What does your financial advisor say? Do you have one?

No.

Sounds like you need to find one. Especially as you're getting closer to retirement. You can find one by asking people you know for recommendations, the certified financial board - https://www.cfp.net/, etc. I wouldn't be planning retirement without one.

There are so many things to consider. Instead of asking strangers on the internet who don't know details about your financial situation. But be sure you use a fiduciary financial advisor. They're required to put your interests about theirs, like not getting you into investments where they make a commission.

https://www.forbes.com/advisor/investing/what-is-a-cfp/

Sephia, she does know specifics about my financial situation and works with federal employees. She gave me information about health insurance, medicare, and what to expect from my federal retirement, which is about what I had figured using the formula on my own. I just don't know about Fidelity and annuities.

She works for Freedom Federal Consultants, which I can't find out anything about except on their webiste. No independent reviews except for employees reviews on what it's like to work there.

I would interview several advisors. This person should explain annuities to you if you don't know. Interview a few and find one you feel comfortable with, one who will answer your questions and explain things. When I began working with mine, we had an almost 2 hour meeting where I had to fill out some forms about myself. My advisor wanted to know everything - what I thought about money, how I spend money, my tolerance for risk, what my retirement hopes and dreams are, my hobbies and interests, etc., etc. There is so much for a financial advisor to know about someone to know how to properly/correctly invest for people. Anyone can tell you information about health insurance, medicare, etc., but without knowing YOU and what you want out of retirement, they aren't getting a full picture.

Is the person you spoke to a fiduciary?

I have no idea.

It's important that you know this. If you're wanting someone to manage your money for you, you need to know if they have your best interest in mind. A financial advisor who is not a fiduciary could invest in things that benefit THEM, where they get a commission for selling you something. That may not be in YOUR best interest. My financial advisor is a fiduciary - he only makes $$ when my investments do. And of course I want my investments to grow. So it's in his best interest that he pick the right investments for me.

Kathsgrdn, I know very little about retirement planning. From the little you have written, I see a lot of red flags. The words guaranteed returned are terrifying. They are a lie, and illegal. Furthermore annuities are gross to me. Words like federal sometimes lead people to a false sense of security. Buyer beware and know that one way or another you are paying people. You are choosing a way of paying people which puts your interest in jeapordy.

Add to this, we are entering a difficult period of the economy. Unless you are very financially secure, I would allow more fleibility in my retirement planning as we contract our economy in orer to tame inflation.

Get a real financial advisor, whom you pay up front for her knowledge.

thanks Zalco.

Thank you Zalco, you're saying this better than me. "Get a real financial advisor, whom you pay up front for her knowledge." Bingo. Not the retirement planning HR person, or a person you walk off the street to a bank. There's so many ways to find a real financial advisor. And so important, like you said, because of the difficult period of the economy that we're entering.

The company is a government contractor. The government actually pays this company to teach us about all aspects of retirement. They also do in person workshops for goverment agencies. So, they aren't just an off the street company.

Kathgrdn, all that means to me is someone paid enough money to someone somewhere to obtain this lucrative deal for themselves.

If you're only being taught the aspects of retirement, you still don't have a financial advisor. You attend a workshop, learn some information, then what? Who is going to monitor and properly invest your retirement funds? You need to google financial advisors, financial planning, etc. Attending a workshop isn't long-term financial planning/investing.

Fidelity is a well-known investment company. I have known some who use it and are as satisfied as anyone can be right now.

I just cancelled it. Thanks for all your comments. I should've investigated before jumping in. I feel like she withheld the information that it was an anuity when we were talking. I've been anxious ever since I did it.

The thing with financial advisors, though, how do you find one that isn't getting paid by a compnay for suggesting certain products?

You find a fiduciary financial advisor. They don't get paid commissions for recommending certain products. A fiduciary only earns their salary when YOU the client's investments make money. They are legally required to put your best interest first. If your investments don't earn, they don't earn a salary.

Google "fiduciary financial advisor." You can learn what their legal responsibilities are to clients and search for one.

https://www.feeonlynetwork.com/how-to-tell-if-a-financial-advisor-is-a-fiduciary/

Kathsgrdn, I don't know the answer. I will check with a friend who knows much more than I do and get back to you. I am pretty sure there is a designation of Certified Financial Planner, which involves test passing and fiduciary responsability.

Sorry, sephia, I wrote my post before seeing yours.

