Ep #46: When Your Retirement Is Off, What Do You Do?

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When it’s time for that little blue book to arrive, it’s important not to just file it away. Today, Micah and Tammy share what this little book is and how you can use it to review your retirement benefits. You will learn why it’s so key to ensuring your retirement is on track and also a valuable tool to use when something seems “off” about your retirement benefits.

Listen in as Micah and Tammy explain what you should do when adjudication is delayed, as well as what you can do in the meantime. You’ll learn what you need to know about the blue book, what happens when it arrives, and how to use it to review your benefits. This episode is full of problem-solving and practical advice about running into and avoiding issues with your benefits, so don’t miss it!


What We Cover:

  • The process of adjudicating retirement and what to do if there’s a delay.
  • What the magic blue book is and what you should do with it.
  • What it means when you receive the blue booklet.
  • The clues that show where your benefits are and if they are correct.
  • The importance of finding things in writing before going to OPM for reconsideration.
  • The timeline on making an appeal.
  • What to watch out for when dealing with OPM requests and dealing with people on the phone.
  • Why you want a copy of everything being sent to OPM.
  • Action items that will help you start reviewing now.


Resources for this Episode:

Ideas Worth Sharing:

This is not a book you want to throw in your file and never look at. This is something that is pretty important, pretty timely, and you need to look at this in a good timeline so that we can review it and make sure you’re getting your benefits. –… Click To Tweet

When you receive this little blue booklet, that means the folks at OPM have finalized your retirement claim. That’s your signal that you should start seeing a retirement check showing up in your bank account. – Tammy Flanagan Click To Tweet

The blue book is the pulse to know that OPM has seen everything. – Micah Shilanski Click To Tweet

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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, great 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 to the Plan Your Federal Retirement podcast. I’m your co-host, Micah Shilanski, and with me, as usual, is the amazing Tammy Flanagan. Hey, Tammy. How’s it going?

Tammy Flanagan:        I’m doing great, Micah. How about you?

Micah Shilanski:  It’s another day in our winter wonderland of paradise up here. Spring will be sometime in the next few months, so we’re excited about that, but right now we’re kind of in the middle of wrapping up winter, but excited to talk about some retirement stuff because an interesting thing comes in spring time in Alaska. It’s actually when retirees’ retirement is generally about finally adjudicated and they’re starting to get some neat retirement booklets coming in.

Tammy Flanagan:        That’s for sure. If you’re lucky, it’ll be adjudicated three months after you retire. I’ve had a few clients lately. It’s been six months to a year so if you’re not getting that blue book and you’re still in interim pay, you’re not alone.

Micah Shilanski:  Yeah. It’s also nothing. I wouldn’t worry about it, by the way. Tammy, I know, like you, I tell my clients that I would plan six months, at least is normal if you don’t hear anything. If we don’t hear anything by kind of that eight, nine month mark, I want to start being proactive, maybe some communications and find out what’s going on, but I would not be shocked at all if it took six months to adjudicate retirement, nor would I be alarmed. That doesn’t constitute an immediate emergency. There’s not a big problem. It just means they’re backlogged like they have been for a long time and it takes a while to process to adjudicate that retirement.

Tammy Flanagan:        Yeah, that’s true. Hopefully people took advice to have enough money sitting in the bank so that you cannot panic or worry because you’re not getting as much money in the interim period as you’ll receive once you’re fully retired. I’ve seen some cases where those interim payments that are meant to hold you over while you’re waiting, they’re relatively small. I know it does cause a little concern for many people who are waiting because they’re wondering how far off is it. Did I really underestimate my retirement? Realize that those interim payments can be a lot less. It just depends on what all is involved in your retirement, whether there’s divorce, whether there’s law enforcement versus regular. There’s a lot of things that can cause those interim payments to be significantly less than what you’re actually going to get.

Micah Shilanski:  Tammy, let’s jump into that. Let’s say we got a retiree and if you’re not retired just yet, these are good things to think about as well for kind of documenting things as you get closer to retirement, but let’s say that you retired earlier this year, you’re getting your booklet. Maybe you have your blue book in front of you or maybe it’s still coming. I guess one, we should define what is the blue book we’re talking about.

Tammy Flanagan:        The magic book.

