Business Innovators Radio - Money Pryor-ities with Darryl & Alicia Pryor- Retirement Planning for Government Workers with Cassie Graves

Episode Date: March 31, 2025

This podcast discusses the challenges faced by federal employees, particularly regarding retirement planning and navigating career transitions. The conversation highlights the partnership between DNA Financial and FedOptions, aiming to provide clarity and support to federal employees dealing with job uncertainties and retirement complexities. Key topics include understanding federal benefits, strategies for financial well-being, and the importance of early planning. The speakers share insights on common misconceptions and offer practical advice for employees to secure their financial future.As CEO of Fed Options, I explain the complicated world of federal employee benefits to financial advisors, so the benefit choices are easily understood by employees.I have spent over 15 years in the insurance industry with 10+ years being focused in the federal benefits arena. As a former spouse of a federal employee, I had first-hand experience of the lack of knowledge that employees and their spouse have around the federal employee benefits. After taking my first federal benefits class for professionals in 2014, I made it my mission to educate employees and their spouses about their complexities and challenges they have with their federal benefits; so that they don’t have to face the rude awakening that some of my family and friends faced when it came to the retirement planning process.My position has changed through the years though. Originally, I began helping federal employees directly as an independent insurance representative, then after a couple of years I began helping financial professionals all over the country. This shift was one of the best life changing decisions I made. While still serving my original mission of educating employees and their spouses, I get to have an even larger impact by helping professionals understand the challenges, complexities, and possible solutions that assist employees and their spouses to have a better retirement future. With Fed Options, we provide a variety of services, resources, and tools that increase service, trust, and credibility with the federal employee community saving financial professionals time, money and energy of having to be the federal benefits guru. This helps them to be able to stay the master of the solution!Money Pryor-itieshttps://businessinnovatorsradio.com/money-pryor-ities/Source: https://businessinnovatorsradio.com/money-pryor-ities-with-darryl-alicia-pryor-retirement-planning-for-government-workers-with-cassie-graves

Money Priorities with the husband and wife team of Daryl and Alicia Pryor, principles of DNA financial and associates. You'll get tips and techniques on personal finance, insurance, and tax topics aimed at closing the wealth gap. So if you want to be a player in the financial game, you're in the right place. Now, money priorities with Daryl and Alicia Pryor. How's anybody doing today? Today, we're going to have an interesting podcast. Before we get started, I like to know that I'm Daryl from DNA.

Financial. I'm Alicia. And today we're going to have a discussion about a topic that we get so many calls from people who are with the government or who are leaving the government or excuse me, I've left the government, but they're not getting their questions answered in a timely fashion. So what we decided to do is we really reached that and we have a strategic partnership that we're developing with the FedOps. And if you saw our first interview with Cassie Graves, then you'll know that this is definitely the person who is very knowledgeable on this topic. So today, I'd like to introduce She to Cassie Graves again. Cassie, how are you doing?

I'm great. Thank you so much, Darrell and Alicia, for allowing me to join your podcast today. I think that we're going to cover a lot of ground and maybe uncover a little bit of misconceptions out there that I've been hearing in the federal employee space, especially in the D.C. area. Yeah, there are a lot of misperceptions out here

and the misconceptions that people have. More importantly, people are just so anxious because they don't know what to do next. So there's a lot of topic material that we're going to have. have a discussion about today. Agreed. Yes, you know, people don't know what they don't know. And your mind is a battlefield, right?

You start creating scenarios and you kind of tend to run with them. But thank you for being here as we provide some clarity with some things. So I'll start with our first question. Can you give us a quick overview of the partnership that we have with Fed Options and provide and explain your team specifically in how you help individuals who are facing potential government job cut? Yes. So we partner with DNA Financial to provide back office support service to help them understand

the complexities within the federal government space to make sure that we can get solid information to the employees. That DNA Financial works with. We want to make sure that federal employees are not stuck in the paralysis of analysis, right? I get so often where people are confused about different things because they get misinformation from their agency, misinformation from different people that they talk to about different things. And, I mean, even certain professionals can not fully understand things.

I have heard people who have had different podcasts or YouTube videos or things like that that have provided misguided information. And so we just want to make sure that people really, especially federal employees, have a solid understanding about their specific situation. and what's true and not true? And then what are the tools of resources to get things corrected or fixed or whatnot? In fact, we're dealing with a number of situations where people are placed in the wrong retirement systems and then they've got FERCA claims or whatever.

