Take an active role in protecting your retirement benefits

The budget proposal submitted by the White House has many federal employees in a near state of panic about their retirement benefits. They are asking loads of important questions. Yet the one I hear most is “What can I do to protect my retirement?”

Historically a White House budget proposal ultimately shared little in common with the final “approved” budget. Even today, I would expect other proposals, lots of bluster, arguments, compromises and finally a budget that looks very little like this proposal.

However, we can’t downplay feds’ (both past and present) concerns and questions. It does appear the likelihood some portion of federal retirement benefits will be slashed is legitimate. Federal benefits have been demonized and politically condemned for years, with little to no negative impact. Yet, could this time around be different? It does seem there may be more support for many of the items addressed in this proposal than in the past.

This shared (federal employee) question reminded me of my grandmothers sitting room. Over her rocking chair was an old, hand-stitched framed print. It had been stitched into a fragment of burlap and was well worn, but, the message could still be clearly read.

“God, give us grace to accept with serenity the things that cannot be changed, courage to change the things that should be changed, and the wisdom to distinguish the one from the other.” – American Theologian, Reinhold Niebuhr

I am certain most of us have heard this prayer (or a variation) at one time or another in our lives. It is often referred to as the “Serenity Prayer,” has been adopted by Alcoholics Anonymous and other 12-step programs, and has been around since the 1930s.

Even for those that do not regularly pray, or don’t believe in prayer, the words still carry an insightful message:

  • Learn to accept and endure things that we have NO control over.
  • Use personal fortitude, strength and courage to change things that we should and could.
  • Possess the knowledge, insight and wisdom to know the difference.

My 2 cents worth

Cuts do need to be made to federal spending. If changes aren’t made, we may be fast approaching a day when, as a nation, we won’t be able to pay even for the interest on our debts. That could have major repercussions on us all.

Yet, as for cuts to federal retirement benefits, I could stomach changes implemented for future federal employees. Then, those new feds would know from their start date what benefits will be waiting for them at the end of their careers.

But Dan (not his real name), who is NOT a federal employee, put it well when he wrote “I am emphatically opposed to changes that pulls the rug out from under feds who have worked a lifetime in public employ. They have been ‘assured’ certain retirement benefits would be waiting for them at retirement. They have planned on those benefits and deserve better than this, for their years of service.”

Is it possible these proposed cuts, to long-term current (and past) federal employee retirement benefits, are more symbolic than substantial?

Rationale – This budget proposal estimates a $63 billion reduction in federal retirement spending over the next 10 years. Averaged over 10 years, this projected savings would be $6.3 billion annually. To put that dollar amount in perspective, our nation’s anticipated 2017 deficit (based on this budget proposal) is $603 billion.

The savings created by this proposal would potentially harm virtually every past and current federal employee. Yet the proposed savings would only account for an approximate 1 percent reduction in this year’s annual deficit. ($6.3 billion/$603 billion = 1.04 percent).

That seems like a massive cost to be paid by a dedicated federal workforce that would result in only minimal returns. Is it worth it? Is there perhaps a less damaging way to save $6.3 billion annually than defaulting on career-long promises to hardworking civil servants?

How can feds use the lesson of this old prayer to help them today with the potential attacks on their retirement benefits?

First, they must understand what assailants to federal retirement benefits could harm their financial futures. Then they must separate what is totally out of federal employees’ control and what is not.

Finally, they must have the courage to change the things they can.

Budget negotiations seem like a process that is out of federal employees’ control. However, this is an area where feds can have a voice and fight for their retirement security.

How?

  1. Write congressional leaders. Let them know how you feel about their encroachment on YOUR federal retirement benefits. Remember, elected officials are very sensitive to public perception. Federal employees should remember they are a part of the public. You can find your representative’s email at: House.gov and your Senator’s at: Senate.gov.
  2. Look at joining National Active and Retired Federal Employees (NARFE). They are a non-profit advocacy organization for federal employees. They fight for current wages, current benefits and federal retirement benefits. Many will blow right past this suggestion, they will let “others” join and fight, while they sit on the sidelines. Wake-up sideliners, there may never be a more important time during your entire career than now for feds to unite and send a clear message. Consider, when voicing concerns in Washington, numbers matter. NARFE allows current and retired feds (both CSRS and FERS) to have a unified voice. If enough feds join NARFE, that voice could be raised from a disgruntled murmur to a furious roar.
  3. Take control of items in your retirement package that you can:
    • Retirement planning — This is such a foreign subject to many feds that it is largely ignored until the last minute. If you are overwhelmed by the subject, you may want to seek out a Fed Focused Advisers (FFA) to assist in creating a comprehensive retirement plan. If you are like some feds I speak to, you may be concerned about the costs. However, an eye-opening study by Aon Hewitt and Financial Engines found, “… on average, employees using (financial advisor) help … had median annual returns that were 3.32 percent higher, net of fees, than participants managing their own portfolios.
    • Manage your investment risks — Know and understand your panic point for taking risks with your retirement savings. This is key in making intelligent investment decisions, even for assets still sitting in the Thrift Savings Plan. Many risk assessment programs can be located online. I know Rutgers University has a free online assessment, as does Motley Fool and I offer a free risk assessment tool as well.
    • Retirement savings — To piggyback on “b,” savings could, at least in part, be strengthened by adding more to your TSP or simply adjusting (allocations) investment choices (wisely) within the TSP.

What federal employees can learn from the “Serenity Prayer.”
No Control – Feds have no control over floods, world-wide conflicts or unforeseen market shifts.
Control – Feds can have a united and loud voice in D.C. They can have control over (many aspects of) their retirement savings.
Wisdom – Will feds have the wisdom to understand how, when and where they can have a positive impact on their financial future?

Pray they do.


Silverlight financial is proud to offer one, three-part, free/no obligation Federal Retirement Readiness Review each business day to federal employees as a heartfelt, THANK YOU to the federal workforce who has meant so much to our success. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risks, including the loss of principal. No strategy assures success or protects against loss. Silverlight Financial, IFinancial Services and its affiliates do not provide tax, legal or accounting advice. This material is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. For a list of states in which I am registered to do business, please visit www.silverlightfinancial.com.