Description: The article expresses the idea of federal employee salaries. The author wants to discuss with you about federal government retirement, you will be shown several types of income stream and the main reasons why people want to work for the federal government. The author desires to emphasize a thrift savings account.
My name is Derek Ifasi, I’m the owner of a Fosse Financial Group and today’s topic I want to discuss with you is federal government retirement, someone should be watching this video, if they currently work for a federal agency and they want to know a little bit more about their retirement plans when they’re trying to get towards the later end of their retirement years, before they want to start taking distributions, that’s why I believe this is going to be most helpful with the federal government.
Whenever you have a person that’s obviously working for the government, they’re going to be offered a couple of different benefits, there is a main reason why somebody wants to work for the federal government.
This individual works for X amount of years and they’ll receive some sorts of pension type income at that later date, 30 years of service, whatever that is, they’ll receive some sort of pension income that will come to them, they will also receive Social Security income that they’ve accumulated throughout their working years. So those would be the first income stream.
The second income stream, they have a type of retirement account known as a TSP, also known as a thrift savings account, a thrift savings account, this is what I want to talk about.
Thrift savings plan is what I want to talk about, it’s basically like a 401k account, don’t try to over complicate what a TSP is, it’s like a 401k account, except for 401k, it is offered through private institutions. a 403 B would be offered through state institutions.
A 457 plan might be municipalities, a TSP account is offered to federal government, you know employees, the federal government retirement, so if you’re working for the IRS or if you’re working as a postal worker, whatever that is, you’re most likely going to be offered a TSP account.
The way that this bucket grows is your contributions into the TSP and the match from the government will all add money into this big retirement bucket now, when you put contributions into it and companies matching you, what determines how large or small this bucket is.
At the end of the day, that has to do with rates of return and these rates of return are typically tied to some sort of mutual funds, so you might see different things, you might see the S bond, you might see the G fund, different things that are set up with your TSP account.
So what it’s essentially saying is the amount of money that you place in, if you have a gain that year on your mutual funds in this buckets, it is going to be larger, but it doesn’t matter, if you throw in a million dollars and you’ve accumulated a million dollars into this bucket, your mutual fund decides to tank before you’re going to retire.
Then your buckets go from a million dollars down to whatever a hundred thousand dollars, basically it has a limitless potential of failure like it doesn’t have a ceiling on the growth potential as well.
So when reviewing your TSP account, you understand that during your accumulation phase, you were placing it in there, you basically chose the different funds and now you essentially have this bucket, that’s sitting there at the end of the day.
If you’re going into your 50s or 60s and you understand more with that date that you’re going to retire, there are certain ways especially once you hit over the age of fifty nine and a half, there are certain ways that you could take this bucket and you leverage it into an IRA contract, it’s known as a transfer, known as a rollover into an IRA contract.
The reason why this is important is that you are reducing the negatives with the TSP accounts and what I mean by that is that there are specific types of IRA contracts, there IRA contracts set up with insurance companies that allow you to have specific contractual guarantees on that account.
So with the TSP account that individual that’s accumulating their money into it, the negatives that could basically affect these accounts and reduce that account further and further down to zero are something known as reverse dollar cost averaging.
What that means is that you’re going to have to pay some sorts of mutual fund related to fees, when you’re going through those TSP accounts, you’re going to have some different TSP related fees or you might use a financial adviser to try to help you choose that you’re going to have an advisor fee with those specific types of accounts whatever recommendations they give you, typically the advisor fee is going to be a little bit more than 1%.
But it’s 1%, mutual fund related fees are about 1%, so before your funds perform anything, your 2% in the hole, you have to at least make up that 2%, if we’re utilizing that hypothetical scenario, you have to at least make up that 2% before you even get to 0% before you even break.
So the third negative would be downward market loss in 2008, portfolios took a big hit, it was about 57 percent on average of a hit to their TSP accounts to their retirement accounts.
So if you had an individual that had a million dollars in that Thrift Savings Plan and let’s say they lost 50%, it’s very realistic, I mean there’s no floor regarding these accounts on the downward market laws.
So if that individual lost the 50% one year and then it wasn’t only that panic, I lost my account, but then on top of it, the company’s going to hit you with the mutual fund related fee.
They’re also going to hit you with an advisor fee if the advisor was monitoring that count, so if you thought there was a loss of 50 percent, there’s a loss of 52 percent, if you say this losses is something a little bit more realistic, 10 percent, it’s not a 10 percent loss, a loss of 12%, so these are some different things that you could go and set up an IRA contract that specifically stops that bleeding.
It would go into a type of bucket, all the money that was already accumulated when you do the rollover, they can fit a bucket with a lid over it, so let’s say that you went and did the transfer before any market losses or anything happen, you took that million dollars, you rolled it over into an IRA contract, it’s a specific type of I or II contract through an insurance company.
What this does is that they have something known as an indexing strategies, so it’s an indexing process that gives you a floor of 0% and all their types of accounts and then it might give you a cap up to a certain limit.
So if you have a specific index that it’s linked to the sp500 and you have a 10% cap and the market gains 10% the first year, then gains 12% the second year, then loses 20%, then loses 57%, then gains 5%, what exactly happens to your specific account?
Think about this bucket now, we’re putting a lid over it, so after the first year at gain 10%, we understand that 10% is underneath the cap, I was at the cap of 10%, so it is 10%, they would essentially open up your lid pour the gain inside.
