Prefer to read instead? Here’s a transcript of this webinar:

Hello and welcome everyone to today’s FedImpact webinar on Your Retirement Scorecard. If there’s one thing that we know federal employees are interested in, it is when they can retire. And it’s not always just a matter of when you can go, but how good life is going to look like on the other side when you get there. We have a lot to share with you today, so hang on.

Just real quick, while everyone’s getting in and getting settled, today’s topic is a pretty big one. We’re going to cover a wide variety of different things, different issues that will affect you in retirement. So hang on to your shorts because we have an awful lot to cover.

For today’s audience, some of you are right on retirement’s doorstep. In fact, some of you are probably already retired and you’re looking backwards like, “Gosh, did I do everything that I was supposed to do?” And then the other extreme are those people who are far from retirement that are just trying to get a leg up and make sure they’ve got their eye on the ball of what it is that they need to do. So all of you are welcome. You’re all coming at this from a different angle, but we’re here to help you.

Speaking of help, the Q&A area, our support team is standing by to be able to answer questions for you. We will do that right in the chat, so find that Q&A area right here in the webinar portal. It’s right next to the handout section and be able to type in your questions. We’ll reply back to you through the support team, but I’m going to stay nice and focused on delivering today’s content and make sure that we get through as many questions as we possibly can.

Handouts are available for download and so we certainly want to make sure that you’re walking away with any of the handouts that you find valuable. You’ll also be directed right to the retirement scorecard at the conclusion of today’s session to be able to get your own. Today’s session is being recorded. In the event that maybe you have to step away or you missed part of this or you come in late, we will make sure that you have a copy of the entire replay for your viewing pleasure. And stay until the end, that’s where you’re going to get direct access to the retirement scorecard so that you can get your own.

So you guys know me. I’m Chris Kowalik, the founder of ProFeds. I’m the developer of the FedImpact Retirement Workshop. Thousands of you go to that workshop every year, and so we’re of course, so happy to know that you’re still eager to look for things to improve your retirement horizon. Of course, the workshop training is part of that. Of course, we have these webinar sessions, we have our podcast, so we try to hit you from a lot of different angles of ways to consume the material that we’re producing. And all in that same effort of making sure that you feel like you can step into retirement, confident with your head held high, knowing that you did all of the things that you needed to do to have the retirement that you want. And like I mentioned before, our support team is standing by for your questions. So pop those right in the Q&A area.

Today’s topic is all about Your Retirement Scorecard. A little bit of a diagnostic assessment for your retirement readiness. Listen, just because you’re eligible to retire, doesn’t mean you should. It doesn’t mean that you’re ready to take on all the steps that are needed to get the retirement right. And keep in mind, it’s easy to retire, it’s hard to stay retired. We find too many people who don’t prepare in advance. They retire only to realize that the money wasn’t positioned properly, they hadn’t checked all the boxes, and so now they have to return back to work because financially they can’t stay retired. We want to know these things way in advance and put you in the driver’s seat.

Agenda

CURRENT SITUATION: For our agenda today, we’re going to take a little bit of a look at your current situation and this is you giving an honest assessment of where you are. In a scorecard like this, a quiz if you will, the only person who suffers by you not being honest is you. You have to be honest with yourself about where you are, the things that you’ve accomplished, the things you’ve checked off the list, so to speak, that you’ve taken care of because you are the one that has to suffer the consequences if those things didn’t actually get done.

PENDING DECISIONS: We’ll talk about some pending decisions. If you have a lot of key decisions ahead of you when you’re planning to officially retire, we want to know that you’ve taken the steps in advance to give yourself that leg up that we were talking about earlier. Like, how do we put you in a strategic advantage to retire ready? And having your eye on those decisions that are coming down the pike when you go to retire and fill out your retirement application will be super important.

RED FLAGS: We want to help you identify some red flags. As we go through a series of questions in the retirement scorecard, you’ll identify some of those imminent threats to your retirement plan and it comes in the form of like, oh, I hadn’t even thought about that. That’s typically where red flags come into play because if you know about something, that doesn’t necessarily mean that you’re going to do something about it, but oftentimes it’s those things we don’t even think about thinking about that really get us in trouble. So those red flags super, super important. And as you think of those, jot them down and do something about it.

TIMELINE: You get to dictate how fast or slow you’re going to put these action items in place, but the sooner you do it, the better because if we can get you ultra prepared now, well in advance of your official retirement from federal service, you are going to be in that much more of a position of control and feeling that competence that we want you to have stepping into retirement. Hopefully you’re ready for this. We have a lot to cover today.

What we will NOT cover

We also have to know what we are not going to cover. I am not here to tell you that when you complete this retirement scorecard that you are prepared to retire. This is going to be a very unique discussion that you’re going to have either with your spouse, with yourself, with your children, whomever that might be, that you have to figure out have you checked all the boxes? And you’re going to find throughout this that there are a lot of boxes to check and you might need a little bit of help.

Keeping score

Let’s talk about this idea of keeping score. Sometimes this makes people a little bit squirrely if I’m being really honest, because no one wants to be told you haven’t done what you needed to do to retire ready. Nobody ever wants to hear that. But I’ll tell you, we do you no favors by sugar-coating things and telling you that things are going to be okay when they’re not. I would rather help you to identify the goals that you have. Like, what is it that you are trying to accomplish in retirement? Figure out a way to negotiate those obstacles, right? I was in the Marine Corps, so we negotiate obstacle courses, right? Figuring out what the strategy is, how am I going to overcome what’s in front of me? And to do that, you have to commit to your mission. You have to be honest with yourself and take action to win.

