I retired in July 2020. One thing I would advise those preparing for retirement to do is choose the life insurance coverage that you want to keep until age 65 BEFORE you retire. Once you are retired, you cannot change your coverage online, and you can't call OPM to do it over the phone. The only way to change coverage is write a letter to OPM and mail it to a PO Box which is a black hole where untraceable USPS letters go to die. I sent letters several times and got no response, and finally gave up. My rates jumped when I turned 60 and I pretty much just have to live with it until I turn 65.
@@erichearduga That's certainly the solution for some families. It's important to consider the financial hardship of an early death of a fed. At the very best, one entire Social Security benefit goes away (or can never be taken), and half of the FERS pension goes away too. If the death is early in retirement, that could mean 30+ years of less income (FERS + SS) to the surviving family, which could be millions. Then the key question is: were there enough assets inherited to maintain lifestyle? If not, that's where life insurance can help. -TG
@@erichearduga While working, I had the maximum number of option B multiples, and then as I hit the milestone birthdays (when the rates jump), I would drop one of the multiples so that the rates would stay about the same. When I retired, I set it to 2 multiples. I'm paying almost $200 a month for life insurance now with the over 60 premiums. Just to clarify, you cannot cancel or modify FEGLI coverage online or over the phone after retirement.
And from what I understand once you hit 50 the monthly premiums are so expensive it's usually not worth it. Like he said of course, you need to consider your own financial situation such as mortgages, debt ratios inability to be covered by other life insurance, and consider is it actually necessary?
My advice is for you and your spouse to go for high income occupations with government pensions and matching TSP/401k plans. You can then opt for no survivor benefits to maximize pension payments (they'll still be beneficiaries of the investment accounts). Invest in the C fund/S&P 100% which is self diversified amongst the top 500 companies and aim for much more than you'll ever need. Avoid retiring in high tax states/localities and don't buy a headache vacation home. Then taxes really won't be that much of an issue. Yes, you'll pay taxes on your income, but you'll still have more money than you can spend. A year's worth cash savings/checking (both while working and retired) is key to wait out down markets. Psychologically, Roth accounts encourage you to never withdraw and die with the maximum net worth, so what is the point of that?
You make some great points, but I want to caution: by not selecting survivor benefits, they will LOSE FEHB upon the death of the fed. This is a HUGE deal in retirement, and this decision should be made very carefully. Moreover, being 100% in stocks in retirement is seldom appropriate for everyone. 12-24 of cash may not be sufficient to withstand a down market. Check out plenty of research by BlackRock, Vanguard, and Morningstar on sequence of returns risk. Not everyone is as risk tolerant as you are and they wish they had your stomach for it! ;)
I retired in July 2020. One thing I would advise those preparing for retirement to do is choose the life insurance coverage that you want to keep until age 65 BEFORE you retire. Once you are retired, you cannot change your coverage online, and you can't call OPM to do it over the phone. The only way to change coverage is write a letter to OPM and mail it to a PO Box which is a black hole where untraceable USPS letters go to die. I sent letters several times and got no response, and finally gave up. My rates jumped when I turned 60 and I pretty much just have to live with it until I turn 65.
Great suggestion! I can't believe your letters fell into the abyss, but I also can't say that I'm surprised. -TG
I'd just drop life insurance that you are still paying premiums once you retire if your spouse already inherits your funds.
@@erichearduga That's certainly the solution for some families. It's important to consider the financial hardship of an early death of a fed. At the very best, one entire Social Security benefit goes away (or can never be taken), and half of the FERS pension goes away too. If the death is early in retirement, that could mean 30+ years of less income (FERS + SS) to the surviving family, which could be millions. Then the key question is: were there enough assets inherited to maintain lifestyle? If not, that's where life insurance can help. -TG
@@erichearduga While working, I had the maximum number of option B multiples, and then as I hit the milestone birthdays (when the rates jump), I would drop one of the multiples so that the rates would stay about the same. When I retired, I set it to 2 multiples. I'm paying almost $200 a month for life insurance now with the over 60 premiums. Just to clarify, you cannot cancel or modify FEGLI coverage online or over the phone after retirement.
And from what I understand once you hit 50 the monthly premiums are so expensive it's usually not worth it. Like he said of course, you need to consider your own financial situation such as mortgages, debt ratios inability to be covered by other life insurance, and consider is it actually necessary?
My advice is for you and your spouse to go for high income occupations with government pensions and matching TSP/401k plans. You can then opt for no survivor benefits to maximize pension payments (they'll still be beneficiaries of the investment accounts). Invest in the C fund/S&P 100% which is self diversified amongst the top 500 companies and aim for much more than you'll ever need. Avoid retiring in high tax states/localities and don't buy a headache vacation home. Then taxes really won't be that much of an issue. Yes, you'll pay taxes on your income, but you'll still have more money than you can spend. A year's worth cash savings/checking (both while working and retired) is key to wait out down markets. Psychologically, Roth accounts encourage you to never withdraw and die with the maximum net worth, so what is the point of that?
You make some great points, but I want to caution: by not selecting survivor benefits, they will LOSE FEHB upon the death of the fed. This is a HUGE deal in retirement, and this decision should be made very carefully. Moreover, being 100% in stocks in retirement is seldom appropriate for everyone. 12-24 of cash may not be sufficient to withstand a down market. Check out plenty of research by BlackRock, Vanguard, and Morningstar on sequence of returns risk. Not everyone is as risk tolerant as you are and they wish they had your stomach for it! ;)