TRANSCRIPT:

Jeremy: So as a federal employee, you have lots of different decisions to make throughout your career and into retirement that greatly impact both yourself and your family really for the rest of your life and the quality of life. One of those things and probably the most popular topic is the Thrift Savings Plan.

Many questions that federal employees have while they’re working and into retirement regarding the Thrift Savings Plan are things such as, what are the funds and how do they work? What is the matching and how does it work? Which fund is right for me based on my risk tolerance; while I’m working as a younger employee, throughout my career, and as I transition into retirement. Other things are, how much can I contribute? Is there a limit to what I put in? Or, the biggest one is, what to do at retirement and throughout retirement. What choices do I have and how do those decisions impact myself and my family for the remainder of my life?

First question is, what is the Thrift Savings Plan? It’s often referred to as the TSP. It was actually established by Congress in 1986. It’s a defined contribution plan and it’s specific to federal employees. You can’t get this anywhere else, it’s a taxed deferred retirement savings plan and it’s very similar to a 401k plan in a private industry or corporate world. So a lot of you federal employees may have experience with this, either through a previous job or a spouse. It’s fully determined by what you contribute. There are obviously agency matchings and things like that that we’ll go over, but it is what you make it. So Matt, tell us a little bit about the advantages to the Thrift Savings Plan?

Matt: Well as far as an accumulation vehicle, the Thrift Savings Plan, Jeremy, is one of the best places I’ve seen to accumulate wealth…if you’ll take advantage of what’s there. You have different things, like you have tax deferred where you get to defer the growth, defer the gains. You have automatic payroll deduction. You have pretty good fund choices actually inside of it. You also have a Traditional, you have a Roth. When you look at the expenses or the fees, if you tried to go to a local financial planner to put together a plan, it’s not even a comparison. The expenses and the fees are minimal. We’ll touch on those later. If you’re a FERS employee, the best advantage is to take advantage of the matching that the agency does on the TSP that we’ll talk about in a minute.

First of all, how does the matching work? ‘Cause this is your greatest advantage. If you put in 0% as a FERS employee, the agency automatically puts in 1%. So you have a total of 1% going in. If you put in 1% of your paycheck, and let me emphasize it is per paycheck…I’ve run into a lot of federal employees that will try to dump a lot of money in it at the end of the year, or two of the months when you get three bi-weeklies, they want to increase their contributions. You can change your contribution every pay period, but your matching is only per pay period. So if you put in 1%, the agency matches it dollar for dollar. Your second percent, they match it dollar for dollar. Your third percent, they match dollar for dollar. For new employees now, they automatically default to 3%: new employees are gonna get the full 100% matching. So if you put in three, the agency is putting in 4%, so you have a total of 7% of your check going into your TSP: your future retirement. If you put in 4 and 5%, they match $.50 on the dollar. So the bottom line is, if you do 5%, the agency does 5% and you have 10% of your check, of your income, going into your account at Thrift Savings Plan.

Please take advantage of this. This is one of the number-one pitfalls that federal employees make, is not taking advantage of the matching program, especially if you’re FERS in the TSP program. You may not be able to do 5% today, so if you can move yourself to the 2 or the 3%, as you get raises and promotions or as COLAs are implemented, try to move your paycheck up as you can. But, a lot of questions we get is, how much can you contribute? A lot of times you hear percentages, but actually it’s determined by the IRS, and in 2018 you can contribute up to $18,500. If you’re older than 50, there’s a catch-up provision where you can do another 6,000, so that puts you up to $24,500 if you’re older than 50 into the TSP. That’s your contributions, that’s not the matching.

Jeremy: What would be the benefit of actually doing…? We’re talking about percentages on the slide before and the matching, 1 to 5%. Now I see a hard dollar figure. If I’m a federal employee, do I focus on a hard dollar figure or do I look at maybe just setting a percentage?

