How to Get the Biggest FERS Pension Possible

ladies and gentlemen federal employees today we're talking about how you can get the absolute largest pension as a First Federal employee that you possibly can if you're into that great stick around if you're not if you're not worried about having enough incoming retirement hey this is not the video for you okay but I'll joke to the side let's Dive Right In if you're new here welcome great to have a financial planner who serves federal employees just like you to make sure you can retire comfortable and confident so what's for today's video is actually I was talking with a federal employee and he said he had a co-worker who was celebrating 55 years of service now that's not 55 years of age that's 55 years of service okay can you even believe it I see I see a lot of long careers and a lot of you know 40 plus year careers but I've never seen 55 years of her just think about how early they would have started and how late they would have had to work to get 55 years it is impressive that is all I have to say now working an incredibly long career is one of the ways you can get a big pension but not everyone wants to do that we're going to talk about today all the ways that you as a federal can increase your pension even if you don't want to work 55 years okay you cool with that let's dive in now this is the Crux of it okay I put it here in the top left my screen now if you're on the podcast I'm actually sharing my screen I'm going to be showing some numbers so definitely go check out the YouTube channel if you want to see all that good jazz but here's the Crux we need to increase if you want a big pension we need to increase the things that go into it and decrease the things that come out of it right it sounds simple but let's break it down now if you're not familiar this is what goes into your pension number one your high three your high three okay number two your years of service years of service now my handwriting is not going to be good I promise okay that's one thing I can promise my handwrite is not gonna be good a high three years of service and then your multiplier there is things we can do for all of these things to make them bigger and therefore increase your pension now like we talked about years of service um that lever is not always fun to pull right we could always work 55 years at least most of us probably could if right um but the years of service one is one of those that is harder to pull all the time especially if you want to be done ASAP so let's focus on the other ones for now let's start with high three okay now if you don't know already you're high three is the average annual salary you make in the 36 consecutive months that you got paid the most okay so what does that mean that's kind of a lot of you know technobabble but let me walk you through that so let's say for most of you it's actually relatively simple because it's going to be the last three years of your career right because generally most people get paid the most during the last three years so whatever your average salary was during the last three years boom that's going to be your high three so for example let's say um you're you're the second okay let's say the year before you retire the second year before you retire in the third year let's say you made ninety eight thousand 99 000 and a hundred thousand well the average of all that it was a simple dumb example but it was 99 000 right that is how it works in a nutshell now it doesn't have to be perfect calendar gears it doesn't have to be a January through December it will be uh it could be like a June through June it doesn't matter it's just gonna be the 36 consecutive months you got paid the most and the average annual salary during that time boom is going to be your high three so what on Earth can we do to increase that we all want to increase our salaries right but here's a couple things to think about number one is sometimes the high paying positions are not a position you want to actually take right sometimes they are but sometimes they're not but guess what if you wanted to maximize your high three guess what you just have to do it for a little bit right maybe three years of your career lock in that high three and then go do something else right go do something else that that's number one also the things that are included in your high threes are your base pay your basic pay and locality pay so basically the if you work in a very high cost of living area your locality pay is going to be a lot bigger so therefore your high three is going to be a lot bigger but guess what let me let me paint you a picture let's say that during the last three years of your career or just eight you know a three years of your career you chose to work in a high cost of living area and your high three gets pumped up really nice and big and then you retire to a low cost of living area where your pension just got inflated for the rest of your life because of the three years you spent a high cost of living area with a high locality right that you're going to enjoy that for the rest of life and then you when you retire to a low cost of living area boom it's just a perfect combination now I know not everyone's going to move I get that but those are the things you can do when it comes to increasing your high three now let's actually jump to the years of service briefly and talk to it a little bit now the one thing though that can increase your years of service without actually working longer is unused sick leave at retirement so if you didn't know any unused sick leave you have at retirement time is going to add into your years of service now there's a chart if you want to figure out exactly let's say you have 900 hours or or 300 hours if you want to know exactly how much time that is worth to you then what you want to do is type in sick leave conversion chart into Google and you'll find a chart that shows exactly how it works out okay long story short about 2 000 hours of sick leave is going to equal a year of service okay so if you have two thousand hours of unused sick leave come retirement that would be worth about a year of service to add into your pension okay Food For Thought other than that there's no other way other than let's say buying back military time if you have military time definitely go check out my video on buying a backpack and be as exceptionally exceptionally valuable for you um and is worth it many many times okay go check that out now last but not least multiplier the multiplier as a normal First Federal employee is only one of two things it's either one percent or 1.1 long story short I'm not going to go into the weeds long story short the way to get this 10 increase to what your pension is going to be is you have to retire at age 62 or later with at least 20 years of service okay if you retire at 61 and 40 years of service you're not going to get it you have to be at least 62 with at least 20 years of service okay if you meet those criteria boom you get a 10 bonus to your pension if don't let that meet that criteria doesn't matter what your your multipliers can be one percent now if you're special Provisions um if you're let's say firefighter border patrol law enforcement you folks of course your you know your multiplier is different it's different rules for you okay um but for the normal traditional First You're multiplying one percent or 1.1 percent okay to get to 1.1 you have to hit the 62 and 20. okay now I know this is a mess if you want to