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TAMMY FLANAGAN – FEDERAL BENEFITS SPECIALIST

P R E S E N T E R

Webinars and Seminars

www.nitpinc.com

http://www.fers-route-to-retirement.com/webinar

/ • Pre-Retirement

• Mid-Career

• New Employee

Radio Co-Host: For Your Benefit

www.federalnewsradio.com

W R I T E R

www.narfe.orgFeature Columnist

Webinar Presenter

www.govexec.com

Weekly Column “Retirement Planning”

Retirement Readiness Webinar on June 16th!Send me an email for the link!

Mistake #1

Avoiding risk

Playing it too safe

Mistake #2Believing

others who know less than you

Who do you trust?

Mistake #3Focus only

on accumulation and not

distributio

n

No plan, but cash

out anyway

https://www.youtube.com/user/TSP4gov

MISTAKE #1: AVOIDING RISK AND PLAYING IT TOO SAFE

• When do you want to retire?

• How much income will you have from other sources?

• How much will you depend on the TSP?

More risk and

volatility, higher

potential for reward

Less time to invest and more money needed to replace income

More time to invest and less money needed to replace income

RISK

Market Risk: C, S, I Funds

Interest Rate Risk: F Fund

Inflation Risk: G Fund

Longevity Risk: Withdrawal Choices

Equities:

C, S, and I

funds

are essenti

al

For a diversified retirement portfolio

(mix of investments)

The key to investing for and

during retirement isn’t

to avoid risk, but to diversify it.

Due to rising life

expectancies, retirement can last 30+ years

https://www.youtube.com/user/TSP4gov

https://www.youtube.com/user/TSP4gov

IS THIS A DO-IT-YOURSELF PROJECT?OR

THIS IS A DO-IT-YOURSELF PROJECT!

MISTAKE #2: WHO CAN WE TRUST TO HELP US?

How much do you know

about CSRS, FERS and TSP?

How will I pay you for your

services?

What is your experience?• CFP, CPA, RIA • Fiduciary

What services do you offer?

Can you provide

references?

Where is my money

invested?

How’s your record?• CFP Board• FINRA• SEC

How often will we interact? Do I like you?

Time to move money to G

Fund (sell high)

Time to move money from the

G Fund (buy high)

That’s great…I’ll keep doing what

I’m doing

Time to rebalance

The C Fund earned 11.89%

return over the last 12

months

Time to move money to G

Fund (sell high)

Time to move money from the

G Fund (buy high)

That’s great…I’ll keep doing what I’m doing

Time to rebalance

The C Fund earned 11.89%

return over the last 12

months

Month

L Income L 2020 L

2030L 2040

L 2050

G Fund

F Fund

C Fund

S Fund I Fund

2014Jun 0.58% 1.19% 1.52% 1.77% 1.96% 0.19% 0.14% 2.07% 4.45% 0.99%

Jul (0.26%) (0.97%) (1.34%) (1.63%) (1.86%) 0.19%(0.19%

)(1.37%

)(4.38%

)(1.95%)

Aug 0.84% 1.64% 2.07% 2.40% 2.61% 0.20% 1.12% 4.01% 4.98% (0.14%)

Sep (0.42%) (1.36%) (1.84%) (2.18%) (2.50%) 0.18%(0.58%

)(1.40%

)(5.10%

)(3.82%)

Oct 0.61% 1.09% 1.36% 1.58% 1.70% 0.20% 0.96% 2.45% 4.11% (0.63%)

Nov 0.55% 1.04% 1.27% 1.42% 1.55% 0.17% 0.74% 2.70% 1.33% 0.51%

Dec (0.04%) (0.50%) (0.67%) (0.76%) (0.94%) 0.18% 0.21%(0.24%

)0.99% (4.13%)

2015Jan (0.08%) (0.58%) (0.83%) (1.02%) (1.18%) 0.18% 2.13%

(2.99%)

(1.85%)

1.19%

Feb 1.19% 2.95% 3.80% 4.39% 4.99% 0.13%(0.91%

)5.75% 6.05% 5.97%

Mar (0.07%) (0.44%) (0.58%) (0.64%) (0.76%) 0.16% 0.47%(1.57%

)1.24% (1.43%)

Apr 0.37% 0.81% 0.95% 1.00% 1.16% 0.15%(0.28%

)0.96%

(1.50%)

4.11%

May 0.30% 0.50% 0.62% 0.72% 0.78% 0.17%(0.26%

)1.29% 1.84% (0.42%)

YTD 1.72% 3.25% 3.96% 4.43% 4.97% 0.79% 1.13% 3.26% 5.71% 9.59%

Last  12 mo 

3.61% 5.41% 6.38% 7.08% 7.51% 2.11% 3.57% 11.89%

12.07%

(0.21%)

Move everything to the G Fund

Evaluate my retirement

income from all sources

Consider my cash flow needs

Call that guy from the free lunch seminar

I’m planning to retire

next year, so I will

Move everything to the G Fund

Evaluate my retirement

income from all sources

Consider my cash flow

needs

Call that guy from the free lunch seminar

I’m planning to retire

next year, so I will

MISTAKE #3: FOCUS ONLY ON ACCUMULATION

How much of my income will come from…

• FERS/CSRS?• Social Security?• Other sources?

