Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Welcome to Reyna Retirement. Reyna Reyes has dedicated her career to helping people make small, smarter financial decisions. Raina Retirement is all about breaking down complex financial concepts into language you can actually understand.
Now here's the co founder of American Federal Benefits Consultants, Rena Reyes.
[00:00:40] Speaker B: We've all heard Johnny Cash sing Folsom Prison Blues and we know what it means when he hears the train of coming. And we know where that person is and what they're thinking. And many of y' all have thought, when can I get paroled from my position?
I gotta get out of Dodge. They have kept me shackled to the desk or shackled to this job. And that is what you want to know. When can I leave? When can I get out of here? I hear the train coming and so you want to know when you can leave. So let me tell you. Eligibility windows from fers, that is FERS Retirement Systems. And on the right hand side you will see CSRS or sisurp. No, we're not sipping on some sister. We are looking at CSRS as well. That is Civil Service Retirement System eligibility. So first on the left, sirs on the right and pretty much civil service. If you're civil service, regular civil service, you're all eligible. You can close your eyes and say you're ready to go. Civil service offset, maybe there's a couple of y' all who might be waiting on eligibility. But in general civil service, by virtue of date of the civil service program, pretty much all y' all are eligible to go. If you haven't left yet, somebody's waiting on your job. No, I'm just kidding. But you want to reach out, we can help you get that done. I'm one of the few people in America who can talk incredibly comfortably on civil service Reach out, we can help.
Furs, however, has quite a few caveats and is incredibly fresh. Right. There's a lot of salt in the wound of the Furs Retirement system right now, especially post bbb. That is big, beautiful bill passing. But the beautiful part of that is that it's bittersweet, right? Yay. It passed without a affecting the Federal Employee Retirement System. Real changes. However, there was such trauma during the time period of waiting to see how it would shake out. That we do have some Casualties, Right. Some people left, quit, retired, took opportunities to leave prematurely, even though it may have affected what their income is. So let's see what your regular eligibility is without any offerings and then we'll add the offerings to it. So, so first eligibility is MRA with 30, what the heck is MRA? Minimum retirement age. It's based on your year of birth and the. Excuse me, if you've said, if you've heard me say 57, that is the oldest MRA that exists. So when I say, oh, if you're over 57, that's the oldest MRA that exists. You see what I mean? There is none later. So there's no 58 year old MRA, right? There's 56 and 10, there's 55 and 6, but there's no 58.
So 57, if you're over 57, you are past minimum retirement age. So take a quick gander and check out to see what in the world your MRA is and then we will come back. Because if you're going to roll out an mra, how many years do you have to have? How about 30 years you're going to have to have in order to leave at your minimum retirement age. Now the next window. Now this is like a two sided coin, right? You got to have both sides of that hit before you're eligible to mosey on out of there. So age 60, all you need is 20 years, which is kind of great. Now a lot of people find themselves in this little purgatory time period between the two. Oh, Dale gone. I'm 59 and I have 29 years of service. Yep. Well, you're going to the next year either way. They just happen to hit double, double eligibility. So if you're 59, with 29, you would hit age 60 and have 30 years of service pretty much at the same time. You would just see which happens first, whether that's your birthday or your eligibility in terms of when you got hired. Right. With will I hit 20 years first? Doesn't really matter. You just pick the first one and we rock and roll.
Now you could also have this as a second job. A lot of people come, especially after the military and they come and work postal or federal and all they need is five years of service to roll out at age six. 62. 62 with five years. A lot of people say five years. That's a very interesting number. Did the government pick that out of the air? No.
They also require you to have your health insurance for five years consecutively before you retire. If you're going to keep your health insurance in retirement. So that's the purpose of the five year deal, in order to both retire and have the health insurance. Because there's no scenario where you can roll out with less than five civilian years. And even if you bought back your military, excuse me, your military time. So for example, if you said, hey, Raina, I'm 63 and I have seven years of military I can buy back and I've worked here at the Fed for two years, if I buy back the military time, doesn't that go ahead and give me nine years and then I'm ready to go? Yes, it gives you nine years. No, you're not ready to go. You've got to work the five civilian. That's just the deal.
