Ep #15: New Year’s Habits

Full Episode Transcript
With Your Hosts
Micah Shilanski and Tammy Flanagan

You can spend. You can save. What is the right thing to do? Federal benefits, thrifts, savings plans, too. You can save your own way, with help from Micah and Tammy. You can save your own way, save your own way…

Micah Shilanski:  Welcome back to the Plan Your Federal Retirement podcast. I’m your co-host Micah Shilanski, and with me, as usual, is the amazing and wonderful Tammy Flanagan. Tammy, how are you doing, ma’am?

Tammy Flanagan:        I’m great, Micah. Good to be here in the new year. And we call it 2020-won, like 2020-won the game. Now we’re onto a hopeful 2021. Let’s hope things improve for everyone and COVID gets behind us, and it’s become something for the history books.

Micah Shilanski:  There’s a lot of that stuff that we can’t control. Right? And it’s so easy to focus on that side of things, that things that are outside of our grasp. But today what we want to do is we want to change that focus to things we actually can control. There’s some things that change this year. No, we can’t change what has taken place, but there’s things in our personal lives that we can change, to make sure you are better for you in preparing for the retirement, because that’s what the podcast is all about, making sure you are an educated and informed decisions, so you can make the best decisions for you and your family. And today, Tammy, we got some pretty neat stuff we wanted to cover about what were some changes that have taken place for 2021. And then also, how do people take that and start applying it to improve their lives for this year?

Tammy Flanagan:        Yeah. It’s a time of, we don’t want to make resolutions, we want to make improvements. We want to take action and do things that are simple and painless and will really pay off down the line. When it does come time to retire, we’ll be glad we made those little changes that can mean a lot.

Micah Shilanski:  Perfect. Now, we are going to be talking about a lot of numbers, so I apologize. I know this is an auditory podcast, you’re listening in, so don’t pay too much attention to the numbers. If you really want to know, you can jump on our website and Tammy’s going to put together a great little piece that talks about these interest rates and number changes that we’re going to talk about, or you’re welcome just to email us and we will just respond to your email and send it. You can email us at [email protected], and we’ll respond, and you just put in the subject line 2021 updates, and we will send you the information for this year.

Tammy Flanagan:        I’m working on it as we speak.

Micah Shilanski:  Perfect. So it’ll be hot off the presses. I’ll be perfect.

Tammy Flanagan:        Hot off the presses, that’s right. There are quite a few changes every year, but they’re the normal changes. There’s nothing earth-shattering, I don’t think. There’s a few little things that are kind of neat changes and good things that have been improved upon, I’ll have to say. But yeah, don’t worry, nothing negative, nothing earth-shattering that’s going to change your retirement plans. They’re all things that should help you get ready to retire.

Micah Shilanski:  Well, Tammy, let’s start off with kind of the little ones and we’ll kind of leave it a teaser. There’s some good retirement ones, changes that are out there, but we’re going to leave it as a teaser so you hang out with us a little bit longer. Let’s just cover the easy one. What were some of the interest rate changes, updates, et cetera for this year?

Tammy Flanagan:        Well, one of the things, I’ll start with the OPM, the Office of Personnel Management. There’s some changes that happened to things that you do to plan for retirement. There were some increases to benefit rates such as the basic employee death benefit went up, and all of these things like that go up based on the retiree COLA. So the retirees this year received a 1.3% cost of living adjustment. Whether someone retired under CSRS or whether they retired under FERS, if they were retired all of 2020, from December of 2019, through November of 2020, they got a 1.3% COLA, and they should already have seen it because it was in their mailbox at their bank on January 4th, because of the holiday, it was delayed a couple of days.

                           That 1.3% COLA increased the basic employee death benefit. If an employee dies in service, their spouse is entitled to a benefit of $34,991.07. They get that, plus half of that employee’s final salary. It’s kind of an adjustment payment to help that surviving spouse adjust to the new income levels, and the life insurance, and the TSP, and figure out if they have to go back to work. That can be a long with a survivor benefit, and I know we’ve talked about that on other broadcasts.