Zalco, no worries. I figured you may have. But good to check with your friend. I certainly don't know it all! Just my own experience coming from executive friends from my employer before I retired. 😊

Thank you, Elmer That's a great explanation.

Yes, Elmer

The TSP now gives you the option to move all or part of it to an IRA at 59 1/2 years of age or do a withdrawel.

"Qualified" plans of any flavor - 401 (k), TSP, IRA, profit sharing, pension, so-called Keogh plans for self-employed, or whatever - are beneficial during working years because "pretax" money goes in. If it's a salary reduction scheme that allows you to put 5% of your pay into a plan, then what you pay tax on is 95% of your pay. If it's a personal IRA, you take a tax deduction (within the allowable limits) for what you put into the "plan" each year.

When you take money out of a qualified plan, that amount becomes taxable income.

When a plan allows (and most do either along the way or at retirement), you can move the money in the plan's account to a different plan sponsor. If your TSP or 401(k) is at Fidelity, you can move the account to a different plan sponsor (Vanguard, Charles Schwab, etc). That's called a "Tax Free Rollover". Once the funds leave the plan in which they accumulated and are moved to another financial house, the resulting account is called an "IRA Rollover account". If the move is done within prescribed rules, the movement is tax free and the distribution out isn't taxable because it went back into a similar and restricted type of account elsewhere. There used to be a limit of only so many rollovers permitted per year.

When money comes out of a qualified plan in one movement and is kept by the owner, that's called a lump sum distribution and is taxable. Normally, it's better to trickle out the money, taking no more than what you need to spend, like monthly, so that what's not needed to spend at the moment can continue to accumulate free of current taxability.

Roth IRAs in this sense are not "qualified retirement plans" because what goes in is after tax money.

I don't know much. My 401k is a Roth 401k. I put 20% in, after tax obviously, and my employer puts 15 %. Its through Fidelity and I am pretty happy with it as far as how it has performed. I am more than happy to let them decide on how to invest it.

Me again. This is just something that anyone nearing retirement age should look at if you are thinking about switching from a public to a private plan. Look at how your individual state treats retirement money for taxation from a public source.

Only as an example because I recently talked to a financial planner who was not aware that in my state, Missouri, public pensions receive tax benefits that regular pension holders do not. I only receive a partial benefit and the top limit changes each year. The benefit this year is a maximum of $38K. After the standard deduction and the extra for being over 65 for some people it can mean little or no taxes. My advisor was wanting me to switch plans to something tax deferred until I pointed this out to him. My TSP and all other governmental sources are included in this amount and it includes RMD's received from qualified plans. For singles after income reaches $85K and married $100K you lose some of the benefit. Each state is different

Kathsgarden while this may be agency specific ask your HR to run a retirement projection if the woman who you spoke to did not give you one. Making an assumption you are FERS and eligible for SS. Not certain if SS still sends annual statements but also check to see what you benefit amounts are at certain states.

If you're the same person as a maifleur from the past, long time no see and welcome back.

I can't offer any advice except my own experience with a tax sheltered annuity. (I also have positive experience with Fidelity for my 403b, but that is a different company than F&G.) I also have never been involved as a government employee, except for my year working at Ohio State University hospital - but there my retirement was with the state employees retirement system, no choice. So, I don't know in what ways your TSP is the same or different.

My hospital in CA offered a choice of TSA plans (IIRC that was the original format of 403bs). I participated as much as I could afford, and kept my investments in it even after I moved to Ohio. It has served me well - I could and still can choose the mix of investments, like stock, bond, or blended funds, quite similar to my 403b, but the advantage of the TSA is that I can put some or all of my money into a fixed return fund - which has been paying 3.5-4% interest the past several years when the returns of some bond funds lagged behind. My Fidelity advisor even told me to take advantage of that!

When I am ready to take money out it works the same as the 403b or my IRA - I am not forever locked into it in the same way that purchasing an annuity would be, and there was no need for me to roll it over into something else before I retired.

It sounds like what you were offered is more of a traditional annuity contract, not the same as my TSA. My TSA is through Lincoln Financial, which also sells annuities, life insurance and such to individuals; my TSA is a group retirement plan though, and not an individual annuity that I purchased.

It also sounds like your "advisor" didn't explain the rules of your current TSP clearly to you. You need to understand that well before you can make an informed decision about what changes to make, and when. She sounds more like a sales agent than advisor.

