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Questions You Should Ask

  • 1. I’m not sure I understand the TSP (Thrift Savings Plan). Is the S Fund a small cap fund, and how “fixed” is the F Fund?

    The S Fund is composed of small AND medium sized companies. It is NOT a small cap index fund. The S Fund is designed to track the Dow Jones U.S. Completion Total Stock Market (TSM) Index. This is a broad market index of small and medium-sized US companies not included in the S&P 500 Index. It will not fit neatly into an asset allocation that uses small cap. The F fund does NOT stand for fixed return. It is designed to match the performance of the Barclays Capital US Aggregate Bond Index, the return on which is variable. Investments in both funds are subject to loss. Using our expertise and based on your plan, we help you create an appropriate asset allocation.*

  • 2. I’m FERS (Federal Employee Retirement System). I don’t want to wait until 62 to retire. Is there any downside?

    There may be. The various retirement date combinations and options (MRA +10, 62 +5, etc.) provide flexibility but also introduce complexity into your decision. While the FERS supplement is designed to provide income before Social Security payments may begin at 62, the amount of the supplement and the number of years until you are 62 can dramatically affect the outcome. We can help you figure out what may be best for your situation.

  • 3. I’ve heard my long term FERS disability benefit is 40% of my salary. Is this right?

    The disability benefit is layered. Provided you have been in Federal service at least 18 months, it begins with a payment of 60% of your high three (not current salary) and then lowers to 40%. Further, the benefit has 3 different calculation dates: current, after 12 months, and at age 62. The benefit will also be reduced by any Social Security payments. Disability planning can be challenging, but we can help.

  • 4. I’m CSRS (Civil Service Retirement System). Is my spouse covered for health insurance if I do not take the survivor annuity?

    You must have some level of survivorship benefit for a surviving spouse to maintain FEHB (Federal Employee Health Benefits). However, many factors can affect the decision. We can help make sense of it all.

  • 5. I’m FERS. When should I take Social Security?

    This is one of the more challenging decisions for FERS retirees today, and there truly is no set answer. Social Security is the third leg of your FERS retirement. Implementing it properly is important. Your age, health, and asset picture are all factors. We work with you to find an appropriate course of action for your situation.

  • 6. I’m retiring under CSRS. I have a job lined up. Will I earn a Social Security benefit at all?

    You may, but not as much as you might think. Unless you have 30 years of “substantial earnings” in the Social Security System, you will most likely face reductions to your benefits from the Windfall Elimination Provision. How much depends upon the year in which you turn 62. We can help you work through the calculations.

  • 7. I’ve been hearing a lot about the tax-advantaged Voluntary Contribution Plan (VCP). Should this be part of my planning? Are my contributions pre-tax, after-tax, tax free?

    VCP is one of the “best kept secrets” of CSRS. It is an after-tax voluntary contribution program that can be a powerful planning tool. You may be able to set aside a sizable sum in a tax-favored environment. We help you calculate and understand the potential benefits and shortcomings.

  • 8. I understand there is a Roth TSP option. Does this make sense for me?

    We consider tax diversification planning to be critical in the coming years. Properly utilized, the ROTH option in the TSP can be a powerful tool.

  • 9. Should I take Medicare Part B?

    This may be the number one question we hear from our clients each year. For many retirees, the FEHB program is sufficient; however, health, type of FEHB plan and even travel plans can affect your decision. We help you sort through the options.

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* TSP funds are trust funds that are regulated by the Office of the Comptroller of the Currency and not by the Securities and Exchange Commission (SEC). Additional information and the expenses of these funds can be found by contacting our office. The Dow Jones U.S. Completion Total Stock Market Index is a subindex of the Dow Jones U.S. Total Stock Market Index that excludes components of the S&P 500®. Barclays Capital US Aggregate is an unmanaged market value weighted performance benchmark for investment-grade fixed rate debt issues, including government, corporate, asset backed, mortgage backed securities with a maturity of at least 1 year. Keep in mind that individuals cannot invest directly in any index, and the fund performance may not match the performance of the index. Fund performance does not include transaction costs or other fees, which will affect actual investment performance. Diversification does not ensure a profit or protect against a loss.

Any information provided has been prepared from sources believed to be reliable, but is not guaranteed and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for informational purposes only and does not constitute a recommendation.

 

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