so this one is so this one. OK, here’s a compression schedule, but it really isn’t different than any I mean, from the regular schedule of what it is when it comes.


Yeah. When it comes to sick leave, whether you’re a compressed schedule or a regular scheduled employee, whether you’re part time or what have you, it doesn’t matter when you are looking at the sick leave conversion. You simply use the sick leave conversion chart. Twenty, eighty seven sick leave conversion chart and that’s it. It’s going to come right at the same no matter what kind of schedule you’re on or anything like that. So.


Right. So OK, there we go.


It does matter. OK, ok. I do want to say that when you’re looking at retirement and you have sick leave being added to your retirement, if they don’t make a full month, then you will have extra days. A but it also depends on how many extra days you have in your regular service as well. So you have to figure out what those days are and how they can how we can make sure that you’re not having like two weeks where you’re not having the added to to your well, you’re losing them essentially because maybe you have one month and and two weeks.


So it’d be forty five days of sick leave. And then you are leaving at the time that you have exactly 30 years, you don’t have any extra days. And so then you’re losing out on two weeks. Right. So then obviously they want you to use those two weeks of sick leave to where you’re not before retirement. So that way you’re not just losing out on those days and not get paid for them. So that’s one thing that we help employees with, though, when they come to the adviser and they’re asking those questions on how many days of my going to have and with how much time do I need to use before retirement and all of that to where I have no extra days, then we can run those scenarios for employees.


Yeah, and I always say give yourself just a little bit extra just in case, because you don’t want to miscalculate. You want to get you know, you want to get you want to get close. Absolutely. And use all the days. I mean, if you have, let’s say, 14 days left over, let’s use the 14 days, but maybe give yourself a day or two or like in sick, leave you parlance a couple extra hours or two just in case.


Don’t go down right to the wire because you never know. And we’ve seen people say, OK, I’m going to get it right, I’m going to nail it. And then they get sick right before they have to retire. And then that eats into a whole month of calculations that they could have put into there for sure. So, you know, give yourself a little grace there, which would be kind of nice. Absolutely. OK, here’s a second one.


Social Security, OK, the SS.


So here are the special retirement. Like, what does it mean? They’re so OK. So I was talking about this with just a second ago when we said the LEOs call this. I mean, everyone calls it this really Social Security supplement or gap insurance or Social Security offset or whatever. And I’ve said this before on Fenobabble and I’m going to say it again. It’s the wrong. We’re calling it the. Wrong thing, and normally, if we call something the wrong thing is like not a big deal, but in this case, I feel like it is a big deal because it’s a big deal.


Calling it a security supplement makes you think that it comes from Social Security and it doesn’t have this conversation with the adviser just yesterday.


Oh, really? No. Do we even. And he said, look, this person’s coming in here tomorrow. And I just want to make sure that you included the Social Security supplement on her report. So I scroll down the page. I said, and it’s a special retirement supplement, if you call it the Social Security supplement. It’s not a Social Security benefit, number one. And number two, if they go to the Social Security office and ask about the Social Security supplement because they think it’s a Social Security benefit, they’re going to be talking about something way different.


Yes. Yes. The Social Security supplement, it is a federal benefit. It comes from first it it doesn’t come from the Social Security themselves. Right. OK, and that’s huge because, again, if you’re if you’re looking at disability income or something like that, it’s a very, very important that we have these things. Correct.


Right. So so what am I a little. No, no, you go ahead. I don’t want to be sexist.


Remember, this is what I think about the earnings test for the special retirement supplement.


Yeah, I think so. Is that right? I believe so.


OK, so if the income is strictly earned income, OK, so TSP is not going or income that you withdraw from TSP is not going to count because that’s retirement, just like your pension doesn’t count. That’s just earned income, whether you’re self-employed or an employee working for a company. Either way, whatever income is actually earned on all those profits or that you have coming in from your employment, that is what counts towards the earnings test for the special retirement supplement.


Got it. Now that. Yeah, that’s that’s a nice and easy one. I do want to add one more thing to that Social Security supplement that that name you gave a great explanation of why. I’ll say one more thing is that there are a number of overall I think it’s really important to name things what they are unless they conflict. So, for example, the pension and I don’t want to confuse anyone, but this just will give an example.