Does your employer have a contact number for someone at your current plan to talk to? I can talk to someone at Lincoln when I have questions about managing my investment there.

I agree with Elmer that if you have an account with Fidelity or T. Rowe Price (and maybe other firms), they offer free tools to help you decide how to invest although the choice of funds is still up to you. They also have articles on their websites to help you understand the ins and outs of managing your money (as does Vanguard.com). Once you have a large enough account balance, then they also offer free one to one discussion with an advisor. I've gotten good help that way, especially about investing for the long term - a projected time in retirement of 25-30 years.

I am a retired federal employee.

They have financial advisors give retirement seminers who are not looking out for your best interest. i really believe the federal government should not be allowed to let for profit advisors give the talks. im sure many people have been scammed by them. Many have high fees and complicated plans.

i dont think you need to get a financial advisor, i personally don’t t trust most of them.

i use a forum called Early Retirement Org. Filled with great and knowledgable people.

Kathsgrdn i just moved most of my Tsp money into the G fund. I’ve lost almost $20,000 this year. I’ll rearrange it when the market goes back to sonewhat normal

I don't really know much about dealing with Fidelity as your personal Financial Advisor. But,

I do know that they handle the Retirement Accounts for some large Companies and make

the pension payments to their employees, etc. So...can't say I worry about them "grabbing

your Pension Check, or whatever, and running to South America with it", anytime soon.

If you want a Financial Advisor, you need to have someone close and available. If you

have questions of any kind, etc., you need to be able to go in and talk about it and get

the answers you need. Guessing and asking random questions on the internet is probably

where the saying, "a fool and his money are soon parted" started. ;)

Seriously...all the best in getting these things straight in your mind where you feel at ease

with your investments.

Good advice about hiring an advisor. if you are retiring from the federal government, my advice is to save as much as you can to fall back on while you wait for your retirement to be processed and don’t retire at the end of the year. It is the busiest time and they fall way behind. I retired on January 1, and didn’t get paid for my annual leave until the end of April My first pension check got deposited on June 1.

Remember that F&G is a life insurance company, which sells annuities.. This is NOT the same as Fidelity Investments, which is a mutual fund company. Entirely different products.

Fidelity Investments is in the same universe as Vanguard, T. Rowe Price, as well as brokerages that also deal with no-load, low-cost mutual funds, like Schwab.

For fee-only financial planning, look for a Garrett Planning Advisor. Expect to pay perhaps $2000-$2500 of an in-depth assessment of your financial life.

https://www.garrettplanningnetwork.com/

Interesting discussion. The bank I work for recently switched all employee HSA accounts over to Fidelity. They still offer the HSA accounts to customers ???

Remember to keep different things separate, angelaid.

An HSA is an arrangement/plan described in the law to allow the accumulation of money to be used for medical and health related expenses. The HSA needs a trustee to oversee its operations and the money contributed needs to be, of course, in some kind of financial account, a separate one for each participant. Many employers offer an optional HSA employee benefit and some will make contributions on behalf of employees. Both the employer contribution and the employees contribution are pretax money. The plus these offer is that expenses for health and medical items, including co-pays under insurance plans and even over the counter stuff, becomes the equivalent of tax deductible because the money that goes in to the accounts does so pretax.

Another way to express what you said is that your employer has an HSA benefit plan that employees can participate in. It moved the "contract" or arrangement to manage employee HSA monies to Fidelity. So, Fidelity got the business. If managing HSA plans and the underlying accounts for each individual wasn't in Fidelity's portfolio of offered services, what you describe wouldn't have happened. Once in, there is most certainly a range of Fidelity funds to choose from where the money will be placed until withdrawn. An added bonus is that income and gains enjoyed by the money in an HSA is not taxable.

@Kathsgrdn, US Treasury I Bonds are currently a relatively safe investment paying decent interest.

I don't want to presuppose anything but the "planning" task faced by a soon to be retired person isn't necessarily different from money management done during one's years of employment.

Household budgeting involves managing incomings and outgoings. Don't spend more than you have, Have money set aside to expect the unexpected with homes and life in general. Budget for travel and other fun things you like to do and spend money on. This is a spreadsheet or pencil and paper exercise to plan for ins and outs.

Use savings in plans as sparingly as possible but when needed. Assume how long you will live and don't use up your funds before then.

