Full Transcript for Federal Retirement Secrets: Can You Afford to Retire? | Chris Barfield

Just that. So you figured no cocktails for you, so that you could answer all these really difficult questions, right? Very good. Chris Barfield: Right. Well, if they get really difficult, maybe I'll start with the cocktails, but Mary: Yeah. Heather: That works too. Clare: Perfect. Heather: Mary, what about you? What are you drinking today? Mary: when we heard that you were a ginger ale connoisseur, I thought to bring on a drink that I get from Eastern Kentucky. It's called Ale8 Have you heard of this one? Chris Barfield: I know it already. Yep. Mary: And it's bottled in Winchester, Kentucky. Chris Barfield: That's right. Mary: and I've been drinking Ale8 my whole life it's kind of like a ginger ale cream soda but mine has buffalo trace in it mm-hmm so I spiked my Clare: very fancy. Heather: Very good. Mary: ginger ale a little bit Heather: How about you, Clare What do you have? Clare: So I consulted with my best friend Chatty, ChatGPT, and I said, what would be a good drink with ginger ale? And Chatty created the Federal Fizz. So I have vodka, cranberry, and ginger ale in my little Federal Fizz. And are we mentioning Heather: Nice. Chris Barfield: Mmm. Federal Fizz. Clare: what we're wearing yet, Or Heather: we can go ahead. Clare: So hashtag nine line. I have one of their t-shirts on that says, drink coffee, pet dogs. So what about you, Heather? Heather: Yeah. Mary and I well Mary and I are both wearing our nine line wiener dog shirts, right? Clare: Love it. And I'm the one with the wiener dogs. Yeah. Mary: He's a tactical, tactical wiener. Heather: You are the you're right? Tactical wiener. I do have a ginger ale drink, but I I don't know about all these crazy ginger ale brands. I just have a can of canada dry ginger ale. Clare: Right here with you, girl. Heather: But but I do have a little papa's pilar in it, so like a little fancy rum. Yeah. Chris Barfield: Hemingway. Heather: Chris, before we put you to work answering everybody's retirement questions, tell us just a little bit about your career before you started Barfield Financial. Chris Barfield: Yeah, I was a police officer right out of college in Charlotte, North Carolina, which is where I'm from originally. And I only did that for a couple of years and somebody talked me into taking this treasury exam. That's what the Marshals used back then. Clare: Mm-hmm. Chris Barfield: To get hired by the the Marshals and I got hired by them and they sent me in their infinite wisdom to San Juan, Puerto Rico. So that's where I started my Heather: Mm. Chris Barfield: career. And I might as well have landed on the moon. Heather: Do you speak Spanish? Clare: Yeah. Chris Barfield: I speak it now, but I didn't speak it at the time. Heather: Of course. Chris Barfield: And so I did three years there. First year was very interesting, fun, exciting. Second year I could take it or leave it. The third year I was very close to quitting. it was Clare: Aww. Chris Barfield: it was it was a tough environment, at least for our agency. It was a a tremendous amount of work down there. you know six, seven days a week pretty regularly, ten, fifteen hours a day routinely. Clare: Yeah. Chris Barfield: I mean it was tough. no one really wants to go there unless they were Puerto Rican. So it was it was tough to get people to go there. So we're always shorthanded. but I got a lot of experience. I got years and years worth of experience in just a few years. met my wife there. That's where we met. She was a an Heather: Yeah. Nice. Clare: Aww. Chris Barfield: FBI agent there in the in the federal building. So we met there. so you know Good things came out of it. then I transferred to the first thing I could get actually, 'cause I just wanted out so badly, and it was Indianapolis. And I had never been there before. I got there thinking, well, I'll just stay there for a couple of years until I get back to Charlotte. And it turned out to be a really good place. The the Midwest is a is a nice place. you mentioned Kentucky, you go down to Kentucky quite a bit, but it's just a nice you know, some people say it's boring and it is kind of But it's it's just a nice, quiet, low cost of living, conservative. you can get nice houses and not a lot of crime, not a lot of crazy stuff that you might see in maybe New York or Miami or LA or something like that. So once the kids were born and started, we got roots there. We just ended up staying. And I Clare: Nice. Chris Barfield: finished my whole career there. So I I retired Heather: Yeah. Wow. Chris Barfield: four years ago this week. And yeah, thanks. Yeah. Heather: Wow. Congratulations. Yeah. Clare: Nice. Yeah, holy smokes. Heather: Cheers to retirement. Chris Barfield: Yeah. Best best Clare: Cheers to retirement. Mary: Cheers. Chris Barfield: years of my life, I tell people that. Clare: There we go. that's awesome. Very cool. Chris Barfield: And and then just recently this summer finally got back to North Carolina. So I'm back in North Carolina now, although I didn't go back to Charlotte. I'm in the Raleigh area, Wake Forest town. So yeah, it's beautiful, Clare: Very nice. Chris Barfield: love it here. Glad to be out of the snow and all that stuff and just glad to be close to mom and everything. Heather: Yeah, that's great. It's all the important things in retirement. Clare: That's so nice. Mary: That's important. Yeah. Chris Barfield: Yeah. Clare: Very important. Very important. Heather: How did you end up being the go to guy while you were still working? Did you have accounting degrees before you got into the government or Chris Barfield: Yeah, I had my accounting degrees. I was working on my CPA just as something to do on the side. I've always been interested in finance and and investments and accounting and that kind of thing. So it's just always sort of a side thing that I did just as a hobby. But really what happened was I was at work one day and this thought popped into my mind. I tell this story in all of my retirement

seminars, it's a pretty simple question, but it led me down this path and it was really this, like What do we get for all of this? what do we get at the end of putting up with, 20, 30 years of whatever it is that we're doing? for me, a lot of sitting in court in the beginning of my career and all that stuff. You're just like, what do you get for all this? And so I thought that was a very simple question to answer. So I asked a couple of coworkers, which is what most people do, and I got 10 different answers from, 11 different coworkers. And I'm like, so no one knows this. Clare: goodness. Yep, there's Heather: Yeah. Chris Barfield: and so, this is how naive I was. I sent this long email to our HR saying, Can you just please explain the retirement system to me? Heather: Yeah. Chris Barfield: And I'm actually still waiting on a response from that. Clare: Ha Chris Barfield: I'm sure they're working on it. Mary: I bet. Chris Barfield: So I just said, Forget it. I'm gonna learn it myself. I was comfortable reading tax law and regulations and all those kinds of things. So I just out of pure selfishness really, I had no idea No thoughts about doing this sort of thing. I just wanted to know I knew we got a pension, but was it gonna be five thousand? Was it gonna be fifty thousand? Was it gonna be a hundred thousand? I didn't know, I'd I obviously I'd been putting money in T S P but when exactly could I get it? all those different rules and stuff. So I just learned it. I just I became obsessed with it. I just studied it every day for months and and got pretty good at it and started answering a couple of coworkers questions and showing them the actual rule, And that one thing led to another. Before long, I'm kind of sending around a little newsletter in the courthouse, or it was really like maybe 10 people. It wasn't even a newsletter, just an email chain. And then that's grown and it continues to grow now. I even this past couple weeks ago, I sent out the most recent one. It's continued the whole time, last 10 years. So I think Clare: Wow, holy smokes. Chris Barfield: there's about I think there's about thirty thousand a month or so that read it now. So it's grown a lot. Clare: Wow! Chris Barfield: And from that, that exposure led to going around and teaching retirement seminars. Even while I was still employed by the Marshall Service, I would have, FBI or whoever contact my management and say, Hey, we'll pay for Chris per diem. Can he come over here and, you know, give us a retirement seminar? So I was actually traveling around doing a job that wasn't even really a job, but I loved doing it. And then in retirement, it just became my full time. gig, So Heather: Wow. Yeah. Chris Barfield: I didn't really seek it. I just got pulled along in it, the whole time. Heather: That's great. Yeah, you definitely found your niche. That's awesome. Absolutely. Yeah. And Clare: Yeah, you're certainly good at what you do. You have a lot of followers. Yeah, you have a great Chris Barfield: Well thank you. I appreciate that. I saw you had Mary: Well, I think. Clare: reputation. Chris Barfield: Tammy on here. I learned when I was studying crazy, Tammy and and Dan Jameson also, but those two were we're all standing on Tammy Flanagan's shoulders to a certain extent. Yeah, Clare: Yeah, she's a rock star. Mm-hmm. Mary: Yeah. Heather: Yeah, Mary: I think for me, Heather: That's great. Clare: Yeah. my gosh. Mary: the reason I follow you so much and have for a while now is just your writing style is great. right? You're funny and it makes sense and easy to follow. I think that's props to you and I think it's why you have so many followers. You're different than most, financial advisors. Clare: Yeah, yeah, Chris Barfield: try to write so that even Heather: absolutely. Chris Barfield: right, I try to, you know, write simply. Like I try to write so that even an FBI agent would be able to understand it when they read it. So she hates that joke. She'll have time to get me back if you have her on. She'll get me back. Heather: Ha ha ha. Mary: I was going to say so a federal agent can understand it, right? for that matter. Clare: Is your wife within hearing distance? Okay, it. Heather: well, we're so happy to have you on. And speaking of your reach, we just have to thank you personally because as soon as you mentioned us on some social media posts and then put us in your newsletter, we definitely saw some increase in listeners and increase in our social media accounts. So so Chris Barfield: Good. Heather: we we are really grateful for that. Thank you. Mary: Definitely. Chris Barfield: Yeah, absolutely. Clare: Thank you very much. Heather: And all the great retirement advice you've given us over the years. So, bringing us back to the retirement advice, we did open up to social media followers to see what their questions were. if you could in broad strokes, Tell us the very basic differences between the special category employees and a regular federal retirement. Clare: Good question. Chris Barfield: Sure. Yeah. So FERS is split into two parts, regular and special category. Special category is the smaller portion by a long shot. And it's law enforcement, federal firefighters, and air traffic controllers. So those are the bulk of there's also a couple of other things that kind of follow along. CIA and some other things are kind of like that. but the main difference is Actually, pretty much everything is different, but I think the main difference is how early you can retire and how much you get. Those are probably the two huge differences. So if a special category employee works 20 years, they get 1.7% towards their high three for each year. So if they do 20 years, they're gonna get 34%. regular FERS, they're gonna have to work 34 years to get 34%, because they only get 1% a year. unless they work past 62, there's a little bonus there. so, we accrue credit towards our high three much quicker. Also, we can leave on our 50th