And if you’re willing to take all of those steps and put them into motion, get your goals straight, figure out your way through, commit and take the action to win. If you lather, rinse, and repeat those steps through all of the different parts of your retirement planning, you are going to be in much better shape than the guy sitting on the sidelines hoping that the government has figured out retirement for him. This is my direct with love statement to you. I want you to take control of your financial future, and if we can play a small part in that by just giving you some tools to be able to do that more efficiently than I can consider today a great win.

Rules of engagement.

I run the risk when we talk about retirement readiness, that folks get angry at me. So here’s the deal. Today is all about getting clear on where you are. I’m not here to judge you. I’m simply sharing today so that you can be in a better position of control. There is no judgment in what I’m going to tell you today. I am a firm believer that all progress starts by telling the truth. And the first person you have to tell the truth to is yourself, not me, not your supervisor, not your HR department, yourself. And if you are telling yourself the truth about the preparations that you have made for retirement, then you are going to be way better off. Planning for retirement is within your control and that is so critical.

I’m anxious to get to the scorecard, but in advance of that, I want to walk you through a couple of things that I want you to have in your mind as a filter for thinking about how you’re going to tackle all of this.

The ProFeds planning principles for federal employees.

These are the ProFeds planning principles. It is my hope that what I’m about ready to share with you, that this becomes a catalyst to inspire you to take control of your financial future. It’s not to cast judgment, it’s just to help you think about what you’re doing.

Principle #1: It’s never too late, too early or too often to plan.

But I will tell you, the longer you wait, the harder it is! We see folks who have one foot in retirement and they’re trying to figure out life insurance planning. It’s really hard to do it that late in life. But on the flip side, the 30 or 40-year-old that has a long way to go before they plan to retire, they think, “Gosh, I have so much time ahead of me, I’ll do that later.” So the earlier you do these things, the better. But wherever you are, it’s never too late to at least make progress. The progress won’t look the same, but there is at least something that you can always do to tweak and modify that retirement so that you get more of what you want.

Principle #2: When you know your numbers, your financial decisions become obvious.

If you have no idea what the numbers tell you, you are going to have no idea how to make decisions, right? If I told you that if you retire today, you could maintain your standard of living based on the assets, based on all the things that you’ve done to prepare, and that was based on real numbers, you’d feel great about submitting your retirement application. But at the same time, if I told you, “Hey, listen, that lifestyle that you said you wanted to be able to live in retirement, that standard of living that you wanted to maintain, you’re not going to be able to do that based on your numbers.” I hope that that’s equally as valuable to you. Maybe not as good to hear, but equally as valuable to you to know I’ve got some work to do. We want you to have good data to make informed and deliberate decisions with respect to your money.

Principle #3: You are free to choose, but you are not free from consequence.

Every single decision that you make has an outcome, even if it’s one we don’t like. And even if you make no decision at all, not making a decision is a decision. It just likely doesn’t yield the outcome that you want. We have to always be thinking, what actions am I taking? What decisions am I making and what effect does this have on me, my family, others who depend on me? What does this look like? And if we take responsibility for the choices that we make, good or bad, then we can be more in the driver’s seat of our own future. In this case, we’re talking about retirement planning, but this really goes into effect in all parts of our life if we’re being honest with ourselves.

Principle #4: If you don’t make a decision, someone will make it for you.

… and it might not be one you like. Now, that someone might be the government if you fail to make elections when you go to retire, some of those are made for you. That might be the IRS. That might be your family members being required to make a decision, perhaps they’re ill-equipped to know the consequences of those decisions. But someone’s going to make a decision for you and you might not like it. I would rather you be in control of the decisions and make them for how they serve you and your family the best instead of standing by and waiting for those decisions to be made on your behalf.

Principle #5: It’s okay not to like the government solution to your problem.

You guys have some really great benefits. My husband’s a retired federal law enforcement officer. I understand the benefits from maybe a different angle as a spouse plus the work that I do, but I’ll tell you it is all right not to love the solution that the government has created for you. How could they possibly make the best decision for the millions of active federal employees and the millions of retirees on the payroll, on the retirement roles?

We have to understand that the solutions that the government has set forth for life insurance, protecting your pension, determining long-term care solutions in the event that that’s needed, saving for retirement through the TSP. All of these have good elements to them, but do they continue to serve you well into the future? And you are fooling nobody if you say that the government has just figured it all out and it’s amazing. That’s not how any employer-sponsored plan works. They have a generally acceptable solution for a lot of people, but it is not the end all be all. And you would be very wise to look with a critical eye on all of the pieces of the benefits that you have to make sure that you get the best out of those benefits that you possibly can. And it might not be the default that the government has set for you.

If you don’t like the government solution to your problem, it doesn’t mean you don’t have a problem. You just don’t like the way the government is trying to solve it. Then you need to look out perhaps to the private sector to start solving some of those problems on your own.

Principle #6: The hard conversations are always worth having.

Here’s the deal. When we’re talking about something as important and as big as retirement planning, we have to be willing to have the hard conversations. Sometimes we’re just having that hard conversation with ourselves of like, what am I willing to live with? How is this going to work? But have the conversations, get real with yourself. Sit down with your spouse, sit down with your children. Trying to figure all this stuff out on your own is really quite tough. Don’t be afraid to ask for some help, but first you have to get clear on the conversation that you’re having with yourself and/or your family or both and making sure that you’re honest with yourself in that conversation.

