What You Need to Know About Standard Form 50

When it comes to retiring as a federal government employee, there’s one form that’s absolutely indispensable. Known as Standard Form 50, or SF-50 for short, this is the official form used by the government to determine your retirement eligibility and calculate your pension.

The SF-50 is a legal government document and the only official proof that you worked for the government during certain time periods. You should receive a new SF-50 each time you change federal government jobs or have an increase in step, grade or pay.

What’s on Your SF-50?

Your SF-50 will include your service computation date, federal retirement system and the amounts that will be used to calculate your high-3 salary. (Read more about the high-3 salary calculation here.) All of your SF-50 forms should be kept in an official personnel folder (or OPF).

In addition to pay and position changes, the SF-50 includes information about your federal government retirement plan and life insurance coverage, as well as a number of different personnel actions such as:

  • Appointments
  • Separations
  • Placement and return to duty from non-pay status
  • Conversions to permanent appointment from temporary appointments

You’ll want to look especially closely at the following sections of your SF-50:

Blocks 9 and 17 — These are Special Provision codes where accuracy is paramount. Mistakes here can end up delaying retirement.

Blocks 12c and 20c — These include the numbers that will be used by OPM to calculate your high-3 salary.

Block 30 — This specifies which federal government retirement system you’re participating in.

Block 31 — This indicates your SCD. Note, however, that this is not the date used for your pension calculation — your RSCD is used for this, and it doesn’t appear on your SF-50.

Gather All of Your SF-50s

It’s important to keep all of the SF-50s that you receive throughout your federal government career. Before you file your retirement paperwork, you should make sure you have a copy of each one of them and then review them carefully for possible errors.

If you’re missing any SF-50s, request a copy of your OPF from your agency’s human resources department — this should include all or most of your SF-50s. If any are missing, you may need to contact the National Archives and Records to obtain them (click here for more details). Once you have all of your SF-50s, arrange them in chronological order by their effective date with the earliest on top and review them for accuracy, focusing mainly the “three Cs”:

Correct — Is all the information accurate and complete? Look especially closely for typos since simple mistakes like this have been known to derail carefully laid retirement plans.

Creditable — Does the employment described actually count toward your retirement?

Continuous — Are there any breaks in service, gaps in your SF-50s or missing dates between period of employment?

Ideally, you should review your SF-50s as soon as you receive them. But if you haven’t done this throughout your career, it’s critical that you do so as you approach your retirement date. It’s not unusual for mistakes on SF-50s to result in retirement delays.

For example, one federal government employee was told one month before his planned retirement date that he wasn’t eligible to retire because six months of his employment was cited as not creditable on one of his SF-50s. It turned out that the problem was a simple typo on his SF-50. The employee ended up having to work an extra month while the issue was resolved.

An Essential Part of Retirement

Standard Form 50 is an essential part of retirement planning for federal government employees. Therefore, make sure you understand what’s on your SF-50s and how to review them for accuracy before your planned retirement date.

https://www.minervaplanninggroup.com/2021/03/17/what-you-need-to-know-about-standard-form-50/

How Should You Invest Extra Cash?

If you find yourself with extra money at the end of the month or quarter after all of your expenses have been paid and you’ve made your regular retirement account contributions, congratulations! Now for the next question: should you be investing the extra cash, and if so how?

Following is a look at some of your options to help you decide the best course of action for your situation. But first, make sure that it is indeed excess cash and there aren’t any hidden or forgotten expenses lurking. If there are, devote the excess funds to these expenses first.

  1. Establish an emergency fund. A study recently conducted by the Federal Reserve found that four out of 10 Americans don’t have enough money in savings to cover a $400 unexpected expense. This drives home the importance of establishing an emergency savings fund you can easily tap when unexpected expenses arise, such as a car or appliance repair.

Everyone’s situation is different, but many financial experts recommend saving up between three and six months’ worth of living expenses in case of a financial emergency. This would likely be enough not only to cover an unexpected repair, but it could also help tide you over if you lose your job or experience a significant reduction in income.

Keep your emergency cash in an FDIC-insured savings account, like a bank or online money market account, so you can withdraw funds quickly and without penalty when they’re needed. You won’t earn much interest but that’s not the goal with emergency savings. The most important thing is that the funds be kept safe and liquid.

  1. Save for a short-term need. In addition to an emergency savings fund, you might also establish a savings fund for specific upcoming need. A car is a good example.