birthday, which is what I did, if we have 20 years or more on of special category time. Or we can leave at any age if we have 25 years on of special category, which is what my wife did. She came on at twenty-four in the bureau, and so she retired at forty nine. So Most regular FERS they can't leave until they get their their minimum retirement age, which is fifty-six, fifty-seven, depending on when they were born. So we get to leave earlier, we get more money. Our high threes are generally higher because a lot of the at least the law enforcement, because we get that twenty five percent extra availability, which goes to the high three. So in some in some instances ours is higher. we get cost of living adjustments right away. I retired at fifty. I've had three cost of living adjustments already. Regular FERS don't even get those until 62, which is really that's an awful rule. That's terrible Heather: Wow, I didn't realize that. Huh. Mary: Ugh. Clare: I didn't either. I didn't either. Chris Barfield: for them. they don't they Mary: Wow, yeah that is. Chris Barfield: their annuity is set in stone until 62. Even if they leave Heather: Wow. Chris Barfield: at 57, their annuity is exactly the same. No matter what colas are issued, they don't Mary: Hmm. Chris Barfield: get one until 62. So yeah, Clare: Yeah, I never did that. Chris Barfield: that's a terrible thing. when we can get our TSP, we can get our TSP as soon as we retire. So somebody in their 40s theoretically could be pulling money out of TSP without paying a penalty. So pretty much everything is different, but in and I would say it's better for a special category. It just is. Heather: Sure. Clare: Yeah, absolutely. Absolutely. Heather: Sure. All right. Thank you. That was yeah. I I'm always amazed. I'm always learning something new about about our retirement, Clare: Me too. Heather: I'm gonna hand this off to Clare to start with some of the basic retirement questions that some of the followers asked. Clare: Yes, and we want to thank our audience again for asking these questions. I want to get this right. So, Chris, people who follow you know are a proponent of retiring as soon as you are eligible. You've written about the I can't afford to retire mindset. Talk about what the numbers look like when you compare retirement salary versus working salary, if you would. Chris Barfield: Yeah, so there are probably thousands, maybe tens of thousands of people working longer than they need to unnecessarily because they think they can't afford to retire because they really don't fully understand the numbers. If somebody's making $150,000 a year, they may think they look at their retirement estimate that they're getting and it's $70,000. And they're like, I'm Clare: Right. Chris Barfield: making $150, and now I'm only going to get $70,000 in retirement. I can't afford to retire. But That's not a fair comparison because there's a lot of stuff coming out of your check right now that's not coming out of your

retirement check. In other words, you Clare: Right. Chris Barfield: have to pay for a lot of things now that you won't have to pay for in retirement. So that frees up a lot of money. That takes a lot of pressure off of because you don't have the same obligations every month. You don't pay for Social Security tax. You don't pay Medicare tax. You're not paying into FERS. You're not paying into your TSP. you're s you're saving some. money in taxes because you're earning less, you're not paying as much in taxes unless you go work somewhere else. But those things could contribute to, you know, 20, 30% maybe of what you're making right now. So when you factor at that those things back in, like, okay, I'm not, because you really can't, let's say you make $150,000 a year right now. You can't spend $150. You can't use all $150 because there's Clare: Right. Chris Barfield: so many obligations attached to it. Well, out of that 70,000 you're gonna get in retirement. You can spend, you can use a lot, a much higher percentage of that because of the fewer obligations that are attached to it. So really there's a couple different methods. One's really complicated, but the other one is you can just look at what your net pay is now versus what your net pay will be in retirement. And you'll see that Clare: Okay. Chris Barfield: those numbers are generally speaking much closer than what people think. You know, Clare: Right. Chris Barfield: people always say, where can I go and make if you're at the cap, people say, where can I go and make 197,000? Well, it's a terrible question because you probably only need to make about 50 or 60, and you can make that probably pretty much anywhere. Clare: Right, seriously. Heather: Wow, yeah, that's a great point. Clare: That is a good point. Yeah, I know Chris Barfield: Yeah. Yes. Clare: that when I was looking to retire, I would look at how much I was bringing home and if I could fit my way of life, my quality of life into kind of those parameters. It's less, it's less, obviously. Chris Barfield: Yeah. Yeah, that's exactly what, everybody should be doing. They they just need you may want to keep working. It may not the numbers may not work out for you, but you at least need to have a true comparison. And comparing the gross income now to the gross retirement check is not even close to being the fair comparison. Yeah. Clare: Right, right, good point, good point. Alrighty, question number two. I wanna make sure I get this right and we wanna again thank our audience for the question. How much difference can a higher, high three salary make and when is moving to a higher paying locality worth it? Chris Barfield: The first part of the question there's is just a huge range because depends on whatever your high three could be. I mean, it if you get s multiple promotions or you move to another agency or you y you know, you keep working until you get years of raises, then your high three could theoretically be you know tens of thousands of dollars more, I guess. But if you're looking at what most people are thinking about is generally If I retire this year, or I'm thinking about, waiting six months or a year to bump my high three up a little bit, you'll find out it doesn't really make that much difference. I did a so here's a a good real-world example. I don't have the exact numbers in front of me, but I remember them pretty good. I did them this week. So an FBI agent wanted to retire in 2022. And so I did his estimate then. He Decided not to retire. Now he's retiring at the end of this year. So it's four years later. Clare: Okay. Chris Barfield: So he worked four more years. His high three went up. He actually was overseas. So the high three is a little bit lower if you're overseas because you don't get locality pay. So he came back, got a higher high three. but in the meantime, FEHB went up. Part of that high Clare: Hmm? Chris Barfield: three goes to the survivor benefit. Clare: Mm-hmm. Chris Barfield: You know, his feg he has fegly, the fegly went up. anyway, net is he's netting about $500 more a month by waiting four years. Clare: wow. Chris Barfield: So that's about $6,000 a year net, which which might be a lot for somebody, $6,000 a year. But you have to think that he gave up one month Clare: Yeah. Chris Barfield: of that supplement payment every month. So that's 48 months he gave up of that at $1,500 or whatever it is a month. It's a long that's a lot of money. It's gonna take a long time to recuperate that. That's one of the reasons why mathematically, Heather: Mm. Chris Barfield: if you if you really wanna geek out on the math and you do the pre Dan James and I talk about this all the time. If you want to do the present Heather: Yeah. Chris Barfield: value of of a f a fixed amount of or of of annuities for future, you know, like the the the largest value, the highest value is is the current value. So in other words, the longer you wait, you might increase your monthly amount. But you're not really going to increase the overall amount over the rest of your life. And that's Clare: Right, right. Heather: Huh. Chris Barfield: the big thing, right? If we don't really care, if your goal was just to get the highest monthly amount possible, then you just work all the way up until the month before you died. And then that monthly check would be gigantic, but you'd only get one of them. And so we try Heather: Right. Yeah, yeah. Mary: Yeah. Chris Barfield: to we try to talk to people and get them to understand what the amount of money is going to be over the rest of their lives, not just over, you know, per month. Clare: Okay, and just to note, your High 3 doesn't necessarily mean your Last 3, right? Okay. Chris Barfield: That's correct. It doesn't. In most cases, it is because most of our incomes just keep going up until we retire. But again, if you go overseas, you don't get locality pay. So that knocks your high three. You're not gonna they're not gonna count those years. Or if

you've been working in, you know, San Francisco and then your last year you get transferred back to, you know, Paducah, Kentucky, Heather: Florida. Clare: Yeah. Chris Barfield: so that you can be home or something, then they're not gonna use that Kentucky year, obviously. It's not gonna be so Clare: Right, right, right, right. Chris Barfield: For most people it's your last three, but it doesn't have to be. Clare: Okay, good to know, good to know. What should employees understand about unused sick leave when approaching retirement? Mary taught me something about this and I think you got it from Chris, didn't you, Mayor? Yeah. Mary: Well, I emailed you about this specifically, Chris, a Chris Barfield: Okay. Mary: year before I retired. And I just remember you wrote back, no one sits on their porch when they're retired and they're 80 wondering about what they did with their sick leave. Like if they did the right thing with their sick leave. That's what you wrote me back. Chris Barfield: Sick leave, there's there's no Heather: Ha ha ha. Clare: Perfect response. Chris Barfield: way to make a mistake with sick leave because the number just isn't that big. Clare: Right. Mary: It's not. Chris Barfield: so you have two choices essentially. You can burn all your sick leave before you retire, which is what everybody used to do because we got no credit for it. So you know, Clare: First flow. Chris Barfield: so everybody just just burned it because you forfeited it all. Now, if you whatever your balance is when you retire. they will tack that on to the end of your career as if you had worked that amount of time. So if you have six months of sick leave built up when you retire, that'll be an extra one half of 1% of your high three every year for the rest of your life, which could equal some, you know, some money over time, but it's not going to make or break your retirement. You'll never, whatever you decision you make, either to burn it or to keep it, you'll never think about it again. Clare: Good point. And also, Heather: Interesting. Clare: when you're taking sick leave, you're earning leave, right? Chris Barfield: Right. So that's the that's another way of now you you we get into a messy area 'cause you have to have some cooperative management if you just want to burn three months of sick leave, Clare: Course. Course. Heather: Mm-hmm. Chris Barfield: but I I could tell stories about people that got pretty creative with doctors doctors notices and stuff. Clare: I'm sure you could tell stories, Chris. Lordy. Heather: I wonder what I do. Mary: Well, and in addition to. Clare: Yeah. Go ahead, Mer. Mary: and you're earning Chris Barfield: But yeah, if you if you if you have three months of sick leave, Mary: more TSP, TSP matchings. Chris Barfield: right, right. Clare: Yes. Heather: Yeah. Chris Barfield: So if you have three months of sick leave and you take three months instead of retiring today, you will get credit because you will have have been on the books

