The poet, Samuel Johnson once said, “Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information on it.”
Albert Einstein is quoted as saying, “Information is not knowledge.”
For many Feds, knowing and/or finding federal retirement benefits and planning “KNOWLEDGE” has been a complicated and daunting challenge.
In this 5 part series on Federal Retirement, we’ll separate facts from myths and reliable knowledge from flimsy information.
Federal professionals are all too often oblivious to, or confused by, inaccurate information concerning their guaranteed federal retirement income benefits. This series will attack two knowledge elusive topics: Federal Retirement Income Benefits and Retirement Preparation.
Part 1 – Bad Advice
The spreading of retirement benefits myths, misconceptions, and half-truths has reached an alarming pace. Trying to learn as much as possible has led some Feds to seek edification from seemingly knowledgeable, but ultimately unreliable sources. They desperately want answers, but don’t know where to go, who to trust, or even the right questions to ask.
Example – Earlier this year, I met with the Lyncombs, a couple that has worked as federal employees for 20 (+) years. Mr. Lyncomb is in his early 50’s and she is in her mid-40’s.
They sought to find retirement planning and benefits answers on their own. What they came up with was an assortment of fragmented pieces of information from a variety of sources. But, they still didn’t have an accurate picture of what their retirement would (or should) look like.
They gathered information from co-workers, online sources, and even Mrs. Lyncomb’s Aunt Betty. Aunt Betty married rich and was widowed young. She knew nothing about federal retirement. But, the most troubling part (to me) was the misguided information they received from a licensed financial advisor.
The advisor wasn’t a crook, nor would I consider her incompetent. She was a well-meaning and experienced professional. However, she was woefully unfamiliar with federal retirement income benefits. She literally didn’t know what she didn’t know.
This advisor works primarily with business owners and was introduced to the couple by Aunt Betty. She provided the Lyncombs both incorrect and incomplete information that nearly caused their retirement future to take an undesired and unnecessary turn. After their meeting(s), Mr. Lyncomb believed he would need to postpone his retirement by 5 years.
Mr. Lyncomb wanted to retire at 57 (in 4 years). When they went to Aunt Betty’s trusted advisor, she reviewed their retirement needs and their presumed income potential. Based on her findings, she informed them that Mr. Lyncomb shouldn’t retire until he turned 62.
After receiving professional advice and gathering their patched together, hodgepodge of information from multiple sources, the Lyncombs were more confused and dismayed than ever about:
- When to start using Social Security Administration (SSA) income benefits. Should they start early at 62 or wait ‘til his full retirement age of 66?
- Social Security supplemental (bridge) payments.
- Having both a pension and the Thrift Savings Plan (TSP).
- When he could (or should) start using his Thrift Savings Plan as a source of income.
- When Mrs. Lyncomb (age 45) should consider retiring.
We were able to demystify their federal retirement benefits, retirement planning and retirement timing by distinguishing correct knowledge from the partially correct and the completely erroneous information they had collected.
The Lyncombs learned the following in a federal “Retirement Readiness Review”:
- Lyncomb could comfortably retire at his goal age of 57.
- He could comfortably wait until 68 (not 62 or 66) to start SSA income benefits.
- He qualifies for $1,300 a month in SSA supplemental payments until he turns 62.
- He can (and should) wait until 70 ½ to start utilizing his TSP savings as a source of retirement income.
- Lyncomb should also wait until she turns 57 to retire.
Lesson learned in part 1: The Lyncombs discovered that it’s inadvisable to seek advice from anyone (financial advisor friend, family, co-worker or even their hairdresser) that isn’t fluent and knowledgeable in the language of federal retirement income benefits.
Feds have very unique retirement income benefits packages. Trusting information from the wrong person can lead to unintended mishaps, poor decisions and a gaping hole in retirement knowledge. When seeking help from a licensed professional, find one that specializes in working with federal employees and be guarded against “BAD ADVICE!”
In part 2, I will uncover some reliable knowledge sources to help with your retirement planning. I’ll also share some dependable locales where you can discover trustworthy knowledge about your retirement income benefits.
I need your help!
My goal in writing this series is to turn on the “Knowledge Lightbulb” and assist Feds looking for answers to their retirement questions which is and always has been my passion since leaving federal service (I formerly worked for IRS).
I invite you to send me your questions about federal retirement. In doing so, you can help guide the topics I cover. I will share answers to these questions in future articles and blog posts on FedSmith.com.
Also, if you have co-workers you think could benefit from the topics I’ve covered here, please consider forwarding this article to them.
Finally, I have written extensively on federal retirement benefits and how to best utilize them. The following are links for anyone interested in learning more about my book, You First: Federal Employee Retirement Guide, as well as these past workshops.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities offered through LPL Financial, member FINRA/SIPC.
