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.
[00:00:39] Speaker B: Well, many of you all, if you were born in my generation or if you had parents that had kids born in my generation, you may remember that Shel Silverstein book, Where the Sidewalk Ends. And do you remember the one that we always kept reading was the very sick day. It was, I cannot go to school today, said Little Peggy Ann McKay, my, all these problems. And she lists all, all these issues. I'm falling apart, and da, da, da, da. But then it ends with, what? What's that you say? You say, today is Saturday, goodbye, I'm going out to play. And you realize, my goodness, she just didn't want to go to school. And so it was this whole, you know, all the teachers were telling us, you know, we don't want to lie and don't be the boy who cried wolf and all those things.
But as you get older, you realize that all that stuff she listed is legit. We're all falling apart to such an extreme that it's just incredible. I myself am 44 years of age, and I am dealing with this thing they call plantar fasciitis, which essentially means that every morning for about 20 minutes, you'd rather cut off your leg than try to walk on it because of the. This heel, I don't know, it's like shooting pain in your heel when you try to use it. A buddy of mine, her husband, deals with it, too. And we're in there, we're both in our 40s, and we're like, yeah, man, the pain is crazy. Oh, can't even get up. Can't even. I'm like, I can't believe I've turned into this person just talking about health. And then I remember, oh, my goodness, Raina, you handle Medicare, you handle retirement. And the biggest conversation we start having is now related to doctor's appointments and health and what medicine you're taking and what are the contraindications and all of these things. Well, you want to prepare yourself, my friend, because you will not be exempt. The only Question is, when will it slap you around? And to where you've got to notice it, where you have to sort of look yourself in the mirror and say, you know, how are we going to handle this? What are we going to do about it? And that is something that you want to remember that your job in federal or postal service has merited you or come with the ability to take advantage of time where you can go to the doctor, you can get your preventive screenings, you can see your specialists to the point of exhaustion, you can see them ad nauseam. That's a Latin term for to the point of sickness. And you have this thing called sick leave that you do not want to retire with a bucket of. You want to use it to your best advantage in the best way. Now, to be very clear, if you're 20, 30, 40 like me, you do not want to burn it up when you have such a long time ahead of you.
However, let's flip the script and teeter the totter. And if you are within that five years before you are retiring or three years or whatever, that close and you've got buckets and buckets. Oh, sick leave. You want to start poking the hole in the bucket to use it to your advantage because it is difficult to use it in a big chunk.
So understand what you can use sickly for your own medical needs. Duh.
Your own stuff.
Doctor's appointments, dental appointments.
Mental health day. A lot of times I think I'm funny and I'm listening to all the specialists and I got to hang on psychiatry and psychology because mental health days are a real thing.
Sometimes it just reaches a fever pitch and you've got to do something about it. Fever family care. So that is family members, that is spouse, kids, sometimes parents, sometimes even further extended. But you have to get approval for some of these things. Bereavement. You can use sick leave for bereavement. You're taking a trip because ex. You know, something happened. Now, I've had people where their supervisor say crazy things to them when they attempt to use this leave.
All you got to do is pull up the documentation.
You, you have this. It's already established. This is not like a. You're not getting their approval.
You're using something that. To which you're already entitled care of a family member with serious health condition as part of fmla.
But it also is an entitlement that you are able to use to care for this person. And the definition of family member, you just have to watch because it can't get to extend it and then adoption related purposes. This I didn't even realize until I saw this. For this chat with you today.
Adoption related purposes you can use sickly for. So if you're scheduled to go meet over and over again with the kids or the parents, and I do not know how closely related that is to fostering in comparison to an adoption adoption, but a lot of people have, it's crazy how often, how much I've heard this recently where people say, oh my goodness, I'm going to retire and I don't really have something I'm retiring to. Nobody needs me anymore.
You may be surprised at the frequency with which some of my retired employees are adopting because they realize like they've got another run.
I can bring life to myself, keep myself young.
And you don't have to adopt a baby. There's middle aged kids, there's kids that are older, that are already, you know, they can, they, you know, they can kind of fend for themselves for the most part. You're just there to be the guideline and the guardrail in your life. So a lot of people are saying, wow, I can, I can do that.
I can get a whole nother batch of kids. I'm just kidding. But it's kind of true. You take care of them, they take care of you. It's a pretty good gig. And some of the people that have done it have told me and they're like, man, it did way more for me than I, than I ever did for that.