for those three months. Plus you will have accrued other sick leave and annual leave and had you know TSP matching for those three months. So, you know, if you could if you could do that and you're inclined to do that and you have really cooperative management, then you can make it work. Where you get credit both ways, I guess. Clare: Yeah, that's a good point. That's a good point. Alrighty, question number four. Again, we want to thank our amazing listeners for providing these questions. How should a couple choose between a full survivor annuity, a partial survivor annuity, or no survivor annuity? And does it matter if both are federal employees? This was a huge thing when me and my husband were filling out the retirement paperwork. Chris Barfield: Yeah, so this is a there there's some hard math in here and there's also just some general preferences. So the the facts are if you do zero, then if you pass away, all your benefits die with you. Your spouse gets no monthly check for the rest of their life. They also get no health insurance. Clare: Right. Chris Barfield: So for most people, zero is kind of a deal killer unless the spouse already has health insurance from some other mechanism. Clare: Right. Chris Barfield: So most people will do at least the 25. They're kind of forced into the 25 because they want their spouse to have health insurance. Then the question becomes: do I pay another 5%? Because to get the 25%, you have to pay 5% of your annuity. Then to get the 50%, you have to pay 10%. So the numbers are just doubled. And to get that extra 25%, you've got to pay another 5%. Well, that might be. two or three hundred dollars a month, that might be an awful Heather: Mm-hmm. Clare: Right. Chris Barfield: lot of money because you get no more health insurance for doing the fifty. Heather: Right. Clare: okay. Yeah, good point. Chris Barfield: The so the health insurance is exactly the same. So the first twenty five percent, you're paying five percent more, but the next five percent is just just the money. It's just cash that your survivor will get. And there's plenty of people that do the 50, but in my when I Talk to people, I talk to a few hundred a year one-on-one, and most of them are doing the 25%. They're doing it because they want the health insurance. That's the main driver of the survivor benefit. If there was no health insurance on the survivor benefit, I think very few people would do it. Because life insurance in many cases is way cheaper than the survivor benefit. And you get all the life insurance up front, life insurance payouts are tax-free. And so that person could, if you could get a million dollars for $400 a month, you can get a million dollars worth of life insurance. That your spouse could inherit a million dollars up front, invest it, and get, pull forty thousand dollars a year off of that thing for the rest of their life and probably Clare: Bye. Chris Barfield: be way more money than they'd ever get with the survivor benefit. Clare: Yeah. Chris Barfield: so there's different approaches to it. if you are a dual fed couple, so if you like my wife and I, or you know, any other People that are already married to somebody that is what we call Ferzonian, you know, somebody else that's in the federal system. Clare: Hahaha Chris Barfield: a lot of times they will do zero survivor benefits. my wife and I both did zero survivor benefit because she has her own, she's a she has her own ability to get FEHB under her own name. She has Mary: Yeah. Chris Barfield: her own pension, she has her own TSP, she'll get my TSP. So I didn't want to take a 5 or 10% hit every month to provide more for her or or her doing the same thing for me. Because think about it, if you're both paying for a survivor benefit, because you don't know who's going to die first, one of you is paying for something that's never going to materialize. Because one of you is going Clare: Right. Absolutely. Chris Barfield: to die before the other. Or worst case scenario, you both get hit by a bus crossing the street at the same time and you both paid for nothing because nobody's going to get Heather: Right. Mary: Right. Chris Barfield: it. You can't pass it on to your kids the way it's set up right now. So but All that being said, there are people out there that still want to do 50% for peace of mind. And there's really nothing wrong with that as long as they understand the cost. Or sometimes, like I'll have somebody that's married to a retired NYPD officer or a teacher from the state. They have their own health insurance. Clare: Right. Chris Barfield: So they decide not to do a survivor benefit. It's fine. There's really no wrong answer or right answer as long as the person understands all the ramifications and then makes the best choice for them, considering that. There are some downsides to life insurance. If you outlive your life insurance policy and then you die, then no one got anything from it. So there are some instances, you know, just that's what I always say is like you change one little, it's like working any case that y'all have ever worked. You change one little fact pattern and the whole outcome is different, right? Clare: Right. Chris Barfield: So I had a couple of HSI agents that were retiring a few years ago, and he decided he was going to do 50% survivor benefit. Because sadly he was terminally ill. And he knew Heather: Mm-hmm. Chris Barfield: that he was only gonna pay into that for three months. He only had three months to live. So Heather: Wow. Mary: wow. Chris Barfield: it made this is some pretty brutal cold math, but it made sense for him to do the Clare: Yeah. Chris Barfield: survivor benefit because he's only gonna have to take that ten percent hit, just for a couple of months. Then his then his wife's gonna get fifty percent for the rest of her life and the kids and stuff. So so you Clare: Aww. Chris Barfield: change one little fact and the whole outcome Clare: You do. Chris

Barfield: changes. Mary: Yeah. Heather: Yeah. Chris Barfield: so that's why it is a very personal decision, but I think the more that people study it, the more that the answer becomes clear to them. That's what I say also. Clare: Yeah, when me and my husband were doing it, which we spent so many hours on the retirement paperwork, he wanted to see bottom line and he's not a fed or anything like that. And when I went to say, this is how much we're paying in for you to bring this home at the, like from my pension, it's a huge cut if you paid, if the spousal annuity was higher. And he's like, I really just want health insurance. That's what means the world to me, because he wouldn't have health insurance. Yeah, so that's what it meant to. From me and him. So yeah, everyone's scenario is different. Yeah Yeah Chris Barfield: Yeah, that's that is the main driver for of it. I think you could replace Heather: Sure. Chris Barfield: the money cheaper in in Clare: Mm-hmm. Chris Barfield: other ways. And I think Tammy feels a little bit different than that. I think she wants to err on the safe side and there's and there's nothing wrong with it. Particularly Clare: Yeah, absolutely. Chris Barfield: one of the things that she brings up, which is very important, is when somebody, one of the spouses passes away, the other one's only going to get one of the social security payments from then on. Clare: Right? Chris Barfield: So there is there is some benefit to having the survivor benefit. I'm not saying there's no benefit to it, but you just have to think about your your situation and what works for you. Yeah. Clare: Exactly. Just Heather: Yeah. Clare: do your numbers. See what you need. Go ahead. Mary: Can I, let me interject a really quick question here, because you're talking about the health insurance for the spouse. Does the spouse have to be carried for five years prior to the retirement to be covered like the employee does? Chris Barfield: No, if the if the spouse Clare: Good question. Chris Barfield: is not a federal employee, so they're just a a spouse of the federal employee, there's no five-year requirement for them. Matter of fact, they don't even have to be on the health insurance at the time Clare: Right. Chris Barfield: of retirement. They have Mary: wow, okay. Chris Barfield: to be on the health insurance at the time that the federal employee or retiree passes away, though. Clare: Mm-hmm. Chris Barfield: So you Heather: Right. Chris Barfield: don't want to die without adding. There are some people that I'm always like, look, don't die without adding them. even if you're paying Mary: Ha ha ha. Chris Barfield: for a survivor benefit, if they're yeah, don't die. Die less. All right. So you they Clare: Don't die. Yes. Die minus. Yeah. Heather: Ha ha Mary: Right. Heather: Ha ha ha. Chris Barfield: have to be on there before they pass. So even if you're paying for a survivor benefit, they can't add themselves after the fact. Now, the other thing that trips up a lot of dual-fed couples is they is is, and unfortunately, this has been put out by some HR people, that you have to have the the FEHB in your own name for five years. That's not true. You just have to be covered for five years. So my wife and I, I've always carried it since we got married. We've been married over 20 years. She's never had it in her name, but she was covered for the five years prior to retirement. She's been continuously covered in retirement. If I get hit by a bus tomorrow, she can start her FEHB in her own name, even though she hasn't had it in her own name. So there's no requirement for her to have it in her own name. It's just the five year rule is that you have to be covered. So I saw a bad instance where a husband had a family plan, F E H B, for him and the kids. And then his wife went out and got her own self only plan because she was told this by HR. So she's already automatically covered under his family Clare: Right. Chris Barfield: plan, but she went out and got a self only plan because she thought she had to have it in her own name according to HR. So she paid thousands of dollars, for five years for something she didn't need. Clare: wow. Mary: Jeez. Heather: Wow. Chris Barfield: So it it does get a little tricky, but yeah. Clare: Now, it is, and a common misconception, and I'm sorry I'm going a little out of order but I want to capture this now, is that say it's just me and my husband had his own insurance because he worked for a healthcare system, I had to be on FEHB five years before I retired. Yes, I had to. the person that... Chris Barfield: Correct. Yeah, the federal employee has to. Clare: Right. Exactly. So that's a common misconception too that people I wrote into HR all the time and I was like, do I have to be on it? I was always on it, but it would it would be scary for someone that wasn't and I know people stayed longer on the job so that they could. Chris Barfield: Yeah. Yeah, I've seen people do I've seen people get on their spouses, their spouse works for health insurance or a Clare: Mm-hmm. Chris Barfield: hospital or something, and they get on their and then plan on coming back. And Clare: Right. Chris Barfield: you just have to make sure if you do that, make sure that you come back in time. Mary: Yeah. Chris Barfield: because especially for those of us that have mandatory jobs. I know of a person who came back and he came back too late and so he bumped Clare: Ugh. Chris Barfield: up against mandatory and Heather: wow. Chris Barfield: tried to get an extension, they wouldn't give him an extension. he eventually he was only three months short. OPM gave him a waiver, which is very unique. Clare: Ugh. good. Chris Barfield: They don't normally do that, so it worked out okay. But don't count on that. Make sure you come back in plenty Heather: Yeah. Chris Barfield: of time if you're on your spouse's. Clare: good, that's Heather: Wow. Clare: perfect. Yeah, god, that's horrible that happened to him