                           The other thing that changed for employees is the interest rate. The variable interest rate went down from 2.25% down to 1.375%. This is a good thing that it went down, because interest rates when we’re earning interest, we want them to go up, but when we’re owing interest, it’s nice when they go down. If somebody’s paying back in military service deposit, or a civilian service credit deposit, they’ll owe less interest on the balance in 2021, because it’s only going to be charged at 1.375% for that interest rate.

Micah Shilanski:  And Tammy, is that the same, or how does that differ than TSP loans? If someone has a TSP loan, how is that affected by interest rate changes?

Tammy Flanagan:        The TSP, when you borrow from the Thrift, you’re borrowing from your own account, and that really has nothing to do with this treasury rate of return. It has to do with the G-fund interest rate, which is loosely based on this treasury rate, but it’s fixed for a whole year. The interest rate I just mentioned is fixed for a year. The G-fund rate changes monthly. So that G-fund interest rate is similar to this. Right now, it’s very low because G-fund rates are low, but that could change next month. It could change in April. So depending on when you borrow from the Thrift, it’s going to be whatever the G-fund rate is for that month. That’ll be fixed for the life of your loan. It’s very similar to the one I just mentioned, but it is one that changes on a monthly basis.

Micah Shilanski:  Got it. Thank you.

Tammy Flanagan:        So that was the OPM changes. Then there were also changes, of course, that happen every year when it comes to social security numbers. Those changes can impact people as far as how much you have to pay, like a tax on your income, and some people did get a tax holiday last year, which was very short-lived because starting this month, you’re going to have to pay that money back in increments over 24 pay periods. Those of you who didn’t have to pay the FICA tax for a portion of 2020, time to pay the piper because your payroll office is now deducting that from your paycheck over the course of 24 pay periods of 2021.

                           But you will, for those who are higher income employees, they’re going to have to pay that payroll tax this year on income up to $142,800, so that’s up a little bit from what it was last year. I think last year it was $137,800, something like that. But I’ll put that in the little attachment that we’re making up for today, and what it was last year and what it’s going to be in 2021. So that went up a little bit.

                           Medicare premiums went up very little, luckily. The Medicare premium for 2021 now, the standard rate is $148.50 a month per person. If there are two of you two of you who have Medicare, that’s almost $300 a month for two people to be in Medicare part B.

                           Those are some of the big changes. There were some changes in contribution rates for FSAs and HSAs. They didn’t change too much, $50 bucks, $100 bucks here and there. If you’re contributing to the FSA, you made that allocation last open season. And if you’re contributing to a health savings account, an HSA, you can do that throughout the year and you can increase that up to the limit if you want to for this year. That limit for self-only is $3,600, and for self and one, or self and family, it’s $7,200.

Micah Shilanski:  We talked a lot about this. I think it was episode 10. If you go to planyourfederalretirement.com/10, we talked a lot about open season, Medicare, and these health savings accounts, which are just a huge part of your retirement planning, so it’s definitely something if you’re not in, Tammy and I would really encourage you to take a peak at. Can’t do it now. Right? But for this next year, be thinking about it.

Tammy Flanagan:        Yeah. HSAs, and tax planning, retirement planning, very, very good thing to think about.

Micah Shilanski:  Tammy, one of the other things that changed… Well, the TSP contribution amounts didn’t change, right? You can still put in your $19,500, then plus the year you turn 50, you can put an additional $6,500 in for your catch-up. But one of the nice parts now with TSP is it’s no longer two different elections that you have to do. You can make one election for your contributions. I think this is so powerful because so often it was just confusing. What do you mean I got to make two different elections for one contribution that goes into the account? And a lot of people really wouldn’t take advantage of the catch-up or it would expire, they would renew it. I mean, all of those things would take place. And now with the one form, I think it’s going to be a lot easier.

                           But keep in mind with the new year, one of the things that also happened is potentially you got a step increase, or there was a pay raise, pay adjustment that took place. One of the things that I love to see with my federal employees is that when they’re working, we call this the 50/50 rule. Any new money that you make, any unexpected income that you have coming in, do 50/50. Put 50% towards the future, so increase that TSP contribution, increase that IRA, that Roth, that outside savings investment. Wherever it is, increase it by 50% of that pay raise. Let the other 50% of the pay raise, go to the bottom line. Let it increase lifestyle. Do more things with your life with that. If you adhere to that 50/50 rule, it’s amazing how over time, that little bit of extra savings consistently really adds up to a lot of money for your financial independence.

