![[TSPStrategy] TSP News](http://2.bp.blogspot.com/-erTXCq61ULM/TmHYAQBZ0GI/AAAAAAAACCs/6cBX54Dn6Gs/s110-c/default.png "[TSPStrategy] TSP News")
|
You receive all messages sent to this group.
View/Reply Online (#3503) | Reply To Group | Reply To Sender | Mute This Topic | New Topic
Your Subscription | Contact Group Owner | Unsubscribe [prefander.leadersworkshop@blogger.com]
On Jan 6, 2023, at 10:56 AM, dlstox <dlstox@gmail.com> wrote:
Employee Benefit Changes for 2023
How new pay rates, Social Security earnings limits and other factors could affect your retirement planning.
With the new year comes changes to employee benefits that can affect your retirement planning. Let's take a look at some of them.
Civil Service Retirement System
Pay Raise: The General Schedule pay adjustment is important to future retirees, because it will be factored into the high-three average salary computation based on how many days the new pay rate is in effect prior to retirement. Assuming you're in your peak earning years, for every day the 2023 rate is in effect, the pay rate in effect in 2020 will be eliminated, increasing the overall computation.
Late last month, President Biden issued an executive order formalizing an average 4.6% pay increase for civilian federal workers in 2023. The raise is split between a 4.1% across-the-board increase in basic pay and a 0.5% boost to locality pay.
Variable Interest Rate: This is used to compute the interest that accrues on unpaid civilian and military service credit deposits, and on voluntary contributions that are on deposit. For 2023, the rate will be 1.875%, up from 1.375% in 2022. If you have invested $50,000 in a voluntary contributions account, it will earn $937.50 in interest (tax-deferred) on Dec. 31, 2023. On the other hand, if you owe a balance of $50,000 on refunded CSRS contributions that you withdrew from a prior period of federal service, you will owe an additional $937.50 in interest on Dec. 31.
Federal Employees Retirement System
Pay Raise: As with CSRS, the 4.6% average increase—the largest since 2002—will likely boost the high-three average salary for federal employees, especially those on the verge of retirement.
Variable Interest Rate: As with CSRS, the rate for 2023 will be 1.875%, up from 1.375%.
Basic Employee Death Benefit: The initial $15,000 portion of the FERS death benefit, enacted when FERS was createdpayable to spouses, is increased by the CSRS cost of living adjustment. The CSRS COLA, effective Dec. 1, 2022, increases the death benefit for an employee who dies on or after that date to half of their final annual pay (or average pay, if higher), plus $40,279. This is only payable if an employee dies prior to separation from federal employment.
Social Security
Earnings Limits: The earnings limit for workers who are younger than full retirement age will increase to $21,240. For every $2 earned over this limit, Social Security will deduct $1 from benefits.
The earnings limit for people reaching their full retirement age in 2023 will increase to $56,520. For every $3 earned over this limit, Social Security will deduct $1 from benefits until the month the worker reaches full retirement age. There is no limit on earnings for workers who are at their full retirement age or older for the entire year.
Maximum Taxable Wage Amount: If you're working with wages subject to Social Security tax withholding, the maximum amount of earnings subject to the tax will increase to $160,200 in 2023 from $147,000 in 2022.
Thrift Savings Plan
TSP Elective Deferral Limit: The annual IRS limit for elective deferrals—the amount that employees can contribute to their accounts—is increasing to $22,500 from $20,500 last year. The limit applies to the combined total of traditional and Roth contributions.
Catch-Up Contribution Limit: TSP participants aged 50 and older can make tax-deferred "catch-up" contributions from their basic pay to their TSP accounts. These supplement the participant's regular employee contributions and do not count against the IRS elective deferral limit. The catch-up contributions have a separate annual limit and eligibility criteria. This limit has increased to $7,500 in 2023, up from $6,500 in 2022.
With the new year comes changes to employee benefits that can affect your retirement planning. Let's take a look at some of them.
Civil Service Retirement System
Pay Raise: The General Schedule pay adjustment is important to future retirees, because it will be factored into the high-three average salary computation based on how many days the new pay rate is in effect prior to retirement. Assuming you're in your peak earning years, for every day the 2023 rate is in effect, the pay rate in effect in 2020 will be eliminated, increasing the overall computation.