know actually how to calculate your pension now like I said these are the things that go into it but how is it calculated bait I got a great video back on my website about how to calculate your first pension again go back to my website hosfighteradvisors.com you can search through all different topics of articles that I talk to you um there is a way to do it at the top of the website to find the topics that are most relevant to you and to get the most out of them for you okay check that out and it'll go through exactly how this is calculated so you know what kind of an impact um changing any one of these might make for you okay but again increasing any of these will increase your pension now obviously the longer you work the higher your salary the bigger your pension is going to be however there comes a point for all of us where enough is enough where you say hey look the income I'm going to have on time is enough for me that I wouldn't be done I want to be done and I don't know when you're going to hit that point but hopefully by the time emotionally you hit that point that your finances are there as well and that's what this channel is all about making sure your finances are there when you're ready to be done okay so so far we've talked about increase what goes in okay what goes into creating a strong pension right but now let's talk about decreasing what goes out so if you didn't know your pension actually has tons of things that come out of it before you actually see a dime okay let's talk through it number one number one survivor benefits okay Survivor benefit is if you're married if you want your spouse to be left with any of your pension if you die first you have to pay for that okay long story short this is a summarized version if you want them to get 50 of your pension if you die first it's going to cost you ten percent of your pension while you're both alive okay if you want them to get 25 of your pension it's going to cost you five percent of your pension while you're both alive now you don't have to elect any of this you can just pick zero percent and they won't get anything right but if you elect that they will not be able to keep your they won't be able to stay on your fehb okay into retirement I'm not sure why that's connected but the government is connected okay um if they don't have a Survivor benefit if you die first they cannot stay on your health insurance okay if they don't have a Survivor benefit from you so long story short if you need a Survivor benefit by all means please please please elect one okay please please please election to make sure your spouse is going to be taken care of however however if you don't need the full you may not want to elect it it's expensive it does cost quite a bit of money so I'm not saying don't take it just because I said I'm saying no please be critical and don't just take it because you think you should do the math right think okay think through and say if I was to die right I know it sounds morbid but I'm a financial planner I'm just used to it by this point right um but if I was as I what income is my spouse and if my spouse dies what income am I going to be left with if you look at those scenarios you could say okay what amount of Survivor benefit would do the jobs to make sure I or them are going to be taken care of right and if you could say hey look um they need the health insurance so I'll let the lower Survivor benefit it's going to cost less money and we're both going to be finding great right just just critical about this you don't want to just accept anything for a fact until you actually run the numbers for you and make sure it makes sense okay that's the first thing that comes out of your your pension is survivor benefits and if you don't need it you don't have to elect it okay you don't have to elect it if you don't need it but if you need it please please please please please elect it okay the next things that that are going to come out are things like fehb it's going to be your insurance right fehb fagly your life insurance dental vision long-term care all of those insurances okay and you want to be critical with this sort of thing you don't want to stay on a health insurance plan that you've just been on for the last 30 years because that's just what you picked initially you've never changed you want to be critical okay is this the best bank from is am I getting the most value I can what kind of plan do I need if you start thinking through these critical issues you can save yourself thousands of dollars just by saying I just could switch to a plan that's more cost effective for me that'll meet my needs better at a lower cost right you definitely want to think these things these things through now when it comes to life insurance fagly that's another thing how much do you need it's kind of like survivor benefits pass away then what will your spouse be left or what were your kids what what sort of things do you want to make sure are planned for if something happened to you and most people I work with as they get closer to retirement in retirement the need for life insurance normally really goes down there's exceptions certainly but generally speaking the need normally goes down as kids are not no longer dependents as mortgages are paid off there's just way less need so be critical about it do you need it if you don't need it don't pay for it unless you want it right but most people keep something because they just are scared and they haven't actually thought through it don't be scared don't let fear choose what decisions are you're going to make and if so you're gonna be paying way more money than you need to okay um same for dental vision do you need bit of everything I'm saying I'm so critical about it if you need it great if it's helpful for you great just think through it and make your own decision save for a long-term care insurance do you need that I've got a whole video on that so definitely check that out as well one of the last things that comes out is taxes okay oh I don't want to move my face um taxes so I've got tons of videos on keeping your taxes down in retirement and all these things all the things I talked about on this that you could definitely go check out are going to keep your taxes down which will lower how much taxes is going to come out of your pension okay the lower your tax bracket the less money is going to have to come out of your pension okay so again I know we talked about this has been a ton of stuff here in this video but long story short you want to make sure you're being conscious and deliberate about all of these things you that you know exactly what goes into your pension you know exactly what goes out and you are making the best decisions to get the most money you possibly can you've worked I've I talked to so many federal employees and federal employees as a group you guys are amazing right you put in decades of your life for two you know in the service of the country and you just put so much in you want to make sure you get the benefits that you are owed and that you get the most out of them okay and that's what this channel is all about if you want to learn more there's tons of links and helpful things in the description below um to help you get there so I hope that's helpful have an incredible rest your day and I'll see you guys next time

Channel: Haws Federal Advisors

Views: 32,547

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Id: BTP2HsyQr2I

Length: 13min 56sec (836 seconds)

Published: Fri Mar 03 2023