Micah Shilanski:  The magic book that we get super excited about. Once that comes in, what do you do with it? This is not a book you want to throw in your file and never look at. This is something that’s pretty important, pretty timely that you look at this accurately in a good timeline so we can review and make sure you’re getting all of your benefits. First thing is, what is the blue book? Look at that. I knew you would have one. That’s perfect.

Tammy Flanagan:        Yep. I knew I had one sitting here somewhere. Yep. That’s why we call it the blue book because it’s a pretty teal on the cover.

Micah Shilanski:  It is. The exciting part about it is not just the cover, but what’s inside. This goes through all of your retirement benefits. This doesn’t come in a big FedEx envelope or anything else, it’s just mailed to you. I have had clients miss it before so I’m very apt to say look for this in the mail. Tammy, when that comes in, what’s the significance of this booklet? Why does OPM mail it out? What are some important things we should be thinking about?

Tammy Flanagan:        If you receive this little handy blue booklet, that means that the folks at OPM have finalized or adjudicated your retirement claim. That’s your signal that you should start seeing regular retirement checks show up in the bank account that are of the full amount that you’re going to be receiving. You’ll probably, around the same time, get another deposit in your bank account. That could be a little bigger than normal because it’s going to be the retroactive money that they owe you back three months or six months or however long it’s been since you first retired. When you look inside the booklet, you said it contains everything. I would say, maybe doesn’t contain everything you want.

Micah Shilanski:  Fair enough. Fair enough. It’s a really good thing you have to look at, but it is not everything. That’s a great point.

Tammy Flanagan:        Yeah. I know. I probably give my clients too much information because I show them the long hand calculation of how they subtract dates and how you come up with everything. I want them to see where these numbers come from. That’s the opposite of what OPM tells you in the blue book. They tell you the last number. This is what you’re getting.

Micah Shilanski:  Right.

Tammy Flanagan:        They don’t say where it came from or too much about where the numbers were arrived from, but they do show you the withholdings from your check, what the net amount of your monthly check should be. If you elected survivor benefits, they tell you the current value of that survivor benefit for your spouse. They may tell you things about your insurance coverage, depending on what insurance you have and they give you a few little tips on how to contact OPM if you have questions. Some information about the tax free portion of your retirement, based on what you’ve contributed. They tell you the total contributions as well, that you’ll need that number when you file your tax return. They do give you a lot of information. It’s a nice book to keep around. You can request another one, an updated one in the future when things change and it will be updated as you request those changes. It’s something that most people are so happy when they see that come in the mail.

Micah Shilanski:  Tammy, I guess where I get excited about this, when it comes in, this book shouldn’t tell us anything new. This should be a quick synopsis of what OPM sees is your pension. In our ideal world, the numbers match.

Tammy Flanagan:        Right.

Micah Shilanski:  Maybe it’s off a few cents here or there, I’m not going to squabble about that, but it’s going to be pretty much precise. If you retired at the year end, you’ve already done a great job listening to our podcast and you already know what your creditable service for retirement is. You know what your high three is. Tammy just said, it’s second grade math. We can walk through these steps and you can find out what your pension is. This is the pulse. This is the check to make, in my opinion. Tammy, correct me if I’m wrong, but I like this because this is the pulse to make sure that we know that OPM has seen everything.

Tammy Flanagan:        Right.

Micah Shilanski:  If I get this from a client and we’re going to go through the list of everything that Tammy and I like to check, and we run through that list and everything matches. Sweet. Gold star. Throw it in the cabinet, we’re done. I’m not super worried about it, but what I like about it is this tells me where to start looking for errors, because if all of a sudden your pension comes in and your pension amount is off after it’s adjudicated, okay, where is it off? This is going to start giving us clues about it. Maybe are withholding more taxes than you thought. Maybe it’s you didn’t have a survivor benefit elected. Maybe your high three is off. Maybe your years of service is off. Where do you even start? If all we had was a bank account deposit number, that would be really hard to figure out. The OPM booklet gives us that step by step of everything they looked at and now we get to compare it to our records.

                  Tammy, to your point. It’s not the whole picture, but it’s enough to allow us to ask questions and maybe if it’s wrong to be able to push back on OPM says, you know what, you only show 37 years of service and I think it should be 39 years of service. Where am I missing those two years of service? At least that’s my take on it. Tammy, what are your thoughts?

