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. Reina 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: Well, many in the era who are ready to retire now remember the song we gotta get out of this place if it's the last thing we ever do. And that's what a lot of y' all want to do right now because you're ready to get out of Dodge. But the question is, can you? Who can? Who can't? Who's got to stay for a little bit longer? Let's see, all the regular eligibility for getting out of federal retirement, that is fers annuity eligibility. So parole windows for this. Now that FERS on the left, servers on the side, that is sirs not sipping on some sister. But if you're civil service on the right hand side you can see your eligibility. Everybody who is civil service is eligible. I think I probably know two people right now who are civil service offset who are not totally eligible yet. But that is very quickly decreasing to everyone's eligible if you're CSRs. Now FERS, that is FERS. Let's see who's eligible MRA and 30, what does that mean? Minimum retirement age. And you gotta have 30 years of service. It's a literal two sided coin. You've got to have both sides of the coin that, that is age and years of service.
So if you're 57, 8 9, you're over your MRA. 57 is the oldest MRA that exists now there's younger ones as well and you'll, you'll know who you are. But the majority of y' all who took the DRP, you derpa derps, you're going to be looking at 57. Probably what that means though. The reason I bring that up is that the course of supplement's not going to start to your mra. But that's a side note. Remember that here, you heard it, you heard here, you heard it here first folks. Wow, say that one three times fast. She sells she shells by the T shore. So the next window is age 60 with 20 years of service. So if you're 60 years old, 60 years old or older. You only need 20 years of service to get out of Dodge.
But you can be 62. All you need is five years. All you need is five years of service. Why five years?
Health insurance. You got to have health insurance as well. And they require five civilian years of service in order to retire. That is, let's pretend you got hired and you were 61 years old and you had seven years of military time that you could buy back, which would then be credited as years of service into your federal civilian retirement. Well, you could do that. A lot of people say, why can't I just buy back my time and get out of Dodge? All of a sudden I have five years.
They make you work the five year civilian. You got to work them. It is what it is. Or esloques, depending on which version of the Spanish you speak. It is what it is.
So MRA plus 10. A lot of people see this and they get excited. They're like, I am minimum retirement age and I have more than 10 years of service. Mister, mister, get me out of here. Well, you could, but as you see that bottom bullet point there, every year that you're not 62 is going to cost you 5% of your pension. So let's say I'm 57 years old and I have 20 years of service. You can go and you get paid immediately. But if I'm 57, how many years under 62am I? 58? 59? 60? 61? 62. Five years times 5%, 25% reduction. For how long? Forever. Forever? Ever? Forever Never seems so long until you're gone. Okay, if you can name that, you can tell me who that was and the reference. I'll give you extra points.
So MRA and 10. A lot of people see it, but a lot of people don't want to take it because it's a bummer. You take a reduction. Who would be a great candidate for an MRNA in 10? Let's say you're retired military and you came to the Fed because you were bored and you wanted extra stuff and you're just tired of the drama. A lot of my retired military don't need the extra money necessarily, and they're more than happy to take the reduction. And you don't get a supplement. No supplement either.
So these are your standard, normal, regular, what they call immediate annuities. Let's talk about the next option. If you are underage, let's say you could have done, you were close to MRA and 10, but you're not there yet. Let's say you're. Let's say you're 55 and you have 15 years of service, or you're 54 and you have 20 years of service.
If there's no vera offered to you, you don't have an option, really.
So some people say, I'm quitting, I'm out of here, I'm done. Take this job and shove it. And so they leave, they quit, they're done, they vamoose, they write a resignation letter, and that's it.
And that's what deferring your pension is, quitting.
So you can do this as long as you have that five years magical civilian.
And you exit the time freezes and then fast forward until whichever years of service matches the proper age. So if you left with 20 years of service, you can turn it on at age 60, but if you had less than 20 years of service, you can turn it on at age 62 with no reduction. That is. Now the bummer about a deferral is that you'll never see health insurance or life insurance again.
So d deferred. Like I don't want to defer because I don't get my benefits back. Which is now remember, you can defer. Like you can quit and then go work another job and then come back to service, pick it back up where you left, and then go do an immediate annuity like a regular one. People do that all the time.
But if you leave and then you turn on the money, that's what it looks like different than the next option, which is a postponed annuity.
And the postponement is very different. Well, it's the same. You quit, you, you turn on you, you turn in your resignation, you're at a dodge, you're not submitting retirement documents, you just quit, you're done.
Well, the difference is you were over your minimum retirement age and you did have the 10 years of service, but you're just postponing the annuity that you could have received at MRA Intent. The benefit of this is that you don't get a reduction that we were worried about, you know, that 5% per year reduction. And you do get to turn your benefits back on. You turn them back on whenever you're turning on the income. So let's say you had 20 years of service when you exited. You can turn it back on at age 60, right? Because 60 and 20. Or if you had 18 years of service, you can turn it on at 62, but you get your health insurance and life insurance back. It's like you get Reinstated back into the happiness. And this is a really great scenario, especially if you leave to go to another job that doesn't have benefits or doesn't have benefits you can keep.
And then you turn this money on and the money comes with health and life insurance. And if you've watched me ever before, you know how strongly I believe in maintaining Fegli. Part basic. Basic fegli, that is basic life insurance. Because after age 65, you pay nothing for it to keep 25% of your salary. We call that a good deal.
Now, the last option, the last type of retirement that there is is disability retirement. Now, who is eligible? Anyone who's been in the fed longer than 18 months, year and a half, 18 months of eligibility. And your disability needs to last at least a year to be accepted for this. You. I've done a bunch of these. Me and my team, we've become very proficient at helping with this. We don't charge for this like a lot of other people do, and we've helped get a lot of people past the finish line. If this is affecting you now, how do you say I'm disabled? You're effectively saying I cannot do my job at the Fed.
Not I can't do his job, her job, nobody's job. I can't do my job at the Fed. There's reasonable accommodations. There's a process. There's a supervisor statement. You got to get, you know, know, statements from your doctor. You're Johnny Cochran, right? You're proving your own case. You're fighting your own fight. You're gathering your evidence.
But it could be the only option that many people have, which is either keep working and dragging myself in on an army crawl every day or not showing up or applying for the disability retirement and getting paid.
Now, that payout for disability, if you get accepted or approved, rather 60% of your salary the first year and then 40% of your salary every year thereafter until the day you turn 62. And then they recalculate it as if you had worked the entire time.
So I hope this helps. If you are close to eligibility and you're just ready to get out of Dodge, let us know.
We can, we can help you understand how to get out of this place if you. The last thing you ever do.
[00:09:21] 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 Reyna 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 1-1-800-872- 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 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 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.
