Work till you’re 62, TRICARE or FEHB, and Would You Rather? All on today’s Fednobabble.com
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 , I Cassie welcome. Hi, how are you? Good recording on a Monday morning just isn’t good for my brain. I think I need to push through it.
So what do we got? The first question.
Here you go. Here’s the first one. All right. I am 58 with 32 years of service. Should I work until sixty two?
The answer is always it depends. I mean that.
I mean, OK, so this is a question out. So just as a reminder for everyone. These are all these are questions that I get during the workshops, the Fed Pilot workshops, and this is one that came up that comes up all the time or something similar. Hey, should I work until I’m 62 or should I work until this or.
I don’t know. What’s your what’s your mental state like?
Can you do you even want to work. What your health. Like what, what are your savings like. There’s no way this can be answered at least right now. No.
And do you want another 10 percent on your pension. Right. Because if you have if you make it to 62 with over 20 years of service and you’re a regular first employee, now, I’m assuming this person is following the regular first employee rules based on their age and how many years of service they have. They’ll get that one point, one percent factor in. It’s that regular one percent factor for the pension computation. So it adds that extra 10 percent, you know, is your high three going to change?
Right. Right. Are you married? What is your spouse’s retirement look like? What is your financial situation? What health condition? And things like that is your spouse said, do you need to carry FEHB for a few more years to be able to qualify to carry it in retirement? Is it even a consideration?
Yeah, I think I, I think this is a yeah. I think this is a question. It’s a it’s a question that needs to be answered. So I I’m kind of mocking it in a way. But it is a good question overall. Should you work till 62? But to tell you the truth, we are the ones that ask about this. You and I. Right? H.R. You can’t ask this of H.R. either. So this can only be answered by a financial professional where they can take a look at the whole situation and say, OK, yeah, now it’s just really so there have been people that have come to the workshop and Cassie you’ve seen this a million times. People come to the workshop. Hey, can they ask this pretty much the same question, right? Hey, well, let’s say let’s change a little bit.
Let’s say it’s I’m 60 with thirty two years. Should I wait till sixty two? They come to the workshop, they ask this question were like, I don’t know.
And then they get a then they get to meet with one of the financial professionals and our trusted network one on one. Get your report. Just like they do like anyone can right now. And what happens is that one of three things happens. Number one, they say, you know, you’re on a good path and here are some options and you’re doing well. Number two, you’re not doing so well. You may want to put more into your TSP before you go and you want the ten percent bump at sixty two for first employees.
Then they go, OK, I got to work until 62 then. Or the other one is you could have retired a couple of years ago and you would be fine. And that happens as well. People come in. Well I could have retired years ago. Yeah. Yeah you could have. So it’s a great question to ask. You just have to ask it of the right people, I think. Exactly.
This is not something that we can answer because we simply don’t have enough information and we’re not licensed to even say whether or not that this person should retire at that age without that many years in service. There’s too many. Like I was saying before, there’s too many different factors that go into play here that need to be looked over by a professional who understands how to coordinate different retirement plans and look at all the different buckets that somebody has for income TSP Social Security, your pension, not including any other outside or private insurance plans or annuities that you might have.
You know, all of those things need to be taken into consideration and put together in a puzzle. And that’s what the financial professionals do, and especially the ones that understand the federal benefits and things like that because they can incorporate the benefits in that bigger picture, in that puzzle. In those different pieces of the of the pie there and get them put together for whatever that picture looks like, I mean, what are your retirement goals? What are you trying to accomplish?
Are you just trying to get enough money to live on or are you trying to get enough money to go and do things with to travel with what? Those are all different factors that really a professional needs to take a look at. You know, we can’t simply say yes or no to.
So in answer to that, overall, I think I hope everyone got a kind of a bigger understanding that, yes, this is a great question. But what are all the other factors that you need to look at to be able to answer this? Yeah, and I think between us, we just gave a whole bunch of things to think about, which is fabulous. All right. Here’s the next one. All right.
My husband is retired military who will be eligible for Tricare at age 60. Should I use TRICARE and not FEHB?
Uh, I guess, yeah, it depends. Yeah, right. But a lot of people would. Go ahead. Go ahead, Cassie. Go ahead.
So there are a couple of ways that the financial professionals will try and take into consideration here. Do you need FEHB until you reach age 60 or until your spouse reaches age 60 and then you guys can get enrolled in TRICARE? What is that TRICARE plan look like? Because there are different ones. I’m assuming this is Tricare for Life, which is pretty good. TRICARE does require folks to also enroll in Medicare. Is enrolling in Medicare Part B part of your health insurance plan?
Uh huh, it’s not. You might want FEHB. Also, location is another factor that comes into play here because. Very good. We don’t know what that TRICARE coverage looks like for your area.
So it might be nice to have, but you may also want to have the availability to get into FEHB in retirement in the event that TRICARE pulls out of that location. So we might need to do some coordination there where we’ve got the FEHB program until the federal employee retires. So that way they can simply suspend FEHB and get into their spouses TRICARE or if they already have or on the TRICARE policy, then they just simply decide to suspend FEHB and use the TRICARE as our primary coverage.
But then they can later on re enroll in that FEHB program in the event that that TRICARE, you know, the they lose that coverage for whatever reason. So there are different ways here to coordinate these different plans and make sure again that you’re getting the best of both worlds and that folks can and cost is another thing as well. What is your TRICARE going to cost? I know it’s pennies on the dollar compared to most FEHB programs. And so that might be something to think about as well.
