Ep #54: Bad Advice

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Micah and Tammy have been seeing lots of mistakes and missteps happening lately, with more people reaching out to see whether they were wrong or right—and often having to find ways to fix the things that weren’t right. So in today’s episode, they’re jumping in to address a few of the situations they have been dealing with and share insight into how you can avoid mistakes and bad advice.

Listen in to learn how to look at things in a way that helps you see whether or not you’re getting good information, as well as how to decipher between good and bad advice and where to look for the right information. You’ll discover the important differences between the types of retirement systems, how to deal with a lack of clarity, and more.


What We Cover:

  • What to do when you can’t get clarity and how to be proactive.
  • The importance of understanding your benefits.
  • When you need to ask questions.
  • Specific mistakes that have been encountered lately.
  • The language you need to make sure is in your estate planning documents. 
  • What to do when something doesn’t feel right.

Resources for this Episode:

Ideas Worth Sharing:

I can’t remember a time, in the 35 years I’ve been doing this, where things just aren’t quite right. – Tammy Flannigan Click To Tweet

Free advice is the most expensive advice you will ever get. Keep in mind where you’re getting your advice from. – Micah Shilanski Click To Tweet

If it doesn’t make sense to you, then that is your cue to question it. – Micah Shilanski Click To Tweet

Listen to the Full Episode:

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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 host Micah Shilanski. And with me as usual is the amazing Tammy Flanagan. Hey Tammy, how’s it going?

Tammy Flanagan:      Hey, Micah, I’m doing just great. It’s been a while since we’ve gotten together, but I’m so excited to cover this topic today because I’ve been hearing from an awful lot of employees, and I don’t know if it has something to do with the fallout from the pandemic or what — but we have run into more than the usual number of, I don’t want to call them necessarily mistakes, but just some things that just aren’t quite right that we want to warn people about.

Micah Shilanski:         Yeah, Tammy that’s a great point. I don’t know what it is. Or maybe we went through some long, full moon cycle. I got nothing, but there is a bunch of bad advice, mistaken advice, misinterpreted rules. I’m not sure how you want to call it, but I’m going to call bad juju, that’s out there.

And it’s really affecting a lot of either clients or other people that we’re talking to and can cost them tens of thousands. And one example, almost a million dollars of a mistake that was made that had to be corrected. And that’s not hyperbole, it’s a real number that’s there. So, these are things that we really got to be talking about, is how do we discover mistakes?

And so, Tammy and I wanted to chat about that. We wanted share a couple of mistakes that we ran across, how we went through addressing them and fixing them. But more importantly, try to like open up our minds and really think about this; how do we look at things, how do you, our listeners look at things and make sure you’re getting good information.

Tammy Flanagan:      Yeah, actually, while you were out getting your drink, Micah, I came across a couple of others. It’s just crazy because I don’t remember another time in the 35 years I’ve been doing this where I’ve seen so many things that just aren’t quite right. And people have had to reach out to folks like you and I to try to figure out, am I wrong about this, am I right about this, how do I fix it, what went wrong, how did these things happen?

And they’re not just mistakes on the agency level, but sometimes, it’s OPM, sometimes it’s social security. Sometimes it can be the employee’s misunderstanding.

But in many of these cases, especially the ones that we’re going to talk about today, these are real errors that can cost real money. And you really got to try to avoid them by understanding your benefits well enough that you can notice when something’s not right.

Micah Shilanski:         No, that’s very, very true. And keep in mind that these mistakes, one of the key things that we want to stress here is that free advice is the most expensive advice you’re ever going to get. Right now, this is a free podcast, so there you go. You can take that with a grain of salt.

And for those YouTube comments in there, I’m not saying to go hire a team, that’s not the point of this. Our job, and one of our goals is to help educate over a million federal employees about their retirement benefits.

So, we have a pretty ambitious goal that’s out there. We really want to get this message out, but we got to keep in mind, where are you getting advice from. There are some phenomenal experts out there that really understand federal benefits that can really give some great advice.

And then there’s some people that dance around federal benefits. And I come across that when I’m looking at websites are looking up other research information of people giving advice that says, ooh, that’s like so close, it’s dangerous. it’s just the wrong information that’s going to get somebody going down the wrong path.

And who does this affect? Tammy at the end of the day, this doesn’t affect the person giving the advice, this affects the person receiving the advice, doesn’t it?