though. Mary: That is terrible. Clare: For special category retirees working after retirement, when does the earnings test become begin affecting the first retirement supplement? That's a mouthful, but I know you can you can dissect that for us. Yeah. Heather: Ha ha ha. Chris Barfield: Yeah, I know exactly what you're talking about. Yeah. So the supplement becomes earnings tested for everyone at their MRA, which is not actually our minimum retirement age. This is a confusing concept, OPM does, but basically for anybody born in 1970 or later, the MRA is 57. So once Heather: What? Chris Barfield: once you turn 57, if you're retired, then your your supplement becomes earnings tested. So I retired at 50, my wife retired at 49. Prior to 57, that supplement is guaranteed. We cannot Heather: I don't know. Chris Barfield: lose it. You can go out and make a million dollars a year if you could find that job, you still get your supplement. But starting on your 57th birthday, at least for us, if you were born in the 60s, it's 56 and so so many months. But around 56 or 57, then it becomes earnings tested. And if you earn too much and it's really the the limit is really low, it's just over 25,000 for next year. So if you earn Over $25,000, and you're over 57, then you're going to start to lose some of your supplement. You might lose all of it, depending on how much you earn. Clare: Now some people might be like, hey, I'm making $300,000 a year. That's worth more to me than the supplement. And then some people are like, I'm going to get every cent of that supplement. I earned it. Heather: that the government owes me. Chris Barfield: Yeah. Yeah, that's that's Clare: Yes, exactly. Chris Barfield: what I tell if you're making three hundred thousand, who cares that you're losing twenty grand or something? Clare: Right. Chris Barfield: if you're only making twenty-four thousand, then you're getting all of your supplement. But there's probably some really serious math to do if you're working for maybe forty or fifty thousand dollars a year Mary: Yeah. Chris Barfield: and you're losing, you know, ten or fifteen thousand dollars of supplement, you know, that might not be worth it. Clare: Yeah, yeah, exactly, for sure. Heather: So to dig down a little deeper on that one, sorry, Clare, did you have more to on that? Clare: No, you're fine. No, no, you're good. Heather: is it the year you turn fifty seven or so Chris Barfield: It's the your it's your fifty-seventh birthday. So the earnings count Clare: 57th birthday. Chris Barfield: I'm my birthday's in October. So when I turn fifty seven of whatever year that is, then I'll only have to worry about November and December earnings for that year. Heather: So you do have to worry about November and December of that year. It's not Chris Barfield: Yeah, it's once you turn your 57. And the way it works Heather: Okay. Chris Barfield: is very similar to a tax return. In the spring of each year, around May, you'll get a form from OPM and you'll have to fill out your earnings from the previous year. assuming you, you know, you were older than 57 or whatever, MRA. And then what they will do is they'll analyze it, you'll send that back in. And then around July or so, they'll reduce your supplement if you were over. moving forward. So they'll reduce it on a monthly basis. So you Clare: Okay. Okay. Chris Barfield: you report it every people ask that all the time. how do they know? They well they will know if you don't send the form in. Okay. So I had a guy one time who Clare: They know. They know. Chris Barfield: he called me and said he owed like sixty something thousand dollars in supplement back payments. And I'm like, this is really weird because you don't have to pay back the supplement. You know, you know you're going to have a delay in turning that thing off like we talked about, you know, because you earned too much last year and you got the first six months. That's okay. They're not going to make you pay it back. But this guy had 60 something thousand. I'm like, well, how does this work? and so when he would get the letters in, he'd get the forms in, I said, What'd you do with those forms? He's I just threw them in the trash. Well, OPM is Clare: lordy. Well there we go. There we go. Mary: Oops. Heather: Well Chris Barfield: OPM is hooked in with Social Security. They will eventually know that you've been earning money. Otherwise, everybody would throw them in the trash. And so then if you didn't file timely, then it's like a lot of other things, then you're going to be hit with all the back stuff that you wouldn't have normally had. Clare: Yeah, good, this is great. Heather: Makes sense, yeah. Good information. Clare: I'm gonna hand it over to Mary for some of Mary: Yeah. Clare: her questions. Mary: So we're going to talk about something very near and dear to my heart, the Thrift Savings Plan. And that too, it's Clare: that's it. Chris Barfield: I thought it was gonna be bourbon. Mary: close, it's close. and when I, some of our listeners might not be federal employees. So the way I would describe the TSP, it's kind of like the government's 401k, right? Essentially. Chris Barfield: That's exactly what it is. It's the largest four one K in the United States. Mary: Okay, so Clare: okay. Mary: this is one of the questions we received from one of our listeners or one of your followers. After retirement, how long does it typically take before someone can begin taking post-separation withdrawals from the TSP? And for special category employees, you used to have to work to 50 in order to have no early withdrawal penalty. How has that changed? And you touched on this Chris Barfield: All right. The Mary: a little bit earlier. Chris Barfield: Yeah, the the second part is the easiest. If you're eligible to retire on a regular retirement under special category, you've done twenty and fifty or you've done twenty-five at any age, the new TSP rules mirror those retirement rules. So

if you're eligible to retire under special category, you're automatically eligible to pull money TSP penalty free. So Mary: That was nice because they just changed that, what, maybe three or four years ago? Chris Barfield: Right. In December of twenty twenty two, that law changed. And there were so many people that had done their twenty-five years and they were forty eight, and they were just sticking around to work one day in the year they turned fifty. Mary: Mm-hmm. Chris Barfield: And Biden was the one that signed that into law in December, and immediately there was like everybody was paroled early. They just left, you know. Cause that's a lot of them were only waiting around for that and they didn't have to anymore. So yeah, so that rule Heather: Yeah. Mary: Hahaha Clare: Yeah, exactly. Mary: Yeah, that would have been me. Chris Barfield: That rule changed. That was a good one. and then the first part of the question. yeah. So when you retire, your agency notifies TSP that you've retired. They'll send over a special code if you're law enforce or special category, they should send over a code that that helps TSP, but it's it's not the end of the world if they don't. so that you don't get a tax bill. But that normally takes a couple of weeks. So, generally speaking, there have been some instances over the last year because the last year has been very unusual. But within the first month, people are typically able to access their TSP. Right before I got on this call, I got an email from somebody who just retired from the Marshalls. He retired August 31st. TSP was notified that he retired September 15th. So that was two weeks later. he put in a TSP withdrawal request on the 22nd of September. And he had the money deposited in his account on the 24th. So he Heather: Wow. Clare: Nice. Chris Barfield: actually got money from TSP 24 days after retirement. Heather: Wow. That's good to hear. Clare: Nice. Nice. Yeah. Mary: Wow. Now. Chris Barfield: So generally speaking it's within a month or so. Mary: For non law enforcement, non special category, what is the rule with them for TSP withdrawals? Let's say they retire at 57 when they're first eligible. I can they now start withdrawing with no penalty? No early withdrawal penalty? Chris Barfield: Yeah, their rule is a little bit different. Their rule is if they separate, and that means in any way, so they get fired, they retire, they quit, whatever. If they separate in the year they turn 55 or later. So they can be 54 as long as they're going to turn 55 that year. They can they can just quit or whatever, take a Vera or do whatever they want, leave in January of that year, then they have penalty-free access. But if they make it to a regular retirement, because they can't retire until they're 56 or 57, whenever they're at their MRA, then they too automatically satisfy the TSP with early withdrawal penalty. Mary: Okay, okay, because I know, a lot of the IRAs is 59 and a half, right? That's the magic number to

not pay the 10 % withdrawal penalty. but under the TSP, if you made it to retirement, you're good to go, whether you're a special category or not. Chris Barfield: Right. That's a good point though, because what what some people misunderstand is that this exemption, particularly law enforcement, this exemption follows them no matter where they go. And so they'll think, well, I'll take my TSP and I'll roll it over to Charles Schwab or Fidelity or whatever, and then I'll pull money out. If you move your TSP over to an IRA, you're now under the real world rules of fifty nine Mary: Yeah, right. Chris Barfield: and a half. And and there are some workarounds. You could transfer the money back in the TSP if you want, or you can do some some other things. that are complicated, but yeah, the general the exception is the TSP exception. Heather: Wow. Mary: Okay, another one of our questions. How can state tax rules affect the decision to keep retirement money in TSP versus rolling it into an IRA? Are there particular states where keeping it in the TSP may offer a tax advantage? Chris Barfield: Yes, there are some states that have state income tax, but they do not tax TSP withdrawals. So Pennsylvania is one and New York is one. Heather: Wow. Mary: I never knew that. Okay. Chris Barfield: So yeah. So now if Clare: I didn't either. Chris Barfield: a state doesn't have state income tax, then obviously they're not taxing anything. But Heather: Sure. Chris Barfield: there are some states that have state income tax that don't tax our federal retirement. and there are a few that don't tax TSP withdrawals. So right. So Mary: TSP specifically, okay. Chris Barfield: New York and and Pennsylvania are generally considered high higher tax states, but they don't tax our pension and they don't tax our TSP withdrawals. So that might be that might fall into a category that might make somebody want to leave their money in TSP. I don't know. There's probably a that's probably a puzzle that has a lot of pieces that has to fit in, but yeah. Mary: Yeah. Okay. Next question for listeners unfamiliar with it. How does your barbell strategy work? And how do you decide how much to keep in the G fund versus investments intended for growth? So quick sidebar, I've read your barbell strategy. It's excellent. I actually am now following it. Now that I'm Chris Barfield: Okay. Mary: in retirement, and I actually rolled some out. But for our listeners that aren't familiar with the barbell strategy, can you kind of summarize it? Chris Barfield: Yeah, the the barbell strategy is first of all, I'm actually shocked that this is as popular as it is, because it's one of, you know, probably fifty or sixty ways to manage your your retirement accounts in retirement. But for some reason, people have gravitated towards this and asked me to expand it from over time. So I have. I think one of the the appeals of it is it's extremely simple. So the the the concept, I think the name of so Normally when when people are talking about investing and they're talking about diversifying, then they'll put a little bit of money in a bunch of different things, right? They'll they'll do something that's super conservative, they'll have cash, and then they'll have maybe some bonds and some mutual funds and then some stocks and then maybe some really risky stuff and then maybe some crypto or something like that. So you have all your money spread out over all of these different risk categories. The barbell simply takes a really conservative investment and then a more aggressive investment. And it just has those two. And so that's where the name comes from. It's not something I made up. It's been around probably before I was born. But Heather: Hm. Chris Barfield: if you look at that, then you have you know, a conservative end and an aggressive end, and there's nothing else on this line, so it kind of resembles a barbell or something. and so the the point of this whole thing is how to manage, not necessarily this is not in any way how to beat the market or to do better in investing than. some other strategy. It's just a way to manage what you've already made. So you'll put some money in the conservative. We'll just call it G for now. We'll just put so you can put some money in the G and some in C or S or I or whatever you want. But you've got something in the aggressive side. And so the whole point of it is that you don't have everything in one aggressive. So you know if you're 30 years old and the market crashes, who cares? If you're 50 Clare: Right. Chris Barfield: or 60 years old and the market crashes, It's going to cause a lot of stress. So you don't want to be 100% in the market. Typically speaking, I think probably a lot of financial planners would agree to that. So you want to put some money in a conservative amount in a conservative side and then one in more aggressive side. So if the market does crash, if the C goes down, at least you have the G side here that's holding up and you haven't lost anything. So it's kind of like putting your money in a savings account, some in a savings account, and some in the stock market. And how you come to that ratio. everybody has a bunch of different ideas, Heather: Mm-hmm. Chris Barfield: and there is no rule for this. This there's not a people want a factory manual. There's no factory manual for this. You do whatever you want, you modify it however you want. Some people approach our retirement. This is not me, this is a little aggressive for me, but some people say, well, our annuity is like our bonds. So then I'll be 100% in Heather: wow. Chris Barfield: the in the market in my TSP. And then that's Heather: Huh. Chris Barfield: my conservative and my aggressive side. I don't really like thinking like that. I try to keep my investments separate. So a good starting point that many financial planners, if you go talk to them, they will talk to you at least as a starting point. They'll say something like a 60-40 split.

