Category: Life Insurance

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]

What is Thrift Savings Plan (TSP)

The TSP is mainly a retirement savings plan for federal employees and service members. The TSP, like a 401(k), allows participants to contribute to a low-cost retirement savings and investment account while receiving automatic and matching contributions from the government.

It is critical to regularly contribute to your TSP account to build your retirement savings. When you reach retirement age, the total value of your TSP account will be determined by the number of contributions you made during your career and the growth of the investments within the account.

Life at Retirement

According to statistics, people are living longer and healthier lives. Retirement could easily last two decades, if not three. Your TSP account funds are critical to your retirement plan. You’ll need those savings to supplement your income when the time comes. However, federal employees may be unsure of the best way to do so.

Retiring with a sizable TSP would be fantastic. However, there is an issue.

We’re not used to living on a huge amount of income. We are accustomed to receiving a paycheck every two weeks.

How do you safely convert your TSP into a paycheck without going bankrupt?

In this article, this very question will be examined in detail.

The most significant mistake on TSP paychecks

With the help of the 4% rule, you can determine how much of your salary can be supplemented by your 401(k) or other tax-deferred savings plan (like TSP) without jeopardizing your retirement savings.

However, the vast majority of people aren’t aware of how the 4% rule is supposed to function, so they end up misapplying it (which results in them leaving much money on the table!).

The Actual 4% Rule

Most people think the 4% rule says you can only take out 4% of your yearly TSP balance.

The 4% rule states that retirees should withdraw 4% of their TSP balance upon entering retirement and then increase that amount annually by the rate of inflation.

Here’s an Example

Assume you have $500,000 to retire with. 4% is $20,000, so you can withdraw $20,000 in your first year of retirement.

Most people believe that in year 2, you must multiply 4% by your new TSP balance, but that is not what the 4% says.

According to the actual 4% rules, you take the first year’s withdrawal amount and multiply it by the year’s inflation rate in year two.

So, assuming 5% inflation, your year 2 withdrawal would be $21,000 ($20,000 x 1.05).

The chart below depicts how a withdrawal would change over time with different inflation rates, assuming a $10,000 initial withdrawal.

But you’re not finished yet.

You want to withdraw $20,000 from your TSP in your first year; how much of that $20,000 will you get to keep? If your TSP balance is $500,000.

Uncle Sam appears. We must not overlook taxes!

Assuming a 20% effective tax rate, a $20,000 first-year withdrawal would result in $4,000 in taxes and $16,000 in spending.

Your overall tax rate during retirement will, of course, depend on the type of retirement account from which you are taking distributions and any other income you may have.

That’s right—zero dollars!

That is one of the many benefits of the Roth TSP, and you can read about the Roth TSP’s pros and cons here.

Making TSP Paychecks

After determining how much you can withdraw from your TSP each year, decide how frequently you want to receive payments (monthly, quarterly) and divide the annual amount accordingly.

Most people prefer monthly payments because they must pay most bills (such as utilities and credit cards) must be paid monthly.

So a $20,000 annual withdrawal would be approximately $1,666 per month or roughly $1,333 after tax.

However, you can modify your payment schedule to meet your specific requirements.

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 federal government has a three-legged chair for pension payments. 

The Basic Benefit Plan is often known as the federal pension plan, the Thrift Savings Plan, sometimes TSP, and Social Security.

However, this post focuses on the Federal Employees Retirement System’s (FERS) Basic Benefit Plan.

FERS Pension Calculation

The length of creditable service is multiplied by a percentage (often 1% or 1.1%) and then multiplied by the “high-3” average salary to determine the FERS Basic Benefits package or pension. The 1% applies to those younger than 62 at the time of retirement or older than 62 but with fewer than 20 years of service.

If a federal employee quits with at least 20 years of reputable service and after turning age 62, the proportion rises to 1.1%. Typically, these three years are your last three in the military, but if your base pay is higher, they may be earlier. Here are examples of how the FERS pension is calculated.

Example 1

Age: Minimum Retirement Age

High-3: $50,000

30 years of service

0.01 x 30 x $50,000 = $15,000 (30% of high-3)

Example 2

Age: Minimum Retirement Age

 High-3: $50,000

 Service: 15 years

 0.01 x 15 x $50,000 = $ 7,500 (15% of high-3)

 35% reduction: $ 2,625 (7 years under 62) = $ 4,875 (9.75% of high-3)

It makes perfect sense to retire after earning the best salary in the federal government as a result of giving more weight to the three years of your top pay to optimize the pension benefit. You should also try to work till age 62 and have 20 years of experience to get 10% more of your lifetime pension savings to optimize your benefit.

Survivors’ Benefits 

The pension should also take the survivor’s benefit into account. This is particularly essential since, presuming you pass away before your spouse, you can give your surviving spouse up to half of your pension. The pension retirement income is 10% less, with a survivor’s benefit of 50%.

When evaluating your FERS pension payout, it’s common to forget the survivor’s benefit. You can offer the surviving spouse half of your annuity for a slight 10% reduction in the monthly annuity payment.

The Cost of Living Adjustments (COLAs)

COLAs are significant pension benefits. It allows you to balance your purchasing power as the cost of living increases for necessities like groceries, gas, and so forth.

