Are feds prepared for the threatening ‘winds’ federal retirement will bring?

There is a “Big Bad Wolf” waiting to blow down flimsy and weak retirement plans. Feds aren’t trained well enough to withstand the blustering winds. What can they do to prepare for this inevitable attack on their desired retirement lifestyles?

Feds have access to retirement benefits that are theoretically outstanding. But having access to a thing and knowing how to utilize a thing, are two very different notions.

If an elderly person is given their very first smartphone, they would have access to a multitude of tasks they could perform. But if they aren’t familiar with apps, they aren’t likely to utilize the full potential of their new device. They would require training and patient guidance by someone that understands what their phone could do for them.

Feds lack this patient and consistent guidance concerning their retirement benefits. The potential is there for the taking, but the understanding and preparations become as confusing as that new smartphone. Their lack of financial or federal retirement benefits training leads to weak and unsustainable retirement plans.

I recently spoke with three federal employees. Each was looking to ensure they were on pace for comfortable (and long term) federal retirements. All three reached out to my office to request one of our free Federal Retirement Readiness Reviews (FRRR).

After reviewing their individual levels of preparedness, I was (I think you’ll agree) understandably reminded of the story of the Big Bad Wolf and the Three Little Pigs. For their stories, the FRRR served fittingly as a personal anemometer (a tool that measures wind speed).

Straw = No planning

Elmer is the name of the first little fed. He is a 62-year-old man that has served in the government for 31 years. When he was a young “fedlet,” he wasn’t concerned about his retirement. He never added to his Thrift Savings Plan; he didn’t understand the need and felt saving for retirement would interfere with his “live for the day,” lifestyle. I know this is corny, but yes, Elmer enjoyed living a little too “high on the hog.”

Randy Silvey, president of Silverlight Financial
Randy Silvey, president of Silverlight Financial

He had no grasp of federal retirement benefits, nor did he really care. Early in Elmer’s career he had heard feds had great retirement benefits … and that was about the extent of Elmer’s in-depth research into the matter. When Elmer contacted me, he was totally uninformed and unprepared. He didn’t know how much money he would need to survive retirement, let alone where it would be coming from. The only thing he was sure of was that he wanted to retire — now!

Unfortunately, when we completed our review it was apparent his retirement was not built to withstand even the smallest puff of wind during retirement.

Result — Based on his current financial situation and conservative estimates, Elmer will likely be working well into his 70s, in order to give his retirement a chance to develop structural integrity.

Sticks  = Some effort, but poor planning

Willie had paid attention to his retirement preparations better than Elmer. Willie is 65 with 30 years of federal service under his belt. Early in his federal career, Willie began saving in his TSP. Willie always tried to take the responsible approach to his financial matters. He has been a vigilant saver and good at keeping his debts to a minimum. Willie, always the frugal one, saw no need to pay for professional management or advice.

Like Elmer, Willie didn’t receive consistent or thorough retirement training. Even with all his years of saving, Willie had been unsuccessful at developing the sizable TSP account he desired. Throughout his career, he was terrified about losing his retirement savings. Therefore, his approach was to be as conservative as possible. Not surprisingly, his long-term (compounding) growth was very disappointing. His approach stunted the potential advancement of his TSP retirement savings drastically.

Result — When we completed his FRRR, we were able to determine a couple of good huffs and puffs (inflation and the rising cost of medical care) could cause his retirement house of sticks to splinter and eventually fail. Willie is now working with a fed-focused adviser to try to help him salvage a quality retirement.

Bricks = Smart retirement planning

Jiggs is a financially fit fed. There is no pork belly on this guy. He is 57 with 31 years of federal service. Throughout his federal career he consistently saved until it almost hurt. He also learned how to administer his TSP account to correlate with his “risk tolerance.”

Like the other two “fedlets,” Jiggs didn’t receive (employer sponsored) federal retirement benefits training until late in his career. However, he was fortunate to have a close family member that worked for the Office of Personnel Management (OPM). This knowledgeable source clearly explained federal retirement benefits. Jiggs was able to learn about his federal pension, the special retirement supplemental, his and his wife’s SSA benefits, FEHB, etc.

When he was ready to create a formal retirement plan, he sought out the advice and guidance of a federal retirement benefits specialist. Jiggs understood that accumulating retirement assets was much different from managing them during retirement.

I put too much effort into saving for my retirement to allow my lack of knowledge to let it all fall apart now,” he said. “I know enough to realize it’s the things I don’t understand that can hurt me most.”

Result — When we completed his review, it was apparent that Jiggs’s retirement is made of solid brick. The Big Bad Wolf (of retirement dreams) will lose a lung trying to blow down this house.

It is also evident that Jiggs had a unique advantage not afforded to most feds. An “insider,” that helped him understand the basics of federal retirement benefits and retirement training. Most importantly, he was able to take advantage of this knowledge early in his career.

While sound (retirement) structure is possible for most feds, the training and guidance appears to be lacking.

It has been suggested that feds are satisfied with their current level of retirement benefits training. Yet I am certain the first two little “fedlets” are extremely unsatisfied. They both feel that inadequate benefits training contributed to the construction of their shaky retirement plans. Neither planned to fail. Yet without suitable training, they simply didn’t know what they didn’t know.

I would like to hear your voice on this subject.

I invite you to participate in a short survey: Let’s establish if feds desire more comprehensive retirement benefits training, or are feds happy with the status quo.

Federal Retirement Training Survey

Randy Silvey is the published author of: “You FIRST, Federal Employees Retirement Guide,” one of the bestselling books of its kind on Amazon and Kindle. He has 14 years’ experience guiding feds to pursue a youthful and wealthy retirement. Randy can be reached at 816-524-515 or www.silverlightfinancial.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities offered through LPL Financial, member FINRA/SIPC.

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