Matt: That’s a great question. A lot of federal employees that we talk to and we meet with and we sit down, have been there for 20 years. They calculated their 5% 15 years ago, but don’t always remember to go back as you get COLAs or step increases and raises and promotions, that it’s not gonna go with you automatically if you do a dollar amount. So if you’re just trying to get the matching, we always recommend to do the 5%, because when you get a pay increase, it’s gonna go with your pay increase.

Now, if you want to do beyond 5%, typically that’s when you’re gonna get into higher amounts and then you do a dollar amount. But you do have to be careful because if you put in too much early in the year and you get to your limits, you lose the ability to get matching later in the year if you’ve put in too much-

Jeremy: Oh.

Matt: Once you hit your limit.

Jeremy: Okay.

Matt: So we’ve seen people that put in the $24,500 by October or November, they’re not allowed to contribute anymore, therefore they’re gonna lose the matching piece.

Jeremy: Again, the catch-up provision there is something that it’s available for those that may not have been educated enough on the Thrift Savings Program early in their career and have some catching up to do, which– hence the name, “Catch-Up Provision.” So it allows them to put in more funds to try to increase their retirement benefit, correct?

Matt: That’s correct. Now, one of the things that TSP came out with years ago was the Traditional and the Roth. So Jeremy, if you’ll go over a little bit of the difference in the two.

Jeremy: Sure. The TSP Traditional option is a pre-tax option. What that means is it lowers your current taxable income bracket– or taxable income, excuse me. The agency matching contributions are automatically added to the Traditional side. What do I mean by that? Well, like we’ve just stated, you have a Traditional and a Roth, but if all you would ever do would be the Roth account, because that’s what you want to do based on certain scenarios, the matching always go into the Traditional side. So you could have in a sense, two TSP balances. The contributions on the Traditional side, they do grow tax deferred. Like I said, they were pre-tax which ultimately means upon withdrawal when you go to take the money out, everything that you’ve put in and everything that it’s grown to (so both of those) are all taxable to you. Everything you take out of it is taxable to you when you make those withdrawals.

Moving to the Roth option, this first became available in May of 2012. You actually, there’s not an automatic option to it. The traditional side is what your money’s automatically put into if you make those TSP elections. You must submit a form, a contribution election form, to actually create the TSP Roth option. Like I said, it’s the after tax portion of the TSP, which means money’s going in after tax, so upon withdrawal, eligible withdrawals after 59 1/2, everything that you’ve put in (so all the contributions and what it’s grown to) are all tax free. So that’s a tremendous benefit. One of the quirks to this, though, is you have to sort of plan this out and make sure you’re in the plan for at least five years in order to take advantage of that tax free income.

So what do they look like side by side? Which one should I do? That’s the question that a lot of employees ask us, is should I do the Traditional or should I do the Roth? Well, there’s no easy answer and it really depends on the individual, depends on tax rates, depends on a number of different things. But the employees are allowed to make contributions into both of the accounts simultaneously, so that’s important. So you could do partial amount into the Roth, partial amount into the Traditional, remember those matchings are going into the Traditional anyway. The funds are separated for tax purposes so when you got to make a withdrawal, you have to make equal amount withdrawals out of each account.

The Roth, just kind of in a nutshell, again that’s taxed now, so to get the same effect of a dollar amount, more money’s gonna be taken out of your paycheck based on your individual tax bracket to actually get to the same net amount going into your TSP. But you do have those tax benefits later. On the Traditional side, tax deferred growth, it does reduce your current tax liability, but the contributions and the growth are all taxable when you withdraw. So just kind of a recap there.

One, you have tax benefits now, which is on the Traditional side and the other, you have great tax benefits later. So making a choice, you have to determine things like, well what is my income now? What is my tax bracket today verses what it may be when I retire? But it’s such an individualistic type thing, you have to look at your scenario now, what you believe tax rates are going to do, but we’re more than happy to sit down with each individual one on one and come up with an actual plan. But for me, what I recommend to most people is, take advantage of both of ’em.