That's been like a traditional 60% market, 40% bonds, something like that. That's a starting point, at least for purposes of discussion, and then from there they might adjust it. And everybody's got different theories. the other way that somebody might come to, so in that case, you'd put 40% of your balance in the G if that's what you were going to do is 60-40. Or maybe you're like, that's a little too aggressive. I want to do 50-50. So maybe you do 50% in G. other people will will think of it in terms of time. So if you're planning on pulling out, you know, $40,000 a year, you want to have protected maybe five or six years worth of withdrawals. So that might be 200, 240,000 in the G fund. And you so you're protecting the idea being that if the market crashes within six years, it's probably going to be back up. So I've got enough to tide me over. And so that's another approach to it. But there's a bunch of different methods for it. But the overall concept of a barbell is you're really simplifying things. You're keeping something in the conservative side and something in a more aggressive side. Mary: isn't part Heather: Okay. Mary: of Clare: I like it. Mary: your strategy too that I read about. want to say it was in the barbell strategy. Maybe it was in another one of your documents about rolling part of it out of the TSP, like we talked about earlier, said if you send some to Charles Schwab. Chris Barfield: Well, this is a this is a hoop that we have to jump through. Yeah. On unfortunately, because the TSP. So I mentioned okay, if the C fund goes down, then I'll just pull from the G fund. The TSP does not allow us to do that. We cannot pull Mary: Right? Yeah. Chris Barfield: only from the G or only from the C. So the workaround is you've got two main workarounds. One is you can transfer your money, like your C fund, you could transfer it over to Schwab and you could put your 60% or whatever over in Schwab. And then the only thing you have left in your TSP is the G fund. You can do that. The other thing that people do is it kind of depends on which one you think is a bigger headache. For some people, that's a big headache. The other way that you can do it is every time you make a withdrawal, because it's gonna come proportionally from the G and the C, then the next day you go in and you rebalance and you put all the money back into the G that came out of the C. So it's almost like it came out of the C or whatever. you know, to me that's I don't want to deal with that hassle. So it depends on which one you value as more of a hassle. Now that's that's a problem, that's a product of the TSP's the way that it functions. we we have to move money out because we can't decide, we can't tell them which Mary: Yeah. Chris Barfield: side to pull from. Clare: Right, right. Chris Barfield: Once we turn 59 and a half, if you move all your money out to an IRA or whatever, then you never have to have you know money in a different account. You just pull from whatever you want, any investment you want. Clare: Okay, good questions. Mary: But for those of us in that gap now, like myself, right? I retired at 48, I can access it. I need to keep something in my TSB. Otherwise, Chris Barfield: Right. Prior to fifty nine and a half. Yeah. Right. Mary: if I want to draw on it, I'm going to have to pay the 10 % penalty. Chris Barfield: Right, or transfer money from Schwab or Fidelity back into TSP first and then withdraw, which you can do. But again, that's getting to be a pain as well because TSP doesn't Mary: Yeah. Chris Barfield: make it easy. So prior to fifty-nine and a half, the TSP has a a pretty good advantage. We can get to our money soon. once you're fifty-nine and a half, though, TSP doesn't really have an advantage. Pretty much Heather: Mm. Chris Barfield: advantage IRA all. Heather: Wow. Clare: Okay. Mary: This is a another follow up question. You might have already answered this. So once your strategy is in place, how do you decide each year where to take withdrawals, when to replenish the reserve and when to rebalance? think you already answered that. Chris Barfield: Yeah, I I think most people are probably pulling from whatever made money the last year, they're pulling from their gains. if the if one makes a significant amount of money or one loses a significant amount of money, there's probably some rebalancing to be done there. So if your goal is to always be sixty-forty or seventy-thirty or whatever, then you know, and and the C fund's been doing it's been on fire last few years, right? So it's going crazy. Mary: Yeah. Chris Barfield: So if you didn't adjust it, you're probably eighty or ninety percent C and ten percent G, and you might that might be a little too aggressive. So then you rebalance. Generally speaking, I think most people will do that once a year, but there's no limit to it. You could do it every month if it would drive me nuts to do that. But monthly, quarterly, Clare: It's a lot. Chris Barfield: annually, or whenever you have preset guidelines, maybe. If it drops lower than, you know, five percent one way or the other, I'm gonna rebalance. Mary: Okay. This is just the last little part of that same question. What if stocks rise but inflation rises faster and suppose someone started with a seven year reserve and has already spent five years drawing from it, how does the shrinking reserve change the decision? And then he said, I know this question is tough, but I just want to make sure everyone's Chris Barfield: This sounds like two trains are leav one's leaving San Francisco, one's leaving Clare: At five miles an hour, the other one's leaving at 20. Mary: questions are put in here a little bit. And then they just said, Heather: Yeah, absolutely. Chris Barfield: Okay, so so s stocks are rising but inflation's going up higher. Right? That's that was the first part of that question. And then and then what was the next part? Mary: Yeah, yeah. And then they said, suppose someone

started with a seven year reserve and has already spent five years drawing from it. How does the shrinking reserve change the decision? And then could you walk through a couple of those less clear cut scenarios and explain the rules you use? That was a tough question. Good luck. Clare: That's that's a multifaceted question. Heather: Ha ha ha ha. Chris Barfield: my question back would be so the market has done incredibly well. I my question would be, why have you spent five years of reserves? Or are they just maybe they're just talking hypothetically, like if you've you've exhausted Mary: Probably. Chris Barfield: five years of reserves. So it if it depends on what your goal is, if your goal is to buy time and to have five years continually of reserves, then you Then you would probably rebalance, take money out of the Mary: Yeah. Chris Barfield: the C fund every year and put into that if that's your goal is to have five years. Remember, this this whole concept is not to make you money and it's not to beat the market. It's just a systematic way to draw the money down. I think that's that's an overarching principle that some people lose. they're like, Well, what I I'm I'm my my account's getting smaller. It probably is going to get smaller if you if you use a lot of it over the rest of your life, So this is just a way to, have an organized systematic appro a way to get it smaller, as opposed to just randomly I don't know how I'm gonna pull money from it. Go ahead. Mary: I've met a lot of people and talked to lot of people that they don't want to touch their TSP. They're scared to touch their TSP, right? You know, I saved my whole career and I'm not Chris Barfield: Yeah. Yeah. Mary: touching my TSP anytime soon. And I'm sitting here thinking, Chris Barfield: Right. Mary: well, I mean, maybe you want to leave it all to your kids. I don't know. But I know for Chris Barfield: Right. Mary: me, I saved my whole career and I'm going to spend it. I mean, I love my daughter and I want to leave her some. But, know, that stuff is going to keep growing. You got to start spending it Chris Barfield: Right. Clare: Absolutely. Mary: at some point. Chris Barfield: The that's why a lot of people keep working when they going back to the discussion about I can't afford to retire is, you know, you you hear about the FERS is a three legged stool, you know, you have your annuity, Heather: Mm. Chris Barfield: you have social security, and you have the TSP. And if you have those three things for most people, assuming you've done what you're supposed to do with your TSP, it generally replaces your income or it gets really close. People say, I can't afford to retire because they take one whole leg of the stool away. They're like, I'm Clare: Right. Chris Barfield: not gonna use my TSP. I can't afford to retire. Well, I don't that was the whole system. that's why you paid into it. And yeah, there are people that are planning on never touching it. I have this discussion all the

