Category: Life Insurance

Government retirement savers could partially compensate for last month’s losses thanks to an impressive October for the stock market, which included the best month for the Dow Jones Industrial Average since 1976.

October’s strong stock market performance was much-needed after a disastrous September in which all Thrift Savings Plan funds lost money except for the infamously conservative G Fund, which invests in government securities. The S&P 500 posted an 8% gain for the month, the NASDAQ rose 3.9%, and the Dow increased by 14%.

This is good news after a late October report from the TSP board revealed that the average account balance for Thrift Savings Plan investors was down roughly $30,000 year-to-date through September. That helped all three of the stock-based funds in the federal government’s 401(k)-like Thrift Savings Plan (TSP) post significant gains in October.

The TSP’s small firm stock S Fund took the lead with a gain of 8.59% in October. Following that, the large firm stock C Fund saw a gain of 8.1%, and the international stock I Fund saw a gain of 5.98%. Despite the improvements in October, these funds still have losses of 23.83%, 17.7%, and 22.9%, respectively; over the past 12 months, they have lost 27%, 14%, and 22.74%, respectively.

The TSP’s bond-based fixed income F Fund fell by 1.26% in October, for a loss of 15.38% for the entire year. The G Fund, the only TSP fund to have made money so far in 2022, increased by 0.34% for the month, bringing its gain for the year to a meager 2.29%.

2055, 2060, and 2065 funds of the TSP’s target-date fund-like lifecycle funds saw the most gains in October, each rising by 7.36%.

	YTD Return at end of September	YTD Return at end of October
G Fund	1.94%	2.29%
C Fund	-23.87%	-17.70%
S Fund	-29.85%	-23.83%
I Fund	-27.25%	-22.90%
F Fund	-14.30%	-15.38%

 All of the core Thrift Savings Plan funds are still significantly down for the year, except for the F Fund, which kept losing in October, but the losses are less after accounting for the gains for each fund in October.

 Below is a summary of TSP’s performance for the year, the last 12 months, and through October 31, 2022. 

Fund	October 2022	Year-to-Date	12-Month Return
G Fund	0.34%	2.29%	2.55%
F Fund	-1.26%	-15.38%	-15.40%
C Fund	8.10%	-17.70%	-14.61%
S Fund	8.59%	-23.83%	-27.24%
I Fund	5.98%	-22.90%	-22.74%
L Income	1.98%	-4.13%	-3.61%
L 2025	3.07%	-8.48%	-7.75%
L 2030	4.52%	-12.45%	-11.62%
L 2035	4.91%	-13.89%	-13.02%
L 2040	5.32%	-15.22%	-14.33%
L 2045	5.66%	-16.42%	-15.53%
L 2050	6.02%	-17.50%	-16.59%
L 2055	7.36%	-20.14%	-19.13%
L 2060	7.36%	-20.15%	-19.14%
L 2065	7.36%	-20.16%	-19.16%

Source: TSPDataCenter.com

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]

The U.S. Senate Banking Committee Chair asked Federal Reserve Chairman Jerome Powell on Tuesday to exercise caution when tightening monetary policy so much that it causes millions of Americans already experiencing rising inflation to lose their jobs.

The letter, which was also written to the Fed’s Board of Governors and made publicly available by Brown’s office, reads, “While it is your duty to fight inflation, you must also keep in mind that you also have to make sure we have full employment. We must avoid the effects of aggressive monetary policy, especially when the Fed’s actions fail to address inflation’s primary causes, overwhelm our recent gains and robust labor market.”

At their meeting the following week, Fed policymakers are anticipated to announce their fourth consecutive supersized interest rate hike, pushing the policy rate to between 3.75% and 4% as part of the most significant series of rate increases in about 40 years.

Brown’s letter urged “continued caution” in light of the synchronized tightening of monetary policy by central banks around the world and other factors that pose the real possibility of worsening the global economic situation. Still, it did not specifically ask the Fed to stop or slow the rate hikes.

For his part, Powell has acknowledged these dangers and the possibility that increasing borrowing rates would result in a rise in unemployment, which is currently at a historically low 3.5%.

He has, however, also maintained that the only way to guarantee the durability of the labor market is to defeat inflation, which is currently running at over three times the Fed’s 2% target.

Brown’s letter to Powell is being published as his fellow Democrats fight to hold onto their slim Senate majority across the nation, with Brown’s home state of Ohio serving as one of the most carefully watched contests. The elections are held one week following the Fed meeting.

Republicans claim they would manage the economy better than Democrats and blame Democrats’ pandemic aid and other policies for high inflation. At the same time, Democrats blame rising prices on avaricious businesses and supply networks.

According to studies, both sky-high demand and supply limits are responsible for driving inflation, and Fed policymakers say they are dedicated to reducing it.

Brown’s letter is unlikely to change their minds, but they are anticipated to at least start discussing reducing rate increases when they meet on November 1-2.

Despite this and the fact that policymakers aim to avoid politics and assert that their efficacy depends on political independence, Brown’s letter highlights the political environment in which the Fed functions.