Tammy Flanagan:      Yeah, it does. And sometimes what I’ll say at my seminars is be careful of, like you said, who gives you the advice. It’s not going to be your carpool, it’s not going to be your lunch mate. And I guess these days, who has a carpool or a lunch mate, if you’re teleworking, which can even be worse.

And you really want to just like you’re trying to choose a doctor or a plumber or something important that’s going to cost you a lot of money, that could cost you your health or your finances – vet that person or talk to someone who’s used them, what was their experience.

Really try to find someone who is a true expert in their field, who understands the federal benefit program. Nobody really seems to know how to reach out to the right type of expert, to help them with these things. And it could be your agency. It could be someone at your organization, in your HR office or in your payroll system who has the experience to help you work through an issue.

But sometimes, those folks are not experienced, sometimes they have a wealth of knowledge. So, you really want to ask them about their expertise. It’s important.

Micah Shilanski:         And keep in mind, even though these questions can be a little uncomfortable, to dive into it, especially if it’s from like a position of authority, it’s OPM coming out and saying this, it’s your HR coming out and saying this, it’s a good buddy coming out and saying this or you’ve attended one of our classes and maybe it’s us that you’re questioning — go for it, I love questions. Knock yourself out. I think it’s phenomenal.

But sometimes, you can feel a little uncomfortable in those, but you have to press for it because at the end of the day, this is your money. This is your retirement. And if you don’t have good information, it can cost you thousands and thousands of dollars.

Tammy Flanagan:      Yep, and I’m glad you brought up the fact about it could be you or I, because I always tell people at my classes, if there’s something I say that just doesn’t make sense to you or doesn’t sound right, please send me an email. Please call me because I can show you where it says that, I can write it to you in a different manner so maybe it’ll make more sense.

Because sometimes, when we hear things, we hear maybe what we want to hear. We don’t necessarily hear what the person’s trying to convey. So, communication can be part of the problem, the way we communicate these rules, these regulations, and the changes that happen.

Micah Shilanski:         I always tell people, Tammy, I know I don’t know everything about federal benefits, that’s why I have a friend called Tammy Flanagan, because she does. So, we’re set.

Tammy Flanagan:      That’s right. That’s why we make such a good pair, like peanut butter and jelly. We like to complement each other.

Micah Shilanski:         So, let’s dive into this a little bit, Tammy, let’s talk about this. What I’d love to do as we go through for our listeners, let’s highlight a couple of the mistakes that we’ve seen recently.

If we went through it, we could spend hours on this, but let’s highlight a couple of the mistakes that we’ve seen really quickly. Where were the red flags in that, and how could this have been avoided, is that okay?

Tammy Flanagan:      Yeah, sounds like a plan.

Micah Shilanski:         Okay, perfect. Well, let’s talk about the one we were talking about just beforehand which is about understanding what retirement system you’re in and understanding the rules for that retirement eligibility.

This is something I know you and I preach consistently when we’re talking to federal employees, really understanding the rules, and there’s a big difference in some of the words.

Like some words we can use, which are interchangeable, which is fine. But there’s other words we use that are not interchangeable. For example, transfer and rollover. Yes, people use those interchangeably and they should not, there is a massive difference.

And the other one is postponed versus deferred. Those can sound the same, but Tammy, aren’t those completely different retirements?

Tammy Flanagan:      Yes, they are. And I really hate the fact that they’re so closely related in the dictionary because people will just say, “I’m going to postpone my retirement,” which they really should be saying, “I’m deferring it.”

Because when you’re saying that to someone in your personnel office, it can mean two different things. When you say that to OPM, it can mean two different things. So, let me see if I can make it simple, which is hard to do because you can actually postpone a deferred retirement.

Micah Shilanski:         And she went there, alright.

Tammy Flanagan:      So, let’s start off with the fact that if you’re eligible for an immediate retirement, meaning that you’re old enough to retire, let’s say you’re 57, you’ve got 30 years of service, or you will be at the time you have that 30 years, you don’t have to worry about what we’re going to say in this example, because you’re eligible for the real thing.

So, a deferred retirement is when somebody either leaves government service before they’re old enough to retire or before they have enough service to collect an immediate retirement.

So, for example, if I’m 45-years-old and I’ve got 15 years of service and I’m going to go work in the private sector, I’m going to resign from my federal career — the fact that I have more than five years of civilian service and the fact that I’m not old enough to retire, still allows me to claim a deferred retirement once I reach my minimum retirement age.