time with people. They never want to touch it and they just want to leave it to the kids or whatever. Which if you're gonna do that, there's probably better ways to leave it than through a through a 401k type investment. but but yeah, I mean it was designed for your retirement. So I If you're not planning on ever using the money, I don't know why you bothered saving it, why didn't you just enjoy it while you had it? but yeah, I mean there's there's some a lot of this stuff, there's hard math and then there is, like I said, personal preferences and and biases and just opinions that you can't really overcome. Clare: Yeah, for sure. Mary: I think some of it, and this sounds silly, like part, I'm like emotionally attached to my TSP a little bit too, right? I know that sounds corny and I talked about this with my financial guy. No, no, but, Chris Barfield: Yeah. You got a tattoo? You got a T S P tattoo? Heather: Ha ha Clare: Well then it's not real, Mayor. Mary: but you know, when I met with a, when I met with a financial advisor and we were talking about me rolling over part of the TSP because of what we talked about earlier, I was like, man, you know, I don't know, this is tough for me because you save it your whole career. You work so hard to do this, you know? Chris Barfield: Right. think about all the things you said no to every two weeks for twenty-five, thirty, forty years, some people, Right. Right. Yeah. And it's and it's Mary: maxing it out for, 27 years, and it's like, I don't know, but I'm going to start spending it. Chris Barfield: yeah, it's hard to I we have this conversation all the time. It's hard to and it's ironic that the people with the largest balances have the hardest time spending it. I've talked to people that are retiring with fifty thousand dollars in TSP and they're thrilled. They got fifty grand. Clare: Woohoo Vegas! Chris Barfield: they're going they're going on trips, And then I'll talk to somebody that's got two or three Mary: you Heather: Ha Mary: Ha Chris Barfield: million in there and they're scared to death. I don't know if I should touch it, And I'm like, you can give yourself a $50,000 a year raise and never work again by by touching your TSP. So Mary: Mm-hmm. That's right. Clare: Right. Chris Barfield: yeah, it's it's hard to turn the switch from being a saver to being a spender. It's just it's it's very difficult. It's one of the hardest Mary: Absolutely, that is very true. Chris Barfield: things. And and I have a little exercise I tell people if if you're really struggling. Take $2,000 out of your TSP when it comes to your your your bank account, take it and immediately reinvest it in a brokerage account. So the money hasn't gone, you paid taxes, but it's still there. And see if the world ends. In all likelihood, Mary: Yeah. Chris Barfield: by the time you look at your statement, the the money's been replaced by the market or whatever. So it the Clare: Right. Mary: Right, right. Chris Barfield: world doesn't end just because you take some money out of TSP. Heather: It's good test. I like that. Mary: That's a good end on our section. Clare: And can't you take the TSP down to like a dollar and always have it? Or what's that? Okay. Chris Barfield: the minimum is two hundred dollars. So if your account Heather: huh. Chris Barfield: ever falls below two hundred dollars, they will close it. You can never get back in. So that's why I tell people even even if you're older than fifty nine and a half, you're gonna move money out. I tell everybody leave a thousand bucks in there just to give you a cushion, leave it in the G fund. And then that way, if you ever want to come back, you can roll everything from an IRA back in. And right now there's really no reason to to be in it after fifty nine and a half, I don't think. but who knows what the laws the laws may change, fees may change, and the TSP may be better. So I don't want to burn that bridge. That bridge, yeah. Clare: to buffer. Mary: Yep. OK, Heather, I'm going to pass the torch to you for health care. Clare: Awesome. You go Heather: Interesting. Clare: girl. Heather: All right. Yeah, we're gonna shift gears and talk about healthcare, HSAs, and open season. what Clare: Pam pam pam. Heather: happens? This is a another follower question, what happens to supplemental dental and vision coverage when a federal employee retires? Chris Barfield: Well, if you have the Fed VIP, that's our dental envisioned, you through benefits or whatever, that can continue in retirement, just like it does now. It is a little bit different than FEHB. There is no five-year rule for dental envision. So you could actually have never had dental envision, retire and be 10 years into retirement and sign up for dental envision the very first time, has to be during an open season. but you can do that. So dental and you can cancel it and then come back. You can come and go on dental envision. The government doesn't subsidize it that much. They don't really care what you do with it. Heather: Okay. Chris Barfield: the other thing that's different with dental envision is that it ends for children at 22. Health insurance ends at 26. So a lot of times people don't realize this until they get a letter in the mail saying, Hey, your kid's getting ready to come off of your dental envision. so there are dental envision Heather: Okay. Chris Barfield: plans out there. Where th they will ensure kids up to twenty six, but the the federal one, the Fed VIP that we have, it does not. Ends at twenty two, yeah. Heather: Mm-hmm. Interesting. Okay. Good to know. beyond Geehaw, what other options are a good value and how should someone search for a plan that offers a good value for their needs in their location? And I think that was based on someone saying that they recently read you were switching to Giha. Chris Barfield: Okay, so I switched. I left Blue Cross 11 years ago. I had that for most of my career, and I switched to a high deductible health plan.

Initially it was Aetna for a couple years, and then we switched we switched to GIHA about seven years or so ago. this is a very, very difficult question to answer because it's really not a financial one, it's more of a medical one. Because There might be I'm in the G GEHA, the GIHA high deductible health plan, self and family. I think it's code 342. If anybody wants to look at that, that's exactly what I'm in. And that is a really low premium. We have a high deductible, but it also includes a health savings account. I save thousands, I mean literally thousands and thousands of dollars a year compared to blue the blue cross blue shield plan that I was on. I think I save $6,000 a year or something. Plus, I save in taxes, plus we can build up a health savings account that never goes away. There's a lot, there's a lot of benefits to it. we are on no medication, other than you know, just normal, my wife takes some normal minor medication, but there are some apparently some specialized medications out there that GIHA doesn't cover or covers at a a much lower rate. So even though if you switch to this plan, even though you save six thousand dollars a year in premiums, you might have to pay ten thousand dollars a year in in yeah, special meds Clare: special meds. Chris Barfield: or whatever. in twenty twenty seven the big the big change is the GLP one. So some some plans are covering more of GLP ones. That's why you see their rates going up. Some rates went up a hundred percent. Heather: Wow. Chris Barfield: Gihar rates did not go up at all. They are covering less of GLP ones. So it really is The only way that somebody can analyze it is they there is a a tool on OPM's website, FEHB. There's a page for FEHB. And you can pull up the national plans and then also the plans in your area. And that'll Heather: wow. Chris Barfield: probably leave you, I don't know, six or seven, probably less than 10 plans. And then you can pull up the brochures and you can see what each one covers. And so, Heather: Sure. Chris Barfield: especially if you have something that is very unique to you. Or you have an ongoing preexisting condition, maybe a heart issue or diabetic or some kind of special allergies or whatever, Crohn's, whatever, something that needs special treatment, then you'd have to see. But people get scared off of the high deductible health plans because it has high deductible in it. But the high deductible is way less than the high premiums that they're paying, Clare: Right. Chris Barfield: and they don't have a problem with the premiums. They have a problem paying the high deductible, but they're paying, it's impossible for me to spend more money now than the Blue Cross Blue Shield plan I was on, no matter what happens. So it's it's an unfortunate name the way that they were called high deductible health plans, just because I think it scares people off. But Heather: Yeah. Chris Barfield: overall, the if you look at the totality of what you have to spend for the

year, including deductibles and premiums, I'm paying way less than the blue cross I was on. Mary: So is your premium for Gija is less than what it would be for Blue Cross, obviously. Chris Barfield: Yes, my my self plus family plan is fifty six hundred dollars a year. And so Mary: Okay. Chris Barfield: the the plan that we were on with Blue Cross, I think, is over ten grand now this year. And the mail handlers is over ten thousand. A lot of them are way over ten thousand. Heather: And I think a bunch of just are are either just went up or are getting ready to go up in the next year, right? I it it's been kind of a crazy year with Chris Barfield: Mm-hmm. Yeah. The average is up about 10% for 2027, a little over 10%. Although some plans Clare: It's ridiculous. Chris Barfield: went down. And this is this is probably the hardest thing to get people to do is to reevaluate their health insurance every open season. Nobody does it. You know, we sign up for Blue Cross or whatever Clare: Yeah. Chris Barfield: day one and we never look at it again. Meanwhile, some plans are going down, some plans are going up, Mary: I'm telling you, it's so true. Heather: Yeah. Chris Barfield: you know. Heather: Right. Clare: It's like our will be, we don't wanna leave it. We feel secure Mary: It's I, Heather: Yeah. Mary: you know what, Chris? I Clare: with it, yes, it's our. Mary: think I am also emotionally attached to my Blue Cross plan that I have now had for 28 years. I just, Clare: Yes, it's my wooby. Chris Barfield: Okay. Mary: I don't know. I'm scared to change it. And I know I... Chris Barfield: Well, there is a there is a lot of fear in that. it's it's and you're talking about medical, you think, something really bad's gonna happen. I've switched a couple of times, I've learned it it's no big deal. I I this guy emails me every year, and this this is insane, I think. But he he'll he'll always switch to the lowest plan no matter what it is every single year. So this guy's changing health insurance every single year. I that's that's too much for me. But it's not the end of the world. You won't have a break in coverage. Now you have to be concerned going back to the other question is your network and what what you have in your area and what doctors like if you're if you if you love is and this is Heather: Yeah. Clare: Right. Just some research. Mary: Mm-hmm. Chris Barfield: this is particularly true, I find, with women, not being sexist or anything, but they don't want to leave their doctor. They find a good doctor, Heather: Yeah. Chris Barfield: they don't want to leave it. I'll go to any I'll go to Carl's Bate and Tackle and Doctor Shop, whatever. I don't Heather: Mm-hmm. Chris Barfield: care. Just give me a script, But Clare: short. Mary: Ha Chris Barfield: But I find so that might be a deal killer. you may be able be able to save thousands in a plan, but man, you don't want to switch from your specialist or or whatever. so you know, might want to stay with Blue Cross that way. Heather: Yeah. Clare: quick question question I know so if I jump to Gija just to test it out cuz like Mary like Blue Cross is my will be I can go jump back and open season if I didn't like it yeah yeah Chris Barfield: Right. That's why I tell people, you're not married to this thing. The the most that they're got they've got you for twelve months. you just switch back. Clare: Yeah. Okay. Okay, good. Sorry to interrupt for that. Chris Barfield: And and that might not be, Heather: No, that's all right. Chris Barfield: I'm just promo that's the best one that I've found. So the the the big push, it's not just the premiums, but when you have a high deductible health plan, it enables you to have a health savings account. That's the only thing that qualifies you for a health savings account. And that money Clare: back. Uh-huh. Mary: Yeah. Yeah. Chris Barfield: is like an FS did you guys do FSAs at all? your flexible spending account? Okay. Mary: Yeah. Yeah. Heather: Yeah. Chris Barfield: The problem with the FSA is that it expires every year. You can only roll over a little amount Clare: Bye. Chris Barfield: and you can only put so much in. The HSA, it never the money never goes away ever. Ever. So I know people with $200,000 in their HSA. It just continue, it just continues Clare: That's... yeah. Chris Barfield: to build up. Plus, the insurance company contributes money to it as well. So mine puts $2,000 a year in there. So when you start factoring that in, in addition to what I can put in, because all mine's tax deductible, once the money's in there, then you can take that money and then you can invest it in the market. So that money's growing. You can't do that with an FSA. So and then when you pull the money out on the back end, it's tax free as well. So it's the only account I know that's triple taxed advantage. It's it's fantastic. Heather: So Clare: Yeah, this is a good question. Yeah. Heather: so that's our our next question and we we we need you Clare: Yeah. Heather: to start over with HSAs and explain Chris Barfield: Okay. Heather: it like we're five year olds because I Chris Barfield: All right, so you you Mary: Please. Chris Barfield: guys know what a four hundred one K is, right? You know what Clare: Mm-hmm. Chris Barfield: IRA is. The HSA is often called a medical IRA. Clare: Okay. Chris Barfield: Because a lot of people are putting money into their HSA, they're contributing every pay period. Money's coming out of their paycheck, going into their health savings account, and they are saving that money for medical expenses in retirement. Now you don't Clare: Okay. Chris Barfield: you don't have to do that. You it works if you want it to work, it works exactly like an FSA without all the hoops to jump through with the receipts. So, you know, money goes into my HSA every month. And they give me a debit card and I go to the doctor and it's 50 bucks and I swipe the debit card and I'm done. The money comes out of my HSA, it pays