Tammy Flanagan:        Well, don’t get too excited. In my case, it was only a 1% pay raise. And on $100,000, that’s $1,000 bucks a year.

Micah Shilanski:  But every little bit helps, right?

Tammy Flanagan:        You can go to McDonald’s one more breakfast a month. Put an extra $20 bucks a pay period in your TSP.

Micah Shilanski:  But the important part is we’re breaking inertia with that. I want building blocks of what I call sticky changes. If people say, and I hear this a lot, “Well, Michael, once I have X amount of money, then I’ll start saving.” No you won’t because you’re not now. If you’re not saving now, even in little bits, you’re not going to save later because you’ve never determined when enough is enough. You have to create habits for success and one of the habits is 50/50. So Tammy, you’re totally right, whopping 1.3%.

Tammy Flanagan:        1%.

Micah Shilanski:  1%, I’m sorry. 1%. So it’s not like there’s a lot of money, but it’s a habit that I want you to stick to, to help towards your financial independence.

Tammy Flanagan:        Absolutely. Don’t think your spouse can do it for you. I had a client the other day, he told me he was going to do all the saving for retirement. His wife, who’s a federal employee, didn’t have to save. They were forgetting the fact that she wasn’t getting any of the free money from her agency because she wasn’t even doing 5%. This is a good time of the year, I think, to learn something new. If it means going to tsp.gov and learning how it works, if you need the basics, go find them. They’re very well put out there. Because it’s important to know that you’re giving up free money if you don’t contribute to the TSP. Even though your spouse is a good saver, you need to be too.

Micah Shilanski:  Tammy, when you said that about one spouse is saying, “Well, I’m doing all the retirement planning, so the other one doesn’t have to,” it flashed in my mind, not only the 5% contribution, but survivor needs that’s there. God forbid, if the spouse passes away, you’ve lost a whole slew of planning opportunities that were there because you didn’t have assets titled correctly. It’s not about one spouse saving for the entire team. It’s about the team saving, that’s both husband and wife, both spouses coming together and making sure they’re saving and putting money appropriately. Because God forbid, if one of them passes away sooner, it allows the survivor spouse more options, more flexibility. And we could tell you countless stories of how this has gone wrong. So yeah, it is definitely a team event.

Tammy Flanagan:        We did have some, some interesting changes, not big ones, but it is a good time like you said, to reassess what you’re doing, maybe do a little checkup on what you’re doing, and maybe make some positive changes for the new year.

Micah Shilanski:  One of the things to think about too, with positive changes for this next year, let’s talk about cashflow for just a minute. I always say cashflow is the heartbeat of retirement. Now, that doesn’t matter if we’re already retired or one day we want to be retired, cashflow is so important to see where money is coming in. So 2020, a lot of us didn’t quite spend our travel budget for some of the year. I don’t know why. At least mine didn’t get spent. So really for this next year, what are we going to do differently? How do you want to plan these things? What are wanting to do? So making sure that you have money set aside for the activities, not just the retirement account stuff that you want to do. Do you want to go take a trip? Do you want to have a big purchase? There’s a lot of people moving, relocating, a lot of recreational equipment being purchased. Awesome. How does that affect your cashflow? It’s a new year, it’s a great time to look at that and start making little changes along the way to set yourself up for better success.

Tammy Flanagan:        Yes. I think a lot of people realize now that they can do so much remotely, that it’s so much easier to make that move and not have to worry about commuting every day of the week. Maybe some agencies will even allow you to telework more frequently than they did in the past because we had to do it in 2020. So I think we’re going to see some permanent changes as a result of everything we had to learn to deal with this pandemic. I hope some of those stick, as far as the telework, and the telemedicine, all the different ways we’ve learned that we can still live our lives, even though we don’t have to leave our house necessarily.

Micah Shilanski:  Amen. Those things I think are all important. Another thing to think about, I mean, come on this wouldn’t be a podcast if I didn’t mention taxes. Making sure, what’s your tax plan for this year? Everyone in a couple of months is going to be looking in the rear view mirror, we’re going to be looking last year at 2020 to say, “Great, what were my tax liabilities?” But what changes can you make now? What changes can you make this year, that best sets you up for success in the future? There’s a lot of opportunities, so looking at that.

