Latest / Federal Retirement Advisors | FedLegacy / Survivor Benefits, FEGLI, and Legacy: Protecting the People Depending on Your Plan
Transcript
- Brandon Tramel: Awesome. Hello everyone. I'll be your host tonight, Brandon Tremel. I'm one of the key advisors here at Fed Legacy. Hope everyone's doing well. Glad you made time to join me tonight. Just want to know where where is everyone from? I'm located in the Maryland area. I just got off the phone with another client and they were actually like 10 minutes from me. So just trying to see if everyone is from around here. We have clients all over the United States. but let me jump into what we're gonna get into tonight. So tonight we're gonna talk about survivor benefits, FEGLI and legacy, protecting the people depending on your plan. Okay, so let's jump into it. So in the next 30 minutes, I'm not going to take too much of your time. we're gonna get into three main things. So the first thing would be three choices most people don't know they're making. All right, so that might be that might make you very inquisitive to what those are. a free government calculator you can open tonight, and we're gonna walk through a That calculator tonight to break down what your options are and what they will be in the future when you retire with the FEGLI which is the federal employee group life insurance. The third thing would be five signs, your coverage is not what you think it is. Okay? So we're gonna we're gonna jump into that right now. Now Three choices nobody tells you about. What what are they? It's going to start with extra life insurance. How much do you keep and and what it costs you later? So a lot of people might be depending on the FEGLI to last them after they retire, but they might not be familiar with the fact that the FEGLI goes up in price. Your basic insurance that you have, the federal employee group life insurance, basic insurance, it covers your salary, your Your base salary plus locality. So some of you might get it, some of you might not. I just had a client I just spoke to. She said that her salary was around maybe a hundred thousand, but including locality that bumped her up to a hundred and fifteen thousand. All right, so it's very key, you know, your numbers, know how much coverage you have. the basic insurance is very cost efficient. option A is also cost efficient. Now options B and C, B represents your salary times a multiple up to five. So it's one, two, three, four, five. So if your salary is a hundred thousand, you have times five, you have five hundred thousand dollars in option B alone. Now option B goes up every five years, so you have to figure out, you know, is this something I want to stay in or do you want to opt for outside coverage? Option C is a multiple up to five and it goes by twelve. it goes up to twelve thousand five hundred for your kids under the age of twenty-two, so twenty-one and under, and for your spouse, it's just an additional twenty-five thousand if you have option C times five. So it's five thousand per option. So we always do meeting with you all if you want to set up a one-on-one. We go over what options you have, what do you want to keep in terms of life insurance going into retirement. The second thing, basic coverage. It's one form, the SF 2818. While you're still working and you wanted to change your FEGLI options, you would go to the OPM website and you would get the SF 2817 form and you can change your options there. After you retire, it will be the 18 form. And we're gonna walk through how that looks for you all after retirement. Now, dealing with that SF 2818 form, you know, once you turn 65, things can change. This was a client of ours, named was Marcus, 66 years old. When he retired, he filled out his paperwork, but today he cannot tell you exactly what he chose. And then he came to us to figure some things out. So it's always important before you retire know your numbers. If you're prepping for retirement, we need to know your numbers even more so because some people can retire earlier if they only knew their numbers. It's very key to know your numbers today. Now, the third thing is your survivor choice. Okay, so your survivor choice is going to be relating to your pension. What are those three options that you all have, and how does that fare for your spouse when you pass away? So, what choices do you have, and what choices should you make in retirement when it comes to your survivor choice? Okay. Now, for Denise, this is another client. She was 62 years old. She kept all her extra life insurance when she retired. Nobody told her that was a choice. So she kept option, she kept her basic insurance. She did no reduction because they give you several options. Do you want to do no reduction, 50% reduction, or 75% reduction? All right. So she she wanted to keep it all, so she she kept it. you could also keep option A, B, and C. But since she didn't. didn't know that she could, you know, change those options up a bit. She's paying a lot of that money with her pension. So that decreases her pension by a lot. So so it's very key to know what your numbers are. And we can do a one-on-one to figure out what your numbers specifically are. Now I'm gonna do a FEGLI calculator demo. And if you can go with me to your computers or your phone, your iPad, whatever you have, I'm gonna show you how to get to the FEGLI calculator, and you can run this on your own time. All right, so I'm gonna go to Google.com, I'm gonna share my screen. You see, I'm on Google. All you have to do is type in three words. We're gonna do Fagely, F-E-G-L-I. Second word is gonna be calculator, calculator. The third word is gonna be OPM. Okay, so we have FEGLI Calculator OPM. Click enter. The first