Critical FERS Retirement Mistakes| Financial Advisor | Christy Capital Management

Описание: Today, we’re going over the eight mistakes that people make regarding retirement.

The first one is not understanding your service computation date. There’s a service computation date for leave and there’s one for retirement. Many times on your paystub, you’ll see a service computation date but that’s actually for leave. For some people, those two dates are the same.

The mistake comes in as let’s say, you’re 60 years old with 20 years of service and you turn in your retirement paperwork and it comes back that you actually don’t have 20 years of service. You only have 19 1/2 years of service and are therefore not eligible to retire. Not knowing your service computation date means you don’t really know when you’re eligible to retire.

The next mistake has to do with beneficiary designations. Do you have your beneficiaries correct? With the federal system, there are four different beneficiary forms. If you’ve had a change in marital status or some type of life change, you want to make sure that your beneficiaries are updated correctly.

If something happens to you and the primary beneficiary at the same time, you want to have contingent beneficiaries. If you don’t do this, the money has to go through your estate and through probate to get divided up according to your will. There can be long delays with probate.

Other beneficiary forms to think about are with your investment accounts or your brokerage accounts. If you have an account at Vanguard where you own some stocks and mutual funds, you want to get a TOD or a transfer on death. This puts a beneficiary form on that account when there is usually not one. This will help avoid probate.

If you have some bank accounts, CDs, or savings accounts at the bank, you need to go to the bank and ask for a POD (payable on death). This puts beneficiaries on that account to also avoid probate.

Another paperwork mistake is not filling out your retirement paperwork correctly. There are two ways you can mess this up. You can just fill the form out wrong or you can pick an election that you didn’t mean to pick. If you're a client of our firm, we will help you fill out your retirement paperwork.

Another mistake is ignoring long-term care planning. You can either get it through long-term care insurance or by getting a life insurance policy that has living benefits, where you can access the death benefit for long-term care coverage.

The next mistake involves spousal planning centering around the survivor benefit decision. As a retiree, you have three options as a survivor benefit regarding your monthly pension check. You can leave half of your check to your spouse, 25% or you can leave nothing.

The next mistake is not understanding the tax consequences of retirement. When you’re doing your planning, are you using gross numbers or net numbers? Making sure you know what your pension, Social Security, and distributions from TSP will be after tax is important. If you have traditional TSP, that number on your statement is a gross number, not a net number. For you to spend that money you have to pay taxes.

The next mistake is not planning specifically enough. You’re going to have your pension and Social Security. You’ll probably need to take some distributions from TSP. Do you need life insurance? What survivor benefits should you select? What are you going to do with your FEGLI? What about long-term care planning? How do you know if you have enough? How aggressive do you need to be with your money to ensure you have enough? All of these things can be planned for by getting a full financial blueprint done. We help our clients with this, so if you’re interested in that reach out to us.

That leads to the last mistake and that is not getting specific advice from people that understand your federal benefits. Getting generic advice from well-meaning people who don’t understand your benefits can be bad advice. They could be a certified financial planner, but if they don’t understand your federal benefits, they could lead you astray unknowingly. Your Federal Retirement has lots of features. You need to know which ones are good, which aren’t, which ones to sign up for through the federal government, and which ones to replace using outside options.

The information provided is not intended as tax or legal advice. Figures shown are for illustrative purposes only furthermore, the information nor the illustrations provided may not be used to avoid any tax penalties. This content represents the general views of Christy Capital Management and should not be regarded as personalized investment advice Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice. Retirement Benefits Institute, Inc., and a portion of its contents merged with Christy Capital Management Inc. Brandon Christy, former President of Retirement Benefits Institute, is also the current President of Christy Capital Management, Inc., a registered investment adviser.