Jamie Shilanski  00:46

Welcome back, everyone. My name is Jamie Shilanski. I’m a registered financial consultant here at Plan Your Federal Retirement. And today we are going to be talking about Furlough, and I do mean low, l, O, W, how low can we go as a country to not get this together in time for federal employees to receive not only their benefits but their compensation? So we want to make sure, in this podcast episode, we’re going to be asking some of the furlough questions that we have been asked by clients and the federal employees that we work with across the country, to make sure that you have good answers. Now, as with everything that we do here at plan your federal retirement, this is 100% about controlling what the controllables are. We don’t get to decide when Congress goes back, waits in the middle and starts establishing compensation, passing a budget and getting people back to work. What we do know is what we are telling our clients and how we have to navigate, not only this furlough, but when the next one happens, because it’s a government position, it will happen. And I know that a lot of people, especially at a time when you’ve been out of work for a couple of weeks, are feeling a lot of uncertainty pressure about whether or not they should stay in the government service. What are the pros and cons? Should they do a deferred retirement, a postpone retirement? Should you do a break in service? If you have questions like that, please, please jump online at plan-your-federal-retirement.com. Make sure you’re reaching out to us as a sounding board, and we will walk through the pros and cons of where you are at in your career specifically, that’s what we really want to make sure we’re not listening to what we call water cooler advice, but you’re working with a professional and going through that information. All right, so let’s dive into this. This has been only a topic of discussion for me as a professional who works with federal employees, but this has also been paramount in my life, because I am surrounded at home by federal employees, as all my neighbors and about 180 degrees around me are those and so, you know, I’ve got one neighbor. I was retired military, went back as federal employee, as a civilian, to have a second career, and did not take the fork in the road, because, while he met his minimum retirement age, doesn’t have enough credible years of service. So he’s got questions. He’s on furlough right now, and wants to know, great is this I’m going to count towards my actual retirement as we get down the path. My other neighbor works at the government budget office and is not getting paid, but is required to go to work, and so as an exempt employee, she has questions too, am I allowed to still take my vacation? How is all of this going to work? So most of your FAQ should have been answered by now, because this this has now gone on longer than two weeks, so most federal employers are Googling everything they possibly can. The Office of Personnel Management, OPM came out with a furlough guidance. You can jump on our website and hit the link for that, or go to opm.com directly and get that as well if you need to. But let’s dive into some of the most frequently asked questions that we’re getting from federal employees. All right, so number one, this is my advice to everyone once they start earning money, period. No matter what their job is, no matter what their age is, you gotta have a 911 and what is a 911 account? A 911 account is an emergency savings for when life hits the fan, because it will at some point in our life, some emergency is gonna happen that’s going to impact our ability to earn income. Right now, it’s the furlough, but it could have been a car accident. It could have been, you know, a belabored birth in which you had to take longer leave than expected. It could be a mom and dad going through Alzheimer’s and just getting them into some type of living facility, something in life is going to happen in which you’re going to have an economical setback. And if you start learning this principle very early on in your career and throughout your life, maintaining it while you’re in retirement, you normally weather storms a little bit easier. In fact, while we meet with federal employees, so many chapters to the conversation has been, God, I have this emergency savings. Thank goodness we’re in a better position. I know many today. So what’s a good number to have in a 911 account? Now I keep you calling it 911 which means emergency. But the reason I call it 911, is that in my bank account, literally, nickname says 911$ sign and then the amount of money I need to have inside of that account. Now, if you are actively employed or not, edging towards retirement, and that’s sort of on a long term horizon, I want six months of as is expenses saved in that account. So I’m going to give you an example. Let’s just say that it costs $6,000 a month to run your household, and I want six months. Great. I want $36,000 saved up in that account. Now here’s also what I know when you go through a genuine emergency, when you go through a genuine emergency, you don’t have Netflix, ecock, Hulu, prime, Disney, all of those. Bringing back all those subscriptions. If you can some of them, you’re locked into a per year. But we start bringing down our expenses, which is why, when we work with clients, I want three budgets. I would see Bible budget, which is, I’m going to trim all the fat off of this I possibly can. To get me down to the nitty gritty. I want the as is budget, what are you