And if you don’t know what that is, it’s probably 57 for most of our listeners, if you were born in 1970 or later, but if you’re older like me, it might be closer to 56. So, somewhere between 55 and 57 is your MRA or minimum retirement age.

So, when you claim that deferred retirement, if you’re going to claim it at 57 and you didn’t have 30 years of service when you left, you’re going to take an age reduction, which is a pretty substantial reduction.

It can be 25%. So, if you’re 57 and that reduction is 5% for every year that you’re under age 62, that’s a 25% permanent reduction in the benefit. So-

Micah Shilanski:         And Tammy, sorry to interrupt you there. But this is a question I get all the time. “Permanent, but Micah, that means when I’m 60 or 62 the penalty goes away, right?”


Tammy Flanagan:      No, lifetime.

Micah Shilanski:         Permanent means permanent, lifetime, sorry.

Tammy Flanagan:      Yeah, that’s okay. So, that’s where we come into the postponed because even though you’re eligible for that deferred benefit at 57, if you don’t want that permanent 25% reduction, you can postpone it until you’re 62.

Then the service requirement for an unreduced benefit is only five years. You had 14 years, you can collect the unreduced benefit at 62. So, that’s a deferred benefit that you can postpone.

Now, let me just contrast it real quickly with somebody who’s already 57. I’m already at my MRA but I don’t have 30 years. I only have 20, like in my example, that I’m going to share with everybody.

Micah Shilanski:         Right.

Tammy Flanagan:      So, this guy, this is a true story by the way. This guy left the government at 57, or he might have been 56, because he’s a little older, but he had 20 years-

Micah Shilanski:         He’d reached his MRA.

Tammy Flanagan:      He had reached his MRA. He had enough service to claim an immediate benefit, but he didn’t have 30 years. So, he was facing a 25 or 30% reduction. So, he basically resigned. His understanding was that he should apply for that benefit right away.

So, he did, he sent the application off to OPM, letting OPM know that when he was 60, because he had 20 years, he could actually file that deferred benefit application at 60, that he was going to claim the benefit.

Well, OPM sent it back and said, “Hey, you’re three or four years away from age 60, we can’t do anything with this application.” Now, they told him in a letter to wait till he was 62 to send in the application for a deferred retirement. Well, they should have said in that letter, you can file your application when you’re 60 because you had 20 years.

But whoever wrote the letter didn’t look closely enough at how much service he had, so they told him 62. Well, the very polite and someone who follows directions, employee said, “Okay, I’ll wait till I’m 62. I know I’m eligible at 60, but I’ll wait till 62,” which he did.

So, at age 62, he sent the application in again, saying he wanted his benefit to commence when he was 60, two years before. And of course, OPM sent him the letter back saying, “You should have sent this application in when you were 60, we can’t do that because you have to file the benefit election before you want the benefit to start.”

And so, he lost two years of benefits by not understanding how to file that application. The instructions are right on the form. They’re not as clear as whatever is clear.

Micah Shilanski:         They’re not clear. They’re just not clear.

Tammy Flanagan:      They’re not clear.

Micah Shilanski:         Because Tammy, even you and I before, we put the instructions here and read them together and was like “Okay, what does this mean?”

Tammy Flanagan:      Right.

Micah Shilanski:         And we live and breathe federal benefits all the time. And it’s like nope, we had to hit the pause button so we could understand these. So, yeah, not clear is an understatement.

And even on that — sorry, I get on my soapbox right here. Even on that form, it does not say he has to wait until 60 to submit the application, it just says 31 days after OPM receives it. So, in his mind, okay I sent it in at 56, there’s nowhere in that form that says that is not how to use that form.

Tammy Flanagan:      Right. There’s no deadline listed on the form. That’s why I still want to argue with what they decided to do and not allow him to do it, but I haven’t been able to get my argument across.

And unfortunately, for him, he’s still not getting those two years’ worth of 20% of his high three. So, I feel like he’s being cheated, but we can’t force OPM to pay him something that they say he’s not entitled to.

Micah Shilanski:         Because I think a solid argument for this could be is he submitted the application when he was 56. There’s no deadline, there’s no expiration on it. It meets the rules they’ve set out in schedule B in part two. And he should be able to fall for it. But that’s a theoretical, practical is there’s no way they’re holding on for an application for four years. That’s just not happening, yeah.