Principle #7: Retirement is complex. Getting help is admirable.

I think a lot of people for some reason think that if you ask for help to get something like this right, that somehow you failed yourself or you’re less of a person and gosh, that couldn’t be more true. I keep coming back to this idea of athletes. We see some of the strongest athletes in the world have coaches because they need a guide on their journey. They need somebody outside of themselves to say, “You’re on the right track.” Or, “We need to make a couple little tweaks here.” Or, “You’re really going the wrong direction. We need to get you back on the path.” And having some help is admirable. Don’t be afraid to ask for help if you need it.

Principle #8: Nobody should care more about your retirement than you do.

Not me, not your agency, not your spouse, not your children, you. You have to care about your retirement. And the fact that you’re here on this webinar tells me that you want to get this right, but it’s so easy for us to feel victimized by the things that we feel have been wronged against us with respect to money. Maybe we lost a lot of money in the TSP in a down market. We got out of FEGLI and didn’t realize we couldn’t get back in and feel like there were some bad decisions made. Whatever it is, we have to own it and say, “I care about my retirement and I’m going to do something about it to get it right.” I felt compelled to walk through these elements, these planning principles, because I hope that this is a filter for you as you’re thinking through the steps that you need to take when we get through the scorecard.

Let’s talk about the six core focus areas that are in the retirement scorecard.

We have to understand that the quiz itself, that the tool that we’re going to be using to get you your retirement score focuses on these core areas, retirement goals and money management, retirement budget and spending, federal retirement and benefits, income and investments, insurance and protection and professional help and guidance. So we have to be able to look at all of these areas because if you just get, for instance, your federal retirement right, but you haven’t thought about any of the other pieces, it’s all just going to fall apart. So we have to look at all of these things and the integration that they all have with one another.

Focus Area #1: Retirement Goals & Money Management.

On the right-hand side you’re seeing a screen capture of part of the score. You’re going to get a report, and this is the section for focus area number one. “Retirement goals and money management. Establishing goals for retirement is key to making progress on your journey. Addressing money matters head-on removes obstacles in your way.” Remember, we have to figure out how to negotiate the obstacles that are in front of us. So we have to start with managing our money.

Written financial goals.

Listen, we’ve all heard about how important it is to have written goals that you continually go back to see what progress you’ve made. We also want to make sure that those goals are substantial and they’re meaningful to you. If you create goals that just get you this mediocre retirement, well, why did you do that? Let’s pick goals that are big, that you can stretch to and really push yourself for, that give you more and more of what you are hoping for. My hope is that your written goals help to serve as somewhat of a shiny light on the rest of the financial decisions that you’re making. And honestly, if you don’t have those written goals, you might be left to wonder, are the financial decisions that you’re making aligned with the bigger retirement vision that you have? Are you doing things on a day-to-day basis that are contrary to the big financial goals that you have? Those are going to be some of the questions that we’re going to be asking with respect to those goals.

Define goals clearly.

If they’re not, we can wiggle out of goals and say, well, I mean I made progress. So we’ve all heard of SMART goals. So those are specific, measurable, attainable, realistic and time-based, SMART. S-M-A-R-T. I believe that SMART goals are easier to accomplish simply because of the thought that had to go into defining them. We put more effort into that and so we can see the end more clearly, and I always use an example of someone that says, “Well, I want to lose weight.” Okay, well what does that mean? It’s not a SMART goal because it’s not specific. We have no way to measure it. There’s no time base on it, and so you can really cheat yourself out of what you really mean.

But if I said, “I want to lose 10 pounds every quarter for the next year and to do so, I’m going to commit to go to the gym three days a week and work out for at least 30 minutes.” Well, now we have very specific measurable goals. I just use that as an example because it’s one that everybody can relate to and really appreciate what the clear definition of the goal allows us to articulate. So we need to make sure that’s true for your retirement goals too.

Measuring progress.

My goodness, it’s so easy to look at where we are and where we want to be and say, “Gosh, it feels like I’m never going to get there. I’ve not made the progress that I wanted.” I encourage you to look backwards from where you established a goal to where you are right now. You might still have credit card debt that feels like it’s looming over you, but have you been able to pay off a lot of that over the last 10 years? Give yourself some credit for that. Not to get in the way of the progress that you’re wanting to make, but to make certain that you’re giving yourself those accolades and those incremental wins that you can celebrate along the way.

Meaningful outcomes.

Like I mentioned before, if you’ve got financial goals that aren’t very good, that aren’t very aspirational, you might have that mediocre retirement that I don’t think you were wanting. Make sure we set those goals, they’re nice and big and they give you the freedom that you’re hoping for in retirement. I think that’s what most people are looking for. They don’t want to be tied to having to go to work. They want to be able to do what they want. They don’t want anybody to tell them they don’t have enough money to do it. And so make sure that you have some meaningful outcomes in the goals that you are setting.

Handling of financial matters.

This can range anything from just paying your bills to saving for retirement. Maybe you’re thinking about how you might be able to leave a legacy behind for your family. And all the things in between those things. The more intentional you are about handling your financial affairs, you’re going to be more mindful of the day-to-day effect that your decisions on that normal day-to-day basis are having on the bigger picture. And anything that you can do to tackle those big financial obstacles, I think of things like heavy debt. Those are things that mentally (that’s head trash for you, that is getting in your head and telling you that you don’t deserve a great retirement because you’ve made some maybe less than awesome decisions to rack up a lot of debt), but you have the ability to say, “This is something I’m going to tackle because this is an obstacle in my way and I need to go get it. I need to go figure this out so I can get onto the good stuff.”