Tammy Flanagan:        Absolutely, Micah, and when you do get this, don’t wait a month to look at it because if you do find something that you think is off or you’re just not clear on or that you see as an error or at least you think it’s that way, you can always ask for a reconsideration of whatever it is that you find is not what you thought it was. That’s going to stop the clock at OPM, let them go back and look at those things and respond to you. Nine times out of 10, they might say, “No, we’re right, you’re wrong,” and then at that point, you have the option to appeal that further to someplace called the Merit Systems Protection Board. You do have recourse. You’re not just at the mercy of OPM. It’s not a communist society where what they say rules.

Micah Shilanski:  Right.

Tammy Flanagan:        You can challenge it and you can say, “Hey, that’s not what my agency told me,” or based on whatever data you have, “I think that this should be different.” You certainly have the right to do that.

Micah Shilanski:  Tammy, when I’m appealing these with clients, I never use the logic, that’s what my agency said or that’s what my agency told me.

Tammy Flanagan:        Yes. No. Never.

Micah Shilanski:  I always want to find it in fact. I want to find it in the retirement booklet. I want to find it on the OPM website. Even I think my website’s a wealth of information. I’m not quoting my website to OPM, because there’s not authority in my website in OPMs point of view. This is definitely something that I want to find stuff in writing that substantiates my claim as to why they’re incorrect.

Tammy Flanagan:        Right. Be concise. Don’t write them a book because…

Micah Shilanski:  Right.

Tammy Flanagan:        …no one’s going to want to read it. Just get to the point, try to cite a regulation or a law or something that’s like you said, Micah, something that’s not just the opinion of my agency, because it says everywhere over your retirement estimate that it is a retirement estimate and OPM has the final authority. OPM has the responsibility to interpret the law as written, so if you think they didn’t in some manner, form or shape, then that’s where you have the right to ask for reconsideration and once OPM issues that final decision, that’s when you can decide if you agree with them where they say, “Nope, you’re wrong up we’re right.” If you still think there’s a need to go further, that’s when you can appeal it to the next level but you have to wait. You can’t appeal something before you get a decision so just because whatever you think is going to happen, hasn’t happened yet.

Micah Shilanski:  Tammy, there’s a timeline, right? This isn’t unlimited. We can’t wait 20 years to go appeal something in this. What is the timeline on making an appeal or asking for a reconsideration?

Tammy Flanagan:        Yeah, that must be received by OPM within 30 calendar days. Not 30 work days, but 30 calendar days from the date of the initial decision. When you get that blue book, that’s their initial decision. Now you’re going back to say, “I don’t agree with your initial decision,” but you’ve got to do that within 30 days. Within a month.

Micah Shilanski:  This can be really timeline and the reason I bring up this 30 days, this isn’t 30 days since you received it. This is isn’t 30 days from when you decided to open your mail and read it. This is 30 days from their initial decision. The way I talk to clients about it in Alaska is, they’re going to make their decision. We live in Alaska. By the time the mail gets up here because they’ve got to truck it. Then they’ve got to fly it. Then they’ve got to put it on a sled dog. Okay, maybe not that bad, but by the time the mail gets up here, we’ve burned at least a week, if not 10 days. During holiday season, depending on when a client retires, that could be two weeks. That’s why looking at this is really, really important. As soon as you get it, you need to open up and review it or get it to your financial professional and they need to review it at that same time, because 30 days happens really, really quickly.

Tammy Flanagan:        It sure does. When you do send a request to OPM, make sure you send it with some type of notification that they got it, so you can say, this is when I sent it, this is when they received it in the mail room. Make a copy of your request so that you know what it is that you asked them to do. You have to do all those things to follow the trail of where this ends up. Sometimes you can make a phone call, too. You can start with a phone call to see if you can speak to somebody. Again, call early in the morning and try to again, speak concisely and you may or may not get any type of a reasonable answer that way, but it’s a place to start.

Micah Shilanski:  We’ll get into a couple little things you need to watch out for. One of the things I consistently tell my client, whether we’re dealing with OPM, whether we’re dealing with the IRS, whether we’re dealing with whatever. You get more with honey than you do with vinegar.

Tammy Flanagan:        Absolutely. Yeah.

Micah Shilanski:  The person who answered the phone, the person that’s reading your email is probably not the person that made the mistake in your retirement application, but they can make it worse.

Tammy Flanagan:        That’s right.

