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. 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: Happy day. If you've ever heard the acronym opm, then you may have different connotations with it. I know a guy, does a lot of lending and loaning and buying houses and he says OPM means other people's money because he can loan and leverage and things like that. But the OPM I'm referring to, you know them as the Office of Personnel Management.
And if you've retired anytime recently here in the last for a year, you are wondering and waiting possibly, if you haven't already been granted access to your OPM website, you're wondering and waiting when you're going to have access to your OPM website. Well, first of all, the website is servicesonline.opm.gov and I've done some videos where I've shown you how it looks in order to access it, you're going to be waiting in the mail for a couple of physical, tangible paper letters. One is going to have your CSA number, that is Civil service annuitant number.
I know you're not a civil service retiree. Most of y' all are furs. But you are a civil servant. So you get a CSA number which you will have for the rest of your life. And once you receive that, and it may come in opposite orders, but you will also receive in the mail a letter with a password. This will link your login.gov to your services online.opm.gov you will not be getting this until you've probably received or are about to receive your first pension payment, which is not fully itemized and all that stuff. You're waiting because they're going to give you what they call an interim check. It's a partial payment because they don't want to do actual math right away. They just want to get you paid and out of their hair so they can do the math slowly. And that's totally fine. It's just the way they operate. And you will receive essentially 80% of what your pension check is supposed to be because they don't do actual math. It's just sort of an average percentage based on history of what people usually receive after their basic deductions.
But we are, I'm kind of on a, on a document kick here what it's going to look like when you actually do get access to opm and, and you're able to look at your itemized stuff. Now, this page here, you see this was from someone who had a fairly, you know, not many years of service, right? So their, their gross number up there shows, you know, just under $600, but it's not actually that gross number. It's actually a little bit higher than that. But we'll talk about how, why that is here in a minute.
So you see this, this person, this is Joe of the fan of the Mama family. You know, Joe Mama and Joe retired back in the day a couple of years ago and wanted to be sure they could see all their itemized stuff. And Joe's married and wants to be sure there's a survivor benefit left.
Had insurance, as you can see, dental insurance. And then of course, tax comes out as well.
Now you see how this is itemized. You're not going to see this until after you've been able to log into your OPM website and download this as your annuity statement. And you'll have one every month for the rest of your life. There's also online where you can pull like tax documents and you can even change your banking information on the website. And even every year you can make changes to your health insurance because open enrollment still follows you in retirement and you use that website. Now, if we zoom in on this, you see that this has a gross amount of the annuity or their pension minus dental, minus income tax, which is netting that 473. But if we look down in the comments, right, what happens, first of all, after a federal employee is retired and they're over the age of 62?
Well, they get the automatic increase every year. Some people like to drink that, that soda, carbonated drink called a cola. I don't like carbonation, but still called a cola. But in this reference, it is a cost of living adjustment cola, cost of living adjustment. So this person shows that 2.2% cost of living adjustment that was increased and then rounded down.
But we look down below. Okay, well, what happens if Joe Mama passes away? The monthly survivor annuity currently payable if you passed away is $312 payable to Joe Daddy. Well, that would be Joe Mama's spouse. Joe. Joe Daddy. As you can imagine, Great names. But you see 312, what are the survivor benefits? Right? It's only half or 25%. 312 times 2 doth not 564 make.
So 312 times 2 we know is $624 a month, which is Joe Mama's actual gross pension. Why do they show 564? Because $624 minus 6240 is there we have it. Well, this is 560. It's like 562, but there you have it. 564. So that's why they're showing it gross.
The reason I bring this up kind of to the extreme is because many people say, oh my goodness, I don't know if I have a survivor benefit. Usually we would want to go in and itemize it and look that they've subtracted the cost of the survivor benefit. They don't show it here though. They subtract the cost of the survivor benefit and then they show you the remainder as the gross amount. I find that to be a little irritating, but they make up for it in the comments by saying there's a survivor benefit. I've seen others where it says there is no survivor benefit or the survivor benefit payable to, you know, the spouse is a smaller portion. For example, if it was 25%, obviously it would show 170 or whatever half of that.
So this is some things to just plan on. Another thing that you note here is that dental insurance, just like vision, would also gets deducted out of your pension if that's what if you're maintaining it. And that's kind of interesting. Dental and vision are not subject to that five year rule. So you can come on and off every year. I got a guy who does it every year. Not everybody likes to be that meticulous, but you know, some do.
And you of course can also have your health insurance, major medical come out of here automatically and life insurance, the cost of life insurance may be coming out. Well, this person doesn't have any life insurance coming out because not only are they already on Medicare and suspended their health insurance, but they only had basic life insurance. And there's no cost to basic life after the age of 65 to maintain 25% of your salary forever as a death benefit. And this, if you've heard me ever say anything, you probably heard me preach on basic life insurance and how you want to keep it at at least a 75 reduction to be free after the age of 65. Hope that helps. Want you to be sure you can see what this document is going to look like and that you do have access to see your itemized stuff. You can go in there and look and see from soup to nuts what you have coming out of your pension. And that way if there's anything that you don't like, you can reach out to OPM and say, hey, look at my stuff, fix my stuff, and go from there.
More My thoughts and prayers are for all of you, all who retired this year. There probably will be a bottleneck before you start seeing this. In the meantime, if you needed to grab cash, reach out. I can help you look at TSP options and see if you can grab some out of there, but I wanted you to at least see an image of how that would look. Once you have access to opm, reach out. Let's make a plan and we'll talk to you now and also after retirement.
[00:08:15] 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 8504506500 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.