We know well, let’s say the TSP has annuities that you can choose. However, the pension is an annuity itself is a form of an annuity. So but we don’t call it that. We don’t call the pension anonymity because that’ll just confuse people as to what it is. And does it come from. I’ve heard people say, does my pension come from the TSP or and they get those confused. So the language that we use is really, really on purpose.


And it’s really important to understand what we use when we use it, because, number one, we don’t want to confuse things. Number two, the more we can the more we can label things correctly, the more of a better understanding we will have of it overall. So absolutely, there’s that. All right. Was that was that question number two? I think that was a question, yes. OK, then question number three, I will be eligible for Tricare.


OK, this is a complicated one. Ready? I will be eligible for Tricare Tricare at 60. Again, Tricare is the military’s version of FBG at 60 because I retired from the US Army Reserves. Good for him or her, whichever. I plan to carry my FBG into retirement at the end of this year and switch to Tricare when I turn 60. When eligible for Medicare, I would have Tricare as secondary is is this advisable? So this person right here has a lot going on, but I think we can kind of take this question and sum it up in when this very last part, when eligible for Medicare, would I have Tricare as secondary?


OK, so this is one of those things where it’s really simple. Yes. That is made very complicated. Exactly.


That seems to be the same. If you have Tricor, you must enroll in Medicare, period. Done. However, here is here’s where it can get complicated. If this person is a military reserve technician, then they will not have the availability for Tricare. And this is something that is misunderstood by a lot of these people because they think the military reserve and I’m a civilian employee, so I have the option to your own special breed. Yet if you are a military reserve technician, I will tell you right now you will not be eligible for Tricare period.


So you’re going to be stuck with me in retirement. OK, but if you are actually reserve and not civilian at the same time, so maybe they did have their separate service, OK, then they will be eligible for Tricare and that’s when you’re automatically have to enroll in Medicare anyways because you’re going to have Tricare.


Now there is a way for federal employees or retired reserves or retired active duty to have the option to be able to get back on their feet if they lose their TRICARE coverage. Right. So if they have to be at retirement, then they can suspend their fee in retirement and hop on Tricare. Obviously, you still have to enroll in Medicare. So you’ll have that in Tricare and Medicare will work together for that coverage. But if you’re in a location where your TRICARE pulls out or something happens, whether coverage is not great, then you can hop back on to the FB and reenroll during open season.


Or when you lose that, lose that coverage involuntarily and have a Medicare. And so that’s really, really strong. And I think something that really should be coordinated with people who have those different health care systems. And if they coordinate them right, then they can really set themselves up for success later.


Yeah, that’s a huge one that a lot of people can take advantage of. That is really, really good. Now, when I when I look at the end of this question here, is this is that advisable? So you said which is which is spot on. If you have Tricare, you have to do Medicare A and B, you have to do those to you just have to. So is it advisable? Well, when it comes to this being secondary, a lot of people say, well, how do I make it secondary?


It just happens. It’s not you don’t have to set it up as secondary. Once you get Medicare, it becomes primary, TRICARE becomes secondary. And that’s just the way it is. So is it advisable? Well, if you get Tricare, if you get Medicare, it’s just going to happen. So you’re not going to have a choice on that one. Exactly.


It’s pretty easy for Tricare that I would say. Yes, that is you have to have it in order for Tricare to pick you up on other coverage. But as far as who secondary in this primary, I think that boils down to who is covering what, who is your doctor, specialist, what have you. Some people take Medicare. Some people don’t want Tricare there. It depends on where you’re where you’re at. And and so I can’t tell you who’s going to be first or second in line.


But what I can tell you is they’re going to be one. Then the other person is going to get billed and they’re going to cover, you know, based on whatever those limitations are, because I’m assuming Tricare for Life. But there are other Tricare programs. True. So I don’t know what those specific limitations are. However, if you’ve got Medicare, you’re going to be 100 percent covered. And I want to say that even if you are not in Army reserves or active duty, you’re FEHB in Medicare.


