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: Raina here and you all have heard it that the Postal Service is offering an early out. Well, what's the incentive and does it apply to you? Is it a good idea? Should you just keep working? What does it mean? Well, let's dive into it a little bit. Some of the big questions have been what about the previous dollar amount? Why is it not the higher amount, 25,000 that we've seen before? Well, you're right, it's only 15,000 and there's been a little bit of contention over that, but it is what it is. What does it mean? When can you go? What are your options? What if I'm already eligible? What if I already put in my documents? Well, let's dig into it and let's pull up the document that they're offering. This is specific to the apwu, that is the American Postal Workers Union. And I've also seen another one that's from the mail handlers union. So it's being offered to specific crafts. As we scroll down a little bit, we can see they're offering $15,000 to basically leave. And they're saying there's a difference here between am I eligible to do a normal retirement and what if I'm not eligible but I'm eligible for a vera? What's a vera? It's a voluntary early retirement offer. And there's very specific requirements that you've got to meet to be eligible for a vero. What does that mean? You've got to be over the age of 50 and have over 20 years of service, or as long as you've made 25 years of service, period, then you're eligible. It's very similar to what we know as special categories on the other side, federal side, like a law enforcement or a firefighter, Border Patrol, Bureau of Prisons, where I can retire you. Do you know your eligibility is a little bit sooner by virtue of age and years of service, but that's just how they classify eligibility for an early offer. So anybody who's eligible for that. Could take this. Or if you're doing a regular. So you see, optional or voluntary.
Pretty cool. You got some choices. So I have quite a few people who are already set to retire. Right. So what does that mean?
Well, if you are already doing that, that's fine. So if you were gonna leave and like you haven't left yet, or you hadn't made the official document submitted, you can leave and make your effective date. April 30th of 2025. That's the day. It just kind of is what it is. They drew the line in the sand, as the government usually does when they're offering something new. Here's the date. If you're before, then it's one way. If you're after, then it's another way. But as you see, if you've previously scheduled retirement earlier than April 30, you're good to go. You don't have to change the date. You just need to let them know that you're going to accept the incentive. Same thing. Well, that's the same thing. I just read it twice. They're offering counseling sessions now, as you can see, they're saying maximum 10 per person. This is very different than the way I do my retirement counseling sessions. I'm not getting a group of people on to let's have a big fireside chat. No, I do a one on one meeting to go over your choice for you and your spouse, if you're married, to make sure that you are on the right track, to make sure that your decision is sound specific to you. Crazy enough. I've heard some of these meetings that they have and God love them, they're trying to do good stuff. But my goodness, some of the first things out of the, out of the specialist mouth is we're going to get through this and let's not have any questions that would be the opposite of what you're trying to do. You obviously want to ask questions specific to what you've got going on. How many times do you get to retire from the post office? 1. We better get that right the first time. Because even if the postmaster or the MPU is your best friend, you can't just call them and say, hey Joe, I retired by mistake, can I come back? Not a thing. So we want to get it right the first time so you can retire and actually stay that way. So here we are. If you're gonna go and you're gonna accept the Vero and of course I'm saying Vero, they're saying voluntary early retirement, they're skipping the O, that's fine, but they're saying, hey, you need to submit those documents anytime between essentially January 13th, when they made the offer, and April 30th. The only additional thing we've got to submit is a magical form 3077. And I've done tons of these. So that's a very quick overview. Basically saying if you wanted to retire and you were eligible, you can. And you get an extra $15,000 little sprinkle on top in addition to what you were going to do anyway. If you want to retire and you're not eligible to do an immediate retirement, but you do qualify by virtue of being over the age of 50 and having more than 20 years of service or at least 25 years of service, then reach out. Let's see if it makes sense. Because remember, there's always two sides to everything. Hard side, soft side, money. Does the money make sense and am I emotionally ready? I bet a lot of y'all are emotionally ready. But maybe the money will work and maybe it won't. So we want to make sure that the hard side makes sense. For example, if you've only got 20 years of service, like you're, you're sliding in under the tag of eligibility for the Vera. 20 years of service. Remember the calculation in the federal government, every year is only worth 1% into your pension, is 20% of your salary going to cut it for you? Because remember, if you are eligible, 20% of your salary is a pension and you can go work somewhere else. That's great. And people ask about the supplement. A standard Vero allows you to accept and receive automatically. You'll automatically get the FERS special supplement. What does that mean? Because you can't turn on Social Security yet. You're too young, you're a little baby. You can't turn on Social Security yet. Clearly, disability is a caveat. I always have to say those little extras. But you can't turn on Social Security yet. But you're also only 50, remember in my little example. So you're not going to get the supplement until you reach your mra. What's mra? You say minimum retirement age, and that's different for everyone. Based on your year of birth, the oldest One is age 57. So imagine if you're 50, your MRA is probably 57. So you're going to wait seven years before you get a seven second stream of income, the second leg of retirement.
