Death 21 and annuities, all on today’s Fednobabble.com.
Welcome to today’s Fenobabble, where we make retirement benefits understandable for humans in under 20 minutes. I’m Cassie Knight and I am Kevin Jones.
And we take your questions from Fednobabble.com where you can submit them or from my Fed Pilot workshops.
And we dive in a little bit deeper and try to explain these things a little bit more than we might have time to in a workshop. So let’s jump in and talk about the first one. What happens if my spouse dies first? Well, that’s a good question.
Where is our favorite remark Kevin?
It depends. Yes, it does. It does depend, doesn’t it? I mean, what benefit are we talking about here? Right.
Defensive stance is first for survivor benefit or for your for your pension or your family or for your health benefits or for it.
I got one more. Are we talking about inservice or retirement here? Yeah.
So it does not change. Yeah.
So, OK, so there Cassie is such a great example of a nice, easy, simple question or what should be a nice, easy, simple question. And then you put it into each of the benefits before you retire, after you retire. And let’s say there are five different benefits that we could look at, just throwing that out and then there’s before and then after. That’s 10 different scenarios that someone should go through to say, OK, what happens if I die first with my pension before I retire?
What happens if I die first with my pension after I retire and know that they are different? Or what happens if my spouse dies first? So really, there are 40 different different scenarios that everyone should kind of go through. I mean, that seems overwhelming, but and some of them are really easy to figure out, but they all have to be gone through. And it also depends, is your spouse a federal employee or not?
Can’t you just say, do they have military service?
Oh, yeah. Yeah. Yeah, this is a very, very good question that really needs to get unique nor case, and I’m going to say that it depends on your so many different factors.
That you really need to talk with somebody about this? Yeah, this is definitely one where you need to look at all those different factors that we just listed out, those different scenarios. And obviously, our advisers in our trusted network help you figure those out. If you guys don’t have somebody where you can ask that question to, that’s knowledgeable in the benefits because the super important that they are, so they can run over all of those different scenarios with you and OK, what if my spouse dies first for my attention, or what if my spouse dies first for the family benefit or TSP?
Yeah, you know how and I was just thinking of is that so the answer to this often is and I hate to say it, but it depends again. So you take one of these situations. What happens to my pension if my spouse dies first or I do any of these right then? So you said, you know, you need to have someone help you. Well, my first thought was, OK, can you go to H.R.? Well, yes, someone can go to H.R., but really all the all the H.R. can say is, well, in this scenario, here are your options.
They can’t say what options are best, you know, and that’s what, again, someone, an adviser or someone that that knows this and can give advice, but I can’t give advice. They can only give here the options here, the laws, rules, you choose what is best for you. So even even when you get the answer, you have to choose maybe one of the options that are out there and then which one is so really there’s a follow up question to this.
40 questions here. I mean, yeah, it depends. It’s like, yeah, OK, well, I think we’re good with that as well.
Are you married? Yes. OK, well you’re going to 50 percent survivor benefit. That may or may not be what you actually choose in retirement, so just because they give you an answer doesn’t mean it’s the right answer or what is actually pertaining to your situation, because what if your spouse is a federal employee and you don’t need to take that 50 percent option? To protect that pension and your your financially and you choose the twenty five percent option, what is that going to do if your spouse dies first?
You know, there’s so many different factors here. So, yeah, if you you can go to H.R., they will give you a snapshot of what happens to your benefits for you. And and that’s really all they’re going to give you, though. They’re going to tell you what your benefits are. They’re not even going to tell you what happens to those benefits when your spouse passes or when you pass. Right. If you get in touch with a financial adviser who is versed in the federal benefits or let us know if you need an adviser who is versed in the federal benefits, we can help you get in touch with somebody who’s really going to dive deep into all of these different scenarios.
We’re going to provide that benefits report that not only gives you that snapshot, but also explains in the future what those benefits are going to do for you. And we can run different scenarios, too, if you’re looking at maybe a decrease in your family or or what have you and those guys can really dial in your best case scenario, those kind of contagious.
Yep. Good, good, good. OK, question number two, would you recommend changing it after the last turns, 21 or now.
OK. It. So here’s another one that we can say, what is it, is it and I’m assuming it is either. Health care or FEGLI, because those are the only. Well, I guess not even health care, because health care goes to twenty eight kids. Twenty six, right. And FEGLI goes until twenty two, OK? So, OK. Let’s take FEGLI, let’s take this from a family point of view, would you recommend Changing FEGLI after the last turns, 21 or now.
So it depends. Do they need life insurance coverage? And do you already have so what is the benefit of keeping what you have? Are you looking at retiring and you think the premium is going to change? Well, I guess I need to know more in depth of what this what this person is thinking. As far as why they’re considering changing that FEGLI benefit, if it’s FEHB, you know, obviously that’s going to play a different part in it.
You know, if it and really it boils down to if the person is a dependent or not and if that child is is still a dependent, because if they’re if they leave the house and they’re not financially dependent on you, then technically they’re not covered anyways. So it depends on what that scenario looks like for you. Yep.