Micah Shilanski:  It could be a long delayed process. I’ve had clients rip into people at OPM and I’ve got to take the phone away. I’m like, “Stop. This isn’t solving… This isn’t helping.” I love that you said concise, polite, and I call it an educational opportunity. One of us is going to be educated in this process. I’m going to learn something new or you’re going to learn something new, but it’s an educational opportunity that we’re getting into.

Tammy Flanagan:        That’s that’s for sure. Yep. Use your customer service skills because there’s nothing you’re going to accomplish by getting riled up.

Micah Shilanski:  Tammy, one thing I want to throw out there. A practical thing that’s come up with several of our clients. I don’t know if you’ve run into it. One was a little serious. We have retirees and a lot of time when people go to retire, one of the things they want to do is travel. One of the things with this 30 day arbitrary date, why do I say it’s an arbitrary date? You don’t know when your 30 days is going to start. What if you’re traveling? This isn’t the first 30 days of your retirement. If OPM takes five months, well then great. At five months, plus 30 days is your time. If they take two months, it’s two months plus 30 days. You really need somebody checking your mail. If you’re going to retire and travel and doing these other things, you need somebody proactive.

                  If you just stop your mail in that period of time and then all of a sudden it takes two weeks to get here. You go on a two week trip and you come back and all of a sudden, boom, there’s 30 days right there. Not a lot of appeal process in that.

Tammy Flanagan:        No.

Micah Shilanski:  I’ve been successful with OPM just one time and that’s actually because the postal service screwed up and we were able to come back and they worked with us a little bit, but I mean, that was very, very difficult and it took 18 months to get them to say yes just to that. Really be timely on getting this 30 day process. Sorry, I don’t mean to get on a soapbox on that.

Tammy Flanagan:        No, I agree with you. We used to tell our employees that too, when I was working in the government and there was a case I’ll always remember this one where this man did just like you said, he retired, had saved up all this money with his annual leave. He took that check and him and his wife took, I think they were gone for about three months. I don’t know if it’s across the country…

Micah Shilanski:  Yeah.

Tammy Flanagan:        …where they went. It’s great. However, he gets back to his house, gets his mail and there’s a letter there from his payroll office saying, when are you coming back from leave? They didn’t even retire him yet. They thought he was on annual leave. Nothing had gone to OPM, nothing had happened.

Micah Shilanski:  Wow.

Tammy Flanagan:        There was a three month delay right there because he didn’t even know that they were missing whatever. His application for retirement never made it to payroll.

Micah Shilanski:  Wow.

Tammy Flanagan:        Yeah, he was AWOL.

Micah Shilanski:  All right. This actually brings me up to one of my things and then I really want to jump into, Tammy, the kind of the things that we’re looking for in that blue book. One of the things I always suggest my clients do, after they have separated. You ask beforehand, but then also ask afterwards, right after you separate from federal service and retire, ask for a copy of everything that goes to OPM. The reason I like to ask for a copy of that is kind of twofold. Number one, is stuff actually going to OPM?

                  This kind of spurs that and then number two, we get a glimpse at the package that OPM is going to receive. You know what, maybe it missed your health insurance certificate. Maybe that’s gone. Maybe it didn’t have survivor stuff in there. It didn’t have the five years claim of FEHB. Maybe it didn’t have all your service records, all of those little things. Once you get that, there’s really nothing I do with it besides thumb through it and make notes of things that questions OPM might have. Now I know when I get this blue booklet, maybe I need to look a little bit harder at X. Maybe I need to look a little bit more at Y because this was missing in that initial application.

Tammy Flanagan:        Yeah. While you were talking, Micah, I was looking up OPM’s website because there’s a… They call them benefit administration letters. These are letters that go out to the personnel offices to help them know how to follow the rules or what has changed or how to interpret the recent change in the law. There was one, I always, I know the date of it because it was in 2012 and it’s called submitting healthy retirement application packages. This is directed to the personnel shop to say, this is what we need from you, us being OPM, and this is what’s usually missing. These are the most common things that are missing and the single most common thing missing is the documentation of five years of health benefit coverage.

Micah Shilanski:  Wow.

Tammy Flanagan:        It’s a simple thing to include. In fact, they shouldn’t be including all of your health benefit coverage all the way back to your first appointment, but at least the last five years, because that’s a critical requirement to make sure you’re even eligible to have health insurance and retirement. Yeah, you are smart to ask your agency’s personnel shop to give you a copy of what they’re submitting and you have the right to question that saying, “Well, I thought I had to have five years. You’re not showing that,” or whatever you want to do to help make sure that everything is there. You have a right to know.