                           One of the things that we’re doing for our clients right now is we put together what we call a 1099 letter. We send all of our clients a letter that says, “Great. Where are all your tax forms going to be coming from?” It’s amazing, you think we’d know this every year. It’s amazing those forms we forget, that all of a sudden create problems. As you’re getting year-end statements right now, as you’re getting this information, it’s great to keep a little log. If you don’t have someone that sends you this letter for you, then keep a log. Anytime you get a bank statement, anytime you get an investment statement, start writing that stuff down, so when you get around to doing your taxes, you can go back through and add a little checklist. Make sure you report everything. I can you, there’s dozens of clients and people we talk to that forget to report things on their tax return, and then they get love letters in about a year and a half from the IRS. And it’s not very lovely in the letter. Making sure we do it correctly is really important.

Tammy Flanagan:        Well, I just made myself a note, Micah, because I need to have that lesson taught to me as well because it never fails, in January, I tell my husband because he does our taxes, “Oh, here’s all the places I’m getting income from this year,” and I list about 50% of them. I think that’s a good thing to keep in mind. I’m going to put that on my to-do list and make myself a list so I can check to see, “Did I do work for them this year? Did I do work for them?” When you’re an employee who is self-employed you get a lot of 1099s. And a lot of retirees, especially new retirees will do different types of consulting, and it is important to keep track of that income that’s coming in, and possibly even have to set up estimated tax payments like a lot of us do.

Micah Shilanski:  Well, even a retiree that retires 12/31, all of a sudden they’re going to get a paycheck in January. Well, if you get a paycheck in January as your last paycheck, guess what? That following year, you’re getting a W2 for that. And how often do we forget that? That doesn’t show up on tax returns. We see that frequently with first-year retirees, whether they have a CPA or not.

Tammy Flanagan:        Yeah. And it’s also a problem for people who may have retired, let’s say in September or, October of 2020. They may just now be getting caught up, like OPM may have just finalized their retirement, so they’re going to get a big direct deposit of everything OPM owes them back to their retirement date, which might even include three or four months of the first supplement, plus some additional retirement payments. All of that gets taxable in 2021, so something else to be aware of. I think a lot of people, when they retire think that the day their retirement’s effective is when that income is due. Well, no, it’s going to come the next month, and for a new retiree, it might come three months from now or six months from now, because things are still in a delayed status. OPM has been deluged.

                           I also heard a really sobering statistic from OPM, that in October and November of 2020, they had over 8,000 deaths of retirees, which was a larger number than that two-month period in the entire history of civil service, which dates back 100 years. They had over 8,000 federal retirees who passed away and I’m sure many of those were COVID-related. It didn’t exempt the federal retirement group, just like it didn’t exempt many Americans. That’s kind of a sad statistic, but it’s one that happened. I haven’t heard about December. It’s a little too early for that, but I’m sure it’s still really high because we went through the holiday season, which caused that big spike.

Micah Shilanski:  Again, how this kind of comes down to it as well, then this means that OPM is processing more claims and they put a priority on survivor benefits, as they should, working through that aspect of it. Well, great, that means if you’re going to retire, it’s probably going to be delayed a little bit more. Again, these are things we can’t control, but what can we do to plan for it? Making sure you’ve got a good cashflow plan, making sure you have good reserves, making sure all of these other things. Because one thing 2020 taught us, we have no idea what’s going to happen in the future. Our ability to tell the future is completely null and void. So really making sure you’re set up in a way to weather these storms.

Tammy Flanagan:        One last thing is that the people who processed those death claims at OPM, they got hit with COVID too, so they were off. The whole staff was off for a two-week period while they quarantined

Micah Shilanski:  Wow.

Tammy Flanagan:        So they couldn’t come in and pick up the cases. So if you’re waiting for a survivor benefit because maybe unfortunately, you lost a spouse or a parent, it could be a little later than normal because those claims are taking a couple of months longer than they normally would. They usually get those out in three to four weeks.

Micah Shilanski:  They do them pretty quick.