Interest rates and unemployment

Like the overall economy, interest rate hikes always affect the labor market. First off, higher interest rates often negatively impact consumer spending and corporate investment, resulting in less hiring and more unemployment.

Industries that generate expensive durable goods and those that depend on long-term finance will probably react to drastically higher interest rates more swiftly.

The construction industry will be one of the worst hits. Home prices have risen to historic levels, and the average 30-year fixed mortgage rate has doubled over the previous years. All other things being equal, higher mortgage rates are likely to discourage home purchases, resulting in a downtrend in home sales.

As real estate investment declines with rising rates, further cooling of the housing market would negatively affect construction industry recruitments. Companies would have to pause recruitment or even lay off some employees when fewer contracts are available.

While public infrastructure initiatives and other non-residential investments may temporarily fuel a sustained demand for laborers in the construction industry, they may not be enough to keep the sector afloat.

The manufacturing industry will also be affected. Rising rates make it more costly to finance expensive, long-lasting items like furniture and cars, which reduces demand. This will slow down production and make companies pause any expansion plans, resulting in fewer jobs.

In his letter, Brown said, “I kindly request that you remember your duty to encourage full employment and that the actions you make at the following FOMC meeting demonstrate your dedication to the dual mandate.”

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]

If you work for the government, retirement planning and conventional wisdom regarding 401(k) plans and Social Security benefits are unlikely to apply to you. However, there are several ways for government employees to plan for a prosperous retirement. The first step is understanding your benefits and how to apply them to your financial picture effectively. The following are the best retirement planning techniques for government employees.

Hired before January 1, 1984

Let’s say you are an older federal civilian service employee employed on or before December 31, 1983. In that case, you may be eligible for the Civil Service Retirement System (CSRS), which offers retirement, disability, and survivor benefits.

Since you haven’t had Social Security taxes withdrawn from your paycheck, you won’t be eligible for Social Security benefits until you work another job or qualify via a spouse.

If you’re eligible for Social Security benefits, your CSRS pension may lower your benefits.

Hired in or after 1984

If you were hired in civilian service in 1984 or after, you are covered by the Federal Employees Retirement System (FERS).

It offers Social Security benefits, a basic benefit plan (pension), and a Thrift Savings Plan (TSP), which includes automatic government contributions, optional employee contributions, and matching government contributions. The retirement payouts for these plans are structured as annuities depending on your age, years of service, and plan contributions.

Contributions and Investments of the Thrift Savings Plan (TSP)

The TSP is a defined contribution plan, which means you choose how much to contribute and how to invest it.

These decisions determine how much money you will get when you retire.

Contributions and how they work

Employee contributions to a TSP can be made either before or after tax. If you contribute pretax money, you don’t have to pay taxes on them until you begin withdrawing funds from your TSP. If you contribute after-tax funds, you won’t have to pay taxes on the money you withdraw in retirement. In any case, your contributions grow tax-deferred.

For 2021, the maximum TSP contribution is $19,500 (increasing to $20,500 in 2022), with an extra $6,500 in catch-up contributions if you’re 50 or older.

Employees under the CSRS and the FERS can contribute to a TSP. Only FERS employees, however, get employer contributions. If FERS covers you, your employer will automatically contribute an additional 1% of your income, and if you make employee contributions, you’ll be eligible for a matching contribution from your employer.

If you have the resources, it’s suggested that you contribute enough to maximize your employer match and ensure you have enough years of service to qualify for the automatic 1% match. You can also transfer funds from a former employer’s retirement account into your TSP.

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]

Even though the OPM retirement backlog decreased by about 9% in September 2022, it is still a sizable figure as the year’s end draws near.

Only 8,086 new claims were received last month, while the Office of Personnel Management (OPM) processed 10,681 retirement claims. This assisted in cutting the backlog overall by 2,595. The current total is 26,642. This is still a considerable number, but it’s a positive change considering that it was close to 40,000 in the spring.

The backlog had reduced in September despite having one of the longest average monthly processing times this year. OPM processed retirement applications in an average of 92 days, second only to when it was 94 days in January.

September 2022 was a lot busier month compared to the previous five years. OPM received and processed more retirement claims than any other month since 2018.

However, the backlog was higher in 2021 than this year, according to the chart below.

	Claims Received	Claims Processed	Total Backlog
September 2022	8,086	10,681	26,642
September 2021	7,589	7,344	28,810
September 2020	6,244	6,540	18,274
September 2019	7,456	7,656	17,376
September 2018	7,142	7,027	17,628

Although the OPM retirement backlog has been decreasing, federal employees planning to retire soon can expect to wait several months for OPM to complete processing and finalizing their retirement papers.

The end of a calendar year is typically the busiest period for retirees. The usual influx of retirement applications that usually flood between January and February will be countered if OPM can progress in lowering the backlog during the last quarter of the year.

