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, Reyna Reyes.
[00:00:41] Speaker B: Well, we know Bob Dylan said that the times they are a changing and he was right. They are changing evermore and all the time.
So we were concerned in 2025 that some big changes were coming. Some did, some didn't, and a lot of people did and didn't retire because of it. So we have a lot of things to consider and I want to go over a couple of bullet points. Some things have been changing, some things have remained. So we'll play a game of did it change or did it not, or keep the change or change that, or let's pick up some other words with change in it. But either way, what's our first potential change we can talk about? You've got to remember that disability is now online. This is a change.
This is only a couple months old. Where used to be if you were going to apply for federal disability retirement, you had to use actual paper, dead trees. You had to fill out a 3108.
Correction, 3107. Wow. Thanks, Raina. You had to fill out a standard retirement form and the SF3112, which was the disability supplement form.
But now everything is online, clickety clickety, and you simply upload your documents, which will be things like your doctor records, your medical stuff, your physician statements, your supervisor statements, all of the ancillary confirmation evidence stuff to prove that you potentially qualify for federal disability retirement. Now it is good to still go pull yourself an SF3112 and get some of this stuff prepped. Because just because you have access online to complete the documents doesn't necessarily mean that they're going to be all perfect and pretty. Preparation is key. Prior preparation prevents poor performance, as they say. And you want to go get your doctor's stuff prepped. That is a doctor physician statement. And physicians love y' all doctors. But you're not incredibly fast when we ask you for stuff, so you want to go ahead and ask them so you can start that process, start the timeline.
Average time for a Physician to get a statement back to you is two ish weeks, two to three. So I'd get, go ahead and get that rolling because anyway, there's a lot of other things to, to talk about for that. But the big picture is that you still have the work to do. You still have to compile the evidence, but you are now submitting it online through Aura and to get access to that, you request it from human resources.
So there you have it. That is a change. Federal disability is online now. It is no longer actual paper. So last year we were concerned, are they ditching the supplement? Are they getting rid of it? When is it happening? Is it going away now? Is it going away in 2028? What's going on? Tell me what's happening. No, it's day they passed a all the laws and none of the changes were there.
So. Well, some of them, but nothing that was incredibly relevant for retirees and people working planning for the supplement. So. So no, the supplement has been on the chopping block before. It was on the chopping block again last year, 2025. It is still here. There have been no changes. We still make plans with the supplement when you retire. You still get it now. Quick note, you don't get it until you're finalized. So don't get all bent out of shape when it doesn't show up. Day one after you retire. But it's going to be, you know, months. Plan for 4ish, 5 to be finalized, maybe 6 or 7 now with this post DRP world, I talked to somebody the other day, got finalized in, but hopefully that was an outlier and it's not going to apply to many of you, but it's good to know either way. So let's plan for the worst, hope for the best, you know, pray for peace, plan for war, all of those things. So the supplement is still here today. If you are between MRA and age 62, you will receive it. If you have turned 62, you don't even have to listen to this ear muffs for you because it doesn't apply anyway because the supplement lasts until when age 62. Why does it last until age 62? Because what do you get at age 62? What do we have for her, Johnny? We have Social Security and that's what you get at that point. So you don't need it anymore. You get Social Security or you're able to turn it on at 62. Do you have to? No.
Could you? Yeah. Will you? I don't know. I got to talk to Raina first. Okay, great. But you could turn it on at 62, right? Yes, I could. So are you going to keep the supplement after 62? No way. So now you got it, but it's still here and you don't have to be worried about that again for quite some time until it comes back again, potentially on a bill.
So, ah, they were also preparing us to potentially pay more. And when I say us, I mean you. For as employees, you currently, if you were hired before the year of 2012 ish, 2013, when they made the Fray system, you put in not even 1% of your salary into your own pension program.
Now you contribute to your pension. If you've seen my little Gatorade video, I've done probably four of them, which that way you kind of understand how your pension contribution works. You do contribute into your pension. That's how you get a pension. Remember, you want to take a withdrawal, you got to make a deposit first. You got to have a bucket from which you can pull. So. So right now you're contributing.08%. Not even 1. It's 80% of 1% of your salary. So that's pretty low. Pretty low. People that got hired after 2012, 13, 14, they contribute in over 4%, some little under 4. But it depends on when you got hired. I'm not here to give you exact decimals on this particular video, but the point is they pay more.
Like five times more. Like a lot more.
Do they get more than you? No, they get the same doggone pension calculation. The pension calculation is the same, but because they got hired after a certain time, they contribute more into that program. There was a proposal to change people who were already on that 0.8 system to contribute in four and a quarter, some as high as potential 9. If they got hired after a certain date, did it pass?
No, this is not a change. This is something that was potentially in the works but did not pass. You do not have to be concerned about this, Reina. Why are you telling me something? I'm just getting scared about it. And it's not a change because people are still asking us if the change was made. This is a year old. This passed a year ago without the changes. And this is not to dog on people who didn't follow the political programming and all the stuff. This is simply to say, hey, listen, there's some propaganda being spread and let's quell the conversation. Let's have the Cortaquel. Let's go to the Cortaquel and quell the conversation. President Snow, what else is Changing or not changing? Let's see.