link that should show up, since we're all using Google, is gonna say FEGLI Calculator. It's on the OPM.gov website. Once we click on that, takes us to the FEGLI Calculator page. I'm gonna put in a test. It's just gonna be, I'll just put Brandon in here. The salary, let's go with 100,000. When you put in the salary, never put in a comma or a period. You're only gonna put in numbers, or else it's gonna give you an error. So just put in your numbers, five numbers, six numbers, whatever they are. Don't put any commas, periods, or dollar signs. Let's do an age of let's say 60 to 64. That's your present age. you get paid bi-weekly. We're going to select all of these options. Now, for you to figure out what your exact options are, you're going to log into your leave and earnings statement, look under deductions, and you'll be able to see and track what exactly you're paying. And you can size that up to what we're about to present right here. But your leave and earnings statement, your LES is going to show you exactly what options you already have. so let's keep going. So I'm gonna say you have option A. Option A is an extra $10,000 on top of your salary when it comes to the FEGLI. So basic insurance is your salary plus $2,000. So in this scenario, I chose $100,000, which means the basic insurance. Is $102,000 of coverage. If your salaries are $50,000, then your basic coverage is $52. Your salary is $150, then your basic insurance is $152, and so on and so forth. Option A is an extra $10,000. It's great value. Never cancel option A. And if you do not have option A, make sure you get it. Option B, this is a multiple of your salary. So in this instance I'm gonna choose five option c again this is a multiple of up to five as well for every for your spouse every option is five thousand dollars per option so if you have up to five then it's twenty five thousand for your spouse for every child under the age of twenty two it's going to be twenty five hundred so if you have times five it will be twelve thousand five hundred I'm gonna go with A non-postal employee, although if you are a postal employee, you pay nothing for the basic insurance. All right, so I'm gonna click calculate. The check sheet page will show up, which looks identical from the page before. We're gonna scroll down there and click next. In this scenario, we have $100,000 as I typed in earlier. Total coverage is $612, and I would be paying $222.32 per pay period. Now, when we look over here, this is option C: the spouse, $25,000, as I mentioned. Children, $12,500 because I elected for option option C times five. Total is twelve dollars and fifteen cent. Now this is a very key table right here. The enrollee detail report. Okay. The basic insurance again, two thousand dollars plus your salary. So since I put in a hundred thousand, the total is one hundred two. The cost of this is $16.32. So this cost goes along with your salary, not your age. Okay? So your age is related to options B and option C. All right. As well as option option A can also be along with the age. But your basic insurance is going to be only tied to your salary. So $16.32 for this person. The option A again is $10,000. Since I am in this example, I put $60, the cost is $6 per pay period. Option B, five times is $500,000, and you're paying $200 per pay period. All right. For the total here would be $612,000 of coverage for this individual. Now I want to scroll down. And option A, the price stays the same, $6 per pay period. Option B, option B, you can see here the price keeps going up every five years. And you know what? I want to make sure this is legible. Make it a little bit bigger for everyone. Option B is a multiple of five. And it goes up every five years. So $200 per pay period. Now you're $65, it'll be $240, $70, $430, $75, $900, and at age 80, they give you a break. It's $1,440. It won't go up anymore after that. Now these are you know these are per pay periods. So when we look into the retirement numbers, they'll be in monthly terms. But you can see here these are drastic prices. And I actually have some clients who pay this. Now, depending on your health, you know, if you have poor health and you don't think that you will get coverage outside of the Fagely, we would recommend keeping the FEGLI. That's the only time you should keep the FEGLI. Option B is if you don't believe you'll get covered outside because maybe you had cancer a couple years ago, you had a heart attack recently, a stroke, things of that nature. But if you believe you're in good health, then the outside policy would save you hundreds of dollars and definitely thousands of dollars over the course of the next few years. let's go down to the option C table. Option C table again, this goes up every five years as well, and it stops at age 80. So I want you all to be looking at these numbers and just choose You know, hopefully you selected the right numbers based on your LESs. Now, this is the most important part of this calculator. Calculate coverage following retirement. Here we have 75% reduction. I'll choose that option first. And then for option the second one, I'm gonna do times five, third one times five, because I want to show you what this will look like if you kept the same amount of coverage you have today. So actually. Instead of the seventy five percent reduction, let's choose no reduction. And then let's say this person is retiring this coming year. so they'll be within this 60 to 64 time frame. If I click next here. We go into the summary report. $102,000 of coverage is what this person currently has. They've elected no reduction, so they keep $102,000. Okay. in this scenario, they started off paying A bi-weekly amount equivalent to $35.36 a month. Since