By Jason Epps, CFP®, CRPC®
Planning for your financial future is crucial, regardless of your career path. However, members of the military, veterans, and federal employees face unique circumstances when it comes to financial planning. From maximizing retirement income to navigating education benefits, there are several financial considerations to be aware of. This article explores some of the most crucial financial challenges and choices that veterans, federal employees, and military members face in order to experience long-term financial stability. Let’s take a closer look at these financial situations and learn how to navigate them.
Pension Maximization Strategy for Retirees
For those approaching retirement, the decision on whether to choose a single-life annuity or a joint-and-survivor annuity can have a significant impact on retirement income. Pension maximization is a strategy that retirees may use to increase their pension benefits by choosing to forgo a survivor pension for their spouse. Instead, the retiree applies for and is approved for a life insurance policy with their spouse named as the sole beneficiary. Pension maximization aims to substitute the spousal pension payout with a death benefit that can offer a payment stream equal to or greater than the after-tax amount the survivor pension would have paid following the death of the partner. This approach can help optimize pension benefits. It’s important to weigh the pros and cons of each option, consider the needs of the spouse, and factor in any additional sources of retirement income.
How to Best Utilize the GI Bill for College Planning
One of the significant benefits for military personnel and veterans is the GI Bill, which provides educational assistance for college planning. Understanding the various GI Bill programs, eligibility requirements, and benefits is essential for maximizing this opportunity. We’re here to iron out the details and provide you the information needed to make the best decisions for you and your dependents. The two main GI Bills are the Montgomery GI Bill and the Post-9/11 GI Bill. The Post-9/11 GI Bill offers assistance with things like tuition, fees, a monthly housing allowance, and a stipend for books and supplies. The amount of support is determined by the length of active-duty service.
When college planning, the first step is to determine which of your college options are entitled to receive GI Bill funding. One thing to note: if your military service ended before January 1, 2013, your Post-9/11 GI Bill benefits expire 15 years after your last separation date from active service.
Addressing the Increasing Cost of FEGLI Supplemental Life Insurance Over Time
In the 1950s, the federal government created the Federal Employees’ Group Life Insurance (FEGLI) program. The program can assist with meeting life insurance needs and includes both basic and optional coverage options. However, the cost of this coverage increases significantly as employees age. The cost per thousand dollars of death benefit of optional FEGLI increases every five years starting at age 35. It is crucial to evaluate your personal insurance needs and explore alternatives to FEGLI, such as individual term life insurance policies. Comparing rates and coverage options from different providers can help you find a cost-effective solution.
Should You Take Advantage of the Federal Long-Term Care Insurance Program?
The Federal Long Term Care Insurance program (FLTCIP) offers long-term care insurance to cover costs of care expenses when enrollees need help with daily activities or have a severe cognitive impairment, like Alzheimer’s. You can safeguard your assets and retirement plans from unforeseen medical expenses through the FLTCIP.
The plan is portable, which means you can take it with you after employment ends. The program offers insurance coverage to eligible individuals, including federal and U.S. Postal Service employees and annuitants, active and retired members of the uniformed services, and their qualified relatives. Research the available options, understand the coverage details, and consider the potential costs of long-term care. Together, we can decide if taking advantage of the FLTCIP is right for you.
Failure to Stay Informed
Benefits for federal employees can get complicated and they may change over your career. Because of this, many federal agencies offer multi-day seminars for mid-career employees and employees nearing retirement. To stay abreast and more informed, it’s a great idea to attend and actively participate in such seminars when possible. The earlier you start understanding the nuances that federal employees are faced with, the better off you will be to make decisions today that have a big impact on your financial future.
Take the Next Step
At KFA Private Wealth Group, we collaborate closely with our clients to create a financial plan that offers confidence and transparency, a plan that can stabilize your future. Our goal is to help our clients make informed decisions, so they can enjoy a fulfilling retirement that aligns with their aspirations.
Whether you’re preparing for retirement, enjoying your golden years, or a government employee seeking professional financial advice, we’re here to help make the journey worthwhile. Don’t hesitate to reach out to our team today. Email jepps@kfapwg.com or call 571-386-2022 to schedule an appointment.
About Jason
Jason Epps is vice president and private wealth advisor at KFA Private Wealth Group, a registered independent advisory firm founded on the premise of providing conflict-free financial and investment advice. With over 17 years of experience, Jason possesses the unique knowledge and expertise necessary to provide his clients with the financial guidance to help them find confidence in their financial future. Jason is a CERTIFIED FINANCIAL PLANNER™ practitioner and a Chartered Retirement Planning Counselor℠, CRPC®, and believes that a financial plan is only as strong as the advisor’s understanding of the core values and beliefs of each client. He serves a diverse range of clients, from young accumulators to pre-retirees and retirees, including business owners and professionals in a variety of fields. Jason graduated cum laude from Mount St. Mary’s University, where he currently serves on the university’s Board of Trustees. While at Mount St. Mary’s, Jason played four years of Division I college basketball. In his spare time, he enjoys traveling, trying new restaurants, and cheering on the local D.C. sports teams. To learn more about Jason, connect with him on LinkedIn.