#98 Do You Really Need Life Insurance in Retirement?

Micah Shilanski 00:46
Welcome back to the Plan your federal retirement podcast, I’m your co host Micah Shilanski
and with me back is the amazing Tammy Flanagan. Hi Tammy, how’s it going, ma’am?

Tammy Flanagan 00:56
I’m doing great, Micah. I’m glad to be here and we’re gonna talk about something of interest to
everybody today. I’m pretty sure they may not know they’re interested in it, but I think they will
be once we talk about it.

Micah Shilanski 01:08
Boy, this is one of those topics Tammy I think you just nailed it right that we have to talk about
that everyone has a little bit of interest on we might have some pre disposition, some negative
thoughts about it, right, but it’s something we got to talk about because it’s so important part
of your retirement plan.

Tammy Flanagan 01:23
It is important and it’s something you really can’t hide your head in the sand over because if
you don’t do it today, you don’t know what’s gonna happen tomorrow. So there’s no time like
the present to take care of. This is kind of a little bit of estate planning when we talk about this
topic of insurance.

Micah Shilanski 01:39
Yes, right now you could have been thinking man we’re gonna talk about it’s March Madness
probably taxes right. Okay. Well, you know, we love talking about taxes and it could be but no,
it is insurance. Right? We need to talk about this in this life insurance, not just health insurance
side. So before you tune us out, at least hear us out for a little bit that there. There’s things you
need to make sure you’re considering. And I know Tammy, one of the things that I always talk
to my clients about and I think you do the same is, look I’m not biased whether you get
insurance or don’t get insurance. This is a math question. And you need to understand what
you’re choosing. And by choosing not to do something, you’re making a choice not to have the
insurance, know the consequences of those actions. And sometimes the consequences are are
negligible. It doesn’t matter. Sometimes the consequences could be devastating to the
surviving spouse. And just because you’re both maybe you’re both retired both have pensions
or you’re both retired and you have different income sources, you may not mean you need the
same life insurance amount for each spouse, there’s been many spouses that one spouse
doesn’t really need life insurance, but the other spouse does. So we got to be weighing those
things.

Tammy Flanagan 02:46
That’s right. I hear people sometimes say they’ll be like, Oh, we’re both the same age or my
husband’s older than me, so he’s gonna die first. It’s like we don’t really know the future do we?
So we have to I always tell people to say remember that right now, there might be two of us.
But someday there’s most likely going to be one of us. And so when you think about whoever’s
the last spouse standing or how is that loss of income when you pass away or vice versa, going
to impact you financially? Will you be able to live in the same house and pay the taxes and the
utilities and insurance and everything else it takes to live in that same house? And you might
say, Well, no, I’m gonna move to somewhere smaller. Well, that’s gonna cost money too. And
maybe you’re luck is still keep up your same standard of living, you’re gonna maybe you want
to do some things and travel so you really have to think seriously about what does it take to
live on my own? If my spouse passes away, so estate planning or life insurance planning for a
married couple is one thing. And then the other thing I’m sure you get this too from your single
folks. Why do I need life insurance? I’m single, you know me, myself and I so I’m not financially,
you know, covering anybody else. So do I really need to have any life insurance? So I think
those are two of my big questions that I get from people are different ways of analyzing this.

Micah Shilanski 04:06
You know Tammy, some of the other things that I hear is well, well, I’m gonna retire so I don’t
need life insurance anymore, because I’m not working. And that kind of leads to Well, I don’t
have an income to replace. And it’s like, Well, you do though, right? You may not have a
working income, but you’re gonna have a pension, you’re probably gonna have Social Security.
And when you pass away, what happens to those, what’s the survivor going to need from that?
And then I know we get another question that comes up, which is like, is FEGLI a good deal or
not?

Tammy Flanagan 04:34
Yeah, because it is a group policy, you know, you get FEGLI. When you’re first hired, it’s easy
because you can sign up for it by filling out a little form. And when you’re first hired, there’s no
medical underwriting. So there’s a lot to say good about FEGLI. But over time, Is it really your
best option? So I think that’s an important thing to consider. Because even though it is group
insurance, it does cover everybody in the group, regardless of their health. So you’re paying
the same premiums as somebody who’s maybe got terminal cancer and signed up for during
an open season. So you’ve got to take that into account. You know, I always say FEGLI is the
best deal in town if you’re not insurable. But if you are insurable, I think you should shop
around I think there might be a better fit for what you need for your life insurance needs.