Ah, high three. They are proposing to take your high three and make it a high five. Would that have helped you or hurt you?
How do averages work? You add them up and you divide by how many entries there are. So you add up three years and divide by three. Or you add up five years and divide by five. If you go back five years ago, you were making way less money than you were three years ago. You see? So you would have averaged in some lower numbers and then divided by a bigger number. So that would have lowered your pension. Would have lowered the amount. Did that pass? No.
Nope.
No way. Didn't pass. Now, this one's old news. This is like. This is like. This is like the. The. The thing they pull out of the box. You know, like usual suspects. Let's pull out the usual suspects. Oh, Casablanca. Gather the usual suspects. Yes, and. But that's it. They just pull it out of the box. They say, oh, throw it up there. Let's. We got. We need something. Do the high five. Try the high five again. Let's see if it stakes. Oh, didn't stick. Again. We'll bring it out again in four years.
I don't know. Didn't work. Didn't happen. Not a thing. It's still a high three. But let's go into this high three. A lot of people don't understand it.
So people say, okay, I made 100 grand this year, 99 last year and 98 the year before. 98 plus 99 plus 100 divided by three is whatever, 99 or I don't know, doesn't matter. It's close.
So maybe that's the case, maybe it's not.
But you got to remember, I.3 is also, when you look at a calendar, it's also a high 36. Randy, what are you talking about? It's a high three. It's not a high 36. You said high five would be bad. Why would 36 be any better? 36 months, my friend. And you probably had more than simply three salary changes during that time. Whether it was. Whether it was a raise or a grade or a step increase or who knows what it was. And remember, bonuses and overtime don't count. In general. There are some special categories, people who are super special, but that's not the majority of my federal government and postal service. So don't count your overtime. That's not a thing. You know, congratulations. But it doesn't count toward the pension because not everybody can get it.
So when you look at high three and you're concerned whether or not they calculated it correctly.
That does tend to be the math that is usually correct. I gotta tell you, I've seen some incorrect math, but that's not usually it. And so let's say you had an entry, your high three, your, your salary was 98,500 for eight months. And then you got the raise to 99, 200 for eight months. And then you got another raise to a hundred thousand for three months. And then you got another step increase or whatever. Now you're at 101.
And then you retired and you say, what the heck is my high three? And you're looking at seven entries.
Or let's say it was more raises in there. Not frequent. Doesn't happen like that. But let's say you got a bunch of changes and you're saying, oh my goodness. But you add it all up and then you divide by three high three.
Because that's. But they're adding all of those times for that time period. So you have that total dollar amount divided by three, if that makes sense. So that's how they determine it. And then that is determined, that determines your pension based on your years of service and what each year's value is.
So there you have it, high three still here. So you're good to go. We don't have to do any crazy math for a high five now.
So when you log into Aura, this is, this is interesting. So the change did happen that everything is online. Remember, disability is online now, but your regular retirement application switched to be required to be online.
Back in the day, this was whatever, June, July of 25 for everybody but the Postal service.
And so the postal service was like, we still got paper. We know how to do our stuff. And then January 1st of 26 happened. And then the postal service says, oh, we're in. They're putting us into Aura also. So now it's everybody, everybody in the. Everybody in the Fed getting Aura, everybody in the club. Okay, that's. Come back, Reina, come back to me. So what's happening is that you have to get access to Aura through human resources. And once you get the access, then you can clickety click online and you go to the page and it's so great. Right now it looks like a Patagonia commercial. Like when I look at the Aura page, the login, I want to buy a tent and like a vest, a zip up vest, a Coleman or whatever they are. And I want to go hiking in the mountains or climb Fuji, I don't know. But they did A really good job with the retirees on the front of that page.
Yeah. I should see if we could put a little snapshot of it right here. This. We should put a picture of the aura page right here. Yes.
This is perfect.
I am going to go kayaking down that mountain river right now. Yes. So you still have to upload paper into aura. So what does this even mean, Raina? It's online. What do you mean, paper? So there's some documents you still have to upload. Duh, you got to upload your marriage certificate if you're married. Duh, you got to upload your DD214 if you had military service, retired or not, bought back or not, duh, you have to upload a court order if you owe a former spouse money from your retirement.
What's not duh is that you have to upload a W4. Now if they're getting signature on these documents. Right. Everybody's saying, why can't they just put the W4 in there? Why do I have to upload a separate form? Well, it's an IRS form, so it goes external, it's not internal to them.
But there is talk that that might go away where you don't have to get the W4P and upload it and all this hullabaloo. So W4P, that's a document still, if you need it, we got it. We can help you. I've done dozens of them where I filled them out for people and had them sign and they accept DocuSign now. So people like me helping people. I'm like, hey, click DocuSign. Upload. We did it pretty fast. Another form you're going to have to have is the life insurance form.
So they're going to up. You can, you can upload your external life insurance form, the SF28 18 or they're pre filling it for you. Now, I will address this in a second because there's some question marks around that, around that particular form. Another form you're going to have to upload, duh, the spouse consent to survivor election. But it's only duh if you're leaving your spouse less than a full survivor benefit. So if you're leaving a whole shabam half of the half of the pension to the spouse, you. They don't have to consent to anything because they're getting that to which they are entitled. And they don't have to sign it because you're spending 10% out of your paycheck retirement check to give them half of the monthly check. If you pass away.