So it's definitely something to consider. You know, a lot of you can retire not to a part time job, but to a full time position as a career parent.
So what's the next scenario here? You got to remember, while you're even taking sick leave, you're still accruing it.
While you're working, you're accruing your leave.
While you are full time or part time, you still can accrue certain amounts of leave. So y', all, most of y' all know that not a big, not a big deal. Now the limits per year you've got, you've got some limitations on this next page here. And you basically, you need to see there is a limit on what you can do.
So on your own stuff there is no limit, but there is a limit on when you're taking care of family. So it's 13 days for general family care and bereavement, 13 days in succession. Now the 12 weeks is FMLA and that's when you got up to 12 weeks per year to care for a family member with a serious health condition each year, and that's each leave. So you just gotta remember you can use this time for stuff other than just yourself, but it's good to know what your limitations are so you can plan accordingly.
And people say, well, Raina, I don't want to use my sick leave. I was told I need to rack it up. I thought it paid me in retirement.
Yeah, it pays you, but let me show you how.
Essentially, it just. Not even essentially factually, it just adds into your calculation for your monthly pension payment.
So in this guy's example, he had 40 years of service, and he also had half a dang year of leave.
So had he simply retired at that moment, that six months would have just added into the 40 years and 29 days to give him a total of 40 years, seven months, 28 days. And when he retired, his calculation would be 40%, you know, or what's seven divided by 12? 40, whatever. 46%, you know, 40.6 or whatever percent. Right. Because that seven months counts. The 28 days does not count.
So at a minimum, this guy should have used those days up because that's almost a month of salary that he would have received in cash by working or by staying an employee.
Where now that 28 days goes into the nether.
Now, let's say this same guy had burned those six months of leave and he stayed an employee, but he wasn't working. He was on sick leave for whatever reason.
And sometimes it's difficult to do it in a chunk. I'll. I'll grant you that. But if he had chatted with me, maybe he had started peppering in some significant sick leave week here, a couple of days there, a couple of appointments here over time, and then he goes to retire. Let's say he had zero sick leave at that time.
What will be in the top row there?
Well, it would be 40 years, 7 months, 28 days.
In fact, if he had, it would be over on the day side, you see, it would be the same, you see, the bottom 40 years, 7 months, 28 days. But all of that would be on the very top zeros across the board in the middle. So the bottom would still say 40 years, 7 months, 28 days. The point is, you still get stinking paid for it in your pension.
But did he get paid for those 28 days?
Sure enough, because he burned it, used it, got paid as an employee, which is what we like, and that seven months up there as an employee, he got paid for his full salary.
So what if his salary had been 100 grand. That was 50 grand that he would have been paid in comparison to six months, that will be half of 1% of his high three salary, which would be maybe 48 or $99,000 or something like that.
One percent, sometimes 1.1. Well, what's 1% of 100 grand?
That would be 1 grand.
So how many years at 1 grand do you need to live to get a hundred?
Yeah, you see what I mean? Or to get 50 rather, because he was at six months.
You get my point.
Burn baby, burn. Let the match get sick. Now be clear, I'm not here to say call in. Never have I, nor will I say call in illegitimately. Right?
So schedule your stuff. Schedule your doctor's appointment. Schedule your checkup schedule your wellness schedule, your FMLA schedule, schedule, schedule. And there's a bunch of specialists you can go see that are more than happy to see you. Once, twice, three times a lady. That's OB gyn. That's not a joke. So you know you can see all the doctors get scheduled and nobody's mad at you because it was scheduled leave and you are skipping to the bank.
Happy go lucky because you got paid. And not to mention the fact that during that time, weren't you still contributing to tsp?
Yes. Weren't you still getting a match? Yes. Weren't you still getting pre tax health insurance? Yes. Weren't you still racking up more leave? Yes.
The benefits are innumerable to burn your sick leave.
So in summary, pray for me in my plantar fasciitis and I will think of you and pray for you in yours.
But the goal is to get this stuff fixed while you have enough leave to do so so you can retire.
Good to go. Turning cartwheels in retirement. Ready to rock and roll. Get scheduled. Let's talk make a plan. Not just for this kind of stuff, but all the other subjects that we have to go over for your retirement. We'll talk to you soon.
[00:12:53] 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 rena directly, call 850-450-6500. That's 850450 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 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.