actually spending with no justifications? No, yeah. But it was so and so’s birthday, or normally, we’re not that social. But there was this concert that came to town, whatever that is. So your as is budget, what you’re actually spending. And then third one I want is your ideal budget. Maybe it’s a little bit more than what you’re spending right now. Maybe it’s a little bit less, but what is the ideal that you would like to spend if you had the opportunity to design your lifestyle that way? Now, when I have this in mind, and I’m saving for my 911, account. I’ve got my survival, but I’m planning on putting enough cash aside for my as is, as is, if, if I don’t get a paycheck for a month, can I continue to weather the storm? Or am I going to have to call the bank and tell them, Hey, I can’t make my $700 a month car payment this month? What can you help me with? And I get a deferment. You know, if you don’t want to be in that position, best way or to get shade from a tree is to plant that seed a long time ago. And so whether you are at the end of your career, middle of your career, beginning your career, or if you’re raising coming into the workforce, you’ve got to have emergency savings set aside. I share with you my hack of 911, I like to call it that. Why? Well, because if I have a savings account and my girlfriends call me up and they say, Hey, we all want to go to Hawaii. What do you think? I say, Oh my goodness. Check my savings account balance and say I was just saving for that. That’s amazing. Let’s do it! So I’m really conscientious of knowing that I can’t dive into that money. I can’t use it for vacations. I can’t use it when the credit card hits too high. I can’t use it to pay off medical expenses, necessarily, unless those were emergency expenses. It just is that word play that helps frame how I treat my money, because when I work with clients, I’m very intentional about how we dedicate our money. Do you work too hard. Have your money not work for you. Now, can that money be inside of savings, a money market or something? Yes, money not be if it’s emergency savings. It can’t be in your GSP. It can’t be in an IRA. It can’t be in a Roth IRA. It can’t be in a brokerage account. Can’t be anything tied to the stock market for emergency savings. Why?Well, when we want the full money out of the market, out of the market, what is it? Is it be when markets at our all time high there is a possibility that they could be at all time lows. So, when emergencies happen to us, when we have to pull funds out, or one of our hard rule money you need to spend or attend in the next five years does not belong invested in the stock market. I’m going to give you an example why we feel so passionately about that right now. 2008, 2009,  10-11-12, 2008 401 K’s, went to 201 Ks, your TSP was could have been cut in half. Potentially. You had a lot of people return to the workforce or delay retirement, because when the 2008 global financial crisis hit, nobody was prepared. And then, as we look at things, as we look at the landscape of what we know about the markets, we know that they’re going to go up and down. We know that they’re that they have the probability of rebounding, like what we saw from 2008 to where we are today. However, it did not happen overnight. And if this emergency had happened to you in 2008 and we’re around March, how devastated would you have been? So. Really particular about that, but making sure you have adequate cash reserves super important, making sure that those aren’t involved in sort of some long term investment strategy, but rather more immediate, accessible funds that you can use. 

Your retirement should be the most exciting next chapter of your life. But that doesn’t happen by accident. That happens with you taking the careful time consideration and planning to make sure you get all of your retirement. And I guess one of the things I love about my job is being able to sit down with federal employees or look out in the future with them, find out what that ideal life is going to look like, and then how do we plan for that today? What are the tweaks we need to make in your life to make sure you’re getting the most out of your benefits, whether it’s understanding your federal pension and making sure you get paid for all the years you’re supposed to when do we turn on Social Security, 62, Fra 70 and change? How do RMDs affect our taxes? What’s the best way to maximize our tsp so we never outlive our money, but enjoy a great lifestyle along the way? These are just but a handful of the questions that you need to make sure you’re answering as you’re preparing for your retirement. Our team specializes in helping one on one, federal employees achieve their retirement goals and answering those questions and so much more. So if you’ve ever wondered what the answers to those questions are, then now is the time to make your appointment to meet with one of our specialists today, the best way to do that is go to plan-your-federal-retirement.com/call. That’s plan your federal retirement backslash call, and you can book your consultation to sit down with one of our specialists in your federal employee benefits and financial planning to make sure you’re getting the most out of your benefits. This is the time that you have to make sure you’re dotting the I’s and crossing the t’s to get all of the money that you’ve earned for your retirement. So take that action today. Sit down with someone that understands what you need, what you want, and can help you achieve those goals. Until then, Happy planning.