they're not working anymore, everything chan translates to a monthly cost. So the third new monthly cost will be $35.36. There's something called the no reduction costs, which is $229.50 a month. You add both of these together and it comes out to $264.86. Okay. Now once the person reaches age 65. The basic insurance amount goes away, and they're they're left paying the $229.50 on their 65th birthday. So I hope that makes sense. option A is of great value still. The $10,000 stays because they elected to keep it. It will be $13 per pay period, but they only paid that until they turn $65. Once they turn $65, it'll be $0 month, which is great. And option B, the 500,000 just becomes more ridiculous. it will be $433 a month at age 60, and so on and so forth until you get to age 80, and it'll be three over $3,000 a month, and nobody really wants to pay that. So it's all about looking into the long term. How much do I need this option B? How long do I need this much coverage? If you're believing that you need a substantial amount of coverage, And you're in good health, and the outside policy would be the best option. But I wanted to show you this process so you know how to handle it on your own. If you want a more in-depth one-on-one about it, let us know, and I'll walk you through your own numbers. so so if anything was unclear tonight with that. So let's get back to the slideshow. So I'm click All so we're gonna get back into the slideshow so we can go over the other topics that I mentioned. So I have a question. It says I have option B now. Does it automatically drop once I retire? Do I have to wait to do something? So nothing is going to automatically drop. Everyone has to clarify on their retirement form how much coverage do they want to keep when it comes to their FEGLI All right, and then someone said I need a one-on-one. And yes, so if anyone desires a one-on-one, since I'm doing this presentation tonight, I would be your advisor moving forward. So please reach out and we can set up a one-on-one to go over any questions that you might have later on. So let's jump into the price of keeping it. I kind of already dug into this through my presentation of the FEGLI calculator. So at age 62, in this scenario, you're paying A little bit once you hit 65, it it continues to stack every five years. So I always tell people when you get into retirement, there's there's no budget that should allow for a bill that keeps going up every five years, especially at the pace of the faguely. So if you can get an outside policy to lock in a rate for the next 20 to 30 years, then that'll be your best option. That's how you save hundreds to thousands of dollars. In the course of you know the next coming years. So we can look into that. Now, Ray and Paula, 64 years old. we're gonna jump into survivor benefits. So, in this scenario, I have a husband and wife, 64 years old. He made a survivor choice in a rush on his last day of work. because sometimes it just it just jumps on on you, life happens, so you have to make some decisions. So he had a rush decision here. And is fagely formed, still names his mother. So when he unfortunately passes away, and especially if his mother is no longer alive, then his spouse will not get that money. So Paulo would not be in a good situation in this scenario. So it's very important how you fill out those retirement papers and have a retirement plan in place. So again. The form you filled out was in 1994. It's a long time ago. I know you all have long careers in the government. So it's important to know exactly what your forms say. Who's your beneficiary? Some people I I've come in contact with, they had a ex-spouse be their beneficiary, so they needed to change that. So be very mindful on your current situation. it's gonna be five signs that there's a hole in your your plan. Number one, you haven't touched your FEGLI form since the day you signed it. So a lot of you might have started careers in the 90s, some in the 80s, but either way, you should know what your form says. Number two, nobody in your family can say in dollars what your husband or wife would get. So know what FEGLI options you have, know how much you're paying. Look at your leave and earnings statement. No one is really checking their leave and earnings statement every two weeks. so it's very key to know what you're paying or you could be losing or burning money. Number three, your TSP form and your will name different people. So be very cognizant on the wealth that you built. is protected and it's going to the right people. Number four, you made the survivor choice without checking what it costs you monthly. So I'm gonna break down in the next coming slides what that looks like for the survivor choice. And the fifth one, nothing you own helps if you get sick and you need care for a long time. All right, so so all of these points, if you if you feel uneasy about any of these points, that means you need to set up a one-on-one call. Okay? Let's keep it moving. and then you can also type plan if you want to set up a one-on-one session and our team will reach out to you. So you always type the word P-L-A-N into the chat and we'll set up that one-on-one. Now, this is a very important slide for everyone that's thinking about retirement in the near future. So this one is the first survivor annuity election options at retirement. So you have three options. First option, maximum survivor annuity. So in this s situation, your spouse's annuity upon your death will receive 50% of the earned annuity. And I'm gonna give you an example of that in the next slide. So your annuity will be reduced by 10% in that scenario. So if you want to leave your spouse some money after you pass away, then you're gonna have