Or maybe they haven't opened that case yet because they just don't know that they need to be, you know, that they were placed in the wrong retirement system to begin with or whatever the situation is, right? There's a number of different things that employees are uncovering, about, you know, that pension amount specifically. And we want people to have a good understanding about what the consequences are if they need to make deposits, free deposits, or if, depending on what retirement system, they're in whatever that situation is. And that's what we help you guys get is that solid pension number.

What is it going to look like if this scenario happens or if that scenario happens? So that way you guys have something to rely on when you're doing the, that retirement planning. We'll get into the analogy a little bit later and more in depth about building a house and how that correlates with that retirement planning concept. And you brought up a good point. Many people here, even though they're trying to work with the HRs, their HRs are not responsive enough to them. Sometimes the HRs don't even know how they answer some of the questions and stuff. So this will be a great tool for many people who are calling and looking for that information that they need. And as we know in many cases,

they're really forced to make a decision within a short amount of time. Absolutely. So with that said, what are some of the biggest concerns you hear from federal employees right now and how does Fed options help us address those concerns, especially for those considering a career transition? You know, this may be, maybe they had them thinking about it, but this is like I've had enough. I'm getting ready to do something now.

I need to do something now, but they're not getting the answers they need to really make an informed decision. Yeah. unfortunately, that's where it's just such a tumultuous time with the government and people don't know what they don't know. And what I'm going to say is rely on the latest email you got from your agency to tell you what you're eligible for and what's going to happen with your position. Because I think the biggest concern right now for federal employees is even if they decided not to take the resignation offer or they didn't take that voluntary early retirement or maybe they weren't eligible for the early retirement and they just, want to continue with the government for as long as possible, right? Now we're getting it where people are receiving rifts or reduction in force letters and they're being involuntarily taken out of the government.

And this is something that I think it just hasn't happened on such a large scale. So what it's called it's a discontinued service retirement is what's available to people who are involuntarily removed from service. And this type of retirement is just not. as common because typically they have such response to Viras and things like that. And it's specific to an agency. And so it might be, you know, okay, this agency is going through. Well, people don't hear about what that agency is going through because it's not at such an amazing scale, right? Where now people are having to get into different types of retirement complexities and eligibility and requirements and things like that to something that they just haven't experienced before.

And there's not a lot of information about because we've been talking about all the normal rules. Well, in a discontinued service retirement, it's like a voluntary early retirement in the fact that it lessens the age and service year requirements for somebody to be eligible to retire. So anybody who is involuntarily separated from service, if they have reached age 50 with 20 years of service or any age with 25 years of service, they may be eligible to file for an immediate retirement. There are some other rules that they have to meet where they can't turn down an offer, a reasonable offer, given that if they were offered a position within the same commuting area or at the same pay grade, then they would have to take it. They can't turn that down to be eligible

for this retirement, right? But right now I don't think that that's the case because they're simply just letting people go and they're letting agencies go. And so, you know, there will know, that's not, oh, you can have this other reasonable offer, right? And so that's what people need to understand. And then I know that in the DC area specifically, there's a lot of confusion on the severance pay that's being offered and what that's all about. Okay. Yeah. So yeah. Go ahead, Alicia. A lot of information babbled around out there and it's trying to decipher what's real, what's fact, and what you can really rely on to hang your hat. on, it's been quite confusing, but for employees who might be worried about their next steps,

what strategies or resources would you recommend they explore to ensure smooth transition, whether that means moving to a different agency or transitioning to the private sector? Kind of building on what you already said. Yeah, absolutely. So I think that first we have to get that benefit analysis, right? So in the beginning, I talked about a correlation on building a house and retirement planning. With federal employees, they need to get a benefit analysis to be able to understand their numbers and figure out where they're starting from in order to make any sort of retirement planning solution,

right? Whether that's for taxes or financials or income or whatever that looks like, they need to know where they're starting from. And that's how, you know, when you're building a house, you're going to set a good foundation. You're not just going to put up the framework and start building on dirt or sand, because then that can create problems later on. And as a homeowner, you're stuck fixing all of these different things. And now you're not able to enjoy this house that you built, right?

