Only FEDs, the Bump, and losing weight on today’s Fenobabble.
Welcome to today’s Fenobabble, where we make federal retirement benefits understandable for humans like you, I am Kevin Jones.
And I’m Cassie Knight we take questions from viewers like you and listeners who submit questions online at Fednobabble.com and from Kevin workshops and webinars that he has been doing through Fed Pilot.
Great. So let’s get into today’s questions. Question number one is this. I oh, don’t know, Cassie. Go ahead, you go my bad, OK, I there is is this strictly federal employment?
I think they’re talking about the high three to calculate a pension, like if that spills, that calculation is used for just federal employees or for everybody, is that state employees? You know, it’s kind of hard to say if I don’t know what other types of employees are talking about, if that’s what I was like.
Well, high three. Yeah. So you’re at high three is used to calculate the the pension.
Most companies don’t have a pension, and every pension for companies work differently. So my guess is that the answer overall would be yes, but might there be another company or a state or local government have a high three? Yeah, they might have a high high three.
Here’s the thing. I helped my mother figure out, like her pension and all that.
She got let go early due to covid and everything else. And actually hers was she was a state employee under PERS2 program and it was actually based on a high five average. It was 60 consecutive months. Sure.
So I’m going to say it depends, but you can always look up whatever program that is, research it, you know, just Google that program, whether it’s purs one, purs two or whatever that looks like, because I know law enforcement officers and and those kind of folks might be under different or special types of programs.
Even if they are some of the PERS, they might be like a. Special PERS program, I don’t know, because I know for us, you know, law enforcement officers and firefighters, they just have a different calculation right now.
But then there’s still fires employees because a lot of the benefits are the same. It’s just a slightly different calculation in their pension still based on the nine three. But then the factor is different when you’re actually doing that calculation. So if they are federal employees, look up the program because there are a lot of different things out there.
And if you need help finding out what a benefit looks like, if you get to continue health insurance or something like try and ask somebody or ask around or research if there’s a specialist in your area for that program.
Yeah. And I’ll also say that with high three.
So this I find it really interesting as I talk to a lot of federal employees that they will say that they will think, OK, and this is kind of hard to really explain. But when we talk about Social Security, sometimes some people get in the mind that Social Security is for federal employees, but forgetting that it’s also for everyone.
Right. And then and then high 3s, you know, this is kind of the opposite, assuming that high 3s are for everyone would know how things are just for federal employees. And so it’s difficult. I think that’s part of the difficulty sometimes is remembering what is only for federal employees and what is what I’ll say only right. Typically, or what is only or I say only what is for all Americans or what is for your spouses, maybe pension or 401k or whatever.
The rules for the 401K, for example, do not apply to the TSP and it is all over the not all of them. Right. And it’s very difficult to remember which rule goes. Where does it apply to both or does it apply to one or the other? And then when trying to figure out what you should do for retirement, if you’re applying the wrong rule or the non-existent rule to a situation where you shouldn’t, oh, that’s going to mess everything up right there.
That’s going to. Oh, yeah.
You definitely have to make sure that you get all these rules and the facts straight for you, whatever you choose to do in life. Because, I mean, even if you get a rule right, it might be different if you separate from service rather than if you’re in service. Right. So there are so many different pieces of the puzzle that really we’ve got to make sure that we’re putting this together. Right.
And that’s why we offer our reports and for people to reach out to us and get in touch with a trusted financial professional who can help them piece together all these little things and make sure that we’re getting the rules, the correct rule, put in the right spot so they can look at that financial picture and set them up for success.
Is the goal good? Yes, it is. OK, what’s the next question? Kevin number two. I hear even if you begin, I think that’s supposed to be begin drawing Social Security at 62, you will still see the bump at the full benefit age. So am I reading that correctly? Yeah.
Yeah, I know. I take the questions as they come from them and I don’t edit them.
So and that what that does really overall is it allows us to possibly interpreted it a couple of different ways maybe. And so we could answer in two different ways. But in this one, I think I hear even if you begin I think that’s begin drawing Social Security. So Social Security, this is for everyone, all Americans, not just federal employees at 62.
