Category: Life Insurance

Put plainly, the Thrift Savings Plan (TSP) is a type of retirement plan made available to federal government employees, including uniformed service members and members of Congress. It is similar to a 401(k) plan offered by private employers—it enables federal employees to set pre-tax contributions aside for investment options with funds that ultimately pay toward retirement. By educating yourself on the ins and outs of a TSP, you can reap the rewards of your investment for years to come.

Currently featuring more people than the number of citizens across several countries, the TSP is a government-created retirement program with over 99,000 millionaires. Its net worth is also larger than several nations across the globe, something the private sector is incapable of touching. As a federal employee, the Thrift Savings Plan (TSP) is a must-have you don’t want to miss out on, with advantages that will pay off well into your retirement years. Before you miss out on the available perks, please consider how the TSP was created and how it was intended to benefit government employees.

Introduced as part of the Federal Employees Retirement System Act in the 1980s, the Thrift Savings Plan (TSP) provided workers with investment opportunities much like a 401(k). The rule since its inception was to keep the TSP simple and affordable, with low administrative fees. Federal workers can make contributions up to $20,500 per year for those younger than 50. Anyone older than 50 years may take advantage of the $6,500 catch-up limit. The government also matches contributions, much like a 401(k), for anyone eligible within the Federal Employees Retirement System (FERS). For example, by contributing 5% of your salary, you are eligible to receive an additional 5%.

Depending on your plan, the overall cost of a TSP is arguably one of its best features, with expense ratios averaging to a mere 0.058% (for the F Fund). In terms of fees, for each $10,000 held within your plan, you should project paying as much as $5.80 annually. The differences between a TSP and the average cost of a 401(k) equates to additional savings you could invest toward maximizing your TSP retirement savings.

Upon reaching the age of 59 ½, TSP participants may begin making withdrawals without risk of a penalty with a few exceptions (including death or permanent disability). Should you start suffering from adverse health conditions spelled out by the TSP, you may qualify to withdraw early. This is not without exemption, though, and comes with a penalty of 10% additional taxes on the withdrawn amount. However, once you reach 72, you will be required to make TSP withdrawals. Taxes are also not paid until you begin taking distributions upon reaching the minimum age.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

Inflation. There are no indications that it will slow down any time soon, and there is no quick fix. The timing is, therefore, terrible if you have just retired or are about to retire. Nobody has been concerned about inflation for almost 40 years. A whole generation has never even known how inflation might affect their finances. However, the current inflation rates are the highest since 1982.

Families are worst hurt by price hikes in electricity, autos, housing, and food. But it goes further than that.

Even the costs of travel (flights, lodging, and rental cars), TVs, appliances, and furniture have risen to heights that were unthinkable just a year ago. Everyone will be affected by these exorbitant rates. However, pensioners will be more affected than working families.

The “silent killer” of retirement: inflation

When you have a fixed income, spending more on groceries and gasoline means making trade-offs someplace else. And before you realize it, you can be compelled to choose between purchasing necessities like food or medicine.

Many experts are concerned that the current inflation rate may be worse than we think, while some people think a recession could be coming soon.

The 71st Secretary of the Treasury of the United States and economist Larry Summers have expressed their concern that we are already approaching a point when cutting inflation without triggering a recession will be challenging.

The effects on your nest egg are still felt even at modest inflation rates of 2% or 3%.

Marketwatch claims that a 3% inflation rate would gradually reduce your ability to buy things. For instance, if your retirement budget is $5,000 per month, your purchasing power would decrease to $3,720 a month in 10 years. Your purchasing power would be only $2,760 per month after 20 years.

Therefore, even with a mere 3% inflation rate, your purchasing power might be lost in just 20 years.

Think about what recent inflation rates might quickly do to your retirement savings. But set aside the numbers and consider inflation differently. What did your home cost twenty or thirty years ago? It was significantly less expensive than what someone would pay today, right?

What do you believe the value of your home will be in 20 or 30 years? I think it’s safe to say that it would be worth a lot more. The same is true for every purchase you make, including that brand-new La-Z-Boy recliner, groceries, and gas.

Most retirees encounter difficulties in this area. They set a savings target based on current prices rather than projected prices for the next 20 or 30 years. And this can increase the likelihood that you’ll run out of money in retirement.

But not all the news is negative. You can use a few easy tactics to prevent losing purchasing power to inflation. These techniques may help reduce risk while providing a solid hedge against inflation. The sooner you take concrete action, the better off you’ll be in either case. Nobody can afford to ignore inflation when rates are this high.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

Millions of current and retired federal employees pay attention to the magnitude of the federal pay boost and the retiree inflation catchup every year. As a result, they are even more vital to the communities where they reside, vote, shop, and raise children.

Therefore, in his State of the Union address, President Joe Biden made a particular point of announcing that federal employees who are now working remotely will return to their offices “soon,” as in “soon.”

Both current employees and those who have already retired may be concerned about the importance of increases and COLAs, but they may be unaware of the specific amounts.

Especially when the sums are so vastly different, the system dictates that the methods used to arrive at such figures are primarily of scholarly interest to the two parties. You’ll receive what you’re looking for. Period!

Cost of Living Adjustment

The Bureau of Labor Statistics provides a cost of living adjustment for retirees. The inflation rate does not play a role in any base raise for active duty federal employees.

As a result, federal employees in high-paying cities like New York, Houston, and Los Angeles earn more than their counterparts in lower-paying states like Kentucky and Idaho. COLAs are frequently granted to retirees even while government salary increases are capped, as in 2011, 2012, and 2013.