Tammy Flanagan:        Now it’s taking three or four months. So don’t be surprised if that is a delay. That’s understandable this year.

Micah Shilanski:  Let’s pivot a little bit to some things we should be thinking about for this year. We kind of talked a little bit about what I call our 50/50 rule, always saving a little bit more, pushing it up a little bit more to the future, even if it’s small dollars. Other things, where’s your money going? Is it still going into the pre-tax portion of your TSP? And there’s nothing wrong with that. But now is the time to look at tax-free investing. Does that mean the Roth TSP or a Roth IRA? There could be some really good reasons to look into opening up a Roth IRA or TSP. One of them is you start a five-year countdown. That’s going to be there. You have to have a Roth IRA open for five years, or 59 and a half, whichever is a leader, in order to take any growth out without penalty and taxes. So start that five-year clock, start investing, even if it’s just small dollars, so it can start building.

                           What other of those changes? We’re going to be looking with our clients, where are they spending their money? Where can we save a little bit more without jeopardizing lifestyle? How do we save in the most tax efficient manner, which is possible for them? Sometimes that’s free tax, sometimes that’s tax-free. We’re also going to be looking into it, this is great, what are their cashflow needs this year, and what other types of tax deductions could we find? How did they spend money? What are they going to be doing in the future? So those are some big things we’re going to be looking at this next couple of months with our clients.

Tammy Flanagan:        One question I get from some of my clients, Micah, is “Can I take my TSP money that’s pre-tax and convert that to a Roth TSP?” Do they allow you to do that in the TSP?

Micah Shilanski:  The answer to that is no, but I recently was told the TSP said somebody could. So somebody is trying it and so we’re going to find out the official answer on that one. But the answer is no, unfortunately, you cannot do internal Roth TSP conversions. However, what you can do is you can still do a Roth conversion, just we have to do it outside of the TSP. We’ve got to make this what I call a two-step tango. Step number one, assuming you’re eligible, we could do a transfer of some of your TSP funds from the TSP pre-tax into a traditional IRA. Then once they’re in the traditional IRA, you absolutely can do a Roth conversion into a Roth IRA. You can absolutely still do a Roth conversion, we just can’t do it exclusively at the TSP. We got to take that one step out, if you’re eligible and then do the conversion.

Tammy Flanagan:        Right. And if you’re still working for the government and you’re over 59 and a half years old, you can now take multiple in-service withdrawals. So if you wanted to do a little bit this year, a little bit next year, that might be something that’s part of your planning, to figure out if that’s wise or that’s in your best interest to do.

Micah Shilanski:  If you guys are interested more on this, we could talk about it more as March and April comes as well. We could do a special podcast just on tax planning stuff we’re doing with our clients. Shoot us an email [email protected] if you’re interested, and we can put that on the docket.

                           But I know with clients, one of the things that we’re looking at, we have a new administration coming in, we don’t know what tax laws are going to be, and I’m never going to make decisions based on theoretical information. This isn’t political, I promise. Or what candidates say on the trail. I’m not going to base anything on that. What is actual law that gets passed? So what do we have? Well, we have in 2026, our tax rates are going up, based on current law. Okay, great that means we’ve got four years between now and 2025, in order to make changes at a lower tax rate. So awesome. What changes can you do now?

                           Tammy, to your point, that could be the Roth conversion idea. That could be a Roth contribution idea. Those are all great things. Then back to the HSAs, those health savings accounts, which you can put in tax-deferred money that grows for you tax free. So there’s a lot of tools we have accessible that you can use.

Tammy Flanagan:        Yeah, I think that’s a great idea, Micah, and also if you did sign up for a high deductible health plan, I know people who sign up for those, but they don’t take advantage of contributions to their HSA, which to me is the main reason why you would enroll in a high deductible health plan. So if you haven’t set that up yet, you should be getting something in the mail either late in January or possibly early February. But by the end of January, most of the plans will send out information on how to contribute to your HSA. So don’t just put that aside, do it right away because I notice if I wait until May to set it up, I never can put in the maximum. It’s easier to do it over 12 months than it is to do it over six months, because then it’s a little less painful to your budget.

Micah Shilanski:  Almost feels like half the work, right?

Tammy Flanagan:        That’s right.