All right. The next thing that we want to talk about is making sure in the federal employee that you’re protecting your benefits. So as a federal employee, the very, very best benefit that you have, and I look at it with green in my eyes, because I’m so envious, because I am not a federal employee, and I don’t get this exceptional benefit is your health insurance. You have amazing health insurance. You have the greatest program in the country. It is phenomenal. And I know that because I know what I pay for lousy insurance as a civilian outside of that network. So when we look at our health insurance, and this is really important too. If you are ever had a conversation with anyone in finance or anyone in retirement planning, anyone that’s a benefit expert, quote, unquote, and they start talking about ways that you could forfeit or give up your health insurance, I want you to pick up your belongings, stand up and run out of their office, run, don’t even walk. Don’t even end the conversation politely, get up and leave, because they do not understand what your benefits and how good that they are. Have I been super clear your best benefit is your federal employee health benefits, super important, so I want to make sure that you’re protecting that during a furlough. Now, what does that mean? That means, if you’re not getting a paycheck, how are your premiums getting paid? That’s, you know, when you roll in FEHB, it’s an automatic deduction out of your paycheck that goes in towards whatever FEHB program you’ve enrolled in, self, self spouse, self family. So you want to make sure that that coverage is continued. Now, the way that it is historically worked with furloughs is that all missed premiums are going to be collected retroactively once the pay resumes. So you really want to watch that and keep track of it, because one of the things that’s going to happen is, you’re used to getting your paycheck, you know, every couple of weeks, but when we have this retroactive pay that comes into impact, the numbers get different. You know, there’s a lot of catch up. There’s corrupt, plus we have all these debits, so you really want to watch that. And that goes to me, to my next tip, which is really tracking your retroactive pay. So when you’re budgeting for these delayed paychecks, you also want to keep, like, a spreadsheet or a calendar of showing when you stop receiving pay, what the pay should be, and make sure it’s documented, and make sure you’re also allocating for when those premiums are going to be deducted. So for example, and I’m just going to use a round number here, let’s say that your pay is short, you know, $10,000 and so you’re like, Oh, I’m going to get retroactive pay, and it’s going to have that $10,000. Well, pause. That’s the gross number, and it’s probably needs the deductions for your health insurance premium and all the taxes and other things like Federal Employee Group Life Insurance that you might be enrolled in right now, your TSP contributions, or getting to the end of the year and TSP doors closed 12-31 so making sure you’re making your retroactive payments into your TSP to make up any catch up contributions you can and those are fully funded. And be patient when you’re talking to your HR. Be patient when you’re working through payroll things. This isn’t fun for those offices either. They are going through this too. So they are really your colleagues doing this, not their opponent, okay, all right. And then you really need to maintain communication and professional readiness. And what does that mean? I, you know, when I talked about some federal employees, you know, there’s sometimes I hear the sentiment of, well, I’m not checking my email because I’m not getting paid right now. And that is true. You are not getting paid right now. You don’t have to go back to work. Quote, unquote, should you be checking your emails and not creating a big storm for you when you get back? Yeah, probably because, in reality, based on, you know, the acts that were passed, you know some time ago, that you’re going to get retroactive pay, most likely. Now, is there a conversation about not having retroactive pay? Sure, you know, we have an administration that loves to stir stuff up right now, and the likelihood of you getting retroactive pay is greater than the likelihood of you not getting retroactive pay, but either one, we control the controllables. We watch and we plan for what comes ahead, all right? The other question that I’m getting from federal employees, because sometimes I got some very busy bees that are just bored, is whether or not they can still go on vacation. You know, there’s a readiness that you have to be prepared for, for being called back to work. So some, you know, good rule of thumb that we have been using is to make sure that you are within, you know, six to eight hours away from your job site for when you are called back to duty. So this doesn’t mean necessarily you grab that biking or on my brochure and go take that European cruise if you didn’t already have it planned, because you could be called back to work sooner than you know, and you want to be ready for that. Now, if you live in Seattle and you want to go over to Coeur d’Alene, yeah, that probably makes sense. You could probably do something like that, because your ability to be ready and return to work is going to be feasible. All right. The other part that I get is, Hey, can I take an outside job? You know, I’m super bored, or maybe I’m tight on cash and I need something