What’s your planning, investing end game?

As more companies scale-back or more often eliminate retirement plans for their workers, the government’s benefits package looks better and better to many private sector employees. But all comparisons are relative, as in compared-to-what?

Instead of being a comfortable, self-adjusting, retirement-to-the-grave pension plan the Federal Employees Retirement System that covers most active duty civil servants is only one component of a three legged retirement plan. Unlike your father’s stand-alone Civil Service Retirement System, which was replaced in the 1980s, FERS will provide only one-third to one-half the income current and future annuitants have to spend in retirement.

To have enough money in retirement and beyond, the vast majority of current federal and postal workers need to be investing wisely to the max in their Thrift Savings Plan which, along with Social Security, will be the three main money streams in retirement. Many financial planners believe that because FERS employees have Social Security and a limited civil service retirement benefit, they can and should invest heavily in the TSP’s higher-risk, higher-reward C, S and I stock indexed funds

Arthur Stein, a Washington area financial planner advises that even in retirement, investors have significant holdings in the C, S and I funds to protect their accounts from being eroded by inflation. Stein believes that even in retirement investors shouldn’t be too heavily invested in the super-safe-never-has-a-bad-day G Fund. That’s because he says overtime inflation could outpace limited returns of the popular G Fund. Several of his clients are TSP millionaires.

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In addition to fully participating in the TSP, or at least enough to get the 5 percent match, experts say that feds need to do a lot of estate planning because most people are probably worth more than they think, especially long-time government employees. That’s especially when they leave an estate which includes a house with a paid-up mortgage.

An estate? You? It’s very likely.

Enter Tom O’Rourke, a Washington area estate planner and former IRS attorney who specializes in making sure feds do the right thing for themselves and their heirs. He is my guest today as we re-air and update a recent episode of Your Turn about powers of attorney, trusts and other things many if not most feds and family members should understand. It should prompt all of us to review our withholdings in 2019 so we will pay enough, and get a bigger refund.

While you are exploring financial data in connection with your tax return, you may wish to determine whether you can increase your contributions to the Thrift Savings Plan. This will not only help you reduce your income tax liability but will also enhance your overall financial well being.

When reviewing your financial information in connection with your tax return it is also a good idea to review your estate plan. So what’s that? Some of the things you may wish to consider are whether you want to change the distribution of your assets after your death, as well as if the person you picked to administer your estate — an executor or personal representative — is still the right choice. Also, is it a good idea to give your children their inheritance in one lump sum, and do they still need a guardian to manage their affairs? Is that guardian still the proper person for this role? Should you consider using a trust as the key tool in your estate plan?

Last, but definitely not least, do you have a financial and medical power of attorney? If so, are the persons you have selected to act as your agent still proper? And finally, have there been any events in your life — i.e. births, deaths, dementia, marriages, divorces and moves — that could have an impact on your estate plan or that you should at least discuss with your lawyer?

Listen to Your Turn at 10 a.m. EST on www.federalnewsnetwork.com or 1500 AM in the Washington, D.C. area.

Nearly Useless Factoid

By Amelia Brust

Dodo birds are national symbols in Mauritius, the island country in the Indian Ocean where the extinct birds once roamed. They appear on the country’s coat of arms, coins and bank notes, and immigration paperwork.

Source: Wikipedia

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