And are you going to have FEHB and Medicare, like all of these questions and strategies are something that a financial professional would be able to answer when they’re looking at the condition of your health insurance cost and coverage for retirement.
And I’ll I’ll just add for those who may not know what TRICARE is, just in case, basically Tricare is the military’s version of FEHB. And so in this case, you know, the spouse’s military or was is in this case is retired military.
And so, you know, that that TRICARE is Tricare for life is what they get after they retire after 60 or 62, when Tricare for Life start to 60, that is 60.
OK, I’m pretty sure it’s 60. And, you know, I believe that’s for active duty and reserves because there’s different. Yeah. Different plans for those different types of military service.
And so, yeah, and there are different things that you can do with when you have one spouse that has TRICARE and the other spouse has FEHB, there are different combinations that most people can take advantage of. So Cassie, like you said, best of both worlds. Some great things you can do there. But again, you have to figure out what is right for you and your circumstance.
So that’s always good. OK, next question. How should we determine whether or not we should place money into the traditional or the ROTH TSP and I think there’s a theme in this, I think in all questions here.
You know, it depends. Right. I mean, and it depends honestly, whenever we say it depends. That means that someone needs to take a look at the larger picture because it might be better for you to do one or the other or both in this case, at least with a traditional and ROTH, some of you will want to start putting a whole bunch of money into the ROTH some of you will want more. The traditional some of you will have a nice spread between the two.
It’ll just depend on your situation. And there are pros and cons to both and there and around the water cooler, you hear things like, well, the ROTH is so much better than the traditional. Well, that’s what I call the shortcut phrase where it’s true to an extent, but not always true. And so and and in some cases it’s absolutely wrong or it sounds right. And so people just go with it. So we have to be really careful about the water cooler talk that we hear all the time.
Not that it’s bad. And I actually like the water cooler talk, to tell you the truth, Cassie, because it means that people are talking about these kind of issues. People are asking questions and looking for information. And I think that’s great and there’s nothing wrong with that. But as long as people are not figuring out what their retirement is based on water cooler talk or how they should prepare for retirement, or should they put it into the ROTH or traditional based on water cooler talk, if they’re not doing that, then OK.
But if that gets them started thinking about it, great.
I’m all for that. Yeah, I think anything that goes to your specific retirement planning, if it’s water cooler talk, you might be able to get some feedback on what other people are doing. You always get it by your financial professional or your financial advisor, you know, or if you don’t have one, please let us know and let you get into it. Has help you get in touch with one, because it’s so important to have those people to ask those questions, too, and figure out, you know, well, I’m 20 years old.
Is a ROTH going to benefit me better than this guy over here who’s 60 years old and gave me this information at work. Like, that’s going to be completely different. There’s a forty year age gap, right, that your situation is going to be different.
And in fact, my husband did this and it drives me crazy.
But he his uncle was a Casares employee and he didn’t have it in the account. Well, he had other friends that did. And he told my husband and when he first started at 30 years old, the G7 is the safest fund to be in watercooler talk right there.
My husband stayed for a few years.
Yeah, that is a short cut phrase. That sounds good because it sounds good because you want it to be safe, right? You want to be able to have the the money when you need it and for it to not disappear.
But at the same time, one of the huge points of a TSP is to have the money grow, and especially if we take into consideration, in fact, I did a ten year comparison between TSP and inflation.
Yeah. And it’s it’s pretty much the same, which means your TSP is if it’s in the given, it’s not growing, it is keeping up with inflation and that is it. And I’m not saying that that’s wrong. I’m saying that honestly, for most people that will probably be wrong, but not for everyone it’ll be wrong. So again, I don’t want to pass judgment on one thing or another. But what is your situation? When are you going to retire?
What your health. What’s your like the same honestly Cassie the same things that you said for the first question, apply to the second question applied to this question as well. You’ve got to take a look at all those factors and put it all together as one. Then you can have some answers like this, but not until then.
That’s right. Yeah. So again, yeah.
Always go get in touch with somebody, figure out, you know, is this going to be right for you in your situation? Don’t just get stuck in the analysis of paralysis or paralysis of analysis. This or whatever, not for you, isn’t it, right? What is your situation because remember, no decision to take action is still a decision, right?
And just as I was saying, no, thank you, I don’t want to change my situation.
Right. But the fact of the matter is, these people want to the people listening want to. And I strongly encourage you guys to get in touch with somebody in your area that is versed in the federal benefits. If they’re not, please let us know. Go to Fednobabble.com and we’ll be able to get you in touch with a financial professional and our trusted network who can be able to help you distill down all of these different questions and really give you some solid answers.
They’ll also prepare a benefits report for you that we offer at no cost. No obligation. No sales pitch. They they want to get you the information that you need so you can start the planning process if you haven’t already now as well is different than anything that you’re going to get from OPM or H.R. or anything like that, because it really breaks down each year the different costs for FEGLI and the different costs for FEHB. And we do it on a 10 year average.
So that way you can see on an estimate basis what is the increase going to look like in your future as well to kind of help you not only plan for right now or in retirement, but also, you know, those retirement years and and be able to coordinate all of that with your with your income.
By the way, Cassie puts these together. And so they’re good. You know, they’re going to be good. So definitely Fednobabble.com go and do that and then stay tuned for the next one, because we’ve got some other good questions coming up on the next one. Thanks, everyone, for joining and go take action.
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.