OPM Retirement Backlog as of September 2022

Month	Claims Received	Claims Processed	Inventory (Steady state goal is 13,000)	Monthly Average Processing Time in Days	FYTD Average Processing Time in Days
Oct-20	8,323	6,992	19,605	77	77
Nov-20	5,876	5,459	20,022	74	76
Dec-20	5,135	5,470	19,687	74	75
Jan-21	13,850	6,569	26,968	85	78
Feb-21	7,495	8,003	26,460	77	78
Mar-21	9,664	8,756	27,368	69	76
Apr-21	9,414	11,396	25,386	71	75
May-21	7,684	8,451	24,619	70	74
Jun-21	7,264	6,884	24,999	78	75
Jul-21	8,922	6,920	27,001	91	76
Aug-21	8,976	7,412	28,565	93	78
Sep-21	7,589	7,344	28,810	94	79
Oct-21	8,006	10,711	26,105	95	95
Nov-21	8,266	8,010	26,361	79	88
Dec-21	7,569	7,200	26,730	92	89
Jan-22	13,266	8,689	31,307	94	90
Feb-22	12,241	8,124	35,424	89	90
Mar-22	10,042	9,117	36,349	82	89
Apr-22	9,983	11,393	34,939	80	87
May-22	7,673	10,266	32,346	88	87
Jun-22	6,032	7,935	30,443	90	88
Jul-22	9,487	10,706	29,224	92	88
Aug-22	8,032	8,019	29,237	87	88
*Sep-22	8,086	10,681	26,642	92	88

After approval, disability determinations are counted among the pending requests. The average processing time in days is from when OPM receives the retirement application until the decision is made.

On average, initial retirement cases produced in less than 60 days took 38 days to complete, whereas those produced in more than 60 days took 125 days.

Incomplete applications adding to backlogs

Incomplete applications that call for backtracking also cause delays. OPM lacks the data required to complete processing in up to 40% of applications.

OPM has taken measures to resolve understaffing issues, including employing overtime pay and hiring more staff. An investigation by GAO discovered that OPM did not track productivity in overtime or link overtime data to application processing statistics.

Even though it was an OPM standard practice to use increased overtime compensation during peak retirement periods, the number of applications processed did not increase over the fiscal years 2013 to 2017.

According to OPM officials, hiring freezes, continuing resolutions, and other budgetary restrictions have reduced hiring rates and caused hiring delays over the last five fiscal years.

Republican Congresswoman Kay Granger’s office in Texas cites OPM data demonstrating that straightforward requests like those for direct deposit can typically be resolved in less than 30 days in the best-case scenario.

When OPM calculates processing time, they count the days from receiving the retirement application until the decision is made.

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]

The final years of retirement are filled with excitement and anticipation, much like the last lap of a race. However, during such a crucial time, you have to be careful to achieve your retirement goals in their entirety. Keeping your eyes on the plan can prevent the anticipation and excitement from distracting you from finishing the final steps and avoid unpleasant, unplanned surprises.

1. Understanding Your Numbers
A retirement budget should be determined well before retirement, and estimating your cash flow beforehand is best. The sooner this is completed, the better. Plus, if you can make a practice run a few years ahead, you will be in great shape to submit your paperwork. This practice is done by calculating your expected retirement income and living off it for a year. Then, you can place extra cash into a savings account and see how long you make it through the test run without needing to make a withdrawal.

2. Maintaining Cash on Hand During Your Transition Period
The Office of Personnel Management, or OPM, may need anywhere between 2 to 9 months to process your retirement application. In some cases, it may take less or more time than expected. Throughout this period, you will receive retirement checks worth a portion of your full check. Keeping cash on hand during your interim period can cover projected expenses during an uncertain timeframe such as this. Work to avoid withdrawing money from your investments to meet the costs and spend the least amount possible.

3. Calculating Medicare Timelines and Final Decisions
Retiring individuals 65 years or older have an 8-month window to pick up Medicare Part B free from penalty. Put time into researching this topic throughout your final year before retirement. Many health insurance companies reimburse Medicare B Premiums, making it worth the time to explore your options. You may also create a rough estimate of the amount you’d be responsible for covering in terms of Medicare Part B premiums. Because it is based on your income, it may be more important to understand if you will enter a higher bracket. This difference may equal several hundred dollars more a month in premiums alone.

4. Planning for Taxes
Many retirees are caught unawares come tax time. The transition period between becoming a retiree and a full-fledged employee involves switching to a different mindset regarding taxes. Those who haven’t considered speaking with a tax advisor may benefit from doing so now. Financial professionals can help to calculate and explain your financial situation to prevent any big financial surprises come April.

5. Pick a Retirement Date Depending on  Sick Leave
Because of the many strategies involved in picking the most attractive retirement date, it’s crucial to understand your pension accruement from month to month. Many advisors argue that the best retirement date begins as close to the end of a month. By doing so, you can successfully account for accrued sick leave and other benefits. Your annual leave will be paid out in a lump sum, whereas sick leave is converted to years/months of services, thereby increasing your service time upon retirement. Take a look at the 2087 chart before setting the final date if you’d like to utilize as much sick leave as possible.

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]