Matt: Yeah.

Jeremy: Because if you don’t know which one to go with today, do ’em both; ’cause it’s nice to have two buckets, a taxable bucket and a tax free bucket when you get into retirement. That way you’re covering both bases.

So across the country we get a lot of federal employees that ask, “Well what funds should I choose? How do they work? What are they made up of?” One of the things that we make a point not to do is actually recommend one specific fund over another because every individual has different points in their career. Their needs change, the risk tolerance change, things like that, and their goals change. What we aim to do is really educate the federal employee on what the funds are, how do they work, what are they made up of, the risk tolerances, and really where to find more information.

So Matt, can you tell us a little bit about what fund options do we have inside TSP?

Matt: Yeah, first of all, I will say that we always want to guide people to TSP.gov. They have great information on the funds and different charts and stuff that you can read to get really detailed on it. But the first fund inside TSP is the G Fund, and it is the only fund –the only fund– in TSP that is fixed. That’s an important word because that means any money that you’ve put into the G Fund and any money that it has grown, you cannot lose. So it is the only fund inside TSP that cannot go negative. You cannot lose money in the G Fund. It’s only issue to TSP, it’s government security’s issue to TSP, and it’s got a pretty good return for a short term fixed fund. The rest of the funds are all variable funds. That means they can lose money based on the market.

The F Fund is the next fund and it’s considered safer than the rest of the funds because it’s bonds, it’s got government corporate, mortgage backed bonds. But you do have volatility there based on interest rates. There’s a lot of things that come into play on the bonds, but it’s traditionally more stable than the rest of the funds (the C, S, and I). The C Fund, your index to the market, is the S&P 500, they’re medium to large size companies in the US; so they’re more your blue chip, your more solid US based companies. The S Fund is also US companies but they’re more medium size, a little bit more aggressive here. In the I Fund, you’re actually invested in companies and corporations overseas in 21 developed countries.

Also, lastly, a few years ago, they came out with the L Funds. The L Funds are kind of confusing because they’re not their own fund, they’re a blend of the five funds here: the G, the F, the C, the S and the I Fund. You can choose the L Fund that makes sense for yourself. All it is a combination. You can pick like the L 2020, L 2030, L 2040 and now the L 2050, and all you’re doing there is picking the horizon and it’s on an algorithm where it’s automatically reallocating your funds to become more and more conservative, which we’ll talk about in a little while. So the L Fund is the G, the F, the C, the S and the I Fund, and you have different L Funds that you can choose from.

But Jeremy, these funds are extremely cheap, so go into a little bit of details about the funds here.

Jeremy: Another thing to note are the fees for all the funds. That’s not a typo. That is .029%, which is basically nothing. I think we’ve talked about the match and what a great benefit it is for the Thrift Savings Plan, and a great benefit it is for a federal employee investing money. The first 5% ought to go into the Thrift Savings Plan, right, because again…we’re talking about doubling your money, correct? But there’s a tremendous argument on anything over and above the 5%, just because of these fees. If I’m trying to go out in the outside world, in the private world outside of a 401k or doing an individual IRA and having to go through an investment advisor or something like that, the fees may be upward of 1 to 1.5%. This is a tremendously cheap program that the federal employees have access to and it’s just something that we definitely want to make a point to mention. Very cheap funds and can pay dividends over time.

We’ve talked a little bit about the details of each fund and kind of what they’re made of and how they work, and we’ve also mentioned that some are extremely conservative, being guaranteed; and some are a little bit more volatile. Tell us what that means and what these funds performance looks like, Matt.

Matt: Well, according to TSP.gov, if you look at the returns of each one of these funds, the first thing I want to point out to emphasize what you said, the G Fund has never lost money. If you look at from 2008 to 2017, if you go back to the inception of the G Fund, it’s not gonna be red. Any of the red numbers that you see, that means that’s what it lost that year. But if you look at the average, it’s been 2.38%. So you’ve got a good safe return there. Now some of those can tell you what the returns are. The G Fund, you don’t know what the return’s gonna be. It can change every year, but you’re not gonna lose money.