Micah Shilanski 05:23
I agree, but Tammy, just as you alluded to, right, this all starts with number one, your life
insurance needs, right? This isn’t a rubber stamp that says everyone needs X amount of
insurance not the case at all. This is your unique situation. How much life insurance do you
need? If you need all. And you know, Tammy, the way that I like to approach this with clients is
it’s super simple. It’s not complex. Sometimes it’s work because you got to put some stuff in
there. But it’s pretty simple that if we have Bob and Sue, right, and if Bob passes away, what
lifestyle impact does that have on Sue? Does she have enough money coming in to keep her in
the same lifestyle she was when they were together? That’s the question. And if the answer is
yes, that you have enough income, you have enough assets, then great maybe you don’t need
life insurance. But if the answer is no, because again, pension got maybe cut in half, because
that’s the max survivor benefit, you could leave the Social Security check could have gone
away entirely. So that’s less income to the surviving spouse, if that surviving spouse who in this
case does not have enough money to maintain her standard of living. Now we need life
insurance even into retirement. What are your thoughts on that?

Tammy Flanagan 06:32
Oh, I agree. And I always when I teach this in class I use myself as an example. It’s kind of
funny, but it’s true. I think of my husband and I and I’m the spender. Believe it or not, even
though I talk about money and planning for retirement saving, I’m a saver but I also I can spend
money pretty well. And my husband is just the opposite. You know, he’s the one that’s very,
very thrifty. I’m the spendthrift. He’s both he’s thrifty. So I always joke that if if I die first he
gets a raise because I stopped spending, you know, I spent everything I make the most of what
he got away, so don’t just be fine financially. He’s got his government pension. That’s pretty
generous after 30-36 years of federal service. So I need to help you okay. But if he dies first,
I’m in big trouble. Because there goes half his pension right, because I only get the survivor
benefit. I have social security, which is nice, but you know if I can delay it till I’m 70 that will be
something to talk about. And then the only other thing left is savings. And so we’ve saved
enough knowing that that’s the case with us, and we haven’t touched our retirement savings
yet. Even though we’re both past age 65 We haven’t needed to because while there’s two of us
were okay. And I’m still working right I’m still young enough, young 66 year old that I can still
make some income. So I’m not going to touch my savings. I’m not going to take my Social
Security in terms of planning for the future. So I don’t think that I would need a lot of life
insurance if he passed away because I have these other plans in place. But I think that’s what
anybody has to do is to say what if it happens, what have we done to plan for that someday
event that can happen tomorrow? It can happen 20 years from now?

Micah Shilanski 08:14
Yeah, I’m 100% with you, right? Everyone’s situation is a little bit different. I love that you and
Brian are looking at it realistically, right? Yeah. And this is what I can say the clients it’s not
good or bad. It’s what’s your real situation. And now we need to look at it. I have one client and
he’s a birder and he likes to spend 20 to 30,000 bucks a year on birding. Well, when we’re
doing the survivor plan, we don’t need if he passes away, she doesn’t need that extra 20 to 30
grand she’s like, I’m not doing these trips, right. So that’s a realistic thing. But Tammy the
mistake that sometimes I find I want your opinion on this is that clients or people because
insurance can be a touchy subject, they’ll start justifying all these things they don’t need but
they actually do. They’re like, Oh, well it cost us 8000 are getting math right, right. 8000 holder
right fingers $8,000 a month to live. Well, that’s two of us. If one of us dies, you know what?
She’ll get along fine on $5000 a month. Okay, great. Where’s that 3000 A month going? Well,
she just doesn’t need that much money or he doesn’t need that much money. I’ve heard it
both. ways. And so generally, I don’t like to argue with people. And so I’m like, okay, great. Well, if that’s the case, what I’d like to do you guys are spending 1000 A month right now, let’s
go ahead and tighten our belts up for the next three months. Let’s save that $3,000 a month
and you guys let me know how it goes. They’re like whoa, whoa, we don’t got $3,000 a month
to save. Like, okay, well, if you don’t have that much money to save now, how on earth are you
going to do it when one of you passes away? So that’s our realistic test that we can do. If you
come up with a number and says great, we can live on less. Awesome. Go do that for 90 days
and if you do it, you bank the money Life is good, okay, you can live on less. But if you can’t
then have an honest conversation that says no, this isn’t that amount of money. We need
more. So we might need to refigure our survivor benefits.