Because it settles in five years and now you've got a crack or whatever the situation is. Well, the same is true with your retirement plan. If you don't set a solid foundation and know your numbers and where you're starting from, how are you going to be able to create a solid plan without having to do maintenance throughout your retirement years. We have to make sure that what we set in place is going to last us throughout retirement. At least that's the goal, right? Whether you're retiring now or you're retiring later, whatever that looks like,

having that solid plan on, okay, if I am able to retire now, what does that do to my health insurance? What does that do to my life insurance? What can I do with my TSP? And how do I set everything up so solidly that I know it's going to work for me later? and throughout my retirement years. Is there anything I can do differently that's going to put that in a better position or whatever so that way I don't have to worry about different things later,

whatever that concern is for that employee? You know, and the same is true. Again, if they're not going to retire and they may be losing those health benefits or in group life insurance, you know, then what is that going to look like for the employee and their family? Do they need to hook up on their spouse's life insurance or health insurance? Do they have TRICARE available? All of these different pieces need to be found out now and explained and what that concept will look like.

What we're seeing is even people who they're not quite, you know, if they haven't met the age and service year requirements for that discontinued service retirement, then maybe they can go out on an memory plus 10 scenario and they postpone. their pension until a later date, right? If they've met their MRI, then that's an option and have at least 10 years of service, right? But if not, what does that look like? And I think those are important pieces to really look at for any stage of the game that they're in. Right, right. Well, that's one of the things we definitely specialize in the retirement and financial plan. And that's why we're so excited about this partnership because it really allows us to broaden the scope of services that we provide. And more importantly, especially in this area, with so many government and

employees, it's really important to help our clients understand how their government benefits impact their overall retirement plan. Sometimes they come, you know, with some high level that may go on to EBIS. I'm not even sure the name of the government system, the cool reports on, but oftentimes those reports aren't complete and doesn't provide all the information that we need to do the financial plans. So we're constantly pulling information from them to try to work through those details. Now, you did give a good job of kind of highlighting what Fed options does in terms of looking that does but can you go into a little bit detail and talk about the type of report that you might provide that will help our clients help us add better fidelity to the financial planning

doctors. Absolutely, absolutely. Because what we see in the employee benefit statements that they get, some can provide service history, some can provide the retirement SEC, and those are all really good pieces of information to have. However, when their calculations are done, it's just for that first month, when the retirement paperwork is finalized, right? And so our analysis is a little bit different because it just doesn't go over that first month of that retirement, but it goes into what happens five, 10, 20 years down the road to these benefits. And then they can see, oh, my goodness, my survivor benefit is 10% of my pension.

It's not a solid number. It's going to continue increasing. My life insurance gets too expensive by age 65. that now it's taken, now I'm having to pay the government money to even keep it. Why am I going to do that? And it's not uncommon, you know, to be able, I mean, the health insurance is a fabulous program. However, it has a significant increase that doesn't keep up with people's cost of living adjustments in their pensions.

And that's what I think a planning piece that people don't maybe realize or understand. And that's why it's so important to plan for inflation and other pieces of, of, you know, like taxes and things like that. And those other financial situations that I don't specialize in that you guys specialize in and make sure how do we strategically pull from all of these different buckets of money in retirement to make sure that we're combating inflation, that we're combating taxes and what that looks like, you know, when people are Medicare age or at different parts of their retirement planning journey.

Say they don't completely leave government or leave service like you were talking about. or maybe they leave the government service, but they're not done working, right? And then what does that look like for them beyond whatever age they're retiring at or leaving service at, especially if they have the special retirement supplement because they may or may not get that depending on that income threshold or the disability retirement, right? There's so many different pieces to this that people need to be able to plan for and all that. And especially I want to get into that severance pay myth. real quick. I forgot to get into the weeds a little bit about that. And this is something that I've realized that the DC employees are thinking that they may qualify

for. However, if they qualify for retirement under those lessened service requirements for a discontinued service, then they're not going to get a severance pay. Severance pay is only for people who don't qualify for retirement and then they can stay on the books for another year. And there's a lot of other requirements that go along with it. It's not something. that's for everybody. So, you know, again, look at the emails that you get from your agency. And unfortunately, we have to rely on HR for different pieces of these clarifying situations because it's not a one-size-fits-all. You know, it's not, this is how it works for you, Mr. Employee where you're at SSA. And then over here, the VA has got something else going on, right?