The rest of the funds, you can see at least one year in the last 10 years where they’ve lost money. The F Fund lost money in 2013. Its average is a little higher than the G at 4.27%. The C Fund has averaged 8.55% the last 10 years. The S Fund’s actually been the best at 9.37. That doesn’t mean it will be the best the next 10 years. The I Fund has not performed very well, 2.23 has been the 10 year average on the I Fund. Typically, the more aggressive a fund is, the higher return opportunity long term you’re gonna have.

So the G Fund is your safe fund, the rest of the funds are gonna lose money. Now why is this important? Again, we’re not telling you where to put your money; but let’s say for an example like in…past 2008, or if we go back to 2001, 2002, you can continue to go back, the market has periods where the market drops. If you’re about to retire during one of those periods, it can make a big impact on your retirement. So if you’re getting closer to retiring, talking about the L Funds, the reason why TSP automatically puts more and more of your money back into the G Fund, is to protect the nest egg that you’ve built inside TSP as you get closer to retiring. In fact, I think if you pick the 2030 like you said, in the year 2030, I believe they have 74% of your money in the G Fund.

Jeremy: That’s correct.

Matt: So only 26% of it is at risk at that point, that’s TSPs guidance on automatic fund. So if you’re about to retire, it’s important to start protecting your money.

Jeremy: How far out from retirement would you actually look at that?

Matt: Great question. Everybody is different, depends on your risk tolerance. It’s good as you get closer and closer to retirement to take more and more of your retirement money and reposition it or position it in a safer spot that you can start protecting it and protecting this asset that you’re building.

Jeremy: The G Fund is a good spot for that while you’re working, correct?

Matt: The G Fund is the only fixed fund inside TSP, not to say the others are bad, but that is the only fixed spot. The rest of the funds can lose money. Now let’s go the flip side, let’s say you’re young and you’re just now getting into the federal employer. You’re a new federal employee. You can take the losses, if you have a 2008 and you’re in your second or third year, it’s okay ’cause you have plenty of time. So we’re gonna talk about that in a minute. But having your money in more aggressive funds when you’re younger is traditionally the advice that’s given. As you get closer to retirement and you want to start protecting what you’ve built.

There’s three things, Jeremy, that you can control inside TSP. The first thing that you can control is time. Start today. So here’s an example. If you contributed for 10 years making $85,000, the 5% and you’ve got the 5% matching with a 2% COLA, and let’s say you average a 5% return. If you did it for 10 years, you would have $118,000. If you do it for 20, it would be 338. If you do it for 30 years, the same thing, you would have $728,000. The only difference is, is how long you contributed and how long you let your money grow.

So the first thing you can control to a degree is time. Start today, don’t delay, is the point. The second thing you can control is compound interest. What funds are my money in, inside TSP? Again, what you saw for the 10 year history is not necessarily what’s gonna happen in the next 10 years. But if you do look here, if you made 85,000, you got 2% COLA over your career, you contributed 5%, you had a matching of 5%, you got a 3% return for 30 years. You’d have $531,000. But if you did the same contribution and you were in a more aggressive fund and maybe you could average around 8%, you would have $1.2 million. That’s a big difference in what funds you choose. So this shows the difference in choosing the funds, and again: everybody’s different on the funds they should choose.

The next thing is contribution. How much you put in. Remember, 5%’s the matching but you can do more. So if you took the same employee for 30 years with a 2% COLA, putting in 5% with a 5% return, $728,000, that number we saw earlier, but let’s say you could do 10% or 15%, over $1.4 million dollars if you can do 15% for 30 years. So the third thing you can control is how much you put in.