Spousal involvement.

Gosh, if you are married, you have to have your spouse involved in these discussions because if you don’t, one of your perspectives is not going to be considered in the decisions that you are making about retirement. So you both want to make sure that you’re involved in those discussions in each one of the categories that we’re going to be talking about today. If you feel so inclined, have your spouse come in and do a retirement scorecard too. Do it separately and see where each of you think you are on each of these areas. I think it’ll be more enlightening than you think. So that’s focus area number one for retirement goals and money management. You are going to get a score on this particular focus area and a handout that shows you some things to think about with respect to these six identifiers.

Focus Area #2: Retirement Budget & Spending.

Knowing what you spend money on now allows you to have an honest assessment of how much you’ll need in retirement to maintain your standard of living. If we can’t get spending under control now, when you have a full salary, you will have a very difficult time getting it right in retirement too.

Creating a retirement budget.

To know what we’re going to spend in the future, we have to figure out what we’re spending now. I know that seems very elementary to say, but if we’re controlling our money and how it’s spent now, it is so critical to the success that we are going to have later. We get older, we have healthcare rising costs, we have normal living expenses that will only increase. You want to be prepared now to facilitate your current living budget to your retirement budget. So what your budget looks like while you’re still working so that you can get good at being on a budget and managing your spending properly in retirement as well.

Debts and financial obligations.

Gosh, we have to have enough money to pay all of these debts and obligations that we might have. So debts we typically think of like credit card spending, especially high-interest debt, other financial obligations, mortgages, helping other family members, rent, car payments, all of those normal things. We’re not necessarily saying that they’re bad, but the more we have on our plate of debts and financial obligations, the more needs to be in our budget to afford all of those things. So we’ve got to get that taken care of. And keep in mind, don’t let that bad debt that you might have in the past dictate how you’re going to live in your retirement. We’ve got to get that tackled so that obstacle gets out of your way.

Spending behavior & consequences.

Your spending behavior, for instance, how often you go out to eat, if you can’t save enough to meet your retirement goals, yet there’s more frivolous spending happening like that, that can just kind of bleed you dry if you’re not careful, right? Those Starbucks runs can get really expensive. We’ve got to help you to connect the behaviors and the consequences. If you continue down a path of spending too much on things that are not necessary, then is that at the consequence of the long-term retirement goal that you have? I’m not suggesting that you live like misers and pinch all of your pennies, but we do need to be aware of how our behavior affects the long-term. So just keep that in mind. Just pay special attention to some of those short-term finances, bills, credit cards, the budget that we talked about. Want to make sure that that doesn’t get in the way of the long-term goals that you have.

Standard of living.

I would offer to you that most people do not want to lower their standard of living when they retire. It’s just not something people want to do. Now that’s not to say they might not downsize a big home into something a little bit more manageable, but the standard of living that they have is still high. So don’t think for a hot second that just because you retire all of a sudden you’re going to be able to live on a lot less than you previously made. That is not how this is going to work. You might unintentionally have to lower your standard of living if in fact you don’t have the income needed to maintain that. But who wants to plan for that? Let’s plan to have all of the money that you want to have in retirement so that you can do all of the things that you want.

You’re going to have all this time when you retire to go visit your grandkids or to travel or do a whole litany of things that otherwise you couldn’t do while you were still working, at least not to the extent that you wanted to. We want to make sure you have the money for those types of things so that you can go enjoy retirement and not just sit at home and collect a check. I know on the surface that sounds like a good idea, but you got to go out and live it. We want you to live in retirement, not just be in retirement.

Inflation factors.

Gosh, this is a perfect time to actually talk about this because inflation has been a little bit all over the place and we see it. At some point, even if you don’t pay a whole lot of attention to the news, you go to the grocery store and you’re like, “Good grief, I only got a few things and it really was $75.” It can really creep up on you and it simply means that your money isn’t going as far.

So we have to think about, is our budget capable of absorbing higher costs due to inflation and certainly rising costs of lots of things, right? Health insurance, life insurance, all of those things can change over time, but we have to make sure that we’re prepared for when inflation happens and be able to sustain that for several years because that’s typically the cycle, the economic cycle of inflation, that it gets really bad and then it starts to peter off and then eventually that cycle comes back and we have to make sure that we can absorb that or else we’re going to be caught having to take money out of an account like the TSP or an IRA where maybe the market’s not doing so hot because of that inflation and now we have to sell shares when they’re really low valued. So it becomes a cycle of bad decisions if we’re not prepared for things like inflation.

Focus Area #3: Federal Retirement & Benefits.

Of course, you guys know I talk about this stuff all the time. There could be just a whole section on this. It is one part of your financial picture, it is not the only part of your financial picture. Your normal people, you have normal challenges just like everybody else does that’s going into retirement. And it’s worth looking at your employer sponsored plans, right? Your life insurance, your pension protection, your health insurance, TSP, all of those pieces, to say how does all of that fit into the bigger financial picture that I have? So in this section, “Getting the most out of your federal benefits programs creates a foundation for the rest of your financial life to be built upon for strong retirement planning.”

Like I mentioned before, you guys have some awesome benefits in many respects, they’re not perfect, but there are elements of these benefits that are really amazing that people out in the private sector do not have. But don’t let that be a reason that you sit back on your laurels and think, wow, I must have the best program out there because the federal government created it. In fact, I would argue the opposite mindset should be true. How can you take control of these decisions to make sure that they’re the best for you?

