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 smarter financial decisions. Reyna 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.
[00:00:40] Speaker B: Everybody wants to be special, and that's so true. And people sing songs about it and write poems about it. But that's not the kind of special we're talking about today. We're talking about special categories, I.e. leo's law enforcement, firefighters, border patrol, bureau of Prison, things like that, where you've got a special scenario, special because you have a special level of stress in your job.
So people in special categories, you know who you are and you should reach out because there's not a lot of specialists out there who really understand what you've got going on. There are so many things to consider. Not only the stress level of what you do, but that stress level lends itself to a mandatory retirement age. It lends itself to a higher pension calculation.
It lends itself to a totally different eligibility window.
It also lends itself to access sooner to TSP because you're retiring sooner. So there's a lot of things you want to consider, right? What's so great about special categories? More money, more savings, more income, which is more money. So 1 and 3 are the same, but also more opportunity post retirement to sort of do other things. It's the, in the civilian world, it's really the closest thing to having a military style retirement because you retire sooner and you get a pension and you keep health insurance, but you're able to do another job afterwards. So there's some things specific to special categories that I just want to kind of go over and I'm not even going to do some little PowerPoint. There's nothing to look at. Just listen, sit back, relax, pop some popcorn and because it's going to be actually pretty short because there's not a whole lot big long list of things that you want to remember other than the fact that I know what's going on with you and I'm the one you should be talking to. But first of all, eligibility to go. It's like Vera. It's the same Vera and special categories, same 50 with 20 that is 50 years of age with 20 years of service or any age with 25 years of service. So you can go when you have that eligibility window now in order to get a pension and you've separated, what's kind of great is that your calculation is much higher.
Every year is worth 1.7% if you make the 20 years. So a lot of people call me, hey, I've got 18 years of service and I went to another place. What, what's my calculation going to be back to normal? You're back to 1%. So if you're so close, let's try to get that 20 in the special categories world. That way you can get what you came for. Like you worked so hard to get this higher pension amount. Let's just finish it out and don't be scared to use that sick leave because that is a big factor on how to even get to it and still maintain your sanity. Right?
So, so eligibility, earlier supplement, you get it straight away, you don't have to wait to your mra. A lot of people are saying, oh no, mra, mra, mra. Yeah. If you go on a vera or if you retire from one of these other non special categories places, not you special categories, you get your pension straight away and you get your supplement straight away. But what's cool about your supplement scenario is that you don't have to, you don't have to worry about an earnings test until you reach your mra. So what does this mean?
If you go get another job after retirement, you can make as much money as you want to, you can make a hundred grand a year and you're going to receive all of your supplement and all of your income. Nothing's going to get offset, reduced, deducted, none of that until the day you reach your minimum retirement age. Let's say it's 57. For most people that are watching this right now, your MRA is probably 57. If you're still working and haven't retired yet, just because that's the way it is, because TikTok birthdays, all that.
So let's say you retire now at age 50, you can go work another job and make 70, 80, 90 hundred thousand dollars a year, 200 grand a year, million dollars a year, I don't care.
And if you, it's only when you reach 57 years old or your MRA that you've got to know about the earnings test. The earnings test this year says if you work another job while receiving the supplement and that other job pays you $24,480 a year or more.
For every $2 you go over it, they're going to reduce your supplement by a dollar.
You don't have that at all until you reach your minimum retirement age, which is massive. That is huge.
So if you're going to work another job, let's do it straight away, like enjoy your time off for a little bit of while there, but go back to it because when you're 57, you're not going to want to. Not going to want to. It's like sweater weather. You're not going to want to. But if you do keep working, that's totally fine. Now if you're making 200 grand a year, you don't care about the supplement, okay? But maybe you don't want to work that hard. Maybe you want to be gone that long. Maybe, you know. So that is a huge, huge factor.
Tsp, they pass this magical law that if you have special categories eligibility and you retire, you are protected from the 10% penalty because you're over age 50.
Or if you had 25 years of service, if you were eligible to retire, you can touch your TSP without a 10% penalty. Now that's a big deal. A lot of people call me, say hey Raina, I need to do a rollover to something else for my tsp, but I also need to grab cash. I'm worried about the 10% penalty.
Depending on your situation, you shouldn't have to worry about it because if we're doing it right, if you're getting it structured correctly, we can use IRAs and TSP to benefit you for what you're trying to achieve and protect you from the 10% penalty. So it's a very cool way to do things.
So that's kind of a nutshell there and I've actually been requested a few for a few places across the nation to go do face to face meetings specifically for special categories. If that's you and you need a meeting, reach out, let me know, we can set it up and get the answers that you need to your people, just like we're trying to do here today. Reach out, get scheduled, let's have a meeting, go over your scenario and do some planning because you're younger, maybe you're not thinking about it, but you're getting closer to that time and the time is now to make a plan.
[00:06:55] 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 reina directly, call 850-450-6500. That's 850450 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 U.S. office of Personnel Management, American Federal Benefits Consultants, Agents Consultants, or any independent contractors through 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.