Tammy Flanagan:      And that was basically the argument that he made twice. Because he got turned down by OPM. He appealed it to the merit systems protection board and they turned him down as well.

So, I don’t know of any other recourse other than filing it in the court of appeals. And I don’t know if it’s worth the money to go through that route. So, it’s just unfortunate.

And in this case, I don’t know what else he could have done other than really understood before he left the government what that meant to postpone his application and how to do it. Get that information from your HR office before you leave, really read that application, ask those questions before you make a mistake like that because it cost him dearly.

Micah Shilanski:         And I’m going to say with this too, he got a letter back from OPM that said he wasn’t eligible to 62. That’s what it said.

And so, here you take it and say from, in his defense in it, your HR is supposed to know this stuff. OPM is supposed to know this stuff. Here you have the governing body, OPM, that says he can’t get this until 62.

So, I can totally understand his thought process in saying, “Yeah, okay, I’m going to wait.” But this is the mistake, this is that free advice, that mistake and advice where you must question, and you got to go back and you have to understand it.

Because Tammy, correct me if I’m wrong in the math, but this cost him tens of thousands of dollars that he’s not going to get. Correct?

Tammy Flanagan:      He’s going to get, that’s right. And I read to you what it said from the court, the judge on the Merit Systems Protection Board, they said that even if you get bad advice from a government official, doesn’t matter.

So, the only way he could have fixed this was to avoid it all together by doing it right the first time. So, if you’re not sure how to do something, don’t do it until you’re sure.

Micah Shilanski:         Yeah. And we see this all the time in court cases, a tax court. Because this is what I love to do in my free time is I read tax court cases. And judges will say this all the time, “Regardless of your positive intent, regardless of what you were told by the IRS, regardless of the advice you received, you are responsible for knowing this and you’re responsible for the taxes and repercussions that it comes.”

And so, judges can be like “Wow, this is really crappy situation, but sorry, that’s just the law.” And it’s the same thing with your benefits. That’s what OPM is saying here. Even though it can be a crappy situation to get bad advice from the federal government, it’s still your responsibility to know the right thing.

And this can sound burdensome – that’s why you’re listening to this podcast and why you should share this podcast with a friend. So, we really get this information out, the importance of understanding how these benefits work.

Tammy Flanagan:      Yep. As the old saying goes, ignorance is no excuse for the law. And that’s exactly what it means. It’s unfortunate because who can really understand the way these laws are written. Even you and I who live and breathe this stuff have a hard time.

Micah Shilanski:         Yep. So, this is where three mistakes … and one of the things that I like to say is paying somebody for advice never costs somebody their retirement. Getting bad advice can absolutely cost you your retirement.

So, if you have a question, reach out to outside experts, reach out to someone else that has an outside point of view that’s not in your general central circle of it. So, you get this outside opinion, a second opinion, if you will, and let’s make sure you understand how this work to get the best out of your benefits.

Tammy Flanagan:      Yeah, I can tell you too; anytime someone has given me their retirement application or any form that they’ve filled out about their benefits to review, I can always find at least a couple, if not more than a couple things that they should have done or that they neglected to do or that they answered the wrong way.

So, it never hurts to have someone review that. Back in the good old days, you had someone down the hall, usually an old lady like myself, sitting there behind the desk that would say, “Come on in, have a cup of coffee and we’ll go over this together.” But more often than not, today, that’s not available. Just not there.

Micah Shilanski:         So, let’s take it another way, proactive, like what our listeners can do. Tammy, I’d love to know your thoughts on this. I use this sometimes in the Medicare world when IRMAA kicks in. Your income’s a little too high and now, you’re over IRMAA threshold, and what do you do?

And you read the rules and it’s like well, do I qualify, do I not qualify, et cetera. I am in the default of, if it doesn’t financially hurt you, fill out the forms and send it in.

So, in this particular case, if you’re like, man, is it 60 or 62, OPM’s telling me 62, well, what if I filed it at 60, what would happen? What’s the worst-case scenario?

Okay, they’d reject it and say, wait till 62. Well then perfect, I’m going to put it on my calendar. I’m going to file again at 60 and let’s see what happens at that point in time.

And so, we’ve used this strategy multiple times when you can’t get clarity. Now, we’ve run into this with the TSP. We’ve run into this with social security, with the IRS, with all these different things that are out there.

So, you got to use your gut check and say hey, does this make sense, and what’s the next step I can take to push this a little bit, as long as there’s not a cost with it, right?