Tammy Flanagan 10:08
And you also have to remember too, that and when I was younger, you know, we had two
children. And even though I had quit my job and I was just starting to do retirement training
and that sort of thing. I wasn’t making a whole lot of money in the early days. I still went out
and bought a big life insurance policy because I thought if something happened to me, while
my kids were still at home needing to be cared for and needing all the things they need as they
grow up. I didn’t want to leave my husband to have to finance all of that on his own. So in my
case, I bought a 20 year level term policy when Shawn was born knowing that when he’s 20
Hopefully you know whether he likes it or not. He could be independent by him. So the need for
that insurance was going to go away at some point. But you have to think in terms of what you
were saying about planning for the future, but also how those needs change over time. You
know, there was a time I did need a lot of life insurance. I don’t think I need it today. Things
have changed and my lifestyle wouldn’t change much you know, heaven forbid something
happened to him because these other plans are in place. But I think that’s the thing. A lot of
people aren’t thinking about that what if situation and one day, what are we going to really do,
then what are those expenses like you were saying what is that monthly amount that I would
need if it’s just me.

Micah Shilanski 11:23
One of the things my dad did for me when I was 18 which I did not appreciate it at the time, but
it was like alright, I need to put some faith in here and he knows what he’s doing is he had me
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it was like alright, I need to put some faith in here and he knows what he’s doing is he had me
buy a million dollar life insurance policy when I was 18. And I’m like, like I’m single I don’t need
this million dollars life insurance like why do you do it? And he was like, well are you going to
be single forever? It’s like, no, okay, you want a wife, you want to have kids. And at that point
in time, the insurance cost is going to be so much more it’s never cheaper than it is today. Go
out and get this policy. So he had the foresight to look in there and says hey, you have this big
expense coming. And it’s worth buckling down now and paying and in grand scheme of things
ready was cheap. It was so cheap when I was 18. I didn’t make any money. So there was a little
fun paying for it right? But it was such a good planning decision because then when I got a
family and all these things, I had plenty of life insurance at that time to make sure my bride
and my kids were taken care of. So this is a future thought. It’s not just the today thought so for
retiree, it’s that same thing. What insurance do I need today, but what insurance do I need for
the rest of my life? And sometimes it’s a bell curve or it’s at least a cliff that kind of drops off
right. With a lot of clients I’m like, Hey, why don’t we probably need life insurance into
retirement? I don’t need it to your 100 but you might need it between 75 and 80. And then God
forbid if something happens to you, then you have enough money left over that you don’t need
that life insurance anymore. So we got to be forward thinking with this.

Tammy Flanagan 12:53
That’s for sure. And then when employees retire, they’re kind of forced to think about life
insurance, because if they have FEGLI, the government plan, you’d have to make a decision.
How much of that do you want to keep? But in reality, I really think that decision should be
made a lot sooner than when you plan to retire. So if you’re listening to this, and you’re in your
30s or 40s, great because that’s the age like you were I mean, maybe not necessarily at most
before doing that. But that 35 or 40. Typically, you’re pretty insurable. You’re not expected to
die anytime soon. You’re generally in good health and most cases, you’re young enough that
the insurance company looks at you as a low risk. So when we talked about this FEGLI a good
deal before we started the show, for that age group. Thankfully, it’s not a bad deal. It’s not the
greatest deal. But boy when you count that price down the road for 20 years carrying FEGLI
when that goes up every five years in price, in terms of having a level term policy, you’re
gonna save a ton of money, but you don’t realize that unless somebody explains it to you,
because you think oh, it’s a group policy. It must be the best deal in town and it not necessarily
is when you think about the future