Micah Shilanski:  Well, let’s talk a little bit to our retirees because I know we have some retirees that are listening, real fast as well. There was a retiree increase that went through, as you mentioned, on that 1.3% COLA, which is really great. But health insurance premiums went up a little bit. So as we say, the government giveth and the government taketh away. We are going to see that. What is it, February 1st that the new health insurance premiums going to kick in, Tammy?

Tammy Flanagan:        If you’re a retiree on your February 1st retirement check, which is your January payment, that’s when you’ll notice your change in rates. Although for some people, the rates went down because they actually took advantage of open season last year. And they said, “Hey, I’m tired paying these high rates. This other plan has the same benefits as the one I’m in, but it costs $100 a month less, or $400 a month less in some cases.” So I’m hoping that people did take advantage of open season to really explore which health plan was best for them. And if that’s the case, then you might actually get a raise on your February 1st check. If you didn’t, watch for that next open season.

Micah Shilanski:  That’s exactly what I was going to say. If you didn’t, if on February, your paycheck went down, your retirement check, because your health insurance went up, then get out your calendar right now, make an appointment. I’m not looking at the date, let’s call it November 15th, November 16th, the time period. Make sure you book it to look at changing health insurance. Don’t force yourself to, but look at the options. I know we’re going to be talking about a lot at that time. There’s a tremendous amount of people that are overpaying for insurance and not really getting benefits out of it. So if you procrastinated this year and all of a sudden you’re paying more, awesome, use that as a forcing mechanism to in November of this year, make that change.

Tammy Flanagan:        It’s not like there’s only two choices. There’s 274 choices.

Micah Shilanski:  There’s BlueCross and not BlueCross, right? Those are the two choices.

Tammy Flanagan:        Absolutely, poor thing. Everybody has at least 20 to 30 choices, so definitely can make a better choice.

Micah Shilanski:  One other thing that’s out there that’s changed for this year, and we don’t have too much information on part of it, but what about the payroll taxes that was there? So there was that payroll tax holiday, and for the people that were tired at the end of the year, there’s a big unknown question I think that’s out there right now about, how do they pay that money?

Tammy Flanagan:        Yeah. It’s going to be interesting to see if that’s going to be something you have to write a check to Uncle Sam, or is it going to come out of your retirement check, or who knows? I don’t think it’s going to be forgiven because it certainly hasn’t been forgiven for the employees who continue to work into 2021. They’re paying it back over 24 pay periods. Along with paying the FICA tax in 2021, they are also paying back the tax holiday they had for part of 2020. That’s a little, not so nice thing that employees had to deal with this year, but that’s what the resolution was. That’s what had to happen.

Micah Shilanski:  So one of the things I’m telling my clients to do, that are in, I only have a couple that retired at the end of the year, is we’re just setting the money aside. We’re just assuming that we’re going to get a bill because there’ll be out of their agency’s payroll system. So by the time their payroll system figures out that, “Oh, we’re supposed to debit this money,” they’re going to be in OPMs logs, in limbo land. So eventually somewhere between 8 and 16 months later, we’re going to get a bill in the mail for X amount of dollars. So Tammy I’m in agreeance with you, I think at some point in time, it will come. I think it’s going to come as a bill personally, but we have no idea.

Tammy Flanagan:        Do you know Micah, that stimulus check that a lot of people got just right around the new year, this year, were the income limits on that the same as it was last year? Did everyone get it, or did more people, or fewer people get it, do you know?

Micah Shilanski:  It was just about the same. I want to go back and compare them to see if they were exact, but they were just about the same income limits. So if you did get it, the previous stimulus, you should be getting this stimulus check as well. But no, not everybody got it.

Tammy Flanagan:        What if you got it and maybe thought you shouldn’t have gotten it? Like you made too much money and the IRS still was generous and gave you one. Are you going have to pay that back, or how does that work?

Micah Shilanski:  No. If it follows under the same rules as the previous one, so I jokingly say, like any government rule, they pass it, then there’s some ambiguity we have to figure out, but from everything that I look at, if you’ve got the check and you weren’t supposed to, then you were still eligible to receive that check. Now, if you’re dead and you got that check, those checks have to go back, so for the decedents that are out there. But if your income was over the threshold, but you got it anyways, then you’re eligible for, because it’s a tax credit, which is interesting, the way it’s set up. Those tax credits, you don’t have to pay back in this particular case.