So to recap, you start today, you can control time to a degree. The second thing is what funds you choose. Are you gonna keep all your money in the G Fund? Or are you gonna consider diversifying the little bit to try to get a higher average return? The third thing you can control is how much you actually put into TSP and it’s up to you. Again, if you can do just one of these three items, you can make the difference in your retirement because it’s in your control. We run into very few people that can actually do all three, and do all three good.

Jeremy: What happens if you do?

Matt: Well, we call it a trifecta.

Jeremy: A trifecta?

Matt: What’s a trifecta? That means you did time, contribution, and you chose the right funds over your career. This is what it looks like. An $85,000 career with a 2% COLA for 30 years, contributing 15%, no catch up provision, 5% matching with an average of 8% return over the 30 years: $2.4 million.

Jeremy: So you’re a multimillionaire just by planning in advance, having the right education and the right guidance, and being smart.

Matt: We’re running into more and more federal employees that are at least doing one or two of these things right. We’re seeing more and more people that are setting themselves up for an easy retirement.

Jeremy: For the younger folks, as far as what’s changing within the federal employee benefits and Thrift Savings Plan, this is even more important than ever, correct?

Matt: Yes it is. This is something again that you own. We’ll talk about some of our other videos, some of the legislative issues that are going on, but this is money that is yours. Some of the things that are discussed about the pensions and things that we don’t know what will happen with social security in the future, we’ll talk about on some of those videos. But this is your money, so take advantage. If you can do all three, you can hit the trifecta, great. If you can at least do one out of three or two out of three, it makes a big difference.

Alright Jeremy, so we’ve been talking about the accumulation vehicle of TSP, which is one of the best accumulation vehicles out there. Once you retire though, we get tons of questions on what do you do with your TSP once you retired because now you’ve moved to the de-accumulation stage of your life. So if you don’t mind, let’s touch on the TSP withdrawal options.

Jeremy: Matt, this is a frequently asked question and it’s because it has such a tremendous impact for the individual not only today but throughout the remaining years in retirement. What options do you have in actually removing the money from the Thrift Savings Plan? You have a single payment, so you can take a portion or the full balance out of the account, but currently you’re limited to that choice: one time ever. If you actually make a second request for a payment, a lump sum payment out, currently they’ll close your account and send you a check for the remaining balance. A little bit of a negative there.

The next option you have is TSP monthly payments. Again, this is kind of used to supplement your FERS pension or your social security amount, so you can actually select a monthly payment. You can in effect, tell TSP what you want to withdraw on a monthly basis, but currently you can only change that one time a year. It is a nice feature but the negatives for that are, you don’t have the option to change it very frequently; but then it is going to set a timetable on your money for when it’s going to run out. At a certain point the funds will deplete because remember, you’re still invested in the G, F, C, S or I Funds because it’s still in TSP.

So what if you’re worried about, you want a monthly income check and it needs to supplement your other two buckets of retirement, your pension and your social security, but you don’t ever want that to run out. You have a huge fear of running out of money, what do you do? Well TSP actually has an annuitization option. It’s with MetLife. Basically what it is, it’s a lifetime payment for your entire life and you will continue to receive that payment as long as you live, much like social security or pension.

So far Matt, we’ve talked a little bit about how to accumulate funds throughout your career and how good of a benefit TSP is and what your advantages are and things like that, but what does it look like to a federal employee when they go to take money out?

Matt: Yeah, it’s a transition in your life, because while you’re working you’re trying to build this asset in TSP, but once you retire, now you’re in what’s called a de-accumulation stage and you have to make a plan. Inside TSP currently, there’s a few things that we’re gonna talk about that you can do, but we have another video on the TSP modernization act: where TSP’s actually improving a lot of these withdrawal options. But first of all, the first thing you currently can do inside TSP is, you can take a single payment. Now the good thing about it is, you can take however much you want. You can take the whole thing out. You can take a portion of it out. But you’re only allowed to do it one time. So if you retire and you go buy a new vehicle, a new truck, then three years later you have an emergency and you need 10 or $15,000, you contact TSP, they say, “We’re sorry Jeremy. We’re closing your account. Here’s the rest of your money.” Because it’s not like a bank where you can just reach and grab money as you need. Now they are gonna improve that, and you can watch our TSP Modernization video.