It’s totally, totally dependent. And again, there are so many things. And which benefit are you talking about? We’d have to dive into that and really say, OK, good, the next one I got to make sure I’m pushing the right buttons here because I think I’m accidentally pushing the wrong buttons and that happens. OK, the next one is if I am in the annuity, does it affect RMD? So what they’re talking about here is on the TSP annual statement.
There is an annuity and it takes your money and annuities. Is it? Which means it will give you that amount of money. It’s it’s a big blue fort on the front of your TSP and you’ll see them in there. It’ll give you that much money for the rest of your life. Even if you live to two hundred every month, you will get that amount of money.
Well, so I guess the question is, OK, so actually use that option. What was that if. Yeah, if you select that out and if you say that only twenty one. Yeah.
Which very very few people do, which is a good thing. I’m glad very few people do. But then there’s R&D, which the IRS comes by at about sixty two, it’s changed. So let’s say sixty two right now and they say you have to take out seventy two. Sorry. Yes. Seventy two. I don’t know what to look at. Seventy two.
And they say you have to take out so much money from your TSP. Well what if your this annuity doesn’t equal the amount of your armed. So can you answer that one? OK. So I’m going to say it depends. On I mean, it the. There are so many different factors. No, it is because, listen, it’s not just the annuity with MetLife either. If you are in an annuity and you are not taking enough of a of a distribution from your account, then the IRS is going to require an armed how much of an armed that is all dependent on how much you have in the account, what what that table looks like for you?
Well, this is really where you’ve got to talk to a financial adviser or a financial professional to be able to dial in those numbers for you. And I think that’s a huge thing. Is this person still working after seventy two? Because if you’re still working and under 70 or over 70 to the requirements are different than if you’re not working. And so all of those different factors really need to be looked at before we can answer this question. But actually talk to a financial professional and find out how much do I need to take and what does that look like moving forward at all if I’m at this age?
Because if somebody is 70, maybe they want to start taking some some of that some of that TSP money or more. If they can maneuver that annuity a little bit to offset the R&D later, I don’t know. But that’s definitely something where you’ve got to you’ve got to talk to a financial adviser professional about that situation. Yeah.
You said, you know, if you’re start if you’re still working past seventy two and I think most people would be like, are you kidding me.
Work past 62. But I remember in one of our workshops the sweet lady came in and I said, OK, you are a Sirrs employee, correct. Yes. Said How many years do you have. She told me Sixty two years. Of federal service, that’s crazy, and she was still working at what? Oh my gosh, 80 something. Yeah, yeah. Seventy eight. Yeah, yeah. At least at least I would say at least 80 if she started work when she was 18.
And I said, OK, what do you going to retire. And she said, I don’t know, I like what I do so I’m just going to keep going. Good for her.
And I you know, I run across scenarios often where people don’t think that they can financially succeed in retirement and so they just keep working. Yep, because why not. And so, you know, it’s not as uncommon as people would think to be working past 60 or 70 to and and have those rules be different for somebody who is retired and depends on how a money you have as well. It’s not just your age factor and you’re in your TSP with your annuity.
They’re right. There are other buckets that you have to think about and if they’re taxable, non-taxable and how to coordinate those, because that’s all going to play into that auntie factor. Yep. So it’s not just your TSP. This isn’t something that is a I should say RMDs are not specific to federal employees. This is something that is for anybody who is in, you know, some sort of individual retirement account or something like that where they’re going to force out.
The IRS is going to force you to take a certain amount of money because they don’t want you to outlive it. Yep. Now, that’s essentially what it is. They want you to pay taxes on your money prior to you dying.
Right now. I will say also that there’s there are other scenarios. You know, a lot of people will think, OK, I’m not going to work past 62. And you say, well, there there are people who do work past 60 if they can’t financially make it. And then other people will say, well, I can financially made it. Well, I know plenty of people who still work past 70 to. Can financially make it, but what happened is and I’ve heard this happened a few times, where right before they retire, their spouse passes away.
And what are they going to do so they just decided to keep working because they like what they do and why not? My spouse is gone, so I’m not going to be taking the vacations that I thought I was going to with them. So they just continue on. I mean, there are a lot of scenarios out there that we don’t we don’t even consider that may make that happen. That’s right. So, yeah, man, all of these questions today could be just one more time.
A big it depends upon.
Absolutely. Every time.
Every time. And all I’m going to say is if you’ve got any questions or you need to get in touch with one of our advisors and our trusted network, go to Fednobabble.com. Submit that the information submitted and on page scroll down. And find what but like us to have, whether it’s the report or to ask a question and submit that to us, I prepare those reports at no cost. No obligation to you in one of our advisers will be reaching out to gather the information needed and then they can provide you with those reports that really lay out what that what those scenarios look like for right now in and beyond your years.
And so, again, Fednobabble.com, no Cassie no obligation, no sales pitch at the end either. They simply just want to provide that information for you and how you have that knowledge. So that way you feel confident in whatever decision you choose to do, whether you don’t do anything or you choose to continue working with them or continue to work with somebody else. You know, our whole goal is to give you that encouragement, to be able to take hold of your benefits and make them more advantageous for yourself.
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