So if you do less like a partial or if you say negatory, good buddy, survive, benefit, they got to say, they got to be cool with that. And they have to sign it in front of a notary, which I am, which a lot of my team is, if you need help with that.
But it has to be uploaded as well, so there's that.
So what's another thing? Now I just promised you that the 2018, that life insurance continuation form has some interesting things. So you need to watch the one they've pre filled. My preference is to upload mine. When I say mine, it's still theirs. It's the original form. But this Aura packet, the online portal, it asks you a series of questions to then pre fill the election form and then you sign it based on what it's pre filled. But sometimes there are some, what do they call it, situational decisions. You know, what is it called? Dispos. I don't know.
If you do this, then that, if this happens, then that. So for example, sometimes somebody is canceling their family coverage before they retire, but then they're trying to get their retirement documents done. So by the time they go to retire they won't have C. But this only gives them the option to keep it or say no because they currently have it. So really the answer should be I don't have it because you're not going to have it by the time you retire. But the form doesn't let you say that. So that would be a wrong answer technically and it could kick it back for an edit later. So you got to keep your eye on stuff like this. And you're like rain, I don't even know what this is. That's one of the reasons you want to give us a call and get scheduled. That's because these are some of the documents that you can get help with in addition to all the other stuff we help with. Life insurance, tsp, disability, Medicare, everything.
So remember also sometimes it's not offering the full or partial reduction. Now recently I've seen that it has been. But there were days when I was like, what is this? You either keep it or you don't. That's not how B works, you know. So then I was like, this is nonsense, I'm doing my own form. And then we upload it.
So we have people that have the pre filled form and then the regular uploaded form that actually has the proper elections. So be aware. Just, you know, alert, Alert, *, *. Be. Be. Keep your eyes peeled as My mom would say, keep your eyes peeled for that one. All right, what's another potential change we have? The Roth conversion. Yes, that is a thing. That has been a change this year. As of January, you can actually convert within tsp. You can take what I call coffee, traditional money and move it over to water. You can put it over to the Roth and pay the tax as it goes in and then grow that money tax free. If you need help, we can help with that. Or you can look at outside Roth, too. But I don't know, it's pretty easy to do it in the tsp. Just watch your age and watch some of these things because you do pay tax, and you would not want to do a big old honker conversion in one day or in one year, rather. What's another potential change we have is the.
Yes, still waiting. I should get some cricket music in the background here. Crickets. And maybe put a tumbleweed in front of me. That'll be pretty good. But the fact is that we are still waiting. And what do I mean by that, Raina? I'm waiting to retire. Yeah, I got that. What else am I waiting on? What are you waiting for?
Love me like you do. Okay, there's no snapping there. You probably wouldn't snap at that song. But the thing is, you are still waiting because OPM is a waiting game. You retire and you get your last paycheck. You get your annual leave, but then you'll wait on your interim payment. And you wait and you wait and you wait and opm, I am not bashing you. This is the fact, and you know it. Because people call you and they say, where's my thing? And you say, it's with the case manager. It's processing. The weight is real. This is why we want to make plans for tsp. If we need to grab cash, we need to make plans to stash some cash in order to retire with money in reserve.
Look at what your bills are. How much are you actually spending?
Let's plan for a good three months of no money.
If it comes sooner, yay. If it comes later, boo.
But you will have been prepared for that time period. And irrespective of your age correction, as long as you are over the age of 55 when you separated or turning 55 in that year, you have TSP as a backup. You can grab from TSP if you need to when you retire, if you need to grab a little bit of cash.
So let's recognize that that is possible.
I've had many people text me the Wait's too long. I need to grab cash. Can you help me? Absolutely. We jump on and we help them with a withdrawal. You don't need my help with the TSP withdrawal. Some people prefer it. They're like, I just don't want to fat finger a button and do something crazy accidentally because you all may not go into that website all the time. Me and my team were in it probably six times a day.
So still waiting. What are you waiting for?
Interim payment. I need an interim payment. That's what you're waiting for? Interim payments and then to be finalized.
That's what you're waiting for to be finalized.
Searching for my pension.
There you have it folks. Some things have changed, some things have not. But you need to be ready for either one of them. How can you be ready? You should reach out to us. We can help carry you down the yellow brick road. We can skip on down to see the wizard and go to the Emerald City of retirement. And that's a horse of a different color if I say so myself. So reach out, get scheduled and let's have a talk to make a plan for you to see what changes are going to happen in your your life and what we need to prepare to plan for all of them. We will talk to you soon.
[00:20:06] Speaker A: Thanks for listening to Raina Retirement. With a strong commitment to ethical standards, Raina works hard to find the right solution for each individual or family who reaches out for advice. To contact Raina directly, 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 accurate 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, FEGLI and FEHB are all registered trademarks of the U.S. office of Personnel Management. American Federal Benefits Consultants, agents, consultants or any many 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.
