Federal Retirement Advice by Alexis Hongamen, CRPC

You’ve done well for yourself over the years and you think it’s time you look for a financial professional to help you plan your finances or look over your investments.  Or maybe you are thinking about your federal retirement and want some help determining if you are ready.  There are a host of reasons someone may need help with their finances and is ready to use the services of a financial professional. Whatever your specific situation may be, looking for the right financial adviser may be an overwhelming and dreaded task.  You are going to trust someone with your life savings and your future. You’ve heard horror stories   here   and   there   about bad advisers and shudder at the thought of selecting one. So, how do you go about it? How do you select a financial professional that will be right for you? Here are some ways to go about it: Referrals The tried and true method of getting someone who has been vetted by acquaintances and friends. ...

How much do I need in savings if I want $XXX per year in retirement and not run out of money? The answer everyone wants to know!! This answer differs for everyone and there is no simple, cut and dried answer.  Everyone’s situation is different.  Let’s take a look at how you can come up with a ballpark answer. Remember that a civil service retirement is now composed of four legs…..your social security (for FERS), your Thrift Savings Plan (TSP), your civil service annuity, and whatever other savings and retirement accounts you have been able to gather. As a mathematical equation, it would look something like this: Social Security Civil Service Annuity TSP withdrawal Other Savings/Retirement Accounts = $XXXX You should have a good idea of what you will receive monthly from two of those sources.  You can generate an approximate social security income projection by visiting ssa.gov and accessing your account (click in top right corner where it says Sign In/Up)....

Here are just a few red flags that should alert you something is not quite right with the way your investment adviser is handling things: When the investment adviser requests you write checks payable to him or the adviser’s firm. An adviser should not hold custody of your funds or assets. A third party should hold custody and all checks should be made to the third party, typically a clearing house. Your adviser should not have access to your account except to make investments with your funds or deduct the previously agreed upon fees. When the only statements you get come directly from the adviser. Statements should be coming from the third party where your assets are held, the custodian of your account. Adviser should not be guaranteeing returns on your investments.  Bernie Madoff guaranteed 1% per month on accounts and we all know how that ended.  Any promises or guarantees made by the adviser should be a huge red flag.

A backdoor Roth IRA is a conversion method used by people that are not eligible to contribute to a Roth IRA. Most people are familiar with a Roth Ira. When you fund a Roth Ira, you are taking money out of your bank account that has already been taxed and placing it in this new IRA.  The limit is $5500 ($6500 if 50 or over) but in order to do that, you need to have income below a threshold. For 2017, it begins phasing out at $118000 for singles. For a couple, the threshold is $186,000.  Which means if you are making more than that, Congress says you aren’t allowed to put money in to a Roth IRA. The backdoor is a strategy for people that are over that limit. So, if you make too much money to contribute to a Roth IRA, there is a rule that says you can contribute money to what is called a non-deductible IRA.  It’s a type of IRA where you don’t get a tax deduction. There are no income limits for contributing to this type of IRA.  There is also a rule that says that y...