Instead of financing your next car, you could use extra cash to start a car savings fund. For example, let’s assume a monthly car payment of $400. If you put this much money in your car savings fund each month, in five years you would have $24,000 saved up to buy your next car. This could be enough money to buy a quality, low-mileage used vehicle or it could be a hefty down payment on a used vehicle, thus lower your car payments significantly. Beyond that, being able to pay cash means you have on less thing to haggle over when buying your car.

  1. Invest in alternative investments. There’s a whole universe of investments that go beyond stocks, bonds and Treasury issues. Known as alternative investments, these include real estate, art and collectibles, hedge funds, private equity, precious metals, commodities and cryptocurrencies, among others.

Alternative investments can provide more diversification to your portfolio. They usually have a low correlation with traditional investments so they can help smooth out portfolio volatility. Some alternatives can also provide a hedge against inflation and a safe haven during times of economic uncertainty. As your net worth grows, alternatives can help you spread your assets out among a wider range of different types of securities, thus reducing volatility. One note of caution when it comes to alternatives – they are typically less regulated and can be more complex than investing in stocks and bonds. So, before you invest in alternatives, make sure you have a clear understanding of the investment.

  1. Beef up your retirement savings. It’s never a bad idea to devote extra cash to a long-term financial goal like saving for retirement. If you haven’t maxed out contributions to your IRA, 401(k) or other retirement savings account for the year yet, consider putting your extra cash toward this.

In 2021, you and your spouse can each contribute up to $6,000 to a traditional or Roth IRA (or $7,000 if you’re 50 years of age or over), up to $13,500 to a SIMPLE IRA (or $16,500 if you’re 50 years of age or over) and up to $19,500 to a 401(k), 403(b) or 457 plan (or $25,500 if you’re 50 years of age of over). If you own a business or are self-employed, you can contribute up to $57,000 (or 25% of compensation) to a SEP IRA.

  1. Pay down debt. If you have high-interest outstanding consumer debt, paying this down may be a wise use of excess cash. But how should you prioritize paying down debt vs. saving or investing the money? Start by comparing the carry on your debt to what you could earn by saving or investing the funds.

For example, if you’re paying 19.5% interest on outstanding credit card debt, it’s pretty obvious that you’ll be better off paying this down than putting excess cash in a money market account earning less than one percent. But the answer isn’t as obvious if you’re trying to decide whether to pay down a 30-year mortgage with a low interest rate or invest the money for the long term, where it could generate a higher return than you’re paying in mortgage interest.

It often comes down to how you feel personally about debt. Some people just have an aversion to borrowing money and want to avoid debt or pay it down as quickly as possible regardless of what “the numbers” say. On the flip side, leverage can be a powerful financial tool if it’s used wisely and responsibly and you’re comfortable owing money.

As fee-only financial advisors, we can help you analyze these and other options and make the best decision regarding what to do with excess cash based on your situation. Book an introductory call with us or send us an email if you’d like to talk in more detail.

https://www.minervaplanninggroup.com/2021/01/29/how-should-you-invest-extra-cash/

High-3 Salary

How to Calculate Your FERS Pension and Disability Benefits

As a federal government employee, you have access to the Federal Employees Retirement System, also called FERS for short. This system includes a pension as well as disability retirement program.

What is Your High-3 Salary?

To determine your FERS pension and disability benefits, you’ll start by making a calculation that’s referred to as your high-3 salary. This is the highest average basic pay that you earned during any three consecutive years while working for the federal government.

Basic pay includes your base salary plus any salary increases you receive from which retirement deductions are withheld, as well as shift rates and locality pay. It doesn’t include overtime pay, bonuses, military pay, cash awards, holiday or travel pay, or cost-of-living adjustments (COLAs). The amount of your basic pay is indicated on your Standard For 50 (SF50) and your Leave and Earnings Statement (LES).

For most federal government employees, the highest three years of basic pay are the last three years that they work. In this case, go back three years from the date of separation to determine the starting date for your high-3 salary calculation. If you have had breaks in service, the three years don’t have to be continuous — you can join two or more separate periods of service together.

For example, let’s say you plan to retire on April 1, 2021, and have worked for the federal government continuously since then. If the past three years were your highest earnings years of basic pay, the starting date for your high-3 salary calculation would be April 1, 2018. If your basic pay during these three years was $70,000, $75,000 and $80,000, then your high-3 salary would be $75,000.