Tammy Flanagan:      Right.

Micah Shilanski:       Then why not do that?

Tammy Flanagan:      Yeah. And like you just said, if it doesn’t make sense, you could be right. So, if it doesn’t make sense to you, then that’s your cue to question it, to really look into it further.

Because if that guy would’ve thought about that a little bit longer, saying “Why in the world would they tell me to apply at 62 if I could actually receive a benefit at 60, that doesn’t make any sense.” That’s the point he should have questioned it. Not after the fact, because then it was too late.

Micah Shilanski:         And also, don’t confuse different sets of benefits like I’m about to do to you right now. We could look at social security and be like hey, social security will give me like a six-month back pay. If I want to file for social security, therefore OPM will do the same.

No, those are different benefit systems that are in place. So, you have to look at them a little bit isolated. I don’t know Tammy, if you’ve run across this, but I’ve run into it with federal employees saying, “Oh, well this is how it works in my agency, therefore, this is how it works in OPM.”

And says, nope, that is not how it works. This is completely, even though it’s both federal government, these are separate. We have to look at it in the lens that this is the only way that OPM operates. And we can’t take what we learned from other agencies and really apply it.

Tammy Flanagan:      Yeah, I’m finding today with everything being so distant from each other, I’ve met people who think their payroll office is actually OPM. Because they’ll say, “Oh, I’m getting my retirement estimate from OPM.” Meanwhile, it’s coming from a distant HR office or their lump sum leave check’s coming from DFAS. And they think that’s coming from OPM.

So, really, you have to understand that your agency has an HR office who’s “responsible” for retirement counseling and your payroll office is gonna pay out your lump sum leave check. And they’re responsible for sending that claim to OPM. But it’s OPM who handles the actual finalization of your retirement. So, it’s hard to keep all those different areas straight, especially when you’re moving through that transition.

Micah Shilanski:         Yeah. So, let’s transition and talk about another mistake that we came across this week that’s not from OPM, but it’s from another professional. That’s an attorney. I love picking on attorneys.

Alright. So, I was meeting with a client, Tammy. I was telling you this before, as we were pre-gaming, I was meeting with a client and they had a friend who does estate planning — well, excuse me, they have a friend whose an attorney who would do their estate planning for them.

Now, that’s generally a warning sign for me because when I’m going to someone for some particular information, I want to make sure they’re an expert in the field, not that they can figure it out, especially when we’re talking complex things like estate planning; when we’re talking federal retirement benefits, when we’re talking taxes. I don’t want to talk with somebody that can go figure it out, has never been there before. I want someone that lives and breathes that.

Let’s change it to a medical example. Do I want to go to a surgeon who could be a great shoulder surgeon, and say, “Hey, you know what, I’ve always wanted to try a heart transplant and I’ll give you one heck of a deal because it’s my first …” No, I will pay the premium for the guy that knows what he’s doing. And it’s the same thing we need to think about when we’re finding other professionals.

So, I was working with this client, they went out, they got their estate planning, done. A couple of yellow flags were coming up along there. Anyways, I get their trust document back and I read their trust. Fair disclosure, I’m not an attorney, so I can’t give legal advice.

I do look at a lot of legal documents though. So, I get used to seeing things and I got a pretty good tax background. And so, Tammy, I start going through it and I start noticing multiple things are missing from the trusts.

Now, one of the things that’s really unique and we’ve talked about this before when we talked about estate planning. But if you have an estate planning document and you have retirement accounts, i.e., everyone listening to this podcast falls into that, because you have a TSP or an IRA and you should have a will or a trust, et cetera. You need language in those documents, which can help and hold retirement accounts. If you don’t, you can cause massive taxation that’s going be done.

So, I was working with a couple retired federal employees. They did a great job saving. Each of them had well over a million dollars in their TSP accounts, which is outstanding pre-tax money. And the way the attorney drafted the trust, Tammy, is that when they die, 100 % of their money has to come out of a retirement account and be subject to the highest taxes possible right away.

Tammy Flanagan:      What?

Micah Shilanski:         Exactly, right. Now, did the attorney write this and say, “Hey, I want the highest taxes possible paid on this?” No, but the attorney didn’t understand how IRAs worked. So, did not include retirement account language in there, did not take into the secure act that passed a couple years ago and all-

Tammy Flanagan:      Definitely came to my mind.

