Joe and Jill – Pre Retirees
This is a very common scenario among federal employees that are close to retirement.
Joe and Jill, ages 65 and 62, are married and Jill wants to retire. They have had unexpected financial issues that required them to take on some debt over the past year. Jill wants to retire but Joe is fine working for a few more years.
This is also a second marriage for each of them and they are concerned about providing for each other in retirement but would eventually like their assets to be left to their respective kids.
Here are some questions they had:
- Can Jill retire and live comfortably?
- Should they stop saving and pay off debt?
- How much can they spend and not run out money in retirement?
- Do they need long term care and can they afford it?
- Should Jill keep FEGLI or not?
- Should Jill take Social Security at 62?
- How should they invest in retirement?
Jill has a TSP loan, what happens to that if she retires? Joe and Jill decided they wanted to put a retirement plan together, and in that plan we did the following:
- Developed a debt payoff plan
- Figured out a way to get Jill’s TSP loan paid back within six months of retirement without any penalties
- Developed a retirement timeline for Jill
- Addressed maximum and optimal retirement cash flow
- Developed an investment plan to fit their needs
- Discussed retirement distribution options
- Addressed risk and insurance analysis of long term care and FEGLI
- Discussed and initiated an estate plan to guarantee that assets are left to the kids, all while providing for the surviving spouse
Joe and Jill committed an upfront fee for doing a financial plan. Upon completion of the plan they decided they weren’t comfortable managing their retirement assets and decided to hire me ongoing to help with ongoing financial decisions and investment management.
Bill and Brenda – Mid career
Bill and Brenda are both federal employees in their late 40s that contacted me after coming to the realization that they would like to retire one day. Neither were real familiar with their benefits.
They both had 5 times their salary in FEGLI and Brenda had 100% of her TSP in the G fund because that was the default when she started employment. They were also in the process of sending their only child off to college.
They weren’t sure exactly what they needed, but knew they wanted help figuring out how to get to a retirement date and get their son through college.
The first step was to gather information and then we spent time discussing college planning and their retirement benefits.
As part of their plan we:
- Defined their priorities when it came to college funding versus retirement savings
- Developed a college funding plan and discussed ways to save tax dollars in the process
- Put together a savings plan with funds going to an emergency fund, TSP, and Roth IRAs
- Composed an investment allocation aligned with the level of risk that was suitable for them
- Changed their life insurance to lock rates in for 20 years and save money
- Discussed some simple estate planning steps to take
Bill and Brenda did a flat fee engagement only.
Plain Jane
Jane had a couple of issues that were bothering her about her upcoming retirement. She was concerned about how the FERS supplement works until she turns 62, how to interpret the earnings test on her supplement, and if her husband’s self-employment income would affect her FERS annuity or supplement.
Jane didn’t want someone to manage her money, but wanted to get a few questions answered before she headed into retirement.
Jane chose to do an hourly engagement where we were able to address and answer all of her questions in under an hour and a half.