Confirm eligibility to retire.

So first things first. You must confirm that you are eligible to retire. I don’t mean you’re eligible now, I mean that you are determining the different pieces of service that you can add into your pension calculation and in the eligibility of even being able to get a pension, we have to make sure that service is right.

Certifying your service.

You do so by certifying your service. If you’ve not done this, please do it. It’s called a certified summary of federal service. I talk about this document all the time in our webinars. So real quick, you can go to FedImpact.com/certify and you will see a document there that you can fill out. You give it to your agency and you say, “Hey agency, I want you to look at my official record and tell me that in fact, the service that I think counts towards retirement actually does. And if it doesn’t, is there anything I can do about it to make it count?”

Decisions made at retirement.

You are going to have a slew of decisions to make on your retirement application with respect to survivor benefits. Are you keeping health insurance? What are you doing with the life insurance? And then of course TSP, that’s separate from the retirement application, but typically a lot of those decisions are being made at the time of retirement. What are you doing there and are there irrevocable decisions that you make that you might not love if you don’t know any better? We’ve got to get those decisions squared away so that when you step into retirement, there are no surprises and you are off to the races having a grand old time.

Deposits owed for service credit.

If you do that certified summary of federal service, you might get a report back from your agency that says, “Hey, there was actually a little bit of time a few years back that you were under a different type of appointment. And if you want credit for that service, you owe something, you owe a deposit to get credit.” You now have to go through that process to figure out is it worth it? What do I get in return? And go through that process prior to the time that you retire. You don’t want to wait all the way until the end. You definitely want to get this done much earlier in the process.

Saving important documents.

Boy, this is really important. I deal with a lot of widows in the work that I do and I’m delighted and humbled to be able to do that kind of work for people especially who are kind of in the dark. They don’t know what was even available to them or where to go, and agencies aren’t typically helping them. How do we save documents in a place that our family knows where to retrieve them, they know what they’re looking at, they know who to call and ask for help from. Those are all really important things.

And if you are the primary financial decision maker in your family and you’ve got a spreadsheet of all your passwords and all the account logins and all the details, but your spouse or your children can’t access your computer, they’re now efficiently locked out of all of these accounts when you die. We have to think about those things of who are we sharing those things with? And I want you to be careful, of course because those are important things like accessing accounts, but we have to have some mechanism to be able to pass that along to them so that they know where to go, where to look to be able to have all that information that they need.

Effect of court orders.

If you have a former spouse and there is a court order, even if you think there are no benefits awarded in it, I implore you to do a meticulous search of that court order, pick that thing apart, left to right, top to bottom, and make sure that there is no language in that court order that grants your former spouse any of your federal benefits. Now, you might already know that it does grant some of those. I’m not as worried about that. I’m worried about surprises that federal employees find out right at the end when they go to retire. And lo and behold, what was granted by a court in a prior life now is going to affect your current spouse, perhaps your children. And so we want to make sure that you have your eyes wide open on those court orders and make sure to get that right.

Focus Area #4: Income & investments.

So this is the fourth focus area, and with this section, “Positioning your assets to work hard for you now generates momentum for maximizing that nest egg and provides income for your lifetime.” So right now, while you’re still working, you have a normal income stream, right? It’s from your job. But when you retire, presumably you’re not going to be working and you might rely on many of your investments. So outside of your federal pension, you may rely on your investments like your TSP, 401Ks, IRAs, other normal mutual fund accounts, whatever that might look like. Now we need to turn that money into income in retirement. So it kind of serves one purpose of a savings vehicle along the way while you’re working, but then it turns into an income vehicle when you’re retired.

Sources of income.

For all of you FERS employees, you have the three-legged foundation of income that’s established by OPM. That’s your Federal Pension, your Social Security, and your Thrift Savings Plan. Like I mentioned though, you might have other sources of income that you need to consider in this as well. Maybe you have rental property, you have other investments, your spouse has a 401k or other type of retirement plan. Those are all pieces that you need to be thinking about. And here’s the deal. We need to understand how all of those pieces of investments and income streams affect one another and how they can be utilized together. We want them to compliment one another and not conflict.

So the next thing is, once you’ve identified those sources of income, now we have to figure out does it make sense for one to start earlier than the other? Does it make sense to start Social Security before you take money out of a 401k or your Thrift Savings Plan? Maybe, maybe not. Maybe the opposite needs to happen, right? And everybody’s situation is going to be a little bit different. It’s important to at least identify the sources of income that you know what you’re looking at.

Access and timing of withdrawals.

When you have all these different potential income streams, you have to figure out, are there different withdrawal rules of when you’re allowed to get that money? And if there are, you want to of course make sure that you’re following along with that. But how can you access money when you really need it? That’s the end goal that most people have is they don’t really care about all the rules. Can I get my money when I want it? We have to get super, super clear on that, that interplay of all the different types of accounts that you have (the sources of income) is going to be really, really important because we’ve got to understand when we’re able to pull certain levers in the financial planning stream of when that money is coming to us. So if you make a bad decision at 30, that’s one thing, but a bad decision at 65 is another thing, right? With respect to taking money out and spending it, we have to be super, super careful.

Tax obligations.