Pay for government employees increased by 2.7 percent in 2013. Old-system civil service retirees received a 5.9 percent cost of living increase, while new-system federal employee retirees received a 4.9 percent adjustment.

In January 2023, then Vice President Biden proposed a 4.6 percent increase for federal employees. The September cost of living statistics must be reviewed to establish the retiree COLA. However, considering how quickly things have evolved, the COLA for 2023 might be a monster.

Raises vs. Cost-of-Living Adjustments

For most people, the debate over a pay increase versus a cost-of-living adjustment is purely academic. There is disappointment among those who receive the lowest percentage raise. And so it goes. However, “regular times” is the most important word. These, on the other hand, are not.

We’re in the thick of a European land war. Refugees, mainly women and children, have fled to six nations, including the United States, Germany, and Canada. Nearly 11 miles from Poland, the Ukraine conflict has shifted its focus to the east.

One assault on a member of NATO (the United States included) is an attack on all NATO members. Many people in the United States think that the recent election was rigged. Many people are eager to see how the elimination of controversial mask mandates will affect the economy.

Ex-President Barack Obama tested positive for COVID earlier this week. Who knows what effect the first large-scale gatherings in recent years — from Mardi Gras in Louisiana to the Florida beaches — will have when people return to their hometowns and colleges?

Increase in the Cost of Fuel

The fuel price looks to be rapidly rising from $4 a gallon to $5 a gallon. Unless, of course, you reside in California, where time moves at a breakneck pace. It’s a little bit! What’s next? It’s hard to say when this “return to the office” trend will run out of gas.

Supply chain issues might become worse before they get better at present. The “economy,” as most people refer to it, is affected by various factors, including new trade restrictions. Your biweekly income and monthly annuity are also real.

Will the massive wave of retirements be triggered if the gap between a COLA and a salary increase widens? It has been foretold for over a decade, yet nothing has happened — for the time being. More than a hundred thousand active-duty federal employees are now eligible to retire.

They need to determine whether they can afford to retire and rely solely on diet COLAs in an inflationary environment. To achieve this, they’ll need to see how their Thrift Savings Plan account is doing and whether they need to make any changes to its allocation in light of the current economic climate.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].

A measure to change the retirement system for first responders who sustain injuries while on duty and must seek out new employment within the federal government was unanimously approved by the House on Tuesday.

First responder federal employees, such as law enforcement and firefighters, participate in an accelerated retirement benefits program, offering to pay more toward their defined benefit pensions with each paycheck in exchange for receiving a full annuity after 20 years of service and turning 50. They must also retire at the age of 57.

Suppose a federal first responder sustains an injury on the job that prevents them from working any longer. In that case, they are not reimbursed for the higher payments they made along the way and thus lose access to that accelerated retirement program.

The First Responder Fair RETIRE Act was proposed by Rep. Jim Langevin, D-R.I., Brian Fitzpatrick, R.-Pa., and Gerry Connolly, D-Va. This act would enable federal first responders who are compelled to seek employment elsewhere in the federal government due to a workplace injury to continue contributing to the accelerated retirement system and retire after 20 years of service and the age of 50.

The measure also allows those workers to get a refund for their prior expedited payments if they leave their federal employment before becoming eligible for an annuity.

Connolly stated on the House floor that we want to motivate our first responders to continue their commitment to this nation. He also stated that we shouldn’t hold them accountable for the harm they caused while protecting communities. And as a reward for their efforts, we ought to keep them enrolled in the retirement plan they chose when they first began their employment.

The bill was moved in July to be considered by the Senate. On August 3, 2022, the Senate Committee advanced the First Responder Fair RETIRE Act. In a letter to the committee on August 2, NARFE stated its support for the legislation.

If passed, the First Responder Fair RETIRE Act will allow federal first responders to continue their service outside their present system while still being a part of the public safety retirement system they contribute to. 

TSP Transition: Lawmaker Requests GAO Probe

The difficulties associated with transitioning the federal government’s 401(k)-style retirement savings program to a new recordkeeper will be the focus of an independent study, Eleanor Holmes Norton, D-D.C., stated last week.

Thrift Savings Plan (TSP) participants have reported difficulties accessing their accounts via the new login system, losing historical account data, and correcting beneficiary information, among other issues. This started when TSP switched to a new recordkeeper and introduced several new services like a mobile app, the capacity to access mutual funds, and sign documents electronically in June.

According to TSP officials, even though they had anticipated that the transition is expected to be “bumpy” and some participants may need to call the customer service “Thrift Line” to resolve problems with beneficiaries or request old documents related to their account, their call center vendor drastically underestimated the number of calls they would receive and was unable to meet demand, resulting in hours-long wait times.

Norton has pushed for details about what went wrong with the changeover since mid-June. She met with the TSP Executive Director Ravindra Deo on June 30, and he pledged to provide her with weekly updates on initiatives to help participants who were having difficulty.

Norton revealed last week that she would request that the Government Accountability Office (GAO) look into the changeover. The Federal Retirement Thrift Investment Board (FRTIB), which oversees the TSP, will have an inspector general, adding that she would draft legislation to that effect.

Norton said she was “profoundly concerned” about the widespread issues with the new TSP online system. She heard from constituents daily regarding the new system’s numerous problems. She said although they need to learn how this fiasco came about and establish new accountability measures at the FRTIB, she will continue to demand prompt repairs to the issues. For this reason, she would ask for a GAO study and drafting legislation to establish an inspector general at the FRTIB.

Contact Information:
Email: [email protected]
Phone: 2129517376

Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].