Micah Shilanski:         Yeah. And so, they weren’t up to date in these laws and they were causing massive tax issues, which basically over 50% of their accounts between federal and state taxes would be subject. Well, if I have over 2 million dollars between both of them in retirement accounts, subject to 50% taxes, that’s a million dollars in taxes.

Now, I do appreciate the patriotism in trying to reduce our national deficit, that’s really nice. But you don’t have to take it one-on-one. The client had no idea that this was in there and how would they? Because they went to an attorney to get this done and assumed it was done correctly. And there’s these massive errors in there.

The only way this would’ve been found if we hadn’t reviewed it is upon death when their errors had to pay a million dollars in taxes. And it was like why do have to pay?

Tammy Flanagan:      They would be no backing out of it. That would’ve another one of those irreversible mistakes.

Micah Shilanski:         Again, the court cases are full of these that says, “Well, regardless of the intent, that’s not what happened. You still have to pay the taxes.” So, this is one … sorry, go ahead.

Tammy Flanagan:      I was just going to ask you to clarify. So, what was in the estate planning document that would’ve caused that to happen? Like what did it say and what should it have said based on you understand?

Micah Shilanski:         So, I can’t tell you what it should have said. Because I have had my hand slapped for giving legal advice and I’m not an attorney so I can’t help there.

Tammy Flanagan:      Right.

Micah Shilanski:         But concept-wise, these are concepts that I’m looking for: so, red flag concepts are forcing mechanisms. This said when both spouses pass away the funds shall be distributed out. What does that mean?

That means they have to go out right away. Okay. Well, you’re forcing distributions out. This has a lot of other potential issues. What if there’s a divorce, what if they’re in a car accident, what if the beneficiaries are on Medicaid? It’s forcing distribution.

So, anytime you’re forcing money out of a trust, it’s a red flag that goes up in my mind and says, okay, why? Now, in theory, it can work out. In reality, there can be a lot of problems. So, the first thing is it had a forced distribution. So, that big red flag.

Second thing, there was no language in the trust which talked about retirement accounts. How to hold retirement accounts, how to do the pass-through taxes, how to do conduits. No language in there whatsoever.

Well, if there’s no language in there, what that means is when the beneficiary is the trust, all of the money must come out (TSP or IRA), it must come out of that pre-tax status and go to a trust and be taxed at a trust level, which is dramatically worse than you and I would pay as an individual. Trust tax levels are the highest tax rate that are going to be there.

So, just by not having this language in there, imputed a giant tax penalty. And again, this is a thing you have to go to someone when you’re doing estate planning that lives and breathes estate planning, but they wanted to save a little bit of money and it cost them potentially million dollars in taxes because they weren’t looking for this.

Tammy Flanagan:      Yeah, and I see that a lot. In fact, I probably was guilty a little bit in my younger days and I think a lot of people are, that you don’t understand just because I went to law school doesn’t mean I know all facets of the law. The law is so complicated as we well know that there are attorneys who specialize in family law, divorce. Maybe it’s separations and child, all of that stuff that deals with family court.

Then there’s estate planning attorneys, and then there’s another specialty which I learned probably in the last 20 years called elder law, which is not estate planning. It’s a whole different thing.

Micah Shilanski:         It’s way different , yeah.

Tammy Flanagan:      It’s way different. So, you want to make sure that when you hire an attorney that they specialize in what it is that you need them to do.

Or let’s say you have an attorney like that person had a friend who was an attorney, then say, “Okay, I need an estate planning attorney, can you recommend somebody?” Because maybe in their circle of people that they deal with, they have somebody who does that and lives and breathes it and even better yet, somebody who understands federal benefits in estate planning. Which can be a specialty of its own.

I know quite a few estate planning attorneys who do nothing but work with federal retirees and federal employees. So, that’s what you want because they really got to understand the language. They got to understand how these benefits work and how they get paid out. It’s unfortunate. It shouldn’t be this complicated, but unfortunately it is.

Micah Shilanski:         Tammy, you made that comment that you can review most federal employees’ retirement applications and find a tweak or two that they could have made. Same thing with me in a trust document.

Most of the time when I’m looking at these there’s things that … and when I talk with attorneys — and I had one on a podcast a little while ago, it was great chatting with him. He said, “Micah, attorneys are order takers. We do what you asked, but it may not be what you wanted.”

Tammy Flanagan:      That’s right.