Unfortunately, it's just there's so many different. And even within the VA, it could be different. or SSA, you know, a certain position can qualify for something and the other position doesn't or a certain office and the other office doesn't. So this is something where we have to rely on HR to be able to give us a little bit more clarity and we have to join forces in making sure that people get the information that they need for their specific situation. Now, this is not the first time we've gone through a drawdown. And so we're encountering a lot of people who may have worked with the federal government

at one time. It may have been drawn down, may have even gone through a, uh, uh, separation or may have just got fed fed up at the furloughs and stuff, but they may have five, 10 years on the books. Are they eligible possibly for any retirement benefits? Great question. So any employee, whether you're CSRS or FERS, if you've had five years where you were contributing to the federal program, the federal retirement system, then you are vested in that system and will qualify for a pension. Even if you left the government and you don't have the benefits, you're still eligible for a pension.

and that could be at your MRI, that could be at 60, that could be at 62. It depends on exactly how many years of service you have. If you have as little as five years, then you can go out at 62, and it's a deferred retirement application that you would complete about 60 to 90 days before that age 62, and you'll send it into OPM. And if you read the instructions on that application, then you'll be able to know where to send it to. However, if you have 10 years or 20 years or something like that, then you can be eligible to take that pension and begin it a little bit earlier.

Say you want to go at your MRA and you don't mind having a little bit of a reduction. You can do the MRI plus 10 kind of scenario where you're filling out the application. It's still going to be the deferred retirement application. However, you'll get the reduction as an MRA plus 10. If you want to wait to have an unreduced pension, then it's 60 at 20 or 62 with five years. And so if you've met those or 57 with 30 years or I'm sorry, MRA, that could be anywhere between 55 and 57, depending on an employee's year of birth. And so if they've met the memory with 30, 60 with 20, 62 with 5, then they can receive an unreduced pension, even if they left the government service with the qualifying years before they met the age requirement. So good information. Yeah, a lot of people would be pleased to know that.

Yeah, absolutely. Gosh, so did why miss anything? Well, not really. I think Lisa has one more question for you. Yeah, I've got a couple actually. Climate where government jobs may be on the line. How do you guide clients to protect their financial well-being and find stability through retirement planning or other financial services? Yeah, so I think there's a couple of different things that employees need to think about And I don't necessarily guide the employee, right? Like, that's more of what you guys do.

But based on their information, there's certain planning concepts that employees need to think about. And this could be different for everybody, right? This isn't everybody needs to think about all of these different planning strategies. However, there are certain things like in general. People need to think about their life insurance. They need to think about if my spouse is relying on 100% of my income, where is that bucket of money going to come from?

Because the government, as a FERS employee, will only cover up to 50%. For CSRS, it will only cover up to 55% is the maximum. And so if your spouse is relying on 100% of that pension, you're going to need to get that planned somewhere else. And if you want a set dollar amount, you might even want to take a minimum and get all of it taking care of somewhere else. And that's what a good financial plan will help provide for the clients. Really helped them determine whether or not how they're going to leverage their

government benefits in addition to doing that foundational plan and that guaranteed income and ensuring their insurance coverage is enough to plan not just to retire because you did bring that up earlier, but through retirement is what we often tell our clients. Yes, and it's not legacy planning. What happens when the unexpected, right? Inevitably, I mean, one thing's always true. Well, there's a couple things that are always true. Taxes are always rising and we're all going to die. Yeah. That's the that's about a lot. I mean, to put it very bluntly, that's what happens, right? And so we have to find out, okay, well, if something were to happen to me, how is my family going to be financially? And I mean, that is a tough discussion to have.

People don't like talking about it. But I think it's definitely something that people need to think about because I have seen so many times where the spouse is not getting what they thought they were going to get, and it negatively impacts them, and it could be life-changing for them. In fact, I had an employee once who I was working with with the advisor, and we were looking at his retirement package and everything else, and he ended up leaving government service and not getting what he needed to in place, and his wife and four kids had nothing, because he didn't make sure that things were taken care of first before certain other decisions were taken care of. And that's what we have to, you know, it's all well and good to be like, oh, yeah, I don't need the government life insurance later on because it gets too expensive.