Micah Shilanski:  Tammy, the few times that we have had the health insurance not be fully submitted to OPM, I got to say, OPM has been great. They’ve always reached out to the retiree and said, “Hey, it doesn’t show you have five years, but you have 37 years of service. How long have you been in health insurance?”

Tammy Flanagan:        Right.

Micah Shilanski:  Most of the time they’re looking for that again. They want to give you all of the benefits you’re entitled to.

Tammy Flanagan:        Sure.

Micah Shilanski:  They’re not trying to mess you out of anything. They’re saying great, here’s this file. I got this glimpse into this person’s entire life and how do I get them the most of their benefits, but they can only work with what they have.

Tammy Flanagan:        Right. Yep. The bad thing about that though, is that now you’ve already gone through a delay because OPM finds out something’s missing. Now they have to wait for you to submit it and they’re going to do nothing on that case until that new document comes in.

Micah Shilanski:  Right.

Tammy Flanagan:        That just goes on the pending pile, so now you’ve got another month’s delay.

Micah Shilanski:  All right. This summer, we’re going to come up with a special webinar that is just going to be talking about how do we be proactive and avoid some of those delays, but let’s jump into… It’s so funny. Again, we write down a of couple topics. We’re only on our third bullet point of 12 and we’re 15 minutes into this. All right. Let’s jump through.

Tammy Flanagan:        I do.

Micah Shilanski:  That’s right. Let’s jump through a couple of things that we, when we open up the blue book, what are some of the things that we want to go through and check? Tammy, when you get one of those from a client, what do you want to see?

Tammy Flanagan:        I’m going to look at the length of service, because they’ll tell you that your retirement was based on 35 years and six months and this was your high three. If that looks off, of course, you’re going to want to check to see, are they off or were you off not knowing that. I know I’ve had law enforcement officers for instance, some of them don’t get credit for their overtime. It’s just overtime.

Micah Shilanski:  Interesting.

Tammy Flanagan:        Yeah. The lead pay, the law enforcement availability pay is part of basic pay, but there are some categories where it’s not. They get a different type of overtime and they were under the impression they would get to count that and it’s not, so that could be a very unpleasant surprise.

Micah Shilanski:  I think that’s a great one. Length of service is just huge and for many reasons, including on how it calculates to high three. One of the first things that I look for is survivor benefit.

Tammy Flanagan:        Yes.

Micah Shilanski:  Let’s make sure the survivor benefit was there. Is the spouse listed correctly? All of those little things that, God forbid, is used if the federal employee dies, what position does that put your spouse in? That’s one of the first things that I’m going to look for.

Tammy Flanagan:        Yeah. I had somebody just tell me recently that they got their blue book and there was the spouse. The name of their spouse was spelled off by one letter and they said, “Is this going to cause a problem if I die. Is she going to have trouble getting the benefit?” I said, “No.” I said, “That shouldn’t make any difference because when you retired, you provided her information, her social security number, the correct spelling of her name, when you got married, where you got married, your marriage certificate so I think that will be enough to prove who she is. I wouldn’t worry about that, being in the blue book, one letter off.”

Micah Shilanski:  Tammy, I’m going to push back on that one a little bit, if I may.

Tammy Flanagan:        Are you? Go ahead.

Micah Shilanski:  I think you’re a hundred percent correct. The spouse would probably end up getting the money…

Tammy Flanagan:        Yeah.

Micah Shilanski:  …but I would still encourage you to fix it, because we’ve seen, now this isn’t with OPM, so just to be fair on this one, but with other insurance claim payouts, other beneficiaries, et cetera. When the name’s off, you have to go through a correction process.

Tammy Flanagan:        That’s on the beneficiary form, right?

Micah Shilanski:  That’s on a beneficiary form. Like I said, this wasn’t on OPM.

Tammy Flanagan:        Yeah. That I would want to be correct, but this is just an informal public. This isn’t really an official legal document.

Micah Shilanski:  Tammy, she’s holding it up, if you’re not watching the video. It’s the blue book is what she’s holding up. Yes, I would make sure it’s all correct. That would be a triggering for me and I get sensitive on beneficiaries because I got to deal with the widows and trying to get them their money when there’s a delay. People aren’t happy.

Tammy Flanagan:        Absolutely.