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Micah Shilanski 15:00
Oh, you’re 100% Spot on, right? So where do I need to be? And sometimes it’s the best thing
for today, but then what’s the plan but as we all know, life turns around and really gets ahead
of us. So figuring out if you actually need life insurance, figuring out how much you need, and
that’s just a math calculation. It’s not a million bucks. It’s not 500,000. It’s how much monthly
income do I need to replace? And how long do you need to replace it for right? That’s where we
kind of come up with that math. And then Tammy, one of the things I want to get into I know
we want to talk about some other stuff, but I’d like to talk about estate taxes real fast, because
this is something that I’ve found, and luckily we’ve avoided it with our clients, but I get calls
from clients being like, hey, my brother in law just passed away a family member just passed
away. Now we have these estate taxes to worry about what’s happening? And this suddenly
gets a little confusing, right? We have our federal income taxes which we’ll have to pay, you
know, April 15, every single year. Then you have state income taxes. If you’re in one of the non
seven states that is a tax free state you have the privilege of paying taxes Tammy and I,
Florida and Alaska representing here, right? Those are easy. It’s just zero. We love it. But you
have state taxes you have to pay on your income. But there’s several states that have an
estate tax which is this is an inheritance tax. If you die in your value of your estate is worth
more than x amount of dollars. You have to pay more taxes to the state. Now, the Federal
exemption is about 12 and a half million dollars. So if your state’s worth less than that you pay
zero in taxes if you’re married, it really becomes 25 million. Couple of ways to do that right? But
you pay no estate taxes so everybody’s heard this number be like oh, I don’t have to worry
about it. However, if you live in Oregon, Washington, New York, a handful of other states, they
have some pretty severe estate taxes I’m going to pick on Oregon and Washington for
discussion. Oregon is limit is $1 million dollars. So if you have an estate worth more than a
million dollars, anything above that is 10 to 16% You’re going to pay in an estate tax. So add
our house out of your IRA accounts right and then you add life insurance to it to someone goes
and buys a 500,000 or $700,000 life insurance policy. And they may be missing the fact that
depending on how you own it, they may have to give up 70,000 or 100,000 of that policy to the
government. So you got to be really careful with this. Does that make sense?

Tammy Flanagan 17:19
Now I want to make sure people understand that we’re not talking about income tax, life
insurance proceeds are tax free. As far as income tax, but your tax we’re not we separate tax
for estates. And that’s something we don’t think about much because we think oh, we only
have to worry about that if we’re wealthy. Well, you can leave a lot of money behind in this
day. of high real estate prices and higher salaries. At least I heard the recent average federal
salary rate is over 100,000 Now, wow. Yeah, I’ll buy it. Now. According to one of those career
places, I don’t know how valid that is. But I tend to sort of believe it because I’ve made a lot of
clients who are in that range where they’re making well over 100,000. So they’re carrying five
times their salary six times their salary and life insurance. Like you said, that’s probably a good
750,000.

Micah Shilanski 18:11
On top of their IRAs, their TSPs. their bank accounts, their house values, right. This number
adds up. So the reason I bring this up is this is avoidable. Now you gotta be careful. Sometimes adds up. So the reason I bring this up is this is avoidable. Now you gotta be careful. Sometimes
it’s harder with group life insurance. If you do individual life insurance Tammy there’s
something called you know, cross ownership that my wife owns my life insurance, I own her life
insurance, and basically the short answer of that is if I died, and I lived in Oregon, for any life
insurance that I die, it’s in her estate because she owns it, and so I don’t pay any estate taxes.
So it’s very easy to avoid it. But you know, you got to see this coming and most people miss
that very little thing about how to properly own life insurance. And again, you’re in a handful of
states, you could end up paying a lot of money that you could have avoided which is always
painful for me.

Tammy Flanagan 18:59
You brought up a good point about Alaska and Florida. We don’t have an income tax. I don’t
know the answer to this, but I bet you do. Do we have an estate tax?

Micah Shilanski 19:08
No, ma’am. You do not have an estate tax either. Neither does Alaska

Tammy Flanagan 19:12
know so that’s all considered income tax. And from that point.

Micah Shilanski 19:16
You have a sales tax and property tax.

Tammy Flanagan 19:19
Yeah, I got worried for a minute.

Micah Shilanski 19:23
No, actually, I pulled up the list right beforehand, just to make sure that Florida was off of it. So
no, you’re off. It’s Hawaii. Illinois, Iowa, Kentucky, Maine. There’s a handful of states out there.
So if you don’t know make sure you emailing your financial advisor like Hey, am I subject to a
federal or a state estate taxes? Let’s make sure that all of your money goes to your heirs and
not the IRS transitioning from that right we have the ownership but it also is probably worth
talking a little bit about beneficiaries as well. Right.