Micah Shilanski:         And that’s a huge distinction between them, and you got to make sure you find someone that’s either going to help you navigate that or you’re going find an estate planning attorney that really wants to find out what you want, not what you said. Because often time what clients tell me what they said is not what they want. And we really have to work on that and really dive into those goals and let’s make sure we’re both on the same page.

Tammy Flanagan:      Yeah, that’s another good point because I was talking to another financial planner one time and she was telling me that she specializes in divorce financial planning. And I looked at her, I thought, oh, this sounds a little crazy. Like why would somebody going through a divorce need a financial planner. Isn’t an attorney who specializes in court orders and divorce good enough.

What you just said, Micah, is so true because she said, the attorney is going to do what you tell them to do: “I want to split my pension, I want to split the proceeds of the house, I want to do this and that with all of our other assets.” And that’s what they’ll do in the court order. It’ll do exactly what you told them to do.

However, that may not be in your best interest financially. Is it really what you want to do, is to give your spouse half of your retirement, based on the length of your marriage, when they themselves have a federal retirement, they’re going to do the same thing for you. So, now you both have to retire on the same date. Otherwise, you can’t afford to retire.

So, you have to do what’s in your best interest, both financially, tax-wise, and then take it to the attorney and have them draft it according to those best interests of both parties. So, yeah, it’s complicated.

Micah Shilanski:         One of the ones I see … well I don’t see it as much, but maybe our state of Alaska employees that don’t pay into social security or former CSRS or CSRS employees that don’t pay into social security. They’ll say, “Oh, well, we are married so you got to split the pension.”

That’s fine in concept. However, the CSRS employee’s not going to get social security, but the X is going to get their social security benefit. So, now, this is in 50/50. And the attorneys and judges have no idea how that stuff works.

Tammy Flanagan:      That’s for sure.

Micah Shilanski:         In a complexity. So, we could go … I was just thinking of more-

Tammy Flanagan:      We could go on and on.

Micah Shilanski:         We could go on and on in this camp. So, let’s talk about some action items which are going to be here. Retirement is supposed to be great, it’s supposed to be amazing. It’s supposed to be life-changing and doing, the exciting next chapter that’s going to be there. But you got to put your work into it to make sure you’re getting your advice.

So, Tammy, the first action item I’m going to say is know who you’re getting advice from and do they have real world experience solving these problems?

Tammy Flanagan:      Right. That’s good advice. And the other thing I would say as far as an action item is to really educate yourself, know what it is that you’re entitled to. Know that inside and out, whether it takes going to seminars, whether it takes reading things that are in the regulations or on the.gov sites.

Whether it means you’re going to meet with somebody who understands it better than you do, but do that due diligence before you make a mistake that you won’t be able to reverse.

Micah Shilanski:         Amen. And it doesn’t matter who tells you this: the HR, the TSP, OPM, a financial advisor, Tammy or myself, it doesn’t matter. Keep asking. If you have something in your gut that doesn’t feel right, then keep asking, keep working through that. Because at the end of the day, this is your money and you are the one responsible for your retirement.

Tammy Flanagan:      Yes. Like almost what I tell people, I say, nobody cares about your retirement more than you do. So, keep copies of everything that you submit, anything that you send off to somebody else, even emails, keep records of email communications, any way you’ve communicated to someone. If you’ve talked to them on the phone, put down the date, the person you talked to.

So, when you come to someone like me or like Micah, and you have a problem that you’ve made a mistake, you can show the paper trail. You can show the communications that led up to what’s happened.

Sometimes, we can unravel those. Sometimes we can maybe come up with a resolution. So, we hate to say it that mistakes happen, but it happens everywhere. Whether it’s someone coming to your house to fix your furnace or whether it’s someone who’s helping you with your retirement.

Micah Shilanski:         And this is another reason — maybe it’s too many action items, but start today.

Tammy Flanagan:      Start today.

Micah Shilanski:         This isn’t something to put off three months until your retirement — start sooner. Discover these problems in advance because when we see them coming, man, these are easy to fix.

But if it’s one second before impact, one second before retirement and we see these problems, that can be a nightmare to try to unwind.

Tammy Flanagan:      Absolutely.

Micah Shilanski:         Help us achieve our goal of over one million federal employees positively impacted about their retirement. And until next time, happy planning.

Hey, before you go, a few notes from our attorneys. Opinions expressed
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
counsel prior to implementation.

Content provided herein is for informational purposes only and should
not be used or construed as investment advice or recommendation
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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