Micah Shilanski:  Just make sure it’s correct and if it’s correct in all the backend and then someone fat fingered it, putting it in the booklet, again, I wouldn’t get too worried about it, but I would totally check it.

Tammy Flanagan:        Yeah. That’s the other reason why you want to keep copies of all those legal documents.

Micah Shilanski:  Yes.

Tammy Flanagan:        Your retirement application is a legal document.

Micah Shilanski:  Great point.

Tammy Flanagan:        Make sure there are no erasures on it. Make sure you didn’t scratch something out or wipe something out. You can’t do that. These documents have to be ink pen. I would suggest black ink or better yet fill it out online so it’s all neatly typed in and just sign it with an ink pen. These are all very official documents that can be challenged in court.

Micah Shilanski:  Perfect. Tammy, let’s talk a little bit about FEHB. We talked about it a little bit of making sure you have your five years, but I know one of the questions I get often from federal employees is, “Micah, I’m going to retire on 1231. OPM hopefully will start paying me by March or April, so I have three months that I’m not paying any health insurance. What happens? Do I lose health insurance for that three months?” Typically, and very smart for our federal employees who know this, is when you’re not paying insurance, you generally don’t get insurance. You’ve got to pay it to get it. That’s not exactly the case because of the retirees, because there’s a delay in OPM. You’re actually still covered under FEHB. Isn’t that right, Tammy?

Tammy Flanagan:        Yes. OPM has an agreement to pay your health benefit premiums and life insurance premiums if you have that during that interim period. You’ll notice once they send you the final payment that they will withhold all the premiums from that before they send you the net amount. That’s only true for health and life insurance and you’re going to get a notice when you retire from your agency saying that they transferred whatever it was, Aetna, Blue Cross, Kaiser to OPM. They’ll tell you that it went to office of personnel management as the retirement system so you’ll have some proof that you had this coverage, it’s being transferred now to OPM. Be sure you get that document. It may come in the mail after you’ve left, but if you don’t get it, I would be calling back to someone in my human resources office, which by the way, make sure you have a contact there before you leave so that if you do have any questions about things like that, you can check back with them and find out why you didn’t get it or when is it coming or that sort of thing.

Micah Shilanski:  That’s so great. Again, this isn’t a common thing, most of the time. I’ve only had a claim get denied once on a client in all of the times and then in the end, we were able to work things out and they weren’t out of pocket or anything for insurance. Yeah, that’s a great question. Tammy, you said in there, FEHB and FEGLI, Federal Employee Group Life Insurance, but I didn’t hear anything about long-term care mentioned. Why didn’t you mention long-term care?

Tammy Flanagan:        Dental and vision for that matter.

Micah Shilanski:  Yeah.

Tammy Flanagan:        Yeah, so there’s not the same agreement with those private programs. The health benefits and the life insurance kind of run through OPM. They take care of enrollment. They take care of changes, but when you have dental and vision and even long term care, to some extent, that’s either going to be run through benefits, benefits.com, which is a private vendor or through long term care partners themselves. Therefore, they’re going to bill you. If they’re not getting the money from your paycheck or they’re not getting the premiums from your retirement check yet, they’re going to say, “Hey, wait a second. We don’t want to drop them from our program.” They’re going to contact you by mail, send you a bill and you just pay that bill until OPM finishes your claim, and then they’ll revert to withholding from the monthly check.

Micah Shilanski:  Yep. I’m glad you remembered vision and dental and long term care, make sure you have a plan to pay those. I’d be proactive. If you don’t get a bill, don’t assume that you still have the insurance on those two. I would definitely be proactive in making sure that’s set up.

Tammy Flanagan:        Don’t get mad because you get a bill. I had a friend of mine. She says, “I can’t believe they sent me a bill. I’m not paying it.” I’m like, “Who are you helping other than them because now they don’t have to give you long term care insurance.”

Micah Shilanski:  Right. This isn’t going to end well for you.

Tammy Flanagan:        No. She was dropped and she’d have to re-qualify and pay at a new age. It’s silly.

Micah Shilanski:  That’d be horrible. Yeah. Okay. Another thing that we’ve got to be careful of Tammy, and this is one that I often see mistakes on, is tax withholdings. You know me, the financial planner is coming out, the tax planner is coming out. I love looking at taxes and this is an area that I often see. We do not have the correct amount of federal income tax withheld or State income tax and this is a big one that often gets missed because State income tax by default is not withheld from your pension check.