We’re very good together as well because we. So that’s one thing that I’ll say it and I’ll throw this on the kind of the back end of this question. This gets this whole thing just I want to say the health care, but not only the health care, everything else gets really complicated when it comes to are you active duty or are you reserves? Did you retire one or the other or did you quit? Or is it disability or.


And and on and on and on and on and on, right, there are different things that you should do in different circumstances, even if your friend seems to have done the same thing that you did. It doesn’t mean that that is what you should do as well, because you you may be very, very different. So as soon as we add in military into the mix, it complicates things. And what I love about your reports is that all of this can be figured out.


It’s very it’s I don’t want to say it’s easy to figure out, but we Cassie I’ll just say this. You kind of make it you kind of make the magic happen in the background so that so that when a federal employee gets the report, it’s like, oh, that’s what it is. And this is how it works. And that’s great. But there’s a lot of magic that kind of like Disneyland, right? There’s a lot of magic that happens in the back end.


But you don’t you just get on a ride and you go and you have fun. Right. But there’s a lot going on in the background. And the person who comes to Disneyland doesn’t need to worry about all the extra stuff they just to get to enjoy it. And that’s the way I feel like federal employees are. They just get to come to this Disneyland. They get to sit down with one of our advisers. And I trust the network and just get your report and say, OK, there we go.


All the magic is done for me and here are the issues and the things that I need to figure out.


So that’s that’s what I love about it myself.


Our whole goal is to keep it simple. Yes. Keep it as simple as possible. These things are complex. These things are there’s exceptions everywhere. And it’s knowing what pertains to you and what doesn’t. And that’s our goal because we really want people to have that information and be able to use the information that works for them so they can financially succeed, whether that’s in employment or in retirement, which is apparently the ultimate goal, is to have the information and the tools and resources that you need for your situation to get to wherever you need to be.


What’s your what are your goals and aspirations? We want to make those happen for you and get you on your way to do that.


So, yeah, and it’s not only just for you, but it’s also for those around you because they’re retiring, too. So if you would please like and subscribe and share this with your with your co-workers, follow all that good stuff. Right. Because not only do you need to know this, but they need to know that we don’t want to see any federal employee have to get out of the of the system of working for federal government, for all of us for so long and then go, oh, I, I think I mentioned this before.


I had someone come back to my workshop twenty years after they were retired trying to figure out how to fix what they’ve broken, you know, so that’s what we’re trying to help people avoid is yes, please, please, please. So yes.


And last words of wisdom, Cassie, take action, get the report, find out what those benefits are for you. Let’s get you on whatever needs to happen for your situation. Let our advisors help you make those dreams come true for you.


So very good. All right. Thanks. Thanks for joining us. We’ll see you next time to get Cassie’s comprehensive report on your federal retirement benefits. At no cost, no obligation and no sales pitch. Go to Fednobabble.com while you’re there. Submit a question for them to answer on the show.

 

#17- FRA, LWOP, APWU

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FRA, LWAP and postal, but not postal health rates gets confusing. You’ll just have to see on today’s Fednobabble.com.

Welcome to today’s Fenobabble, where we make federal retirement benefits understandable for humans in under 20 minutes. I’m Cassie Knight and I am Kevin Jones.

And we take your questions from those who submitted online at Fednobabble.com and also from the Fed Pilot workshops. And sometimes, you know, we can’t cover as indefinitely during the workshops as we want to. And so we get to go a little bit deeper here.

We get to answer some of those questions that that we feel that are a little bit more worthy of a longer explanation. So given that Cassie first question for you, if you are for retirement and continue to work, do you have to stay under the $18,000?

So I’m assuming that they mean for the earnings test. All right, that’s that’s what I’m assuming. Yeah, that’s the only eighteen thousand that I know. So I’m assuming that as well. But there is the earnings test on special retirement supplement and Social Security.

So.

Right. But if they’re talking about the full retirement age, I’m assuming it’s for Social Security would have to be Social Security.

Yeah, because, you know, once you’re past age 62, they’re not getting that special retirement supplement anyways. Right. So the answer is no, you’re not subject to the earnings test after your full retirement age. So you can continue to work and you don’t have to worry about the income that you have coming in for the earnings test. Right, and I I think this is where and the reason I brought that up earlier was just because it gets confusing.