Late last month, President Biden issued an executive order formalizing an average 4.6% pay increase for civilian federal workers in 2023. The raise is split between a 4.1% across-the-board increase in basic pay and a 0.5% boost to locality pay.
Variable Interest Rate: This is used to compute the interest that accrues on unpaid civilian and military service credit deposits, and on voluntary contributions that are on deposit. For 2023, the rate will be 1.875%, up from 1.375% in 2022. If you have invested $50,000 in a voluntary contributions account, it will earn $937.50 in interest (tax-deferred) on Dec. 31, 2023. On the other hand, if you owe a balance of $50,000 on refunded CSRS contributions that you withdrew from a prior period of federal service, you will owe an additional $937.50 in interest on Dec. 31.
Federal Employees Retirement System
Pay Raise: As with CSRS, the 4.6% average increase—the largest since 2002—will likely boost the high-three average salary for federal employees, especially those on the verge of retirement.
Variable Interest Rate: As with CSRS, the rate for 2023 will be 1.875%, up from 1.375%.
Basic Employee Death Benefit: The initial $15,000 portion of the FERS death benefit, enacted when FERS was createdpayable to spouses, is increased by the CSRS cost of living adjustment. The CSRS COLA, effective Dec. 1, 2022, increases the death benefit for an employee who dies on or after that date to half of their final annual pay (or average pay, if higher), plus $40,279. This is only payable if an employee dies prior to separation from federal employment.
Social Security
Earnings Limits: The earnings limit for workers who are younger than full retirement age will increase to $21,240. For every $2 earned over this limit, Social Security will deduct $1 from benefits.
The earnings limit for people reaching their full retirement age in 2023 will increase to $56,520. For every $3 earned over this limit, Social Security will deduct $1 from benefits until the month the worker reaches full retirement age. There is no limit on earnings for workers who are at their full retirement age or older for the entire year.
Maximum Taxable Wage Amount: If you're working with wages subject to Social Security tax withholding, the maximum amount of earnings subject to the tax will increase to $160,200 in 2023 from $147,000 in 2022.
Thrift Savings Plan
TSP Elective Deferral Limit: The annual IRS limit for elective deferrals—the amount that employees can contribute to their accounts—is increasing to $22,500 from $20,500 last year. The limit applies to the combined total of traditional and Roth contributions.
Catch-Up Contribution Limit: TSP participants aged 50 and older can make tax-deferred "catch-up" contributions from their basic pay to their TSP accounts. These supplement the participant's regular employee contributions and do not count against the IRS elective deferral limit. The catch-up contributions have a separate annual limit and eligibility criteria. This limit has increased to $7,500 in 2023, up from $6,500 in 2022.
You receive all messages sent to this group.
View/Reply Online (#3501) | Reply To Group | Reply To Sender | Mute This Topic | New Topic
Your Subscription | Contact Group Owner | Unsubscribe [prefander.leadersworkshop@blogger.com]
The vast majority of offerings in the 401(k)-style Thrift Savings Plan did not have a good month in December—or a good year in 2022 for that matter.
The S Fund, invested in small and mid-sized businesses, had the worst performance for December, losing 6.55%. It was down 26.26% for 2022.
The common stocks of the C Fund fared just slightly better. The fund lost 5.78% last month and 18.13% last year.
The international stocks in the I Fund were 1.85% in the red for December and were down 13.94% for the year 2022, while the fixed income bonds in the F Fund lost 0.65% for the month and 12.83% for the year.
Government securities in the G Fund were the one bright spot, inching up 0.32% for December and 2.98% for the year.
The lifecycle funds, which move to a less risky mix of investments as participants near retirement, were all in the red for last month as well as last year. The L Income fund, designed for people who have already started making withdrawals, was down 0.9% for December. L 2025 lost 1.65% last month; L 2030, 2.64%; L 2035, 2.93%; L 2040, 3.22%; L 2045, 3.47%; L 2050, 3.71%; L 2055, 4.48%; L 2060, 4.49%; and L 2065, 4.49%.