Okay, well, what happens if you don't have something in place? And success, sorry, another kind of flip side to that is I had an employee I was working with when I was working directly with employees 10 years ago who didn't naturally qualify for any life insurance or anything like that. He kept, he had to keep the government policy. And I told him he had to keep it because we had done some underwriting and found out that he's just ineligible. And he was kind of expecting that anyways. And so he kept it. And, you know, therefore, he had that in place. So when he passed away, his wife had something.

So I would say there's, you know, a pension max strategy. If you can do that income replacement and fold it in with that life insurance, right? Let's maximize the federal government benefits that are really good. And then if there's other planning that needs to be able to. to be done outside that's really going to be helpful to the employee, then let's do that. However, I want to caution people. You can't take it all the way down for survivor benefit. You can't take it all the way down to zero if your spouse is relying on your health benefit. That is so key. I think that if financial advisors fail to talk about this is if their

spouse is relying on their health benefit, they have to keep a minimum survivor benefit if that's going to be the case. So we have to make sure, again, that we're keeping the great parts of their benefit and that the family is protected. And that's really a key. So life insurance, income for the spouse, and what are you going to do with your TSP? That's the other big ticket item and not on the financial side, but because I think people misunderstand what can be done to their TSP, right? People think, oh, I'm just going to leave it there. Well, okay, but then you're subject to market risk. If a beneficiary is not named or maybe a beneficiary is named that is not your spouse, there's some severe consequences that happen when you pass away. Yes. Right? And that could

really impact somebody negatively, especially if it's a daughter or, you know, somebody else who's very close to them who's going to be having to take care of their estate, right? And then, of course, making sure a beneficiary named is ultimately important because that will avoid the whole probate. process, right? Absolutely. Which a lot of government benefits are outside products wrapped in a government package. And there's a number of things with the TSP annuity. It may work for people, but it may not because there's some other limitations that aren't talked about, such as the lack of flexibility with the program. Once you pick whatever that decision is, that's it. There's no stop starting or changing.

With newer annuities, there are a lot more flexibilities because they have just grown with the times, right? The other thing is that people can lose ownership of their money, right? So when they do the annuity, the government enters into that contract with MetLife. That's the annuity carrier. And, you know, then the government kind of owns that. It's not even a policy, right? So the ownership of that is gone.

And I don't know about you, but if I'm saving for retirement, I don't don't want anybody to own my money. Right. And so those different aspects just aren't talked about, or maybe people don't know what they don't know, like you had earlier, Alicia. And so I think those concepts are really something that employees need to consider when they're looking at these different things. The other things I mentioned before are taxes, especially for high-income earners,

where Medicare is involved and things like that. And maybe they're subject to EURMAs and there's taxes, there's inflation, there's different things that I think are very key that they can do now and earlier in their planning where they can set themselves up to really be successful later on that people just don't realize they think, oh, I'm not close to retirement, so I don't need to worry about it. Yeah, leveraging that TSP with this Roth capabilities and everything else also, that way to kind of avoid some of the possibly avoid some of those RMDs in the future. So absolutely.

And then when those RMDs hit, they become a taxability. event, you know, if they remain in the traditional. And so lots of discussion, they really tie those two pieces of the benefit together. Yep, absolutely. Well, and you brought something up that was, that's really good, Daryl. And that's RMDs within the TSP, right? So people who are leaving that in their TSP who are going to just let it be there, there's a couple of different things.

There's no guaranteed income for the longevity of their life and maybe their spouse's life where in other products, there can be that longevity, right? Also, the RMDs, if they do have other assets, other IRAs, other accounts, the RMDs with the TSP aren't aggregated with other accounts. And so they can't pick and choose which bucket they're pulling those RMDs from. They have to take their RMDs from the TSP and then their other accounts can aggregate together. So there is a benefit, I think, to moving that into something else where it might aggregate and then they have more flexibility in the choosing of where their RMDs are coming from. Yeah, while they're in the accumulation phase, they should be doing a lot of planning now to determine what it's going to look like when they get to that distribution phase, absolutely. Wow. One final question for you. Could you share any success stories or common threads you've seen among federal employees who successfully navigated these changes and what lessons they offer to those who might be uncertain about their future?