Does that make sense for you? Maybe, maybe not. Now remember, what's cool is before you reach mra, you can go get another job and you can work as hard and as long as you want to and make as much money as you want to, because there's no earnings test that's going to affect you. Fast forward, however, and when you reach the age of accountability, when you reach your mra, your minimum retirement age, and the supplement starts paying you, then you're held to something called the, called the earnings test. And that is same as Social Security, where you are subject to a maximum of income that you can earn while also receiving income from the government in any way, shape, form or fashion. And this supplement comes from who? Opm, that is the Office of Personnel Management. So because you're getting paid from the government, they say you can't double dip. So no double dipping, which means you can make money and receive the supplement. How much this year? 20, 25. You can earn 23, $400 a year. And the rule applies to you. Just like somebody receiving Social Security. If you go over, some of my gamblers at the blackjack table will say if you bust, then every $2 that you exceed the 23,400, they're going to dock your supplement a dollar. Is it worth it? Again, this is an individual consideration. Every individual's different. There's no one size fits all in this. They're just incentivizing people to leave. Why? Well, some of your jobs are replaceable. Sorry, it is what it is. Some of your jobs can be done by a kiosk or a bot or AI. There's a lot of things they can do that they consider themselves being able to do for less expensive and with less drama. A lot of people say that every job has drama. Many would say that the post office has exponential drama. And I hear about it all day, every day. But that is neither here nor there. The point is they're offering people to exit their job because they maybe don't want to keep paying that type of salary and benefits. Remember, you've got a defined benefit pension plan which most people in America will never see because so many companies have gone to just a 401k. The TSP is the government's version of the 401k. And you've got it.
You've got your pension and you've got Social Security and you have a tsp. So your job has quite a few benefits. So we really want to consider, does it make sense to exit now and stop all those benefits from accruing? TSP match stops. When you separate, you're no longer building into the pension, which will increase your monthly payments by however, you know, 1% every year.
And same with Social Security. You might go get another job that does contribute into Social Security and that will increase your benefit for when you're 62 or older. But again, we want to heavily weigh these choices. It's kind of a no brainer for people who were ready to retire and were just sort of waiting for the day that their heart told them it was time. Or I some people, they say, you know, I don't mind the job right now. I'm just waiting on somebody to give me the side eye enough that I want to go. And that's fine. A lot of people hit critical mass when this offer came. They said, hey, I had one woman literally yesterday say to me that she was praying for a sign. She said, God, tell me if they give me an early out offer, I'm going to take it. I had her documents ready to go for a separation date of last month, December.
She didn't do it. She didn't submit the stuff. I was joking with her. I was like, you let me do all this work and you didn't even submit the pages. She's like, oh no. But we finished them yesterday, got them ready for a separation date of when? April 30th. Because she's following the rules for the vera and she's going to keep working through then accruing TSP dollars, contributions and getting the match and adding into all of her things. And then April 30th is going to be her last day and then she'll be $15,000 richer from this. Clearly taxable. Of course, everybody's dying on that hill of taxes, that's fine. But she's going to get her $50,000 incentive and annually pays you in a lump sum when you separate. Also taxable. So a lot of people I've seen on sort of where everybody has the ability to comment, they're saying, oh, taxes at 30 or 40%. I'm not sure where you're getting these numbers. Most of my postal employees are going to be in a 22 to 24% tax rate. So rip 20% off of that. It's not a party, but it's not as bad as them taking half of it. So things will happen. I think it's a great option to consider if you're already eligible especially or if you're on the latter half of the eligibility window, upper 50s, almost 30 years. You see what I mean? There's a quite a difference. Or if you have another job offer elsewhere. Let's consider that because could be a great way to go. So there you have it. You've got some choices. Clerks, mail handlers and a few other subcrafts like maintenance and things like that. If you have questions, reach out to me. My my number and everything will be on the screen available for you in my link to my calendar. We'll get that to you as well so you can get scheduled and get answers. We'll retire you soon.
[00:12:56] Speaker A: Thanks for listening to Reno 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 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 1-800-872- 8857. You can also go online to American Federal 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, 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.