We all know there are two certainties in life, death and taxes and it’s going to happen. We have to make sure to be super familiar with the strategies of, I’ll say, legally reducing your tax obligations, those burdens that you have both now and in retirement. When we think about tax obligations, that’s really the now. When we think of taxes in retirement, we have to think, I mean there’s obligations there too, but there’s also strategy and we’ll talk about that here in a moment. But super important that we understand and have the foresight to do the things now that allow us to control the tax obligations in the future.

Risk tolerance.

You have to make sure that the investments that you have match the risk tolerance that your gut tells you you have. We don’t want you to be too aggressive and lose a lot of money and we don’t want you to be too conservative and miss out on a lot of gains, right? There’s probably some middle ground there, and I’m not here to tell you one is right or wrong, but the whole purpose of investing is that you put in a little bit of money and you get a whole lot back in return eventually. And the longer time that you have to be able to do that, the better off you are. If you need some help on finding that right diversified mix, do not get that from a webinar. Do not get that from some app that you’re looking at. Don’t get it from the water cooler of your buddies in the office. Get it from a licensed professional that has an obligation to look at your entire financial picture and make sure that the guidance that they’re giving is aligned with who you are and what you’re trying to accomplish. That’s a financial professional. They need to be licensed in your state. If you are going to an unlicensed person for advice, when things go south, there is nothing you can do about it. Nothing. They have no obligation to have given you correct information or for it to be aligned with you and your goals.

Social Security.

Boy, Social Security is an important part of your retirement plan and you have worked literally your whole life in all of your working years towards the Social Security benefit that you’re set to receive at 62 or later. But the timing of when you take Social Security is going to be important. Jave you thought through what that looks like? Is it going to be taken right at 62? Are you going to wait until your full retirement age, somewhere 65 to 67? Are you going to wait all the way until 70 or somewhere in between? Each of those have different consequences. Remember, we’re free to choose. We’re not free from consequence. Every decision that we make, we need to think about the good and the bad that comes out of that. But definitely Social Security is a big part of your retirement plan as a whole, and we want to make sure we get that decision right.

Tax strategy.

This is one of my favorite ones, which is tax strategy. So it’s different than the tax obligations because we’re always going to have some sort of obligation for taxes. We can pay that now, we can pay that later, we can pay it along the way, whatever that might look like. But the tax strategy is looking big picture and having a licensed tax professional be able to look at projecting in the future what things are going to look like so you can manage the tax outlay, the obligation that you have in the future to your benefit. Now again, we want these to be legal strategies. I’m not interested in you getting yourself in trouble. Your standard of living in jail won’t be good. So let’s keep this legal folks, but we want to make sure that if you’re using a tax strategy from a tax professional, that that is also aligned with your financial strategy. So those two professionals should be working together to make certain that you’ve looked at the entire picture and we have all of those pieces in mind.

Focus Area #5: Insurance & protection.

Protecting your earning potential and your accumulated assets gives peace of mind that your family’s finances are secured even upon your death.

Type & amount of life insurance.

Listen folks, there are all sorts of different types of life insurance and each of them serve a very different purpose. You’ve probably heard of permanent insurance, you’ve heard of temporary insurance, and neither one of them is necessarily good or bad. They’re different, they serve different purposes. And so it is critical that you have the conversation about what you are trying to protect and that conversation needs to be had with you and your spouse (if you’re married), maybe you have a partner, you’ve got children that perhaps you’re trying to protect, grandchildren, who you’re trying to leave a legacy for, whatever that might look like, we’ve got to make sure that you are carefully assessing what the right kind and the right amount of life insurance is for you.

Needs assessment.

When we just think about buying life insurance, it really should be called death insurance, right? Because that’s when this triggers. It’s you no longer have life, you have death, and now there’s an outlay of cash that’s going to someone. Typically, your family, it may be a church or a charity or a cause that you care about, but most of the time you are trying to solve a financial burden that your family will feel when you are no longer present. It’s easy to give this a SWAG, right? Where we’re just guessing on how much life insurance we need. But why do that? Why guess when you could know. So a needs assessment is just a worksheet. It’s just a tool to be able to go through and have a thoughtful kind of business-minded discussion about what it is we are trying to replace financially when we die and that amount of life insurance then gets put into place. Now remember, you have to qualify for life insurance. So the earlier the better that you have this conversation.

Continued health insurance.

Boy, continuing health insurance is an important aspect of retirement because health insurance costs are rising and there is no end in sight for that happening. So we have to think about how the health insurance costs going up along with all the other things that are going up in price are really going to affect your retirement budget. So as a federal employee, of course you have the Federal Employees Health Benefits Program. It’s a huge, huge perk. We’re part of the FEHB program. Like I said, my husband’s a retired fed, and there are still decisions that need to be made with the FEHB program. It’s not like a set it and forget it kind of program.

You’re going to continue to be involved in Open Seasons and making certain that the coverage that you have aligns with the kind of care that you need. Right now while you’re still working you’re pretty healthy, you’re not going to the doctor a lot. That plan you’re in might be fine, but when things start to change in retirement, you need to make sure that you’re coming back to the health insurance programs and taking another look, whether there are certain types of care, drugs or whatever that might be that need to be covered. All of these plans operate a little bit differently.

Long term care services.

Next up, the least popular topic that we talk about is long-term care. And here I’m not talking about the long-term care insurance. I’m talking about recognizing the need that we may very well have for long-term care services. This idea of not being able to bathe ourselves or feed ourselves or dress ourselves seems so foreign to most of us because we don’t ever want to believe that things are going to go that direction and it’s uncomfortable to talk about. But if you do not have a plan in place for if this happens, if you need this type of care, you need someone to help you get dressed, bathe, feed yourself, whatever that might look like, that will naturally fall on your family. And from personal experience, I will share with you that that is a really tough thing for a family to carry on for a long period of time.