So then a lot of people look down here at the blue and they say, they see the MRA and 10 and they say, oh, I have my minimum retirement age and I have 18 years of service, that's more than 10, I can go ahead and go. Isn't that true? Yes, but.
Yes, but if you do, they will reduce your pension by 5% for every year that you're not 62. So let's pretend I'm 57. 7, 58, 59, 60, 61, 62. Five years away from 62 times 5, which means 25 reduction for how long?
Forever. Forever, ever. Forever never seems so long until you're gone. So that's exactly right. Forever. You do not get that money back. It is a permanent reduction, permanente reduction.
You will not be seeing that money ever again. So that's a reason a lot of people are not cool with taking the MRA +10. And go ahead and talk about the big bad, big bad deal that a lot of people accepted.
Some people were being offered VERAs and VCIPs and some people were getting rift.
A riff is a reduction in force. So if you were rift and you had MRA, but you only had that 19 years of service, you were actually eligible for a pension, which means you took the reduction because of the rif and you were not eligible for severance because you were eligible for the immediate annuity. So there are people who are accepting right now a significant reduction in their pension, not because they felt like it, but because they were rift into it.
So there's that. Now you say, Vera. What the heck is a Vera? Well, Vera is the lady to use take care of me in the nursery, but that's not important right now. Vera is a voluntary early retirement offer.
Actually, it's the acceptance. What's the word authority Vera Volunteer Early Retirement Authority, which offers the offer of a vera.
And so if you were eligible for a Vera, that means you had 50 years of age or more and 20 years of service or more or they don't care how old you are and you had 25 years of service.
So if you are either one of those eligibility windows Avera doth thought be able to have. We're going to. Yeah, I'm going to amend that one. Do thou be able to have? Thou are able. So the point is though, Avera is the same as any of those top three in red. It's just as eligible. No reduction. You are not MRA +10. You are eligible for that Vera offer, which means you don't get a reduction in pension and you get to keep your health insurance, assuming you had for the five years and you would get a supplement. But the supplement will not start until you reach MRA. So let's say you left with a Vera at 54 because you had 20 years of service. Yay. I don't get a reduction in my pension. Ooh, I have to wait till 57 to get my supplement.
But the other side of that is, remember with the supplement, you have to watch how much money you make.
So many people who are not eligible for the supplement because they took Avera are actually living the dream because they can make as much money as they want to while waiting on on the supplement to start paying them.
So page 78. I know what page I want to go to to show you. There it is. The supplement bridges the gap, right? It's designed to carry federal employees between retirement and Social Security because you' just not ready yet. You're not eligible. You're not old enough.
So if you retire with MRA and 30 or 60 and 20, you're automatically eligible or a Vera. But the Vera eligibility for the supplement does not start until you reach mra. So they'll start paying you then. But when they start paying you, you're subject to this earnings test. So this year 2025, they say you can make up to $23,400 in your other job.
Word of the day is job J O B. And they you're able to work another job at whatever job that is, whether it's a fun one or a not fun one. It doesn't matter if you're earning money, you can make it up to $23,400 before they start reducing your supplement. It's the same rules as Social Security. Social Security has the same scenario. You can receive Social Security and work a job. But if you exceed that dollar amount, they're going to reduce your supplement or Social Security by a dollar for every $2 you went over the amount. So if I made $23,402, they're going to reduce my supplement by a buck. And that's true of Social Security as well. Until you reach certain ages that is around full retirement age or past full retirement age. But that's for a talk another day. So if you're eligible to retire, you've got quite a few little happy options there for you in terms of getting out of Dodge. And it can be a nice little gig in terms of knowing that you're good to go, ready to retire. The only question is, are you truly ready? Right. What does ready mean? Ready in the money and ready in your heart.