You have the earnings test that goes for special retirement supplement and for Social Security. If you talk about full retirement age, that’s Social Security. If you talk about mant minimum retirement age, that is that special retirement supplement. But that only goes to 62 as where this picks up at 62. And so and they and the minimum retirement age is different than the full retirement age. And I mean and this and this earnings test plays differently with each of those.

It’s not easy, outnumber all the rules.

Yeah, it can definitely get confusing here, and so I’m glad that they actually had full retirement age is what I think they meant, but that gives us a little bit inside of that.

You know, it sounds like this question is pertaining to Social Security rather than the special retirement supplement. So when you’re submitting questions, please be as detailed as possible so that we can really make sure that we’re answering them correctly for you and and giving you the advice and the answers that you’re seeking. So. Yep, great.

All right.

Next question is, if I took a laptop, which is leave without pay for an extended period of time, what things would you recommend I keep in mind regarding retirement?

This is an awesome question. I love it. Yeah, and we get this question actually pretty often, I don’t know how often you get it in your workshops, but I get it from advisers pretty pretty frequently on what does that time frame look like for people with leave without pay and versus creditable service? The answer is pretty simple, but. Not at the same time, because it is. If somebody has a lot that is less than six months in a calendar year, then that time counts for creditable service.

However, we have to be very careful here, because if somebody has had an extended period of time of love, then what does that mean for them? What is is that a year? Is that two years? You know, what is that look like for that employee? And when did that time begin? When did that time end? And we count the six months in the previous year and the six months in that other year so that we technically they only have a year that doesn’t count for credible service.

So really, I would suggest anything that has a part time service, anything that is questionable in their service history to fill out a certified summary of service and try and get that figured out prior to retirement. Yep, that’s great. So you so you said six months in a calendar year, so really someone could go almost a full year if they took six months in one year and then six months in the next and not have a count against their years of service.

That’s right, yeah. Yeah, and isn’t that interesting, so if you think you’re going to have surgery and you’re going to be out for a while, you may plan it in July just in case.

Exactly.

Exactly. July 1st and then all that time.

Yeah, that’s interesting, isn’t it interesting Cassie how there are these rules and you hear six months. Right. I mean, someone may just here live without pay. You can’t go six months in a year without realizing, OK, there are ways to take advantage of this. It’s six months in a calendar year. And so that means you can double up on that at the same time. And so there are certain things that you can do if you time.

Right. You can come out ahead. But if you time it wrong, then you’ve got serious issues with that. So it’s just I don’t know.

I find it interesting. Sorry, but that’s just benefits in general. Yeah, sure, good. You know, you have to. Be strategic in how you plan to use your benefits to your benefit, right, not to the benefit of the government or the whatever, then and there are ways to strategically plan whether you’re working or whether you’re not working. So that way the benefits can really be, you know, you can you get the most use out of them, whether you’re an employee or in retirement.

And that’s what I love about our advisors in our network. They need help, whether you’re in service or out of service. And they can really kind of dial down for you all of those different pieces that most people don’t think about. So that way they can help that employee or retiree or in the transition of employment to retirement and make sure that you’re not.

We’ll see counterintuitively working those benefits to where they’re actually hindering you and being able to actually benefit you.

So, yeah, you know, I find it also interesting that a lot of people think, OK, if I go see someone, it’s for my retirement. Well, if if you’re working with them well before retirement and you have anything come up like leave without pay, you can go to them and say, hey, how can I do this right? How can I take advantage so it doesn’t hurt my retirement? So instead of it just being an end of career thing, it’s got to be throughout your whole career?

Well, at least, you know, I would recommend that it’s throughout your whole career that you’re working with someone so that when something does come up, you can say, oh, does that hurt or does that help or how do I do this so that I can have a better retirement in the future? So this whole planning for retirement, it’s got to be the whole thing, not just at the end of working.

