Federal Employee Retirement Planning
If you are an employee of the federal government, at least 60 years of age, and have been saving money in a Thrift Savings Plan, you need to watch this short video to learn about an important option you have to convert your savings into a guaranteed lifetime income payout.
The TSP is a retirement savings program for civilians and members of the armed forces who are employed by the United States Federal Government. The TSP is very similar to a 401(k) plan in many ways. They are similar because they are both employee sponsored and they are both defined contribution plans and tax deferred retirement plans. They also share the same annual contribution limits.
Thrift Savings Plan Investment Options
We know that your federal benefit packages can be confusing. Our qualified retirement specialists will help you understand your options and will provide you with a customized retirement planning solution that is tailored towards your retirement goals and will help you get the most out of your benefits.
TSPs offer six different funds. Each fund has its own advantages and potential drawbacks. If you choose your own funds, take into account your risk tolerance, investment knowledge and future goals. Our annuity providers are all A rated carriers and we will design a guaranteed income strategy that protects your principle and fits your needs and goals.
G Fund (Government Securities Investment Fund) invests in government securities. These offer extremely low risk, but also have the lowest rate of return.
F Fund (Fixed Income Index Investment Fund) invests in U.S. government, mortgage-backed, corporate and foreign government bonds. This fund takes an indexing approach to investing. This means it’s passively managed regardless of conditions in the bond market or economy. The F Fund offers fairly low risk and rate of return.
C Fund (Common Stock Index Investment Fund) invests in the stock market from the S&P 500 Index. Return depends on market performance, meaning higher risk but you could earn more money.
S Fund (Small Cap Stock Index Investment Fund) also invests in the stock market, but only with small to mid-size companies excluded from the S&P 500. Risk is even higher than the C fund, but your investment could earn even more.
I Fund (International Stock Index Investment Fund) invests in international stock markets. This poses the most risk, but has the potential to earn significant growth.
Finally, Lifecycle (L) funds are those managed by professionals. They invest your savings in a diverse mix of securities from the above funds based on target retirement dates. There are several options: L2020, L2030, L2040 and L2050. The number in the title indicates the year of an employee’s retirement the plan is designed for. For example, an L2020 plan is designed for an employee retiring in 2020.
L Funds automatically rebalance investments every quarter to align risk with the target date. As a retiree already withdrawing from your TSP, you also have access to the L Income Fund. This fund focuses on preserving assets and rebalancing funds daily to maintain the right mix.
Fixed and Fixed Index Annuities offer tax-deferred growth, allow you to protect your principle from market volatility and loss, the ability to include long-term care protection and leave an inheritance to your heirs.
Roth IRA Conversions
Roth IRAs have a number of attractive characteristics: there are no age limits on making contributions as long as a person has earned income, funds can be withdrawn tax free, and distributions are not required at age 72. Individuals can let their money grow in a Roth tax free during their lifetimes, leaving whatever is left in their accounts at death to heirs. For these reasons, many traditional IRA owners take advantage of an opportunity the IRS gives them to convert traditional IRAs to Roth IRAs. Qualified plans, tax-sheltered annuities (TSAs), and government plans also can be converted to a Roth IRA.
Taxes and a host of other factors can affect Social Security claiming decisions.
A person's Social Security benefits might be reduced by the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), if he or she worked in both non-covered employment (jobs where Social Security taxes were not deducted) and covered employment. The WEP can reduce a worker’s benefit while the GPO can reduce the amount of spousal, dependent child, divorced spousal, or survivor benefit that a person receives based on the work record of a current or deceased spouse (or ex-spouse).
We specialize in strategies that help you maximize Social Security, prepare for long-term care costs and offer options for guaranteed lifetime income and tax-deferred growth.
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Some annuities come with “nursing home doublers” that can help cover long-term care costs not covered by Medicare. Depending on the annuity, these double payments last for up to five years or until an annuity with the doubler drains its cash balance.
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