There is a cost of living adjustment in the FERS pension. Raising your cost of living will be ideal if you are 62 years old.

As one of the major problems with many annuities that are not inflation-adjusted, the cost of living adjustment is a crucial component of the pension. Your purchasing power decreases over time, and you must find a way to balance your budget to make up the difference.

Tips for Increasing FERS

The following are the top four techniques to optimize your FERS pension:

1) Retire at least 62 years old and after 20 years of service. Your monthly pension income will grow if you can retire after more than 20 years of work. But keep in mind that you should be at least 62 years old.

2) Retire in your 60s with a maximum of three years of earnings. Before you retire, work toward obtaining your major federal government promotions. Your multiple is based on such a higher last three years of salary.

3) Hold off on taking the monthly allowance until you’re 62 to get the most out of the COLA. Use the COLA as an alternative. Then, if at all possible, retire at 62 or later.

4) If married, take into account the survivor’s benefit. You can provide your spouse with protection by purchasing a 50% monthly annuity for a slight decrease in your monthly annuity.

You should consult a financial counselor to acquire advice specific to your situation because these four general guidelines do not pertain to every instance. 

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 implementiong a sound plan for your retirement. We are commited to helping you achieve your goals. Visit us at M. Dutton and Assoiciates.COM. Tel. 212-951-7376: email: [email protected]

While continuing payments to survivors upon the death of a retiree receive the majority of attention, survivorship benefits are also available if a current employee passes away. However, there are several additional eligibility requirements.

Your spouse would be eligible for a survivor annuity if you were an employee who was married at the time of your death and had at least 18 months of creditable civilian service. That annuity will be paid to you based on a portion of the annuity you were eligible for on the day of your death. This is 55% for CSRS survivors and 50% for Federal Employee Retirement System (FERS).

Note: A FERS employee’s eligible surviving spouse is entitled to a basic death benefit and 50% of the employee’s final salary (or high-3 if that amount is higher). That death benefit is around $37,000 in 2022.

The beneficiary(s) on your enrollment could continue your coverage if you were enrolled in the self plus one or self and family choices of the Federal Employees Health Benefits program at the time of your death. Any eligible survivors would be out of luck if you weren’t enrolled in the program (or if you were, but solely in the self-only option).

Benefits for FERS Survivors

A pension is given out upon retirement as part of the FERS defined benefit. This annuity, based on your age and the number of years you’ve worked for the federal government, offers a yearly payment equal to a set proportion of your most recent wage.

Your FERS account offers three types of survivor benefits, each with distinct rules.

Fundamental Death Benefit: When a FERS employee passes away, the surviving spouse is entitled to a lump-sum death benefit equivalent to $34,991 plus 50% of the deceased’s final income. (Note that while this is the approved sum for 2021, inflation is considered yearly.)

To be eligible, your surviving spouse must have been married to you for at least nine months or be the parent of a child born during your marriage.

Insurer Annuity: The surviving spouse is also qualified for an annual payout based on the deceased’s pension schedule if they match the qualifying criteria listed above and the deceased federal employee had ten years of creditable service. This benefit would equal 50% of their annual pension, with no age-related reductions if the federal employee passed away before retirement. Each year, this sum is adjusted for inflation.

Premiums

The benefits and government portion of the contributions are the same for an FEHB eligible survivor as they are for a current or retired employee participating in the same plan. The premiums would typically be subtracted from your survivor’s annuity payment, and they can also pay the premiums directly to OPM if the annuity is insufficient to cover them.

Any FEGLI benefits will be given to the person or people you designated on the Standard Form 2823, Designation of Beneficiary, if you enrolled in the Federal Employees’ Group Life Insurance program and have one on file. If you don’t, the money will be dispersed following the usual hierarchy of importance:

• First to a living spouse;

• Second, if there is no spouse, to your children, with the share of any deceased child being split among that child’s descendants, if any;

• Third, if none of the aforementioned apply, to your parents equally or in full to the lone survivor;

• Fourth, if none of the aforementioned, to your estate’s executor or administrator; and

• Sixth, if none of the aforementioned apply to your relatives as decided by the state’s legal system where you resided.

When you pass away, the Federal Long-Term Care Insurance Program will continue to cover your spouse or any other qualified family members as long as the premiums are paid. However, a family member who is receiving a survivor annuity is the only one who can sign up for the FLTCIP program for the first time.

• Any member of your family who previously had coverage via your Federal Dental and Vision Insurance Program enrollment is eligible to keep it. Similarly, anyone receiving a survivor annuity is also eligible to enroll.

• Any money in your TSP account at the time of your death will be distributed according to the above-mentioned standard order of priority unless you submitted a valid TSP-3, Beneficiary Election form.

• The beneficiary, if it’s your surviving spouse, can maintain the account and enjoy the same administration and withdrawal privileges as you did. Any other beneficiaries, however, are required to close the account.

• They can do that by either taking a withdrawal or transferring the funds to an IRA or another type of eligible retirement savings vehicle.

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 implementiong a sound plan for your retirement. We are commited to helping you achieve your goals. Visit us at M. Dutton and Assoiciates.COM. Tel. 212-951-7376: email: [email protected]