Yeah, that’s really great advice, you know, because I can’t tell you enough. How many times employees that I’ve talked to or advisers that I’ve talked to where they they’ve talked to employees and they they have this misconception that, you know, I just need to create my benefits when I’m when I’m about to go out the door, you know, a couple of months before I go out the door. Right. Well, what if there’s one if there’s issues that we could deal with that might take some time with the government to get in order prior to retirement?

And you want you it could save thousands of dollars if you plan that years ahead of time as opposed to at retirement and waiting until that time to make sure that you’re you’re doing all of this in a way that’s beneficial for you. So I don’t care how young or old do I go see somebody and let them help you coordinate those benefits and making sure that they’re they’re really working for you to the to your advantage?

Yeah, absolutely critical. OK, good, good summation there. Next question. I’m not a postal worker, but my insurance is with a p w you will my rates go up because. Really, what this is referring to is the I’ll say again, shortcut phrase that. Postal workers when they retire? Well, right now they get a discount as to how much their their health premiums are, but when they retire, their rates go up. So this person is saying, I’m on the postal workers.

Health insurance plan, are my rates going to go up to? Yeah, and so the answer is they’re not going to go up because you retire. Right, OK, as we’re postal employees, their rates, I should say, most postal employees, their rates are different than regular employees, and so they do pay a lower percentage and at retirement they do increase because then they just jump into the normal percentage for everybody else, which is that. Seventy two percent range of of the cost.

Right. I guess they pay at least twenty eight percent because the government pays the seventy two percent. Right. So regular employees though, just because they’re on the American Postal Workers Union then there are going to stay the same for them even at retirement, unless obviously there’s an increase due to the annual increase, which typically there always is some sort of annual increase, but it doesn’t increase just because you retire. Right. And I hear this not just for folks who are under the A.P. w u program.

I get this question often from advisers where employees think just because they retire, that their health insurance rates increase. And that’s simply not the case. Right? It doesn’t change. I mean. Well, let me backtrack a little bit. Your premiums that you pay don’t change how you pay them changes, right?

OK. Yeah, you know, in the workshop, I say your rates don’t increase, but you’re going to pay more. And that sounds like a complete contradiction because how could my rates not increase? But you’re paying more. So explain that just a little bit while we’re here. Why?

Why the heck not sure. Sure, so people are employees, rather, pay on a twenty six per pay period basis throughout their employment rate because you’re not getting paid monthly, you’re getting paid every two weeks. And typically that’s on a twenty six pay period scale for that year. But then in retirement, you’re only paying the premium 12 times a year because you get that your switch to that monthly benefit with a pension. And so you do add up or at times your premium by 20 and then try to get your monthly premium.

But you also have to think about the tax issue. Most people don’t realize that when they’re employed, they get to pay their health benefit before tax. But after retirement, you actually pay that health premium after tax. And so you’re paying more because you have to include the taxes that you’re paying on that premium as well.

Right. So it’s I find it really, really interesting that, yes, rates don’t go up, but you will pay more. And that concept, I mean, is foreign, right? You wouldn’t think, OK, I’m going to be the same, but no, you’re actually going to pay more because of everything that goes along with it.

And this isn’t the only thing that is confusing like that. I mean, there are other benefits where you say this is how it works, but when you dive into it, that’s how it works on the surface level.

Just to as a quick explanation of how it really works is very different. So that’s that’s again why we highly suggest that everyone here go to Fednobabble.com and to sign up and get a report from one of our trusted advisers in our and our trust network. You can sign up. We’ll have one of our advisors from a trusted network reach out to you. They’ll do a report. It’s free. It’s no cost, no obligation, no sales pitch. They’re going to show you what your retirement will be, not just the day you retire like the H.R. report does, but over your home, your mint, and some things that you need to be thinking of.

And you can ask them all the questions you want. So we highly recommend that you go do that so that you can prepare. That’s right, and when they do that, and obviously they’ll have the opportunity to submit a question as well, and if you do submit a question and we use the question on the show, then you’ll get some you’ll get a T-shirt or a facemask from us here at Fenobabble. And also, don’t forget to inscribe shares with us and let’s get the word out.

So that way people can have the information that they need to really dive deep and coordinate those benefits as soon as possible.

That’s perfect. All right. Until next time. Thanks for watching.