The second thing you can do is you can say, you know what? My CERS or my FERS pension and my social security’s not enough. I need additional checks every month to help pay my bills. This is where the TSP monthly payments are great. You can tell TSP however much you want. “I want $100 a month, I want $1,000 a month.” You get to pick how much you want a month, but they only allow you currently to change it one time a year during open season. So you’re locked in for 12 months on that decision, so if you get to July or August and you have an emergency, too bad. You’ve locked in how much you’re gonna draw out on a monthly basis. And, your money’s still in the G, the F, the C, the S and the I Fund. So the number one fear of retirees is running out of money. So this strategy, you actually can run out of money a lot faster when we spreadsheet it and look at it. You can run out of money a lot faster than what you anticipate without proper planning.

The third thing you can do is you can say “TSP, I want a check for the rest of my life.” You can annuitize it. What TSP does is they take your money and they give it to Metropolitan Life and MetLife says, “Okay Jeremy, based on how old you are, whether you’re wanting income for you and your spouse, we’re gonna tell you how much we’re gonna pay you a month. You don’t get to decide. But we’re gonna pay you for the rest of your life. You will never run out of money again. ”

Now you’ve got to be careful. There’s lifetime only, which pays the most, and it’s actually what TSP shows on their statements. If you look in the top right corner where it says your lifetime income, they’re doing lifetime only. The downside to that, you died one month after you retired and let’s say you had $300,000 and you got one check and you passed away, the money’s over.

There’s other things. You can do cash refund, you can do ten year certain, you can also do joint for you and a spouse. So you have a lot of different options. You can do level income or you can do increasing income and we’ll talk about that a minute but you gotta remember, this is irrevocable. If you choose this option, you will never run out of income again, but you never can change your mind.

Now, if you’re still working – the great thing about TSP, even if you’re older than 70 1/2 – you don’t have to do RMDs. But once you retire, if you’re older than 72 or once you age into 70 1/2, you have to take RMDs which is Required Minimum Distributions where you’re required to start taking money out of your TSP. Now, you can do a combination of these, which is not a bad strategy either. Now one of the things that you also are allowed to do with TSP is you can do a transfer or a rollover to an individual retirement account or another account, but you need to make sure that you put it into the right account. That’s where we specialize in this. We help people understand what their pension’s gonna look like with FERS and CERS. Let’s look at your social security, your spousal stuff, and let’s figure out what you need to do.

So we’ve got one comparison because each individual we meet with is a different story. They’re needing to accomplish a different need, but I’ve got one example here that I want to show. What we did based on TSP.gov, we took TSP with $300,000, a 60 year old employee that’s gonna retire at 65 or maybe his spouse is gonna work five more years, and they don’t need income for five years. This is a real story and you’ve got $300,000 and inside TSP, if you defer it for five years and you choose your level income and you do a cash refund… If you remember earlier, if you choose Life Only, the money dies when you die? Well let’s say in this example you’ve got children. You want to make sure your children get the money if you pass away first. This is…cash refund in this scenario is not what we would recommend. Level income would pay you $19,380 at 65 for the rest of your life in TSP.

They have another option called Increasing Income and if you’ll watch our inflation video, you’ll see why this is extremely important to consider for your retirement planning, because of the cost of goods go up. So if you’ll look right here and year one it’s $13,452, which is less than 19: you’re taking a big pay cut, but you’re gonna get the raises with the CPI increase up to 3%.

Jeremy: Okay.

Matt: So it takes up until year 13 for the increase in income to catch up with where the level started.