Tammy Flanagan:        Wow. That’s a gift, a true gift from Uncle Sam. That doesn’t happen very often.

Micah Shilanski:  That’s right, and almost twice in a year, so what are the odds of that one?

Tammy Flanagan:        That’s right.

Micah Shilanski:  All right. Well, let’s transition to some action items for our listeners, Tammy. I’ll kick it off and I’ll say number one, what’s your plan for this year? It doesn’t have to be big, it doesn’t have to be grand, but what is your plan, especially as it affects retirement? How much are you planning on saving? How much do you want to grow? How much you want your travel fund to be? What things do you want to do? It doesn’t just have to be about saving money. How are you planning on spending money? And this is always a great time of year to look at this. We have the whole year ahead of us. What great things do you want to see done?

Tammy Flanagan:        What are your goals financially? And I guess I’ll say for on the side of the insurance we talked a little bit about, keep track of your expenses that you spend on healthcare this year. Get yourself one of those little accordion folders at the drug store or at the five and dime. Do they still have five and dimes? I don’t know.

And start putting in those statements, month by month if you want to, just to see where’s your healthcare dollars going? Are you spending it mostly on prescriptions? Are you spending it on dental or vision mostly? Where’s that money going? Because that’ll help you tremendously when it’s time for open season next year, so you can really see what you spent money on, how much you spent, and see if you can get that down for 2022 by choosing a dental plan or a vision plan or a different healthcare plan.

Micah Shilanski:  I love it. And apply that 50/50 rule, no matter how big or small. Again, I want you to create sticky habits. I want you to create habits that you can continue to do. This is joking when I say dieting doesn’t work. We put on all those pounds after the New Year’s and we’re saying, Oh, crude, now we need rid of this extra weight that we have,” so we go on a pure cabbage soup diet. Well, that lasts for a solid nine days. And when we’re tired of cabbage soup, we go right back to what we were, and we’re eating all that other food and it doesn’t help.

                           That’s the same thing people do with finance, is they say, “Oh crap, I’ve spent too much money over the holidays and I’m not saving enough, so now I’m going to put 100% of my paycheck towards this,” or, “I’m not going to spend any extra money,” and that’s just not realistic because we’re still creatures of habit. We still need to do that entertainment. So I want small, sticky changes will continue with throughout this next year. So start with that 50/50 rule and move on from there.

Tammy Flanagan:        Well, one last thing I would like to add to our to-do list and this isn’t a real uplifting one, but it’s an important one. We did talk a little bit about death benefits and the death rate from 2020 and from COVID. So update your beneficiary forms, make sure that you’ve got the right people named, make sure those are on file for you, for TSP, for your retirement, for your unpaid compensation, which can be the most important one if an employee dies in the service. Who cashes your last paycheck? Who cashes out your annual leave? And also life insurance, FEGLI. So you have four beneficiary forms to keep up-to-date, and I’ll add those to that list of things that I’ll put on my update list.

Micah Shilanski:  Perfect. If you want that list, of course, you can email us, [email protected], and subject line updates for 2021 and we’ll send that to. If you want to grab it yourself, you’re welcome to. Jump on our website, planyourfederalretirement.com/15, because it’s episode 15. We’re going to put links to as beneficiary articles as Tammy said, and the forms to update, and this information Tammy’s going to put up there. So it will be great.

                           Well, perfect. Well, Tammy, thank you so much again for another wonderful podcast. So much fun.

Tammy Flanagan:        It was fun, Micah. Like I said before, I really enjoy doing these because it reminds me of the old live radio shows we used to do before the internet. It’s kind of that same idea. It’s been fun. Thanks for having me.

Micah Shilanski:  Tammy and I were actually talking about a little bit offline, so I guess we’re going to make this real, if I’m saying it now. We’re going to try to figure out how to do a little bit of a live podcast. We’re going to go get you, the listeners involved so we can have an active chat. And when that’s going on, we love answering your questions, because then it’s real. Instead of our theoretical ones that come up, love hearing directly from you, so stay tuned for that. And until next time, happy planning.

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