For the year of 2022, L Income lost 2.7%; L 2025, 6.72%; L 2030, 10.32%; L 2035, 11.65%; L 2040, 12.9%; L 2045, 14.03%; L 2050, 15.05%; L 2055, 17.6%; L 2060, 17.61%; and L 2065, 17.62%.
You receive all messages sent to this group.
View/Reply Online (#3500) | Reply To Group | Reply To Sender | Mute This Topic | New Topic
Your Subscription | Contact Group Owner | Unsubscribe [prefander.leadersworkshop@blogger.com]
On Jan 3, 2023, at 6:00 PM, Thomas Wellock <thomas.wellock@gmail.com> wrote:
There are free online calculators that can help you make a decision. You will need your SS record to use them. The short answer is this: If you are fairly healthy and married, the spouse with the highest SS check should wait till 70 to take it. If you are a healthy, single woman, still wait till 70. For single healthy men, wait till about 68. Take it earlier if you have serious health issues or have no choice.On Tue, Jan 3, 2023 at 5:06 PM Carlos Miranda <mirandarts@gmail.com> wrote:Thanks. Reason I ask is because I'm forced out at 56. So I receive a SS bridge but at 62 I need to decide….take SS or wait it out with less pay until 65 or 70. I appreciate your graphs.Carlos MirandaOn Jan 3, 2023, at 4:22 PM, winfield100 via groups.io <winfield100=yahoo.com@groups.io> wrote:NOTE:These are very rough numbers based and a guestimate of $2,000/month at age 65 when I retired32% Less at age 62, 32% more at age 70, but all _VERY_ roughto me it looks best to retire at 100% retirement age if your health is "flakey" and around age 85 the age 65 and age 70 total checks crossthe retiring at age 62 gets way less lifetime income.I'm personally looking to going well into my 100's, healthy and mentally reasonable, but eh, who knowsyou need to individually get to SocSec and get actual numbers and make your own individual spreadsheet.Also, signup for ChatGPT and ask the low level AI questions like above and below. for retirement answers.<1672780541441blob.jpg>On Tuesday, January 3, 2023 at 01:45:20 PM EST, Carlos Miranda <mirandarts@gmail.com> wrote:Thanks for the chart. Wondering what 62 to 70 would be.Carlos MirandaOn Jan 3, 2023, at 1:15 PM, winfield100 via groups.io <winfield100=yahoo.com@groups.io> wrote:I personally think this may be nit picking a bit too much.Think of your health, I personally did, having had a number of medical heart procedures over the last 15 or so years, that were quite successfulI did a simple spreadsheet, which you can too. I think SocSec benefits were 100% at age 65 when I retired and maxed out at age 70 or so, and declined prior to age 65using rough numbers, say a guess of $2,000/ month at 65 and the ~$2,640 at age 70so guestimating 4 years of $2,000/month, roughly $100,000 EXTRA starting at 65 or $2,640 at age 70So about $100,000 in SocSec benefits before age 70 kicks inthe benefits (with out SocSec raises) don't cross until your late 80's, so If you are going to be healthy then etc etc"gather ye rosebuds whilst ye may<1672769693502blob.jpg>On Tuesday, January 3, 2023 at 10:22:05 AM EST, dlstox <dlstox@gmail.com> wrote:The Best Date to Start Taking Social Security Benefits
A reader poses a question that's trickier than it seems.
APRIL 9, 2020TAMMY FLANAGANRetirement Counseling and Training www.retirefederal.comOne of the things I think I'm pretty good at is answering questions about federal retirement, but a recent email about Social Security left me stumped—twice.
Greg, a longtime federal employee, wrote to me:
Social Security benefits max out at age 70, I get that. But filing too soon loses a portion of the maximum amount, and filing too late loses a whole monthly benefit. I have searched all over, and nowhere can I find out exactly what the best date is to request benefits begin. … My wife reaches age 70 in the middle of April and we were wondering how to maximize her benefit by selecting the best starting date.
I thought Greg was asking a very common question: When is the best time to file for Social Security retirement? So I replied as follows:
There are a lot of theories about claiming Social Security benefits. Social Security has a fact sheet on this question as well. There are many factors that can influence the best time for you:
- Are you married or single?
