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, Reina Reyes.
[00:00:39] Speaker B: Raina here coming at you. Post big beautiful bill signature. And many of us were super hyper ultra uber concerned about what it was going to include, right? And many people, I can count on two hands and a foot how many people retired because of what was potentially going to be in it.
And fast forward now we have the answer and we didn't maybe need to do that.
Remember I was saying, I think I was one of one of these videos. I was screaming from the rooftop, get your documents ready. But you don't have to send them until the fat lady sings, right? Until. That means the ending, folks, let's not go down some diatribe about that comment, but the ending was that they've signed it and none of the proposed federal employee changes have been part of it. Supplement stays, high three stays, no high five. We're still paying 0.8% if we were hired prior to 2013.
And the only thing they're going to be doing is like double checking health care to be sure people who are on health care are supposed to be on it.
So that just makes sense.
So we're super happy that this is, that this is the thing, right? So we can go on about our lives and go back to, you know, loving our job, loving the people we work with. Little bit of tongue in cheek, of course.
So let's consider this a paradigm, right? Even had some of those changes been made, right. I always want us to remember how good we have it. Now, this is not to say, look how great you have it and you know, say to you, oh, it's fine, you've got a pension, you should be happy. That's not the point. That's not the point. My goal here today is to say, number one, yes, the bill passed. We don't have to be bothered with a lot of the Fed benefit problems that we thought we would be facing. So we're very excited about that.
Also to remind us how great it is that we do live in a country that, number one, your voices have been Heard right? You were listened to. Who knows how much of your calling and emailing and shouting from the top of some building that you wanted these benefits to remain as they were. Because this is the contract you signed. This is what you agreed to. This is the deal you made when you hired in. If they want to make changes to new stuff, that's totally fine. People hiring in would agree to that term when they got hired or when they will have been hired to use perfect English.
So these things are good. We're very happy about this. All I want to also remind us is that, number one, we should be very happy that we have a pension. Those are few and far between. Many people in America have none. And you say, well, that's the job they signed up for. That's true. But those mom and pop stores, the small businesses, many of them have gone away from a pension at all where there is no monthly payment forever.
Many of them have quickly switched over to only using what they call a 401K. They that doesn't mean you have $401,000 in your account. It means it's a tax code name that just says you can shove money in a bucket and you don't pay tax until later when you take money out of the bucket and put it in your own bank account.
So there's some little cool things in there where the employer can, you know, can contribute to your balance as well as long as you do.
And that's where I get many, many, many, many, many, many, many phone calls that say, hey, Raina, I have a pension at the Fed, but my spouse does not.
I have the monthly lifetime income. Maybe they're the bucket of money, the long term, long term nest egg. What do we have? These are the kind of things that you want to look at, sort of recon, take, take inventory of. And these are things that we want to chat about because the things that are just going to pay you monthly are your Fed pension and Social Security. They're just a monthly payment and it is what it is. Or there's a couple different versions of this is either socks in Spanish or sloque is. So tell me which one you subscribe to. There's a couple of different versions of this, but it just means it is what it is. So that monthly income from the pension, it just is what it is. We can't change it. We can't lump sum it from the Fed. That's not a choice.
Social Security, also a monthly lifetime payment, that is not a lump sum either. Tsb401k403b bucket o money that you can grab from or we can peel off to make an income. I've had many, many, many people call me to say, hey, the spouse ain't got no income but they have a bucket. Can we take a portion of that income to make it a lifetime payment? The answer is unequivocally yes, we can definitely do that. And these are ways that we can A, well not even A, that we can teeter the daughter. We can do A and B, we can make sure that you have sufficient lifetime income for not just yourself but your spouse. Because if I pass away, what does my spouse get to keep? Remember they keep the higher Social Security of the two and they also keep maybe a portion of pension if you left a survivor benefit and if we take a portion of their 401 peel it off into a plan that can pay them a lifetime income, then if you pass away that income will just continue to pay them regardless of the choices you made. And this is a great thing to consider because sometimes you say, well it's going to cost me money Reina to take to. It's going to cost me money to leave half or a portion, half or a quarter to the spouse. But it doesn't cost us anything to peel off a portion and make an additional income for the two of you. So these are some things we want to consider. And in terms of paradigms, remember you have a pension and Social Security because you live in what I consider to be the greatest country in the world.
And there are other countries that have Social Security and pension incomes or schemes or whatever place you're calling it. Like I know a gentleman from Australia and he, we were, you know, meeting, met online and this is on TikTok and he was telling about there they call them schemes where we would call them like a program or something like that. And so they have Social Security but remember their taxes, they're forced into tax at a very high rate, 40ish percent tax.
But then you say oh well I have free health care, free school, free all these things. And then we're back to the Alanis Morissette song that says isn't it ironic that it's the free ride that you already paid, right? So there's a ton of. I was meeting with another woman from Australia, she's like, it's great over there because yeah, you pay a bunch of tax but you don't pay for all these things.
You don't think about some of these things. There's concerns that maybe students Going from, say, high school to college have that in America that they wouldn't have in Australia. So she's saying in Australia, they can go right into school. They don't have to worry about all these, you know, entrance exams and essays and all these things. You just kind of, your grades speak for themselves and all the extra things that you did and you walk in. Why am I even bringing this up? Because we live in what I consider to be the best country in the world. And they, there's comparisons, but when you, when you put the two side by side, you say, hey, well, we have a lot of things that many people don't have.
And a really good friend of mine just happens to be from the country of Cuba, which I love. Cubans. I consider myself to be an adopted Cuban because of my long standing relationship with her and her family. And I am going to get the opportunity to visit and take some things to, to some family members there that just can't buy them, right. The next time you go into a store and just buy Tylenol, remember that there's people in the world that can't just do that.
And they definitely don't have a pension and they definitely can't call their congressman and say, I want you to vote a certain way on this certain decision coming up. There are places where you don't have that ability.
So I am very happy that this bill passed favorably for all of us here dealing with federal benefits and federal retirement and federal prep.
I also encourage you to remember, hey, number one, there's other Americans that live in your neighborhoods that don't have any of these options available to them, and you do. And then just your neighbor just a little bit further away in either direction also doesn't have those types of choices that they can make. So I definitely want to encourage us to just, hey, let's make it a grateful day. Have the gratitude for what you know you have and be grateful for the things that maybe we do take for granted. I do not want to take for granted anything. And I want to be appreciative of all of y' all working. And we appreciate you in the federal government, all the stuff that you do and all the work that you finish for us behind the scenes. Many people truly will have no idea how much goes into any particular federal job. Whether that's, you know, and it's not even up or down scale, whether it's the $300,000 a year income earner or the $20,000 a year daycare provider. They're all so valuable and they're all parts of the body right? The you know the pinky doesn't do as much as maybe my brain, but I would be pretty pretty lost without it for a while.
So I encourage you take inventory of the things to be thankful for and love your family while you have them. Have a great day.
[00:10:47] 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 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 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 interesting 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.