to do, because I can’t control what Congress is doing. So I do want to control something. This is where we see a lot of federal employees take a few gigs. They sign up for Uber meet. Seems to be the number one lift. Start driving around. Sometimes I see waiters, waitresses, those kind of things, seeing a lot of small part time jobs that are real discretionary, that they could pick up and put down if they want to. Can you have a part time job during a furlough? Yes, you can, providing that you are still abiding by the ethics standards. So what does that mean? Well, if you have, you know, the type of job where you have a lot of federal ethical restrictions, make sure you’re talking to your HR and get approval before you take something. So, you know, this is normally for individuals that aren’t allowed to work for some type of publicly traded company or somebody that has a government contract. So for example, if you work for the FAA and they have a contract with a satellite company, you can’t get furloughed, and then all of a sudden, call that satellite company and say, Hey, do you guys want to hire me on a temporary basis? You probably should run that by your HR before that happens. And then the next part of this one is, is really about mental health and staying really conditioned, because the times of uncertainty don’t bring out the best in me. They don’t. And so I’m the type of individual that says, Okay, I need to know what I can control. What do I need to let go of? And then what is my plan? How do I make the most of this time to be as productive as possible? So making sure that you’re making the list, you’re coming up with a daily routine. You’re not just hanging out watching TV, wondering when all this is going to happen, and I hope you’re not just watching the news to go the back and forth between the different pundits, because remember, their job is sensationalism. Their job is entertainment. That’s their job. So they’ll get ratings based on your views. So they’re going to be sensational. Make sure you’re thinking about that as well, but maybe there’s some things that you haven’t gotten order that you’ve really wanted to. One of the real easy things one of my federal employees is doing is we talked about this for years, and they just didn’t have time to get it done. But we live in a world that I like to call subscription there’s subscriptions to everything. And so one of my Hacks is I grab a credit card and that exclusively is used for when I have to sign up enroll in a subscription. Maybe that’s all trails, maybe it’s Netflix, whatever it is that’s going to give me Spotify, whatever it’s going to give me that subscription cost on a monthly basis, I put it on that one credit card for my entire family. Why one credit card for the entire family? Because I have worked with a lot of clients that didn’t know they had two Netflix accounts. And no, they just automatically log into one of them, and they didn’t know they were paying for two. Now is that a substantial amount of money? No, it’s not. Do you want to give extra money to Netflix? Probably not, you know, so maybe that is a little housekeeping, things that you wanted to do. As far as that goes. This is also great time to be looking at your estate planning. You know, are there things that you were supposed to get done when it comes to estate planning? There are four elements in our world. Three apply to everyone. The fourth, one applies to most people, but not all. The four elements. Those are your durable power of attorney, making sure that if something happens and you becoming fascinated, who is going to make financial decisions on your behalf. This, to me, is the most powerful document you’re ever going to sign. Why? Because, God willing, your coma and you better be in a financial position you feel comfortable waking up too. All right. The next one is the advanced medical healthcare directive. You know, don’t put the burden on your loved ones to make your final decisions. Make them ahead of time. Have you done those things? Those two documents in most but not all states are free. A lot of them build them into the statutes, or they’re available at the hospital in their complimentary you can go to a hospital’s website, or you can call their admittance office, and the admission office will give you a copy of those, because they really like to make sure that people have those filled out before they go into surgery. So these are things that you can get done, and they must be notarized in most states, and notaries are really easy to find. Go to your bank or go to UPS or FedEx store. The UPS charges you know, last time they had to do it, they charged $2 documents, you know, but maybe these are part of the housekeeping that you can get done. The last two documents, Last Will and Testament, one for each individual. Fourth document doesn’t apply to everyone, but applies to many people that we work with our trust. You know, making sure you get your trust done, making sure you’ve got all your beneficiaries updated. What are the things that you’ve said – Yes, I need to get around to doing that, but I just haven’t done it yet. This is the time to really capitalize on being able to control those things, being able to get those things done so you have some element of productivity while we wait for all of this to be figured out. This is Jamie Shilanski, planyour federal retirement. We are here to answer your questions as a federal employee and how your benefits work with your greater financial plan.