You will still see the bump now, the bump, I believe that they are talking about. Is. Well, I don’t. Well, the only bump that I can think of is that if you’re not drawing Social Security at 62, you know, we say at every year it goes up about eight percent. It’s really every month, but every year it goes up about eight percent. And they’re asking at the full benefit age, even if they draw start drawing at 62, won’t they see the increase?
What do you think so I think that there are a couple of different things, they’re either interpreting their Social Security statement incorrectly and they’re thinking, well, if I take Social Security at 62 and it says I’m going to be fourteen hundred dollars now, then at my full retirement age at 67, then I’m going to get twenty one hundred dollars. Right. I don’t know if these what the numbers are, but there’s a difference between the ages that you take Social Security and just because you take Social Security at 62 does not mean that you’re going to have that much at 67.
That is, if you delay taking or they begin beginning to take Social Security. And so I think they might be confused on that part or their thinking in terms of a disability type of retirement.
And maybe they’re just getting confused on the different types of retirement, how that works, because with with a disability type retirement, then there is a bump during certain times because things are recalculated at certain ages. OK, and so full retirement age for Social Security is one of those bumps that even if you retire at 62 or less, then you’re going to see it bump a little bit. And let’s not let’s not get confused on the cost of living adjustments that naturally happen with Social Security either.
Correct? Good, right. Yes, I think that’s something else that people don’t think about. Like, if you start if you start taking Social Security today at age 62 for fourteen hundred dollars, then you’re going to have a little bit of a cost of living adjustment typically every year. OK, sometimes that’s not always the case. Sometimes it’s very minimal. But you still have a little bit of increase just based on the cost of living adjustment for inflation.
Now, that’s not a bump, though, and it’s not going to change for retirement age. It’s just going to be a steady little increase every year. So it will obviously be different than at 67. And you’re the amount that you’re collecting at 60 to.
Right. What do you see, Kevin? So, yeah, I think I think that bump, the word bump is could be translated a few different ways, translated to, I guess taken a few different ways. We just have to be careful.
I think when asking questions, it’s important to use as much as possible the precise language, language that we mean and use use the correct language, because, again, Bump could be a couple of different things. A classic case of this is the what a lot of people called these Social Security supplement. Which there is no such thing, right, right, and so they they say that and then it gets starts getting confused with other things.
And so I don’t know when and unless someone really knows what they’re talking about, it’s and and they’re having this one on one conversation, let’s say, with with some of that they work with, they’re not going to be able to drill and say, OK, when you say bump, what does that really mean? And then that those expectations and it could be something completely different than what they first interpreted it as.
And so, again, it’s just really important to make sure that we’re using those things. But overall, with this, when we were when anyone starts for the most part, again, it always depends. But when we start drawing Social Security, we’ve locked in the amount. We’re not going to see that extra bump every, you know, eight percent every year that we talk about in the workshop. We’re not going to see that it locks it in.
And yeah, well, we will get COLA, but it’s not going to be the extras that we typically would think, especially if you retire.
Right. Because you’re not going to have that earned income to to bump it.
Yeah, right. People think, oh, well, I’m going to quit and then in five years I’m going to collect X amount. Well, if you look at the Social Security statement and you really read it. It states that that is if you are going to earn X amount of dollars every year until that age, right.
And so I think, you know, it’s not very clear it’s in the fine print because these are government documents which say that’s that’s so true.
That is so true.
And so we can guesstimate. But until you actually go in to take your Social Security as well, then we can’t tell you how much that’s going to be and if that number is even going to be accurate.
Yeah, boy. But lots to think about that really close. Yes. OK, let’s go to number three here. I was turned down for federal long term care because of my weight. Any suggestions besides losing weight?
LML I love this one when she has this question in this in the webinar, it was I just said, thank you just for being real, you know, and I appreciate that just you just said it and you’re not ashamed of it or embarrassed by it. You just said it. I love that.
Well, exactly. I think she asked or he asked the question that everybody else is thinking. Right, right. Yeah.
Because nobody wants to say that question. Nope, nope. Got to be so careful. But that is that is a real question. And I think. OK, so before we even get into the question, I want to talk just about the question in and of itself, because too many people are scared to ask the questions they really ought to ask. Too many people are scared to say, OK, I don’t want to mention my weight because I’m too embarrassed by it.