to elect for this. Okay? And then this gives your your spouse. A good amount of money even after you pass away. Number two, the partial survivor annuity. Your spouse's annuity upon your death will be 25% of the unreduced earned annuity. Your annuity will be only reduced by 5% per month. Okay, so now I'll show you how that looks as well. Now your spouse, and this is what I like about the TSP and OPM putting these stipulations in place. So Your spouse must consent to an election of a partial survivor benefit for the partial and the no survivor annuity options. Okay? So you always have to do that. and remember, if you all have any questions at all, you can either reserve those for the one-on-one or you can drop them in the chat. The third and last one would be no survivor annuity. Now I have a lot of clients who choose this, but it's a key component here. So it says No survivor annuity will be paid to your spouse upon your death if you choose this option. And any health benefits will cease. So if your spouse is dependent on your federal employee health benefits, F-E-H-B, and you do not and you choose this option, they will be left without any of those health benefits. All right. So that's a very key thing. So if your spouse is dependent on that, you cannot choose this option. your annuity will not be reduced. So that's why a lot of people draw into that. So they say, well I I need all of I need every single dollar that I work for in my pension. I I want all of that to come to me. so in this scenario, this will also leave your spouse open for losing benefits that they will need the older they get and and you've already passed away. if you are married at retirement, your spouse must consent to that election of no survivor annuity. So OPM is always thinking about the spouse when dealing out these options. So it's very key on what you choose here. Now, real world scenario I told you I was gonna break down. In this scenario, this person chose the the maximum benefit for their spouse. So let's say their pension is $4,000 a month. Okay, your maximum survivor benefit only costs you $400 a month. That's the 10% of that monthly pension. Okay, so $400 a month for that person's lifetime. When that person passes away. In this case, I chose age 70. Let's say the spouse lives to age 85. That's an extra 15 more years. Okay. In that 15 years, the spouse will collect $2,000 a month. That's substantial. All you had to do was pay $400, and the spouse is getting $2,000 a month for 15 more years. Total of that would be $360,000 in total. And and that $400 a month bought that. So that's a great bang for buck. this is a great scenario if someone is thinking about retiring, they're married, this would be a great option for your spouse. Now, when we speak about financial and retirement success, we have a federal employee financial house, okay. And in our financial house, we deal with different layers of your financial house. Now, your ground is going to be dealing with your pension and your social security, okay. And this is your secret sauce. When you all are federal employees, you have the secret sauce of having a pension. Okay, so your neighbor they won't have a pension, they worked at in the private sector, they have to deal with their 401k. to last them their whole retirement to pay their bills every single month. For you all, your pension can either pay 100% of your bills or at least a good sum of it. Okay, so that's their secret sauce of having that ground. And that's what your pension and your social security can do. Now if you need help building your financial house so you can have great confidence when retiring, then please set up a one-on-one and we can figure that out. Now, everything I just gave you is yours. I just can't tell you what that cost is for you per month. Are you are you in a better situation? Do you need a walkthrough so that you feel even more confident? let's figure out those answers. Remember, you can type the word plan inside the chat, and we can set up that one-on-one if you need that. Now, what does that look like? The retirement readiness review. it's just 45 minutes. We'll sit down. We'll walk through a calculator, we'll work some real numbers out so that we ensure that based on these projections, this is what your retirement will look like. And if there are any flaws that we see, anything that needs improvement, we will make it more efficient. What does this cost? This costs you nothing. There's no pressure at all. everything is made for you. And we're just trying to build financial wealth in our community. We realize the government does not do a great job breaking down the effects of the FEGLI after you retire and even after you turn 50. Once you turn 50 and you have options B or C, we already know you could be saving hundreds of dollars. The government's not telling you that. They want you to come in, do your 9 to 5, go home, come back, do it again. Right? So no one's checking on your TSP as well. So we also offer that TSP maximization plan where we look over your TSP contributions and based on the year you're going to retire, we're going to break down what's the best investment strategy for your TSP. So, all in all, if you don't have any more questions, you can always reach out to FedLegacy.com. That is our website. You can learn more about us. Check out our Facebook, our LinkedIn, our YouTube page. we have a whole host of people who are federal employees within our Facebook group, thousands of people in there. So if you want to compare notes, that's a great place to check out. You can also schedule a meeting on that website. But that is pretty much it for this meeting. Thanks for watching. if there are no questions right now, then I will bid you ado.