People who don't know until the end of the month whether their spending has been properly restrained may need help to chart out their financial future. I think most people don't. A few thousand dollars isn't a lot of money but the "planners" have clerical staff doing data entry into software and then they spend a few hours with you to explain what they did. That's not a lot for the price. But I do understand that I have a financial background and I understand that even basic stuff may be unfamiliar and beyond the experiences some have. If so, spend the money once and learn from it.

Or, buy a few books instead and bone up on what you need to know. This is a good reminder that retirement is a major life change and isn't something that everyone handles well. In addition to planning finances, it's equally or more important to plan out how to spend your time in retirement to be happy and deal with the transition. There are books for this too, as well as life counselors. Most people can get the ideas they need from books.

The bank I work for recently switched all employee HSA accounts over to Fidelity. They still offer the HSA accounts to customers ???

Yes, Fidelity still offers HSA account to anyone who qualifies under HSA guidelines even if the individual does not have any other investments (IRA, Roth IRA, mutual funds, stocks…) with Fidelity.

Keep your money in your tsp. it has low fees and a variety of funds to choose from. No different than what you are doing now.

you just have to decide how much you want to withdraw each month and it should be no more than 4 % of your total yearly.

Thats really all you need to know at the beginning.

Read some books, check the Early Retirement Org forum and by the time you retire in two yrs, you will feel more confident in your ability to manage your retirement.

if you do go with a financial advisor, ALWAYS ask about their fees.

Maifleur, she did give me an estimate and I figured it up the night before and it was nearly the same. I am also signed up for the SS website so I had that information projected for several different retirement ages. Contacting my HR is not easy to do. You call and they never answer or call you back when you leave a message. I really dread having to do this paperwork with them when the time comes. Also, are you saying you kept your TSP account when you retired?

Zoe, yes, I've heard it could take awhile to get that first check. I'll be prepared for sure.

I'm glad I cancelled it and feel really stupid about letting her talk me into it. Even while I was doing it I started feeling anxious. I never have anxiety!

I wouldd avoid annuities at all costs. They are expensive. I love Fidelity and have used them all my investing live. That's 40 plus years now. Vanguard is another excellent company. My sister just moved her invetments from an expensive financial planner to Vanguard and is paying 1/3 of one percent to get a plan in place. You can opt out of the planning part at any time thus saving that expense and just buy and hold as they say. Just keep in mind that the market is very volatile right now and is way down from its previous highs or just six months ago,

Thank you Elmer for the excellent explanation. You have confirmed my thought that there is no need for a financial advisor in my case as my retirement money is in mutual funds and I’ve been educating myself on saving and investing for the past past several decades. With retirement on the horizon I’ve debated if we should consult a financial advisor, but have decided not to since we have a clear understanding of what we have have, need and spend.

Kath - IMO you did the right thing by cancelling the transaction. If Fidelity and Guaranty are offering an annuity, I’d be very cautious. It may be appropriate in some cases but it also reduces your financial flexibility by tying up a large chunk of your retirement savings.

Another thumbs up for the community of ”Early-Retirement dot org”. i learned a ton from reading there & asking questions. I had been rather illiterate in this realm & was sold an annuity inside a IRA by so-called financial advisor (he was not a fiduciary) which was a dumb move, like wearing a belt and suspenders). With their help i was able to get out of it without penalty. Annuities are expensive & have hidden fees. 2% might not sound like much, but over the life of your retirement it adds up. You can do much better with Vanguard or Fidelity, both have low fees for $ management. Ours is 0.03% at Vanguard.

Kathsgarden I did keep my TSP account both for the tax reason I mentioned above and when I retired in 2008 I thought because I was once again having nebulous health issues I thought it would be easiest for my husband to handle if I died first. Contrary to the rumor that existed even then while there will be changes like the recent stuff you do not have to withdraw anything until it is time for a RMD.

Having had money in the L, S, and I funds at one time or another I now do a split between what was G fund and C fund. I do dislike that the G fund is now called a cash account where at one time was called a government bond account different from F fund which is a general bond account. I can live with name changes. Having retired on September 30, 2008 the day the stock market took a major dive while I lost half of my account before things became better the current dip is not as concerning as it could be. Something that might not be clear is your money is invested in shares and not just a stand alone pool of money. Except when you withdraw or change funds the number of shares do not change only the value of those shares. When you change from one fund to another the shares you have in the fund you are leaving internally will be sold and that money used to purchase shares in the other fund.