Determining Your Pension and Disability Benefits

Once you’ve calculated your high-3 salary, you can determine the amount of your pension and disability benefits. The FERS pension calculation is as follows:

High-3 Salary x Years of Creditable Service x % Pension Multiplier = Annual FERS Pension

If you’re under age 62 on the date of separation or 62 years of age or over and have less than 20 years of federal service, your pension multiplier is 1%. Assuming a $75,000 high-3 salary, your annual FERS pension would be $14,250 with 19 years of service.

However, if you’re 62 years of age or over on the date of separation and have 20 or more years of federal service, your pension multiplier is 1.1%. Assuming a $75,000 high-3 salary, your annual FERS pension would be $16,500 with 20 years of service.

The pension multiplier is the same (1.1%) for the FERS disability calculation if you’re 62 years of age or over on the date of separation and have 20 or more years of federal service. But if you’re under 62 years of age when you begin receiving disability benefits, you will receive 60% of your high-3 average salary minus 100% of your Social Security benefit for any month when you’re entitled to receive Social Security benefits during the first 12 months. After this, you will

receive 40% of your high-3 average salary minus 60% of your Social Security benefit for any month when you’re entitled to receive Social Security benefits.

Once you turn 62, your benefit will be recomputed using an amount that essentially represents the benefit you would have received if you had continued working until the day before your 62nd birthday and then retired under FERS.

How to Increase Your Pension Benefits

The best way to increase your FERS pension benefit is to continue working past your earliest eligibility date for retirement if you’re able to do so. This will increase both your length of service and your high-3 salary.

Going back to our hypothetical example, let’s say this individual worked five years longer, giving him 25 years of eligible service. This also boosted his high-3 salary to $80,000, thus increasing his FERS annual pension benefit to $22,000.

Don’t miss this critical point: By working an extra five years, this individual increased his FERS annual pension benefit by $5,500. If he spends 20 years in retirement, this adds up to an additional $110,000 in pension payments.

Plan Carefully

Your decision about when to retire will have a lasting and long-term impact on your retirement finances. So give this careful thought and plan to spend time crunching some numbers before making a final decision. Book an introductory call or send us an email if you’d like to talk about your situation in more detail.

https://www.minervaplanninggroup.com/2021/01/28/how-to-calculate-your-fers-pension-disability-benefits/

San Diego Window Replacement Companies

Window Replacement

One of the nicest investments you can ever make for your house in San Diego would be to fully replace your old, drafty windows and doors. With the suitable new doorways and doors, your home will certainly gain from improved energy efficiency and increased property value. And better still, stunning new sliding glass doors and window replacements can greatly compliment and enhance your unique home design for years to come. Of course, to find the perfect match, you will have to hire San Diego windows replacement experts that are proficient in fitting all types of doors and windows. So how do you pick the right firm?

 

– First, look at the standard of the job. A good company will show off its extensive range of imported and local windows, doors and shutters so it is easy to compare prices and quality. Furthermore, reputable window replacement San Diego firms have their own showrooms where you can view and measure every one of their products and then discuss the project personally. You may bring your own samples and have them quantified by a local San Diego tech. The most reliable companies have highly trained technicians who know how to properly match each item.

 

– Next, look at the window replacement San Diego cost list. Compare the features and materials used for each product, in addition to the installation costs. Ensure that the price list includes the installation fee, which is generally not included in the first quote. It’s common for some companies to charge additional installment fees when labor is added to the bill. Look for a house window replacement cost that does not include additional hidden charges.

 

– Assess the warranty coverage. Your San Diego window replacement window installers’ guarantees will often cover any defects in workmanship and materials used during the installation procedure. But, it’s important to be aware that the very best guarantee isn’t a guarantee that you won’t encounter difficulties. It is also important to be aware of what the window installers will do if there are flaws or if the job isn’t done correctly.

 

– Always inquire about renewal references. Good window replacement San Diego firms ought to have the ability to offer you at least three renewal references. Ask about these references from several distinct companies. When you contact the references, ask about the installation procedure, quality of workmanship, the durability of the windows and patio doors, and whether they would recommend the firm for your next installment. This gives you an notion of the quality of the work the business supplies.

 

– Once you get your three references, then take some time to call each one. Only accept renewal quotes that come with a private phone number, or even a site link that you may use to request a written quote. Request a renewal price that includes a guarantee on all of vinyl replacement windows installations, the materials used, the quantity of labor charged, and the length of the warranty. All these are the only components of a good vinyl window installation which needs to be included in a renewal price.