If you can plan, put your business hat on a little bit, take the emotion out of this and say, if this did happen to me, what would my family do? What would they have available to them financially to perhaps allow someone else to provide those services (like a long-term caregiver versus the family needing to provide that kind of care)? It’s one thing to say, “Hey, listen, I need some help eating.” But it’s a different thing to say, “Can you help give me a bath? I can’t get to the toilet.” Right? Those are all very different conversations that you probably do not want to be having with your family. Instead, being able to get some services from the outside is preferred.

Medicare.

So when we think about insurance as a whole, of course Medicare has to be part of that conversation. Most of you do not have a requirement to enroll in Medicare, but some of you do, certainly our military retirees under the TRICARE for Life program, when you turn 65, you’ll be required to enroll in Medicare as well as the Postal Service Health Benefits Program. Not just yet, but starting next year, we’re going to see some mandatory enrollments in Medicare Part B. Definitely important to be thinking about. When we think of Medicare though, there’s natural confusion with respect to that program. There’s part A and part B, and then we have part D, which are prescription drugs.

And what about Part C? Well, that’s just the commercial version of this. And then we have a supplement and we have that Medicare Advantage that was part C. All of these pieces can be really, really confusing. What does all of it mean and how does it affect you? We need to dig into that. Now, if you’re 50 and you’re listening to this webinar, Medicare is probably going to change pretty considerably in the next 15 years before you’re going to be looking at it. But if you’re in your 60s, you need to be thinking about what this looks like to see, is this something that’s on your radar that you are going to need to enroll in or perhaps should enroll in based on your health situation?

Legacy planning.

I mentioned this briefly at the top of this slide when I was talking about the idea that sometimes we want to gift some money to grandchildren or a church or a charity that we care about, that’s not really a “needs assessment” based type of thing. That is simply a want. So when we get older, we typically don’t need to financially support grandchildren for instance, but we might think, wow, what a beautiful thing to be able to leave some money behind for my grandchildren. Maybe they want to start a business or build a home, or maybe it helps with college, whatever it might be. But being able to give that as a gift, that’s high on the radar for a lot of people and we need to at least have that as part of the conversation. Now if you decide that that planning isn’t for you and you say, you know what…I’m not interested in doing that, that’s okay, but at least you have the conversation about it and you know that it’s a thing to at least think about.

Focus Area #6: Professional help & guidance.

Seeking guidance from licensed professionals helps to ensure that all of the pieces of your financial situation are working harmoniously together. You do not want different professionals you are working with to be at conflict or at odds with one another.

Seeking advice.

Why is it that it’s so hard sometimes for us to ask other people for help? I’m not really sure. I’m sure that we could get into a whole psychological thing about that, but this idea that I’ll just do it myself, it’ll be fine. I’ll get the best information I can and make a decision instead of leaning on people who do this for a living and are very good at their craft. Let’s go get some help. I don’t build my own houses. I don’t do my own dental work. Man, why on earth would I do my own financial planning? Let me let some pros come in and help.

Taxes. Goodness, I haven’t done my own taxes in years, right? The tax code is so complicated and of course I run a business so that complicates it even further. But things are complicated. And so seeking advice from a licensed professional to be able to help you, frees your brain to be able to focus on the other things that are within your wheelhouse to control and allows the professionals to be able to step in to help.

Complexities of federal benefits.

We need to address the complexities of federal benefits. It is imperative that you are working with somebody who understands how federal benefits work and the weird oddities of these benefits. You are not like the normal people out in the real world. Your benefits are unique. The way they operate are unique. And so you need to make sure that the professionals that you’re seeking help from actually understand the benefits that you have.

Financial professionals.

I’d like to say you only retire once, but I suppose that’s not necessarily true. Some people retire and then they have to return to work only to retire again later, hopefully. But we want you to only retire once because it was the right thing to do. You had your finances in order, you got through all of the complexity of the benefits and having a financial professional to help maneuver you through those processes and all the nuances of financial planning is really, really critical.

I look at financial professionals as the guide on your journey. They see people retire all the time. That’s what they’re helping their clients to be able to do, to prepare to put all the pieces in place so that retirement looks the way you want and you have a chance to have them in the passenger seat, right? You’re in the driver’s seat. But to have someone in the passenger seat to know what’s ahead, what are the obstacles that you don’t even see yet that they know are in your way to help you get through those? So I’ll tell you, a high quality financial professional is going to save you or make you more money than they’ll ever cost you. So please go out and get some help. Of course, we have a whole network of financial professionals here at ProFeds. These are partners of ours. They don’t work for ProFeds, but they are licensed professionals in various parts throughout the country, all over the place that have the ability to help federal employees because they understand those weird nuances that happen and can guide them on that journey.

Tax professionals.

Good grief, the US tax code is frustrating to say the least. Having a tax professional, like I mentioned, we don’t do our own taxes here, but having a tax professional on your side is just critical to your financial foundation because taxes will eat you alive in retirement. Having that tax professional is going to take care of some of the other parts that we saw in the focus area where we talked about tax obligations and tax strategy by getting somebody to help you on that. Super, super important.

Estate planning professionals.