Now your accounts are going to be sitting at 1.1 million, the next year it gained 12 percent, but your cap is 10 percent, so you’re only going to be allowed to have 10 percent into your account which is another $110,000.
That is ratcheted in it by an annual basis, that’s where the gains are credited in there, the next year, the third year, you would have had a loss of 20 percent with anything in your TSP account with this, because we had that preservation, we have that floor of 0%, it dropped 20 percent.
So you would have had a gain of 0%, the lid remains closed, nothing came out the next year lost 57 percent in 2008, we have that for 0%, therefore they’re not pulling anything out of your accounts preserve protected and you have a 0% that year, the next year, because it’s going by a one-year basis.
If the account gained 5 percent, 5 percent is underneath your 10% cap, so then you have a gain of 5% into that account, so it’s always going to be stepping up and ratcheting and locking in those gains, so it’s such a powerful way to get that safe consistent growth on to that specific TSP money.
What’s designated for that TSP money now? That’s one area, that’s one way on how you could basically set it up into an account, you can either do it on a short-term basis, like a six-year contract, you could do on a longer-term basis, a 10-year contract.
Obviously, the longer that you’re able to place your money into those types of contracts, the higher the guarantee that the insurance company could give, could provide in your specific IRA contract.
But majority of the times individuals like to leverage these types of IRAs for an additional income source, I talked about the federal employee, the federal government retirement.
We’re most likely that employees are going to be receiving a pension plan, when they’re in their 60s, they’re going to be receiving Social Security, when they’re in their 60s, then you had this TSP account.
This individual wants to leverage a portion of it or all of it, then use as a third income stream so that they could be living in retirement and getting three paychecks, essentially three paychecks at the same time and live with confidence.
If you don’t need the money, basically take whatever is extra and throw it into checking account, whatever that is, but so what you could do is with that same individual that had a million dollars and you could use any variation of that number.
This is the hypothetical number, they had an income goal, maybe the pension was giving them fifty thousand dollars a year and the Social Security income was giving them another thirty thousand dollars a year.
They want to have exactly a hundred thousand dollars that they’re making in retirement year by year, this gives them eighty thousand, but now we have a gap of twenty thousand dollars, they have a million dollars, because they’ve already sufficed at age 59 and a half, they could go.
This is one of the things that our company specializes on, we try to show you, we specialize with a lot of federal government retirement plans and a lot of TSP planning and there’s a specific process that you have to do.
So at any point in time if this sounds interesting to you, call our 1-800 number 1-800 five six six one zero zero two, but essentially what we try to do is to show you when you’re calling in, we try to show you the different areas, we try to figure out what your goals are.
If we ask you questions, we determined that $20,000 is your gap, then you could take a portion of the million dollars, maybe that’s only going to come out to three hundred thousand dollars that you rollover into a special contract with an income rider attached to it.
What that income Rider does is that it provides lifetime income that it will grow, that will go to the individual for the rest of their life or their spouses life, so it acts like a personal pension plan.
While that portion of the monies are going into three hundred thousands, going into that contract, that’s turning on the spigot, make up that net of $20,000 20700 thousand that you could go and place into one of those safe IRA contracts as well.
So there are so many different ways to skin that cat, it’s as if you have to take the full 1 million and only throw it into one product, one company, one IRA, there are ways that you could transfer portions from one aspect to accomplish one goal.
While you have another one, that’s accomplishing another goal, you could do that in several different ways as well, you could go and you could have four different IRA contracts with that initial transfer, because you suffice that age of fifty nine and a half on top of it.
If you’re working for a federal for a federal agency and you decide to leave and you’re in your 30s, you’re in your 40s that also makes you eligible with that TSP account now, because you’re no longer working there.
Someone would do a 401k rollover, you could do a TSP rollover, that would also make you eligible for that money in place into an IRA contract where the rollover does not make sense or where you cannot do it.
If you are under the age of 59 and a half, you’re still working for the company, you know they’re not going to allow you to do that in service rollover, so there are some little tweaks, little specifics that you have to be mindful of if.
That goal is important to you, we specialize on it, it is very safe consistent planning, we try to show you a bunch of different scenarios, we go through something known as the retired Sharpe planning system, its proprietary to our company, the name of our websites retiresharp.com, the name of our YouTube channels retire sharp.
So we deemed it the retired sharp planning system and what happens is that after asking you a whole slew of questions and trying to figure out and educating you and saying there is a gap, there are some times that people call us up.
What they’re doing is completely fine, there’s no reason to change anything and that would be even more perfect of basically having that additional confidence saying what I’m doing, what I have been doing for these couple years.
It has been very correct and I’m basically on that correct path, but with those individuals, we show them different financial products, different financial strategies on average, we go over 1200 different scenarios per individual that produces the most optimal results.
So we might go through the top three results and say recommendation is good because of this, it’s bad, because of this B, but our main recommendation might be a Company A and we basically utilize the strategy with it, this is the reason why we have a lot of national volume.
We are a plus on the Better Business Bureau, we’ve never had complaints, we’ve always had very good reviews, it’s methodical process and due to this retired sharp planning system, because it is proprietary to us, no other financial agency has that and we try to help educate you, whether it’s video tutorials, whether it’s literature pieces, whatever it is, we’re trying to at least help you out.
We also offer 24/7 customer service at any point in time, feel free to give us a call one eight hundred five six six one zero zero two, I hope you found value in this video, please make sure to subscribe to our YouTube channel retire sharp, so you have access to the most updated information, thanks.