If you have not already done so you should check to see if the account shows a named beneficiary if you want one. You will be asked about beneficiary's both for any life insurance and for your TSP account. You will need your beneficiary's social security number. You can of course provide nothing but if you name one or more once you pass and a death certificate is presented it immediately passes to them. You can also do subsidiary beneficiary's in case the first named ones have passed on. Trying to think what I was asked to provide and I may have been asked for marriage certificate but you can call and ask.

If you have any questions you can message me or post here. I do not often look at Houzz. Good luck on your retirement and depending on your agency you do have the right to tell them you have changed your mind up to turning in your badge and signing out.

I agree with Elmer.

First I read an excellent book from the library (sorry that I no longer remember the title or author) written for laypeople, that explained nearly everything I needed to know to manage my money, in good clear language. Then I continued to read personal finance magazines, consumer's reports, and the educational offerings from online brokerages.

I did make the mistake once (long ago) of agreeing to that "comprehensive financial analysis and recommendations" for a 1% of assets fee - and found that I was told nothing that I didn't already know, in fact they mostly regurgitated the information that I had given them in a pretty printed report, and then made some rather inappropriate, for me, investment suggestions (this was not one of the well known online brokerages recommended in my previous post.)

I suspect that our situations have be a bit similar in terms of lifetime income, perhaps savings. If that is at all similar to mine, you absolutely do not need a "comprehensive financial plan" IMO. You need to sit down with pencil & paper, make a list of what you have, where it is, and how it will be available to you once you retire. Draft out your current budget and what you anticipate in the next year or two. Make sure you have your financial documents in order - will, durable POAs, house documents. Then go to one of those recommended, free websites and start using their tools to make your own plan. For example, I was always more comfortable with investing a larger share in stocks, and riding out the ups and downs - so after answering the questions in the website tool, it suggested a certain mix of stocks/stock funds and bonds/bond funds. Now I am retired and more interested in sheltering more of my savings from the swings, so that same tool suggests a more conservative mix. And I figured out that, once my DD was grown, I did not need life insurance.

These are the sorts of things one of those comprehensive plans cover. Unless you are dealing with a need to shelter from high taxes, or have (or want to have) unusual and more risky types of investments, or have several million dollars to manage, IMO you don't need to shell out thousands for basic advice.

IDK if this still applies because it was an option put to us years ago. The attorney drawing our wills and trusts suggested that we could take out life insurace with our DS as beneficiary. We'd pay the premiums. Under the law at that time, the beneficiary would not owe state (Illinois) or federal tax on the settlement. We didn't do it...and we haven't died (!)...so I don't know if this is still a logical option or superior to the way our trusts are set up to pass to DS and family. I would think that there would be some legal prohibition on taking such action "in anticipation of death within X years". I know there was similar wording involving the creation of some types of trusts.

Your comment touches on a couple of different rules, chisue. My knowledge is basic and now non-current, it isn't in the heart of the work I used to do but I do have some understanding of it.

Some years ago, federal gift tax and federal estate tax were separate. There would be times that the tax due if a transfer were made as a taxable gift could be less than if the transfer were made as an inheritance at death. The "transfer in contemplation of death" rule restored as an asset of the decedent subject to estate tax anything gifted within three years of death. Since the law changed and the gift and estate taxes are now fully integrated, other than changes in valuation that occur over time, a taxable gift made the day before death will result in the same overall tax burden as if not made then but passed along as an inheritance. I believe the gift in contemplation of death rule still has some bearing under law when someone is challenging a bequest and arguing that a prior transfer was made to deny their right to something they otherwise would have gotten upon the owner's death. Something to talk with a lawyer about if applicable.

As far as life insurance, remember that only assets owned by a decedent are subject to estate tax. That may sound trivial but therein lies the applicable rule and opportunity. If someone other than the decedent owns a life insurance policy on that person's life, and pays the premiums, the policy payoff at death goes to the policy owner, not the decedent, and so play no role in that decedent's estate tax obligation. There are a number of ways to separate ownership of a policy from the person covered, including what;s called life insurance trusts. The key is that the premiums need to be paid by the purported policy owner, not the covered individual.

Life insurance is insurance, not a lottery ticket or a horse bet with a big payoff. When the insurance proceeds don't fill an essential role (as with funds to raise children or pay for a survivor's living expenses), there's really no need for it.