Gosh, there's been a lot of success stories, but I would say the most successful stories I hear are when people plan earlier, right? You've never heard anybody complain that they plan too early and now they're stuck being successful, right? You always hear the opposite. If I knew then, what I know now. So I would say the most successful stories are when people don't rest on their laurels, when they don't get stuck in, when they don't believe the lies, if you would, you know, I don't need it, I'm too young, you know, whatever they're telling themselves. It's really never too early to plan or I don't have any kids or I don't have anybody that I need to plan for yet. Well, there's always things that you can do for yourself now to set up to where you can

be in a good position to where you do have people later on coming into your family or whatever, right? If you're younger, whatnot. But I think the other thing is there's really four key things that employees can do at any time of their career to really make sure that they're set up for success. One of them, and the number one, is filling out beneficiary forms. Making sure you've got TSP, Fagley, there's two other documents for your first contributions or CSRS contributions and those sorts of things where people can make sure that their beneficiaries are named. So that way, at least on the federal benefit side, they can avoid the probate situation. because that can get really, really nasty,

and it can really set others back that might be relying on those funds to take care of things when somebody has passed away. Number two, making deposits or redeposits or understanding certain concepts on if or if not, they choose to do those deposits and redeposits. So how, again, how do they maximize those benefits, right? This is especially true for those who have military service

or who have had really early non-deduction service time, or if they've had a break-in service and they took those retirement contributions when they left. So there's a couple of different things where we have to make sure that we're really being able to maximize that benefit with the government. Number three, getting the retirement paperwork in order. And I know, this sounds silly to be able to do it when you're early retirement or whatever,

but if you know how to complete it and if you have that framework, then you're set and you're ready. for when that time comes. And this is especially true during this time when positions aren't guaranteed. And last but not least, getting that benefit analysis and knowing where you're starting from so you can know where you're going. And I've heard this even with people who are retired, they've come up to me and are like, oh, well, I already know what I've got and what I'm doing and I'm solid and I'm good, right? And it's like, okay, well, what if you had a second set of with somebody who has done this professionally and does this day in and day out and might be able

to make a couple of tweaks to make that plan even better. Right. Or even just getting confirmation that what you have planned out is solid. Right. Yeah. Right. That's so key, I think, people miss that part of it because, I don't know, maybe they're scared or something. And I get it, right?

There's a lot of bad people out there that are just trying to do quick transactions that are just like, oh, let me help you with, you know, you need. a new newty, you need an annuity. Well, maybe, but maybe not. Absolutely. There's other ways where you can plan to protect your family and make sure that things are in place that are going to help you really be successful in retirement. But don't be at annuity adverse either if that is a situation, right? We want to make sure that all things be open, I would say, when you're talking to a financial professional and get that taken care of. Absolutely. Absolutely. So we've covered a lot of ground today and we really appreciate your time. We're really excited about this partnership.

You know, some of the things that you mentioned, we kind of do inherently when we help people with retirement planning and financial planning. But for that key component now that we were able to really deep dive a lot more into their government benefits and making sure that they're leveraging. Ideally, early on, we want to be able to make sure we're counseling people. When they still go into the government who are early in their careers, they can start making some decisions to leverage those benefits as part of their long-term retirement or financial plan because there are a lot of great benefits. You know, we still have people who are calling and taking money out of TSP because they

needed to live off. But perhaps there's another way they can get to that TSP without taking the money directly out of the TSP. And so now with our partnership with Fed options, we'll have a lot more knowledge and opportunity now to really help people put together a good plan of action because DNA, we like to say your goals are strategies. And so I partnership with the Fed options, we can make sure we're really looking at those federal benefits.

Love it. Well, thank you guys so much for today. I appreciate to be able to come on here and help you guys and help ultimately the federal employees who are just in such confusion right now. So, you know, reach out if you have any questions. And thank you so much for your time today. I appreciate it. We are DNA Financial and Associates.

As Gerald said, your goals are strategies. your success is in our DNA. You can reach us at dNA Financial Associates.com, and you can also call us at 301, 381, 1040. We're here to help. Thanks, everybody. Money Priorities with Daryl and Alicia Pryor. Make sure to like and subscribe for more tips and techniques on personal finance, insurance,

and tax topics aimed at closing the wealth gap and making you a player in the financial game. Visit DNA Financial Association. Associates.com for more information.