Tammy Flanagan:        That’s right. Yeah. If you live in a State, which many States do tax your retirement, keep in mind that OPM never asked you about state tax withholding. They asked you if you want federal tax withheld, but didn’t say anything about state tax. You have to be proactive to realize that if you’re in this interim pay status for six months, nobody’s paying any State income tax for you. You can either set up estimated tax withholding or you can wait until the claim is adjudicated and then set up State tax withholding with OPM. Most states, I believe, I don’t know what your experience has been Micah, but most States you can arrange to have OPM withhold the State tax from your monthly pension check. Maybe for the first year, six months, have more withheld if you retired at the beginning of the year and didn’t get checks for six months.

Micah Shilanski:  This is when I make my joke that says the best States to take care of the State income tax are definitely Alaska, Florida, Texas, Washington, Nevada. If you’re not paying attention to that, those are States that are income tax free.

Tammy Flanagan:        That’s right.

Micah Shilanski:  Yes, this is something that you really need to be proactive and I get a decent amount of people that are surprised at the end of the year when they go to file their tax return, because again, it was autopilot when I was working, they were withholding Federal and State. I said, keep everything the same. There’s a box that says withhold at the same W4 rate and now magically State stopped and you have a tax bill at the end of the year, so you’ve got to be careful of that one.

Tammy Flanagan:        Yeah, absolutely.

Micah Shilanski:  Tammy, another one that comes up is the supplement as well. The FERS supplement. If you’re entitled to the supplement, one, it shows up differently in your blue book and it functions a little bit differently at the same time.

Tammy Flanagan:        Yeah. I think a lot of people are surprised on a couple of things here. Number one, when you’re filling out the application to retire, you may have noticed, or maybe didn’t notice that the supplement’s not mentioned anywhere on that application. People wonder, how do I apply for the supplement? You don’t apply for it. When OPM adjudicates your claim, they will determine if you’re entitled to it. During the interim period, they’re not sending you the supplement because they haven’t done that analysis yet to make sure that you retired younger than 62, to make sure it was an unreduced, immediate retirement and all of the conditions because only about half of the retirees are entitled to the supplement.

Micah Shilanski:  Right.

Tammy Flanagan:        That’s one thing. The other thing is, once you start receiving it, there’s going to be a limit on how much outside earned income you can have. You can have your pension, of course, and you can take money out of the thrift, but if you go to work and you have wages or if you become self-employed, you’re going to find that you’re going to have to report those wages to OPM and your supplement could be terminated or reduced depending on how much you’re earning.

Micah Shilanski:  Every now and again, someone’s going to say, “Micah, they’re not really going to know about it so I’m going to get both of these.” The truth is, they do know about it. The problem for you is they know about it two years after the fact. You’ll go about it. You’ll be making “excess income” or too much earnings and not eligible for the supplement, but you’re still going to receive the supplement and about two years later, OPM will get a copy of your tax return and be like, “Oops, you made too much money,” and then they’re going to stop or greatly reduce your pension in order to make sure that’s back paid, et cetera. I’m very proactive with clients in this. If we know we’re going to be over, perfect, there’s a form for that. We can send off the form to OPM. We can make sure that we’re withholding it or at least we can be withholding that supplement income aside in a separate account so that when we have to pay it back, it’s not a financial detriment to us.

Tammy Flanagan:        I don’t know about you, Micah, but I know OPM, the IRS, Social Security Administration and the Thrift Savings Plan, none of them are in the habit of sending junk mail. When you see something with the return address that says Office of Personnel Management or Federal Thrift Investment Board, open it up, read what it says, because it’s usually something important.

Micah Shilanski:  That’s a great, great point. All right. One of the other things, Tammy, that we got in the habit of doing for our clients this last couple years is going back and looking to make sure they got all of their back pay correctly. Did they really get those supplements? Did they get all of their checks? We go through and actually just run the math for them. We have them bring in, every time that your pay is adjusted, even in interim status, you’re going to be getting a letter from OPM and you’re going to say what it is. We’re actually going to get those into the back of the OPM book, actually look at the client’s payments and say, “Hey, did everything balance out?” There’s only been two times that it has not with clients. The odds are, it’s going to balance out just fine, but this is one of those things that I like to take a peek at. Let’s make sure the client received all the money they were supposed to receive.