Tammy Flanagan 19:50
So if your life insurance in the government FEGLI most people will file a beneficiary designation
because if you don’t, everything’s gonna go according to the Federal order of precedence,

because if you don’t, everything’s gonna go according to the Federal order of precedence, meaning it all goes to your spouse, which is what most of us would want. If we’re married, but
then from there it goes to your children is living right so your children would share that equally.
In your children. If one of them passed away, their descendants can get their share. That’s how
the order of precedence works. And then if you don’t have children, and you don’t have a
spouse, then the look for parents if living parents are both deceased, now you’ve got your
estate, your will. So if you don’t have a will, is this one probate comes in or this is when
everything like court has to decide who’s gonna get the money?

Micah Shilanski 20:35
Yeah, that’s a good question. Right. So A will is a document that helps govern and is governed
by probate. Probate is the court sponsored process for dispersing your assets. So if you don’t
have named beneficiaries in there, it goes to your estate and if you have a will, well, the great
news this is when your wills should kick in. If you do not have a will. The government has one
for you. You may not agree with who their beneficiaries are. So this is what I always encourage
the client to get as make sure you get a well but make sure you have named beneficiaries. And
Tammy, I know you and I are not a fan of of the defaults and it says hey, if you want your
spouse to get the money, and if she dies, then if you want your kids to get the money, don’t fill
anything out. We’re not a big fan of that. It’s got a space for it. Put your spouse’s name on
there, put your kids names on there when you don’t have any children. You spell Micah M I C A
H. No, just kidding, right? But you’ve got to fill these things out .

Tammy Flanagan 21:25
And make sure you keep a copy of it somewhere. So whoever it is that you’ve named can find it
and figure out that they need to make a claim for that benefit. Because they don’t always go
looking for your beneficiaries if nobody steps forward to claim the money. So you know, you
should have that strong box or that safe deposit box or someplace where you’re keeping all
these records of your federal benefits because someone’s going to have to figure out what to
do with all that when the time comes. You know, I had a pretty close friend passed away last
year was relatively young, but he had been sick for a long time and I think he knew that it
wasn’t going to end well for him. But he did none of that. So his sisters, he wasn’t married,
didn’t have any children didn’t have parents living so the left behind were two sisters. And
they’re now trying to set up some way to get this money. One thing with the Thrift Savings
Plan. He was a federal employee. She’s been on the phone with them at least six times and still
doesn’t even know how much he has in his account. So he didn’t leave behind a statement he
didn’t file beneficiary forms. What was he thinking? And I thought I thought he had done well, I
just assumed but apparently not so fine. That taught me a lesson. If I know people that are
close to me, I’m gonna make sure they have those documents on file that somebody knows
where to find them. Regardless if it turns out well or not. You’ve got to be prepared. You don’t
know what the future holds.

Micah Shilanski 21:53
You know Tammy, one of the things that I found as a financial planner, right, I’m asking clients,
do you have your estate planning done? And they say yes, I’m like, great. Can I get a copy of it?
Well, we don’t have it signed just yet. Oh, no. Oh, when did you meet with the attorney 10
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years ago, you know, and I’m like, Okay, well, I’m gonna save it’s not done so far. So we need
to go back and we need to finish this right. So sometimes we we’ve gone to the, you know, the
integral we’ve done to the ninth yard but we haven’t crossed that next line. That actually
means it’s done. And so done is not always signed, it’s filed, copies are distributed where they
need to be every two years. One of the things about every two years we do for all of our clients
is we do a beneficiary report, where we list all of the assets that we are aware of how they’re
titled, who the beneficiaries are, who the contingent beneficiaries are, and the dollar amounts.
And then we go through this with all of our clients and then they go through and review it says,
Is this still correct? And there’ll be several times there’s no, Mike, I updated this on my tsp so
great. I’m glad you did. We didn’t get a copy of that. So I can’t update this report until I get a
copy of your updated beneficiary change. And sure enough, they never updated their
beneficiary. So really important sometimes we think we have things done, and it’s not done.