This is one that a lot of people don’t think about. When we think of estate planning, it sounds very hoity-toity, doesn’t it? But in reality, estate planning is simply determining when I go, other than life insurance, what happens to everything else? Are there some ways to structure the estate? Again, hoity-toity sound estate, but are we able to do that in a way that is more favorable for who we’re leaving the money to? We think about normal things like wills to tell your family, to tell the court what you want to have happen. And in the absence of a will, the court will make decisions for you.

And remember, if you don’t make decisions, someone’s going to make it for you. And anytime a court gets involved, chances are, what you wanted to have happen to your money does not actually happen to your money. So let’s get that part fixed. You do that by having an estate plan. That could be a trust, that’s typically what gets put into place, but where all of that is managed. So you essentially still get to dictate how your money is used even after you’re gone. And I don’t say that from a control standpoint, but you still have a say to make sure that your wishes are carried out.

Beneficiaries.

You don’t need a professional to get your beneficiaries set. You can do that on your own, but making sure that you understand what types of accounts deserve a beneficiary and if there’s no beneficiary possible, are there other ways that you can dictate how that money is paid or the asset is passed to your family? Lots that we are covering today, my goodness.

Overall score

So here we are, end of the focus areas. Here’s the deal. You are going to get an overall score. In this example, we’ve got a 25% score. If you’re kind of in that medium range, you’re going to see that turn orange. If you’re in that top range, you’re going to see it turn green. But I don’t want this score to scare you. We’re going to combine all six of those core focus areas. You’re going to get your overall score and I hope that you’ll use the results of these six core focus areas to figure out what you need to do next.

You can improve your score, come back and take this as many times as you want. But we want this score not to scare you and not to deflate you in what’s possible. We want it to inspire you to take action to get the retirement that you want. When you know your numbers, you get to take action on the things that are most important to you. If you bury your head in the sand and you don’t bother looking at any of these numbers or you don’t even bother to take the quiz, you are flying blind into retirement and I will hope for you that things turn out okay, but that’s not how this normally goes. So know your numbers, be able to take action on those numbers themselves.

Get your retirement quiz

If you are ready to get your retirement score, here’s how you do it. So this quiz is designed to give you that framework of action items and I’m going to give a couple of pointers. This quiz is going to take you about 15 minutes. Take your time on each question, read all the statements carefully and answer the questions honestly. iIf you don’t, the only person who’s hurt is you. You don’t help me, you don’t help your supervisor, you don’t even help your family, if you answer in a way that you think will give you a higher score but wasn’t truthful. These are designed to help you. When you get done with the quiz, we will email you the full results. If you don’t want to provide your email, that’s okay. You’re going to get your overall score, that 25% that I showed on the previous screen. So you’ll get that, but you’re not going to have any of the details of the different topics that we talked about today.

We want you to get all the results so that you can take action on this. So you’ll be able to do that. If you go to FedImpact.com/quiz, you will be able to start the retirement scorecard. Like I said at the end, we will email you the PDF of the results. You’re able to come back and take it as many times as you wish. Like I said before, if you’ve got a spouse or a significant other, have them take the quiz, see where they’re at. How do you guys think you compare? Do one of you think that you’re way more prepared than the other? And why? If that’s facilitating a conversation about all of this, then I will be delighted.

Next steps

So like we do at the end of all of our webinars, we talk about the retirement workshop that we host. I want you to retire with confidence. I hope that that rings through my voice in all of the work that we do, certainly on today’s webinar where we talk about this tool that we built for you. But the very best place to start this process is by attending one of our workshops. These are in-person training sessions. There is no cost for you to attend. These are sponsored sessions. So the fee’s been paid for the session. We’re going to cover all the federal benefits topics and those big decisions that you’re going to be making as you approach that retirement window. Here’s the best part: at the end, there’s one-on-one help available following the workshop if you ask for it. So you want to meet with a financial professional to get these things squared away. You have a chance right there on your evaluation form to say, yes, I want to meet. And then you schedule a time to be able to do that.

They have a whole process of getting super clear on your federal benefits first. And then if you’ve got some of those additional questions perhaps that even come out of the retirement scorecard exercise that you’re going through, that will be a perfect place to be able to start that conversation. So you can see all of the details by going to FedImpact.com/attend. You’ll see all of the cities and dates that we have these pre-retirement sessions happening. I encourage you to find a location, we can’t be in every city, but we’ve got a whole lot of them and hopefully we have one near you.

Handouts & Replay

Today’s handouts, they will, of course you can still download them, but they’ll be emailed to you as well. We will send a link to the replay for all the registered participants and you can certainly come back and listen as many times as you need.

The next webinar that we are going to be holding is on Choosing the Perfect Day to Retire. This will be on February 15th at 1pm CT. And I’ll tell you, we actually did a webinar similar to this about a year and a half ago or so, and there were so many great questions that came out of this that I felt compelled to put this back on the docket and have an opportunity to walk you guys through the big decisions on choosing your retirement dates so that we could all be super, super clear on what you should be looking at and the things that many of you are looking at that don’t provide a hill of beans of difference in your retirement. I don’t want your big day to be ruined by any of these shortsighted decisions, so choosing that perfect day to retire is really an eye-opening topic and I look forward to sharing that with you on February 15th.

You can sign up for that in the same place you signed up for this one by going to FedImpact.com/webinar. Thank you all so much for joining us. I absolutely love these types of sessions. We’re able to key you in on some of the big decisions that you’re going to be making as you approach that retirement window. Again, to find a workshop, you can go to FedImpact.com/attend. And to find the next webinar on Choosing the Perfect Day to Retire, go to FedImpact.com/webinar. Thank you all so much. We’ll see you next month.