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: Happy day to you. They say that geniuses are known to procrastinate. Apparently Einstein procrastinated a lot and had a very dirty desk or a very messy desk. So I'm pretty much Einstein. So listen to the genius here that's telling you some pretty cool things. So I bring up procrastination because a lot of times people say, I'm not ready to do that. I need to postpone that, or I need to defer that. Well, want to talk to you today about postponed or deferred retirement.
A lot of confusion around how do I actually do it, how do I postpone, how do I defer? How do I get out of Dodge and then turn on a pension later? How do I tell HR that I'm postponing or deferring?
Well, it's crazy how easy it is.
You are not actually retiring at that moment. So let's pretend you are 55 years old. No, correction, you're 57. You're over your MRI and you have 20 years of service. Well, there's no Vera available for you today. But you want to get out of Dodge because somebody is on your last nerve. And that's fine. You want to go, but you say, oh, Rayna, I heard I can postpone. I heard I can postpone my retirement. And you absolutely can.
So in order to postpone, the step would be write this down. You're ready, you quit, you resign, you sever ties. There is no retirement document for a postponement or a deferral. You literally quit and resign. Your time freezes. It just sits there in purgatory waiting for you to reclaim it or turn on the income at a later date.
Postponement, as you can see here, means you separated after you were at your minimum retirement age and you had 10 or more years of service.
The benefit of postponing rather than deferring is that even though you'll have a nothing time period in terms of no pension, no health insurance, no life insurance, no money until you Turn it on later, you will be able to turn back on both health and life insurance when you initiate the pension. When you turn on the money later, you will have the life and health insurance again.
So you keep the pennies, we love the pennies. That is the benefits. So that's the huge leg up you have if you're able to postpone. But to do that, the action you take when you go to leave is to simply quit. You just resign. Now, deferring means I am 55 and I have five years of service or 10 years of service or 12, it doesn't matter. But I'm under my minimum retirement age.
Well, the app, the action item is the same.
You quit, you just submit your papers to say love you, bye, been fun by, hasn't been fun by, whatever it is, and you exit and then that relationship is now over. You are no longer an employee. You go do whatever you're going to do when you turn the money on again later, most commonly at age 62, because you may not have been, you may not have had the years or the age when you turn on the money later.
There's only money, but there is no health or life insurance again.
So that's the difference between deferred and postponed. It is uncommon. There's not a lot of these type of retirements, but some people, again, I see it commonly also with like maternity leave, right? So mom was working, had a baby, left work and then came back to her federal or postal job and just picked up where she left off.
That would have been a deferred annuity had she just turned on the pension later. But she came back.
And then all the time it's just a break in service. Pick up where you left off and then you can do an immediate regular annuity or retirement when you actually have full eligibility.
So a lot of people forget that these are some options that they have now, obviously most recent limitations on returning and freezes notwithstanding. But as a, on the whole, that is kind of something that many people will do. But again, with deferral, you're just quitting. There's no document to leave. So if you need help with this or you want to go over some things, reach out. Me and the team can definitely help you make take action on this. But most commonly you may call me later at 62 to do the documents because that's when you actually do the deferral or the postponement retirement application to say, hey guys, flip the switch, start paying me money and oh, by the way, turn on my health and life insurance if I postpone or just give me my money because I defer. Hope that makes sense and we'll talk to you soon.
[00:05:38] 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 854, 456,500. 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 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.