- What is the age difference between you and spouse, if married.
- What is the income difference between you and your spouse, if married.
- Do you have children age 18 or younger?
- Are you widowed?
- Are you still working or fully retired?
- Do you have other sources of retirement income that could bridge the time between retirement and a later application for Social Security?
- Do you have good health and family history that shows longevity?
My response was frustrating for Greg, because it didn't answer the question he actually was asking. So he tried again:
But the basic question—which is not answered anywhere on Social Security's website or anywhere in your published columns—is how to answer the question in the online application that says, "When do you want your benefits to begin?" The choices are limited to months, not dates. If the birthday month for age 70 is selected, the first half of the month is age 69 and only the second half of the month is age 70. So does selecting the birthday month for benefits to begin result in a calculation of "age 69 benefits" or "age 70 benefits?" If the former, then I would want to select the month AFTER the age 70 birthday month. Here's the problem: If I guess wrong (or if SSA gives me the wrong information) then either I get a lower benefit for life by going too early or I miss out on a full month of benefit by going too late. With so many experts out there saying that waiting until age 70 is an option, I can't believe this question hasn't been asked before and answered.
Believe it or not, I still didn't understand the question. Here's my second response to what I thought he was asking:
Once you have applied, it could take up to three months to receive your first benefit payment. Social Security benefits are paid monthly, starting in the month after the birthday at which you attain full retirement age (which is currently 66 and will gradually rise to 67 over the next several years). Generally, the day of the month you receive your benefit depends on your birthday, or that of the person on whose record you're collecting benefits:
- If the birthday is between the 1st and the 10th of the month, you will receive your first payment on the second Wednesday of the month after that birthday.
- If the birthday is between the 11th and the 20th, you will receive your payment on the third Wednesday of the following month.
- If the birthday is between the 21st and the end of the month, you will receive your payment on the fourth Wednesday of the following month.
If your payment date falls on a federal holiday or weekend, you can expect to receive that month's payment on the weekday immediately prior. Social Security does not make partial-month payments. Individuals first become eligible to receive a benefit during the month after the month of their 62nd birthday. So, someone born in May becomes eligible in June. Since Social Security pays individuals a month behind, the person will receive the June benefit in July.
If you would like to receive your first payment in the first month you are eligible, you will need to apply three months before your birthday.
This was still not the answer Greg was looking for. So he and his wife turned to the experienced and knowledgeable employees at the Social Security Administration, who were finally able to address his question. Here's what they said:
If you want to maximize your monthly payment—which means you want to collect the largest possible number of delayed retirement credits—then you want to specify in the application that benefits should begin in the month that you turn 70. For example, let's say that you turn 70 on Aug. 15. You may request that your benefit begin in August with the first payment in September. By requesting that your benefit begin in your birthday month, you will receive the maximum possible monthly payment for the rest of your life. Delaying your benefit until September (with payment in October) will not give you any additional retirement credit, and the monthly payment will still be the same as if your benefit begins in August, so all you are doing is giving away one monthly payment for no reason. However, if you request that your benefit begin prior to August, you will get an extra monthly payment, but the amount will be slightly lower and it will stay that way for the rest of your life, except for COLA adjustments.
The decision on when to apply for retirement benefits is a personal choice, and the trade-off in waiting as long as possible is a higher monthly payment. If you make a conscious decision to wait until age 70 in order to maximize that monthly payment, then knowing when the benefit should begin is key, since too early will reduce your lifetime payments, and too late will inadvertently give up a month's payment at the maximum amount. One month of Social Security benefits at age 70 could be several thousand dollars, so it is an important tip to be aware of!
There is one exception to the above strategy: If your birthday falls on the 1st day of the month, then you will want to request your retirement benefit begin in the month PRIOR to your birthday, as Social Security considers your birthday to begin in the month of the day before your birthday. So someone who turns 70 on August 1 should ask for the retirement benefit to begin in July.
Thanks for your patience, Greg, and for sharing this valuable tip for others to benefit from.
<1672769693502blob.jpg><1672780541441blob.jpg>