Tammy Flanagan 24:02
And sometimes in the government, you don’t realize there are four different potential
beneficiary forms that you might need to keep up to date. Yeah, one perfectly which we’ve
been talking about. You have one for your retirement, whether it’s FERS or CSRS. That’s a
different form. And then you also have one if you’re still an employee for unpaid compensation.
Now, the one thing that has changed since 2022, is the Thrift Savings Plan. There used to be
you could download the TSP free and fill it out and mail it in or, you know, whatever you wanted
to do there, but now that’s all electronic. So you have to go to tsp.gov access your account and
fill out your beneficiary elections online. And one thing that I didn’t realize till recently that has
changed Nonetheless, if you heard this or not that you can no longer designate contingent
beneficiaries on the new way of filing a beneficiary form as a threat. No, so you can’t say to my
two children and otherwise you know, to my children’s you know, whoever you know, you can’t
do that anymore.

Micah Shilanski 25:04
Boy, this is the baffling because on I’m going to have to take a peek at that. Thank you for
letting me know because on the TSP form, it will show primary and contingent beneficiaries on
the TSP statement.

Tammy Flanagan 25:13
If you have an old form on file, if you have that tsp three, and you never updated it since 2022.
They’ll still honor that contingent beneficiary but if you’re filing a new one electronically, you
can’t do it.

Micah Shilanski 25:26
Holy smokes, do they have every talk to them any update on when they’re going to fix that or
address it?

Tammy Flanagan 25:30
It’s not the answer. That’s the way it is. They say that’s the way it is in many other accounts,
not the government accounts, but like bank beneficiaries and other insurance plans. So I don’t
know I’ll pass that on. What I was told from ours would be it tsp told me this

Micah Shilanski 25:47
I would really like to know that Yep. Okay. So if that’s the case, and you’re now listening to this
be like, hey, I need to update my contingent beneficiaries. And you cannot, maybe this is where
a trust comes in. Right? Yeah, I need to kick you out and say spend more money and with an
attorney by just saying if you can’t have a contingent beneficiary, then you need to have a
trust. Now this has a massive tax implication under secure act 2.0. This podcast just took a left
turn sorry, because of how beneficiaries have to be described as an eligible designated
beneficiary or not. So you really got to be on top of things in your trust planning or estate
planning attorney does, understanding how it works with retirement accounts. So what I will tell
you in my experience, the vast majority of estate planning attorneys do not understand IRAs
and income taxes. Their job is to worry about estate taxes, not income taxes, which got a huge
consequence.

Tammy Flanagan 26:40
Another thing to add about setting up the trust, I know when we moved from Virginia to Florida,
oh, we just had our trust done. We have it all filled out everything was professionally done and
distributed. Well, the rules are different in Florida. So you had to have another attorney look at
it and update it to the conditions that would be payable to those same people in Florida. So
state to state the rules can be a little different. You want to go have that trust document,
checked out to make sure with a local attorney that it’s going to hold up in that state. We didn’t
have to have a completely redone but there were a few parts of that that had to be language
had to be changed.

Micah Shilanski 27:18
Yeah. It’s really important to know. Well, Tim, we’ve got just a couple of minutes left, you want
to try to dive into one more thing real quick before we talk about action items. Sure. Let’s talk
about how death benefits are paid out. Right? Because there’s a little bit of there’s some
different options that you have not only with FEGLI, which is really MetLife kind of writing those
checks. But with all insurance companies, so God forbid, a loved one passes away. But say
there’s proper beneficiaries formed, they’ll say husband passed away and it went to the
spouse, she’s the beneficiary. What happens with that money?

Tammy Flanagan 27:46
Well, the money can be paid one of two ways if it’s life insurance, especially in particular FEGLI
is FEGLI is really MetLife. MetLife has held the contract since 1954. So it’s pretty, pretty obvious
that MetLife is your insurance company if you own FEGLI. Well, with that you have the choice as the beneficiary to take a cash payment, they’ll just transfer the money to your bank account or
send you a check or you can let them hold on to your money for you and in something called a
total control account. So it’s kind of like a bank account. It does earn some interest, and it
makes it so you don’t have to make any quick decisions on what to do with the money. So at
least you can leave it there for the time being until you decide okay, I’m gonna move it here.
I’m going to move it there. And then you write yourself a check boring during the check to
somebody else. So it’s kind of a draft, not technically a bank check. But it works on the same
principle. And I know you had told me, Mike, that some of those total control accounts pay a
pretty decent rate of interest. So we checked on FEGLI and what did I say it was like a little over
2%