the doctor, I'm done. There's no there's no tax implications for that. The money went in there pre-tax, I got the tax deduction, just like I would get with the FSA. and so that's if you want to simplify it, that's all it is. It's like an FSA, but the money never goes away. It never if you die, somebody's gonna inherit the money. So Heather: Okay. Huh, okay. Chris Barfield: you can put in and for Clare: Yeah. Chris Barfield: 2027, a family can put in $9,000 into the plan. The eight the FSA is a little less than half of that. So you can put more money in. The health insurance company themselves, they contribute, like the TSP contributes or the agencies contribute to our TSP. the my insurance geeha contributes two thousand dollars a year to my HSA. So even if I don't put anything in, they put two thousand in there. Clare: How come we don't have this and how do we get on this? Yeah. Yeah. Yeah. Heather: Wow. Okay. Yeah, how how did we not like realize this earlier in our careers? Because anybody's Mary: Hold on. Heather: eligible this is not just after you're retired, right? I don't know why we don't Chris Barfield: Right. This is no, no. It's this is one of those things that it Clare: Yeah. Chris Barfield: came out in I think I don't know, two thousand twelve maybe. I don't know why it didn't like instantly I say this all the time. Instantly, overnight. Why didn't everybody like get this? Why didn't this cause everybody's looking for the the next hack, you know, or whatever. so if you think about this like My premiums are $5,600 a year, but they put in $2,000 into my HSA. Now my premiums are down to net $3,600 a year. Clare: So it's 36, yeah. Chris Barfield: that's a third of what some people are paying. but to qualify, I think, I Mary: So, does it grow like a Roth? Clare: This is great. Chris Barfield: think this is the main hurdle. This is the main hurdle. In order to have an HSA, you have to have a high deductible health plan. That's the only thing that qualifies you for it. So for those people whose blue cross is their would be. They're never gonna have Clare: That's my movie. Chris Barfield: a health savings account because they're not willing to switch to the h the high deductible health plan. Heather: A high deductible health plan basically means you have to pay whatever your deductible is before before i and correct me if I'm wrong, I could be way off base here, but but so let's Chris Barfield: Yeah, i the no that's Heather: say my doctor charges two hundred and fifty dollars for an appointment and I have to pay I don't even know what the deductible is for for Giha. Chris Barfield: The the deductible for mine for Gijha I think is thirty five hundred dollars a year. All right. Thirty seven maybe, yeah. Heather: Okay. So you're paying thirty five hundred out of pocket okay, before you are are getting the what do you call it when your copay? B b before a copay kicks in and then after that the co c copay kicks in. Chris Barfield: Yeah, it it that's right. That's true. Although there is you're not paying the full amount, you're paying the full amount of the negotiated rate with the doctor. Heather: Okay. Chris Barfield: So the doctor might have a set, first of all, like all of the preventative stuff's going to be free. The doctor may also have a set, like Giha may have negotiated them, it's $50 for a visit. So if you had no insurance, Heather: Okay. Chris Barfield: it might be $250. But their negotiated rate is fifty dollars. Well, you'll owe all of the fifty dollars. All right. So it's not like you don't have anything. Yeah, you could use your card. Heather: Okay. you don't have anything. Yes. Mary: Do you use that card? Does that card pay the copay? Okay. Heather: Yes. Chris Barfield: Yeah, yeah, you c you can. Clare: And does that Heather: So the Chris Barfield: Or some people choose to put pay out of pocket the fifty bucks and let their HSA build up. There's there's basically we we could talk all day about the strategies of how to use the HSA but Clare: How does the money get in the HSA? Out of your pension, out of your salary? How do you... Chris Barfield: Well, if you are you can have it deducted. So if you're working, then you just have it, you log into your, you know, employee express or whatever you had for your self-service and you put money in there coming out of your paycheck. Clare: Okay. Chris Barfield: so that's how it your money gets in there. The insurance company automatically deposits it in the HSA. In retirement, you can have it deducted from your monthly check if you'd like. I just typically write a check once a year for the whole thing and just be done with it. but you can con you can still contribute and retire. That's another misconception is that once you retire you're not eligible for it anymore. that's not true. So Mary: Can I clarify something here really quick? So the check Clare: huge. Mary: you're saying that you wrote for, you said it can be up to $9,000 a year. That's going into, you said essentially it's like a medical IRA. So the tax savings, is it kind of like a Roth IRA where it brings down your taxable income now, you said, right? It comes off your income now. But then what about the gains? Are you taxed on the gains when you start using it later? Chris Barfield: Yeah, this is what's awesome about this account. It's another reason why I don't understand why it's not more popular. When I write that check and I send that in, that is tax deductible on my tax return. So it lowers my taxable income. The money that sits in there that grows every year because I haven't invested in the market, that is tax free as well. When then when I go to pull the money out, as long as I use it for medical expenses, it is completely tax free then as well. You never pay taxes on this money. This is these are dollars that completely got by Congress. They're never taxed. Mary: So what if you have 200 grand in there and what if you Clare: Okay, health saving is account

people, get ready. Mary: don't want to use it for medical? What if you're like, you know what, I've got all this money sitting in the HSA, I want to use it for something else. What's the tax implications then? Chris Barfield: Right. So okay, if you are prior to 65, you have to pay an early withdrawal penalty and taxes. Okay? So you can always get your money. It's just the cost of it. If you are 65 or older, all you have to do is pay the taxes on the withdrawal. That's it. Clare: Okay. Chris Barfield: So the worst that you're out is the tax. So if you want to go buy the Corvette or whatever, you can do that with your HSA. There's no problem. It's just that you've lost the tax advantage of it. Clare: So people that may have not signed up for long-term care, could this maybe be a solution? Mary: Mmm, yeah. Chris Barfield: Yeah, so people plan on using l this for long-term care. The other thing, if typically, this is probably the most common thing, if people are not using their HSA today, like they're going to the doctor and their prescription's $30, so they're just paying out of pocket and they're leaving the the $30 in the HSA, what they're trying to do in most cases is build up money to pay for their Medicare premiums at $65. Because you can use your HSA to pay for your Medicare, your Part B premiums. And so Depending on how much Heather: Mm-hmm. Chris Barfield: money you earn and how much money you're pulling out of TSP, you might get hit with those Irma brackets where you have to pay more than other people in in Part B. So people are using their HSA to pay for that. That's their goal. So that's that's why it's called the med the medical IRA. Heather: Interesting. And that answers another one of the questions. Clare: What? Someone in the advertising Mary: Wow. Clare: campaign for HSA has not done a good job. Chris Barfield: Well, what's funny is that the people that Heather: Or Chris Barfield: talk badly about it, if you go on these these toxic Facebook pages that talk about federal retirements and stuff, the people that talk bad about it have never had it. You know, and it's funny because the arguments, you hear both arguments, you'll just like, well, that's only good if you never go to the doctor. Or the other people are saying, That's only good if you always go to the doctor. Neither one of them know what they're talking Mary: Yeah. Chris Barfield: about. You know what I mean? And they've never had it. Heather: Yeah. Clare: Right, seriously. Chris Barfield: so I don't know. I I I've given up in the beginning I like, Hey guys, look what I found and I think and everybody's gonna you know, welcome it with open arms Heather: Yeah. Chris Barfield: and people are like, I don't know about that. I don't know. I'm worried about how much I'm gonna have to pay. And I'm like, I've got a l you know, eleven years now of real world study. I pay way less than I ever would have paid with Blue Cross. Yeah, I know. I know. Clare: Well change is scary to people and I get that but yeah. Heather: Yeah. Well, and I Mary: Yeah, Heather: think the idea of the Blue Cross Blue Mary: that's exactly. Heather: Shield is just so widely known, so widely accepted. I know that that that's been my concern Chris Barfield: Yeah. Yeah. Heather: all along, but my husband and I actually kinda went through and did like what do we spend on a on a average year? What's our how many times do you go to the doctor and what are you spending on prescriptions? Went Chris Barfield: Mm-hmm. That's a good that's a good exercise. Yeah. Heather: through all of that and then plugged everything into Chat GPT and had Clare: Absolutely. Heather: got quite the education on how much we'd be saving. So we are we are planning on switching. I've been Blue Chris Barfield: If you Heather: Cross Blue Shield my entire career and we're switching this year. Clare: Me too, 1996. Chris Barfield: Yeah, I I think if you go talk to people that really understand a lot about money, like you go talk to CPAs or financial planners and stuff, most of them are gonna have HSAs. And I Clare: Bye. Chris Barfield: and I saw this report one time. I wish I would have saved it because I haven't been able to find it again. But it was like the agencies where the high deductible health plan is the most popular, and it was all agencies that had to deal with money. So it's like the SEC and the FDIC and they had like the highest Heather: That's smart, yeah. Chris Barfield: usage of you know high deductible health plans. Heather: That's funny. Clare: It's like that Mr. Mom scene where the guy has to give up his will be and he's like, can I have a moment to myself please? Yes, it's hard. Yeah. Heather: That's hard. Chris Barfield: it's it's it's tough. I I did it. I remember I was like, but I thought and I had, two younger kids and very active in sports. We went to the ER and, we had broken bones and teeth knocked out and all that kind of stuff. and I just remember like, Well, we're gonna try it for one year and if it's if it's terrible and after a year I was like, Man, this is this is unreal. I w yeah. Clare: the bomb. Yeah. Heather: great. Yeah. do you know Clare: Good question. Heather: off the top of your head, Chris, other than Geehaw, what are the are there other big companies that offer? Because Blue Cross Blue Shield does not offer a high deductible plan, right? Chris Barfield: The well I think they're there someone told me I haven't verified this, but in the in the DC area, I understand that Blue Cross now offers or maybe a regional high deductible. Heather: wow. Chris Barfield: Don't don't quote me on that. Somebody told me that. I don't know that's true. Heather: Okay. Chris Barfield: Aetna offers one in that's the one I used to have, and I think they offer that in the regional, not in the nationwide anymore. Mail handlers had one up until this year. This open season right now, this year, this is the last time they're doing their nationwide one. It's going to they're