Tammy Flanagan:        Yeah and it gives you a better understanding of what’s being taken out of your check, where the money’s coming from. I think it’s a good exercise.

Micah Shilanski:  Yeah. Perfect. All right. Tammy, let’s go through some action items for our listeners because this podcast is all about taking action to empower you in your retirement and I’m going to say one of the first action items that I would suggest if you are eligible for the FERS supplement, so half the people listening to this are going to be eligible for it. About 50 percent of retirees get it. Mark on your calendar when the supplement stops. This comes as a surprise. Yes. It’s age 62, but it’s amazing how many people we get, 57 are getting it, then five years later, they’re 62 and all of a sudden they lose a thousand dollars a month and what happened to my money? I would absolutely be marking on the calendar is when that first supplement stops.

Tammy Flanagan:        That’s a good tip. I would say if you’re just a recent retiree, get organized. Start to keep track of things, have a place where your beneficiary forms are filed, have a place for your loved ones to know who to call if something happens to you. Keep copies of everything that you use to apply for retirement, the applications, personnel folder and put that all in a safe place. It shouldn’t take up too much space and if you’re really savvy, you could put it on your computer as a file. However you do it, have those documents somewhere because for the first couple of years, things are still changing. You’re still settling in. You might need to refer back to that. You might even go back to work for the government. You might need some of those documents in the future, so don’t throw anything away too quickly.

Micah Shilanski:  I’m going to get organized. Tammy, I love that. It’s such a great tip. If you’re going to do it on a computer, make sure someone else has access to those documents …

Tammy Flanagan:        Yes.

Micah Shilanski:  …because keep in mind, the computer, you’re going to have to change your password every 90 days or every new computer or whatever and it can’t tell you, people are now passing away that something’s encrypted on their iPhone, their computer, no one else had the username, access and password to makes it kind of hard to get copies of these files when you’re disabled. Really important. Tammy, I’m going to say our third action item is make an appointment to review your blue book with your records. Have a time to sit down, 30 minutes to an hour. If you’re not working with a professional to help you with this, then do it yourself. Make a time, put your phone on D and D or whatever, pull out your documents and actually go through them and make sure everything’s correct. If there’s a question, circle it, and worst case scenario, we ask for OPM to review this and they could come back and they could say, nope, everything’s right in their reconsideration or they could say, you know what, at least it opens the window for us to appeal things later.

Tammy Flanagan:        That’s right. Exactly right. I was trying to think, it just slipped my mind, I had a senior moment of another action, but lots of things you can do when you first… I know the one thing I was thinking of is when you’re retired, keep in mind that you don’t have a payroll office anymore telling OPM or TSP or anybody else…

Micah Shilanski:  That’s right.

Tammy Flanagan:        …where you’ve moved and a lot of retirees like to relocate. If you’re going to permanently change your address, be sure to change that address with the agencies that are sending you money. Let them know what’s happening, where you’re moving to and if you just signed up for Medicare, make sure you call your health plan to say, “Hey, guess what? I just retired. I just enrolled in Medicare Part B,” so they’re not taken off guard to wonder why are they now secondary payer? I’ve seen some bills get messed up and billing offices not bill the right people. Communication is key.

Micah Shilanski:  All right, well the podcast is all about action items and you have several great action items that you guys can do this week to be empowered in your retirement. Thank you so much for staying in tune. If you’ve made it this far, hit that five stars. Come on, give us a like. You know you like it if you’ve made it this far and share this with a coworker, share this with a friend. One of the things Tammy and I have a huge passion about is sharing this information to empower federal employees, to make sure that you have the right information about your benefits. I can’t tell you how many questions we have about, I heard this, I was told this, my agency said this and it’s just wrong, but somebody was counting on that for retirement. We really want to empower you with great information. Help us share that and until next time, happy planning.


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herein are solely those of Shilanski & Associates, Incorporated, unless
otherwise specifically cited. Material presented is believed to be from
reliable sources, and no representations are made by our firm as to other
parties, informational accuracy, or completeness. All information or ideas
provided should be discussed in detail with an advisor, accountant, or legal
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Content provided herein is for informational purposes only and should
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regarding the purchase or sale of any security. There is no guarantee that
any forward-looking statements or opinions provided will prove to be
correct. Securities investing involves risk, including the potential loss of
principle. There is no assurance that any investment plan or strategy will be

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