Micah Shilanski 28:47
Yeah, a little over 2% Which isn’t wasn’t today’s standards. I would not consider that a good
interest rate. Right. rewind the clock. 24 months. That was the month. Yeah, run the clock. 24
months when bank accounts were paying zero than two and a half sounded pretty good. But
right now you should be getting north of 4% in your savings. accounts. And if not, there’s plenty
of good banks, online institutions that you can do that with. So these are one of those things
that we need to look at. Right when the money comes in. Biggest thing when money gets paid.
I always tell clients make no big decision. You just lost your spouse. You just lost your parents.
Right? You are in no emotional state to make big decisions. So I want to pause as many of
these big decisions as we can. So sometimes as using the total control account of saying, You
know what, let’s deposit the money in there. Let’s let it sit for six months, you know, then we
can come back and revisit it. That’s okay. Right. Don’t feel the need that reaction to start doing
things because a lot of times you’re not making good decisions.

Tammy Flanagan 29:48
No, not at all. Not at all. So you don’t want to take it just divvy it up to all your best friends. We’ve seen that not only this man. And I’ll just give everyone a check for 50,000

Micah Shilanski 29:59
I’ve seen that. I’ve seen it, give it away to kids and all these other things. And then the person
who was distributing all the money didn’t realize taxes were due and then had to go back to the
heirs to get money back to pay the taxes but most of the are spent all the money already and
so I didn’t have anything for taxes, they can create quite the nightmare. So….

Tammy Flanagan 30:17
literally a year to settle in the state if not years in some cases where it’s more difficult. Yep. So
yeah, don’t spend that money too quickly until you know what all it is you have to pay out as
the as the beneficiaries.

Micah Shilanski 30:31
Well Tammy this podcast is not just about us having fun and learning new things. It’s about
action items. So what are some things our listeners could do this week to take more control of
their situation, their finances, especially when it comes to survivor benefits or life insurance?

Tammy Flanagan 30:46
Well, I would say this is the new year right? We’re in a new year again. So you want to make
sure that you understand who is your beneficiary Do you know where those forms are if you
don’t sign to file, new ones trying to figure out who it is. Then also OPM has a really nice little
retirement booklet. And they’ll give you a new one every year. If you ask for it. You can get it
off of OPM services online as well. And that’s going to tell you this is who we have down as your
survivor. I had a client recently his former spouse was still listed even though he has elected
survivor benefits for his new wife and his other his previous wife. She had remarried before 55
But yet they still named her so his current wife might have had difficulty claiming that survivor
benefit seeing that OPM had the wrong name down so you want to check your documents to
make sure they are what you think they are.

Micah Shilanski 31:38
Yeah, that’s really important. You know what I’m gonna say another one is talk with your
financial advisor or CPA. Do you live in a state that has an estate tax? Are you addressing that
in your planning, just to make sure and if you are, the answer isn’t Oh, it’s fine. I’m under that
dollar amount. Really look into it, because a lot of states have a lot of different rules on how
this is set up.

Tammy Flanagan 32:00
Yeah, you got to do your homework. The other thing is kind of a simple thing, but I think there
are a lot of people who neglect to do this as if you live. Make sure that the TSP OPM, everybody
knows where you went. Make sure your address is up to date. Make sure your bank information
is up to date. I’ve seen people not get their checks because of that. Yeah. And they don’t
realize what was happening. So you can update your address with all the agencies pretty
simply, but be sure to do it. Don’t neglect that

Micah Shilanski 32:29
Perfect Tammy. I think these are great things that we can go into and where did you say again
to get the to get a new OPM retirement booklet?

Tammy Flanagan 32:35
Retirement services online, so if you go to opm.gov, you can access your account there and
just go under retirement, then we’ll drop down tab and that’s it’ll tell you how to have an
account if you don’t already have one.

Micah Shilanski 32:48
Perfect I’d say it’s really important. Another one for cybersecurity. Always have an online
account when you have an option. One way you’re seeing cyber theft take place is if you don’t
have an account, they’re creating one for you. So if you have one, it’s a little bit harder for
them to get your identity and to change things up. Tammy, this has always been a pleasure.
Thank you so much for being on the podcast again to all of our listeners, make sure you share
send this information we got some big goals helping another 1 million federal employees with
their retirement and that doesn’t work without your help. So make sure you share this. Tell
them what a great podcast it is. And until next time, happy planning.