We’re now a bit into the new year. Are you losing weight? Exercising regularly? Eating five fruits or vegetables per day?
Not saying that those things aren’t important, but chances are you didn’t make resolutions involving your job that might actually be easier to keep—and that will help you more than cleaning out your closets. We’ll limit them to three:
Get the Most from the TSP—This should go without saying, but if you are not taking full advantage of your retirement savings opportunity through the TSP, it’s time.
If you’re under the Federal Employees Retirement System, you get an automatic 1 percent of salary contribution from your agency, but to capture the matching contributions of up to another 4 percent, you must invest personally. Yet a tenth of FERS employees don’t invest at all, and many who do invest don’t capture the full match. That’s passing up free money.
If you’re not investing the needed 5 percent, or especially if you’re not investing at all, what would it take to get at least to that level?
If you’re under the Civil Service Retirement System you will get no agency contributions but the TSP still offers tax-advantaged savings. And under either system, if you’re relatively high-paid, the TSP could be your only vehicle to save through “Roth” style investing, if that would be advantageous to you.
The TSP investment limit is now $18,500 a year. If you are age 50 or older (or will be at any time this year) you can invest another $6,000 on top. That may seem out of reach, but it’s a goal to aspire to, and many federal employees do achieve it.
Reconsider Your Benefit Choices—The FEHB open season for this year ended in mid-December, so it’s generally too late to change your plan or your level of coverage now. But remember, if you experience certain life events, such as marriage, addition of a child to your family or retirement, you can make certain changes. That could happen this year.
If that happens—or if it doesn’t, the next time open season rolls around—be sure to look into ways you can save money and/or get coverage that better suits your needs. Only about 5 percent of enrollees make a change in any given year, and experts say the figure should be much higher. They say that most commonly, the reason people sit out the open season is simple inertia. Not even exploring whether you can do better for yourself in health insurance is passing up free money, too.
What about your other insurance benefits? The FEGLI program has some advantages and some disadvantages when compared with other forms of life insurance. Open seasons are rare in that program—the last was in 2016 and it’s not likely there will be another for years—but you can increase coverage in that program on experiencing life events similar to those applying in FEHB, or by providing proof of insurability. On the other hand, you can decrease coverage at any time.
When’s the last time you asked yourself this question: should I have more FEGLI, less or my current amount? If you can’t recall, it’s time to get an answer.
Similarly, how much thought have you given lately to the FEDVIP vision-dental insurance program or the FLTCIP long-term care insurance program? Enrollment is much lower in them than in the FEHB and FEGLI, in part because enrollees pay the entire premium with no government share.
But if you haven’t explored them lately, you’ll never know whether it might be worth it to you to enroll. FEDVIP allows enrollment or enrollment changes during the annual benefits open season or on similar life events as FEHB and FEGLI. In FLTCIP, you can enroll at any time, and if already enrolled can decrease or increase (at an added cost) coverage at any time, in all cases subject to passing underwriting.
Understand Retirement—If you’ve been a federal employee for any substantial time, you should at least understand the retirement system you are under and how the benefits are calculated. Extra points if you already have a projection of your benefits at your expected retirement date.
The basic calculation involves simple formulas of years of service and high-3 salary levels. But both elements have complications that you should be aware of.
For years of service, for example, there are special considerations for gaining credit for time in the military, or if you worked for the government for a time, left, and then returned. You may need to make deposits to capture that time, which may or may not be worth it to you to make.
Similarly, you might be fooling yourself regarding your high-3. Not all forms of compensation count toward that figure. If you’re in a position that regularly pays you certain forms of premium pay or incentives, your high-3 might be lower than you think. One quick way to assess this is to look at your leave and earnings statements: any form of compensation for which retirement contributions were not withheld will not count in your high-3.
Social Security is another matter: the benefit formula there is much more complex and really isn’t something you can calculate by yourself, since it involves earnings going back decades that are statistically massaged in various ways. Unfortunately, the SSA no longer sends annual estimates automatically to everyone. The best way to get an estimate is to create an account on the agency’s site; then you could get one at any time.
And remember, those estimates will not include the potential impact of the windfall elimination provision, government pension offset or earnings test. Don’t know how they might impact you? It’s time to find out.