Jeremy: 13 years later, I’m 65 years old in this example, starting to take the income, so that puts me at 78 when I actually quote, “break even” and start receiving the same amount of income per year that I could’ve gotten-

Matt: But you haven’t broken even ’cause those 12, 13 years prior you were getting less.

Jeremy: Oh.

Matt: So it actually takes longer to catch up with what you let the TSP, MetLife annuitization option before you actually catch up.

Jeremy: Oh wow.

Matt: But the other thing I want to point out is in the account value, you see where it’s zero. Remember, we said this is irrevocable. If you choose this option you forfeit the right to your money that you had in TSP to get this check monthly, paid to you for the rest of your life or your spouse’s life. So what we did in this scenario is United Benefits, we shop out to try to find who’s gonna have the best alternative in your scenario, and we’ve positioned an individual retirement account, an IRA, where we can accomplish the same thing of getting a lifetime income that you wanted inside TSP.

By using the same $300,000, turning it on at 65 (one example illustrated) and it paid $20,736 and this was not level, it’s increasing. We can index it, let’s say to the market, and you can get raises that exceed 3% a year, so you may have…some years you get more than 3%, and you may have some years you get no raises. But the point is, you’re not gonna be kept at 3% so if you look at the comparison; but time 13 years, now you’re getting $36,000 a year. And in 30 years, you’re looking at a $75,000 a year income. But the other key factors, if you look at the account value, the account value is still there. You’ve got $282,000, the following year it looks like you’ve got around $298,000 and that’s gonna change based on your gains; but if you needed to reach back in and grab your money, you haven’t annuitized your money where you forfeited it. You still have access to it.

Jeremy: That’s actually a really nice feature. So it provides me the lifetime income, but I still have access to the funds?

Matt: Yes. So you can accomplish the lifetime income ’cause if you do run out of money, which you see in your 13, you have run out of money. So if you do pass away at that point, there is nothing for your beneficiaries.

Jeremy: Okay.

Matt: But, you’re still getting $36,000 year with raise opportunities and we’re projected in 30 years to be getting $75,000 year, even though there is no money there, you don’t run out of income. Once you’re retired, income is king.

Jeremy: The thing I’m gonna say first is that these are very large lifetime decisions as a federal employee, and they’re very scary. So it’s important to sit down with a professional. They can guide you through these, not only define the options that you have, but actually give you some guidance on, how does this decision impact me versus another? Some of the things to remember are that if you choose some of the annuitization options and things with the Thrift Savings Plan, it’s no longer with Thrift Savings anymore, it’s actually with MetLife. The level option is a great option and it’s a high paying dollar figure and it looks attractive, but it loses purchasing power because it stays stagnant over the course of your retirement.

The alternative is the increasing option, but it has its drawbacks. It’s capped and it’s tied to the CPI. What does that mean and how does it work? We’ll sit down and go over that with you as well. The main point of emphasis here is anything in regards to the TSP annuitization option there and the lifetime income, is it is an irrevocable lifetime decision. And we ran into countless individuals that have said, “Oh, I wish I would’ve seen you guys before I decided to do this. I’d already made the decision and I can’t turn back on it now.” It’s just important to know what you have available currently –which we’ll go over– and then what’s available outside. Right, Matt?

Matt: Yep, that’s right. To show you an example, everybody’s different. If you look at the screen here, for this example, the TSP level would pay you $581,400 over 30 years. The TSP increasing, if you got 3% every year, would pay you $640,032 over 30 years. In the United Benefits program, we talked about here for that IRA, would pay you over $1.2 million. So you’ve increased your retirement income over the next 30 years by over $639,000. That’s a huge increase. Matter of fact, that’s approximately double what either one of the TSP options are.

Jeremy: That’s amazing.

Matt: Everybody’s different, so we want to meet with you. Our job is to be the expert that can sit down with you and understand the FERS and the CERS and your social security and go over your spousal options, then help you position part of your TSP to get the most that you can out of it.