I don’t care if you’re embarrassed by it. We need you need to ask that question probably more than any other question.
And you know, that’s so funny, too, because when I was helping federal employees do the retirement planning and everything else, then I would ask them for their information to make sure I was getting them a good quote or whatever. And they were like, oh, well, do you want my weight?
Like, you know, how close do I need to give you for a great amount of always the thing.
And so for this person to be so open and honest and these are the questions I just want to point out to you that these are the questions that you need to be asking when you’re talking with financial advisors and insurance professionals, like they need to know this information. Because the good news is about this question is, are so many other opportunities like long term care is not the only option. But if we’re just talking about the question like this is a question that you need to be asking for those types of reasons to do that planning.
And so I just love the question because it’s one of those right questions that that need to be asked. So that’s good.
And it could you know, it could be something as simple as. I’ve hardly put anything into my TSP what should I do about that? OK, good, I’m glad you told me about that, right? I mean, not me personally, but when you’re talking to a financial professional, you should say those kind of things be completely open and honest. There is no there is no embarrassment. There is no guilt trip. There’s nothing it’s a guilt free zone.
When you go to talk to a financial professional, when you go to get the report, when you go to do all this, it’s guilt free. Please never think that we Cassie and I or the financial professional, whomever you work with will look on you and think you’re a fool or oh my goodness, I got can’t come away and go because. Well, this one guy told me, no, you don’t do that now. Wherever you are, let’s get you going and help you.
I think people are so taken aback, like, oh, I don’t have enough for all, you know, all of those lies that we like to tell ourselves. We do that with when it comes to the retirement planning and everything else as well. And you know what? It doesn’t matter.
Like, those are just lies that we tell ourselves to ourselves from taking action.
Right? I mean, honestly, I do the same thing. I’m like, oh, you know, I’m not knowledgeable enough. Or, you know, I, I don’t know what I’m talking about or I’ll just get down on myself sometimes. Right. But that’s obviously not the case because advisors are looking at me and, you know, so thankful that I’m providing the advice that I am to them, even if it takes a little while. But we find the answer right.
And we get that information to them and we’re making sure that they have that candid information and that’s solid so that they can tell the employee about it. But, you know, every once in a while I’m like, oh, well, do I really know what I’m talking about?
Right. Always questioning. Always questioning ourselves. Right. And always feeling because that question that we’re not good enough. Yeah. Yeah, doesn’t matter. So this employee anyway, is the ability to answer.
The question is, is in a way opening the kimono. Right. In a figurative way. Any suggestions? You know, the suggestion I would give is talk to a financial professional because they have more options than the one option that the federal government gives you. So they may have something there.
Absolutely may have something. And if it’s not a long term care program, it could be something else that takes care of long term care, that isn’t called long term care insurance. Lots of lots of options out there.
There are living benefits that somebody can include on other types of policies, whether it’s annuities or life insurance or something like that. Right. That can take care of these. Now, you know, if you’re looking at the the weight stuff and the medical stuff, that maybe the annuity is the best option rather than the life insurance, or maybe that’s just the right not the right company to work with, work with. Every company has their own parameters as well as and charts and things like that as far as like height and weight are concerned and, you know, different readings for for different things.
And so what I would really suggest is ask that question to a financial advisor. If you’ve got one. Great. If not, let us know unless let us get you connected with somebody who can answer that question directly after they have all of the information and the facts to work with there.
Yeah, Cassie want you to continue and talk about that real quickly as we end here. So, yeah, if you want to go to Fednobabble.com. Right, then you can submit that question, you can fill out the form to get in contact with us, and we’ll get you to a financial adviser who will be able to prepare a report for you and then they can answer all those questions for you and then report just list out kind of where you are with your benefit.
So that way they can see where you’re going and what adjustments need to be made and help you out with that. And of course, if you ask a question and we use it on the Fenobabble show, then we’ll send you a Fenobabble T-shirt.
Great. And as always, if you would, please share like subscribe do all that good stuff on Facebook, YouTube, wherever you see this, we’d love it. And of course, please make sure you share it with your federal employee friends because they need to know this stuff just as much as you do.
So love these questions today. Hopefully everyone got some great info from it. And until next time, take care.