So what's the calculation? Every year is worth 1% until you reach 62 and had 20 years of service. So quick note there. If you're over 62 and had 20 years, you're going to get that magical 1.1% per year which is worth it every time. Although your proximity to that age makes a big part, is a big part of determining whether you want to go that far. For example, if I'm, if we're talking at age 57 with 30 years of service, you're probably going to poo poo my idea of working till age 62. But if you're 61 or 60 and a half, you're going to be much more open to going to that, to that point.
So if you're eligible to go, we definitely need to have a talk because again, you can be eligible by virtue of a window opening up for you. But maybe the money's not right or maybe, and I joke about what do you feel in your heart?
But we've all seen Shawshank and we know what happened to Brooks. And there's a lot of people that retire and they feel like they have no more need or they have no more identity, no more purpose, no one needs them anymore. They don't have a reason to wake up and doggone shower. I mean they, they feel bummed out. You've all seen it, you've all heard it, you know how it works. And so that's two sides to the, to the teeter totter. I think everything's a seesaw where you put something on the one side and something on the other and see how it shakes out and try to achieve some type balance. So when we meet, we first will go over the actual math, what is your net income after tax tag and title? Assuming your first window of eligibility, and then if it's not cool, if it's not what we really want, we'll see what the next best window would be. For example, 60 versus age 62 is a very common comparison that I make and most often worth trying to achieve that age 62. However, if that income between pension and the supplement or Social Security is replacing your income that you had before, then we're just having a good old fun time with TSP and maybe nest egging it. Although sometimes we see a that we're in the red, right? We're going to be negative. We're not going to be making as much money as we were while we were working. So we might need TSP to help compensate some of that. And I'm the queen of all of that. It's best to reach out and at least get, you know, get my opinion on what you got going on. And the sooner the better. There's no scenario that's too soon to start planning. Whether it's me or someone on my team. We live this, we breathe this. We want the best for you, primarily because we've done this for a long time and we're national. We have too many people talking to us. There's too many people that we, that we work with. I would rather talk to you five, ten times before you retire to know beyond the shadow of a doubt that the decision you're making is the best one for you and your family. Because there's going to be 20 people you work with who you're going to have call me as well, and they're going to be watching what happens with you. And then 20 years from now, I'm going to have someone in your family call me if something happens to you. Well, 20, 30, 40, 50 years from now, they'll be calling me, hey, Reina, something happened to so and so. Can you help us do the claim? Why did you help them choose this option? I need to be able to tell them why and why I encourage you to retire at some time. So I say this because I've been in these situations. I've been doing this since 2005, so I have quite a few people who I've taken from suit to nuts and then dealing with their children already and helping them do similar things that we helped mom or dad with.
So I hope that helps. In terms of eligibility, you definitely want to go when you're both eligible and the money's right and you're ready in your heart and soul. And always remember you want to retire to something not from something. Not only from something, but to something. So you want to think of what you're going to be doing in retirement before we just try to get you out of there to escape whatever drama you're dealing with right now. Looking forward to talking with you. Reach Out My contact information is here. It's all over the place. If you don't have it. My number 850-450-6500. You can text me straight away and I'll get my calendar right over to you so we can get scheduled to have a talk and look under the hood and make a plan for a very long happy retirement. We'll talk to you soon.
[00:15:40] Speaker A: Thanks for listening to Reyna Retirement With a strong commitment to ethical standards, Reyna works hard to find the right solution for each individual or family who reaches out for advice. To contact Rena directly, contact call 850-450-6500 that's 850-450-6500 or to reach the team at American Federal Benefits Consultants, call 1-800-872-8857. That's 1-800-872- 8857. You can also go online to americanfederal.org not affiliated with the United States Government. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. The information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. American Federal Benefits Consultants is an independent organization, not a government agency or affiliated with the Federal Government or any state government. The terms CSRs, FERs, FELI, and FEHB are all registered trademarks of the utilities, consultants, or any independent contractors do not provide tax, legal or investment advice and do not engage in the solicitation or sale of securities. Consult with your tax advisor or attorney regarding specific situations.