… at my • 1st Eligibility for CSRS or FERS?• 5 years later?• Are there any other milestones?

HOW MUCH DO I NEED FROM TSP TO REACH MY GOAL?

WHAT DO YOU NEED THE TSP TO DO FOR YOU?

Create Income

• Monthly Payment

• Annuity

As Needed

• Partial Withdrawal

• Transfer to IRA

A Little of Both

• Mixed Withdrawal• Monthly

Payments

• Transfer to IRA

• Annuity

THRIFT SAVINGS PLAN

TSP

Cash or Transfer to

IRA

Monthly Payments

Life Expectancy

Specific Amount

Annuity

EXAMPLE OF PARTIAL WITHDRAWAL

$300,000 TSP

Withdraw $100,000

Transfer $80,000 to

IRA

Cash out $20,000 to

you

$200,000 remains in

TSP

EXAMPLE OF FULL WITHDRAWAL

$300,000 TSP$100,000 keep in L Income

Fund / withdraw $2,000 monthly payment

Transfer $1,000 to

IRA

Transfer $1,000 to

bank

$200,000 transfer to

IRA

May change amount

REQUEST FOR PARTIAL WITHDRAWAL TSP-77

23

REQUEST FOR FULL WITHDRAWAL TSP-70

24

MONTHLY PAYMENTS

Age 50

• Retire• TSP: $500,000• Investment Return: 6%

Age 62

• Use $500,000• Begin to withdraw

$3,000 / month

Age 90

• Balance: $0

MONTHLY PAYMENTS: LIFE EXPECTANCY

Age 50

• Retire• TSP: $500,000• Investment Return: 6%

Age 62

• Use $500,000• Begin to withdraw $1,833 /

month ($22,000 / year)

Age 90

• $4,000 /month

• $48,000 / year

• Balance: $543,203

MONTHLY PAYMENTS: ANNUITY

Age 50

• Retire• TSP: $500,000• Investment Return: 6%

Age 62

• Use $500,000• Payments: $1,476 / month• $17,712 / year• Cash Refund / Increasing

Payments

Age 90

• $3,378 / month

• $40,536 / year

• Balance to beneficiary: $0

6% Rate of Return

TSP RETIREMENT INCOME CALCULATORSWWW.TSP.GOV

ONE MINUTE VIDEO

BONUS MISTAKE: FORGETTING ABOUT TAXES!

Taxable Accounts: usually 15% capital gains• Investments (stocks, bonds, real estate)

Tax-deferred Accounts: ordinary income tax• TSP, IRA’s, 401(k)

Most interest taxed at ordinary income tax• CD’s, savings accounts, etc.

Pensions: ordinary income tax• CSRS and FERS (small portion tax-free)

Social Security: It depends

Roth IRAs and Roth TSP: TAX FREE!

ORDINARY INCOME TAX: 2015 FEDERAL TAX BRACKETS

Rate Single Married (Joint Return)

10% $0 - $9,225 $0 - $18,450

15% $9,225 – $37,450 $18,450 - $74,900

25% $37,450 - $90,750 $74,900 - $151,200

28% $90,750 - $189,300

$151,200 - $230,450

33% $189,300 - $411,500

$230,450 - $411,500

35% $411,500 - $413,200

$411,500 - $464,850

39.6% $413,200+ $464,850+

Other IRS Publications:• Credit for the Elderly

or the Disabled• Pension and Annuity

Income• Contributions to

Individual Retirement Arrangements (IRAs)

• Distributions from Individual Retirement Arrangements (IRAs)

• General Rule for Pensions and Annuities

SOCIAL SECURITY MAY BE TAXABLE

SingleUnder $25,000

$25,000-$34,000Over $34,000

Tax-Free50%

taxable85%

taxable

Married

Under $32,000$32,000 - $44,000

Over $44,00

Tax-Free50%

taxable85%

taxable

Provisional Income: adjusted gross + tax-free interest + 50% of Social Security benefit

Kiplinger State by State Tax Guide/

Kiplinger State by State Tax Guide/

MARITAL STATUS

If you get married, get divorced, or become widowed as a retiree, you may need to change your:

Survivor benefit election for your retirement benefit.

Health insurance coverage.

Beneficiary designation forms for FEGLI, CSRS or FERS, and TSP.

Social Security benefits payable to your new spouse or from your new spouse.

MARITAL CHANGES: CSRS AND FERS

Add survivor benefits

Within 2 years of marriage

Pay back to when last benefit stopped (or retirement)

Marry

Election made at retirement is void

Divorce decree determines division of retirement and survivor benefits

Divorce

Elect to stop reduction for survivor benefit

U.S. Office of Personnel ManagementRetirement Operations CenterPost Office Box 45Boyers, PA 16017

Widow