they're they're redoing everything. I guess they're just trying to get everybody to quit their insurance because they're I mean their rates went up six thousand dollars in one year. I mean, I mean, can you imagine? Like, who's gonna stomach that? Anyway, Clare: my goodness, yeah. Mary: Jeez. Chris Barfield: so you just you'd have to go on that OPM website. I think the Ga is probably the the biggest nationwide one now. Which is also United Healthcare. So some people have said, Well, where I live, United Healthcare doesn't work that well. And that might be a reason Heather: Mm. Chris Barfield: not to get on it. I don't know. But Heather: Sure. Chris Barfield: 'cause they some of the networks depending on who they partner with and Heather: Okay. Clare: Okay. Heather: I'm gonna read this one. I think you mostly answered this for us, but just in case there's any subtleties that you wanna comment on. For someone eligible to contribute to an HSA after retirement, are the tax advantages as valuable as when they were working? Chris Barfield: yeah, well, they're all still totally deductible, the exact same amount. So, yes. The the reason I'm giving a little bit of pause is if the higher tax bracket you are, the better the benefit is of the tax deduction, right? So while you were working, if you had a really high salary, then you know, if you're in the 32% bracket, then you're getting a better deduction than now if you're in the 22% bracket. but yeah it's still all just as tax deductible in retirement as it was while you were. Heather: and then I believe you also answered this. once you reach sixty five, can you use the HSA funds to pay for Medicare Part B premiums? Chris Barfield: You absolutely can. Mary: us. Chris Barfield: And the other, the other key at age 65 is that that is when you are one well, if you sign up for Medicare, you're no longer eligible to contribute to an HSA anymore. So that's that's the last time that you can contribute is if you you may be 70 years old, you can still contribute if you never signed up for Medicare. But if you sign up for Medicare, then you can no longer contribute to an HSA. You still get to use all the money. You still have all the money. everything. You just can't contribute anymore once you sign up to Medicare on Medicare. Heather: Okay. Yeah. Okay. Chris Barfield: Yeah, and and even if, let's say, this is a a concern of some people too. I I no matter how many times I say this, people always say, Well, can you lose the money? You can't lose the money. You the HSA. So let's say you guys switch to an HSA, a high deductible health plan for five years, and then you switch black back to Blue Cross and you've got $30,000 or $40,000 in your HSA. That money is still in there. You can still use it for medical expenses. You don't l ever lose that money, even if you no longer are in a high deductible plan. Heather: Okay. Yeah, Clare: Good to know, wow. Heather: my gosh. okay, well on that note, we we wanted you to generally

tell us is a this is a huge huge question, but Clare: That's a big question. Heather: kinda walk us through what happens to a federal retiree's health care when they turn sixty five and if they already have FEHB, are they required to enroll in Medicare? Is it mandatory? Chris Barfield: Okay. It is not mandatory if you have FEHB to sign up for Medicare. You are not required FEHB does not require you to sign up for Medicare. If you are a recent postal retiree and you have PSHB, 'cause that's what the post office has now, they switched. They're not in FEHB. P S H B does require you to sign up for Medicare at sixty five. If you retired beginning like maybe two years ago, I think. So anybody that's that's been retired for a while is okay, their grandfather, but if you retired in the last couple of years or anybody that's retiring in the future under PSHB, you are required to sign up for Medicare. And then if anybody is on TRICARE, they were in the military, a lot of agents were in the military and have TRICARE, TRICARE requires you to sign up for Medicare. But FEHB does not as it stands right now. Heather: Okay. Clare: okay. Heather: So what why would I I mean I'm thinking right now I don't have Clare: Yeah. Heather: Medicare, Mary: Yeah. Heather: why would I sign up for it? I can't contribute to Mary: Right. Heather: my HSA anymore. I so why Chris Barfield: Yeah. Heather: should I sign up for Medicare? Clare: And haven't we been paying into it since I was 16 and flipping burgers at McDonald's? Yeah. Chris Barfield: Yeah, you have. You've been pa yeah, yeah. Yeah, you've been paying into it one point four five percent every paycheck. Clare: Yeah. Chris Barfield: Tammy wrote a great article about this, that exact question on Friday. So on her on her gov exec it was like, Heather: okay. Great. Clare: hashtag Tammy. Chris Barfield: Yeah, should I Mary: Okay. Chris Barfield: sign up for Medicare? This is a very popular question. Here is the here's what continually makes it a question is that if you're not required to sign up at sixty-five. but if you do sign up later, there is a penalty that is permanent for the rest of your life. And it's a substantial penalty. So if if for Medicare Part B, which is what we're talking about, if you don't sign up at 65 for every year that you wait, it's an additional 10% on top of the premium that you have to pay every year forever. So if you waited five years, that's 50% more Mary: Ali. Chris Barfield: that you have to pay. If you wait 10 years, it's 100%. So people are worried, okay, well, FEHB does a pretty good job, but there is still out of pocket expenses for FEHB, and there's even the catastrophic catastrophic limits might be, I think for some plans they're like $14,000 or something. And so you may not want to take that hit every year. So if you sign up for Medicare, you're gonna have to pay more every month because you're buying another insurance plan, basically, Mary: Right. Chris Barfield: a couple hundred bucks

a month more. But All the retirees will always tell you there's no out-of-pocket expenses. Medicare becomes primary. Whatever Medicare doesn't take kicks over to FEHB. FEHB takes care of the rest. And you, you know, you might have a you ever see those crazy bills where it's like a dollar the bill was like three million Mary: Yeah. Chris Barfield: dollars, but you owe a dollar thirty cents or something like that. Clare: Yeah. Chris Barfield: so that's why people will get both. But some Heather: Okay. Chris Barfield: people don't. They roll the dice and say, I'm not gonna do that. So I I I I it's a tough, it's a tough question to answer. And postal, they don't have the choice anymore, so they don't have to worry about it. But the rest of us, we're st we're still good. We have to figure out whether and the and the Heather: Yeah. Chris Barfield: the cost goes up the more money that you make. So like it's just over $200 part B right now a month, which is that's per person. So you gotta pay it, your husband got to pay it. That's $400 a month. but if you are still making money or you're pulling significant money out of your TSP, you know, you might have to pay three or four hundred dollars a person a month for your Medicare Part B. So some people are like, that's just too Heather: Hm. Chris Barfield: much, I'll roll the dice. Mary: What would you say Heather: So Mary: you see more of the majority of the people you talk to? What do most do? Chris Barfield: I see up until this year, I saw everybody signing up, pretty much everybody signing up for Medicare. But now as people are realizing their TSP accounts have grown a lot, I I see a couple people a month with two million dollars in TSP and they're in their 50s. If they don't do anything by the time they're, 75 years old, they might have 10 million dollars in there. And if That's when the required minimum distributions hit. And if those required minimum distributions are $100 or $200,000 a year, they have to pull, then that's going to force Clare: You don't have to pay my car. Chris Barfield: them to go up in the brackets. so now I hear a lot Mary: Yeah. Chris Barfield: of people going, Well, I'm not going to sign up for. I don't Clare: Night. Chris Barfield: know if they're going to or not, but it's a big risk to take if you don't sign up for. Heather: So we won't hold you to this, but you've already said you and your wife are relatively healthy, relatively low costs for your medical bills annually. What are the barfields doing? Mary: Ha ha! Chris Barfield: I tell people if you're in your 50s, Heather: In in ten ish years. Clare: Yeah. Chris Barfield: I tell people if you're Clare: Yeah. Chris Barfield: in your 50s, don't waste any brain power thinking about this. That's what I tell them. Because who knows what Heather: Ha ha. Mary: Wait. Chris Barfield: it looks like at 65. I mean, they're Heather: Good point. Chris Barfield: always talking about changing Mary: Good advice. Chris Barfield: all these benefits. But I I probably will lean, I'd have to do the numbers again, but I probably lean on the, you know, of getting it. I I just but I just don't. Clare: Yeah, that's a whoopie too. It's a whoopie. Mary: You can pay it with your big HSA that you've been saving all these years. Heather: Yeah, right. Clare: Yeah. Chris Barfield: Right. that's part of that's part of the reason for the HSA is to offset any of these costs that but I it's hard to guess, but I would imagine that I'm probably going to take it. just because the the risk of, you know, if Clare: There's penalties, my God. Chris Barfield: you wait until like maybe you're still healthy in this your sixties, but then in the seventies everything's breaks down and now you're in the you know, now you gotta pay you know, who knows what the insurance companies are paying by then too. Maybe they're paying a lot less. And so now my catastrophic Expenses thirty or forty grand a year, I don't know. so it's it's tough Heather: Yeah. I'm Chris Barfield: to speculate that far out. Clare: It is. Heather: Absolutely. That and that's really good advice to not not worry about it. Don't spend your brain power worrying about it quite yet. Chris Barfield: Yeah, I tell yeah, people in their forties, Mary: Yeah. Clare: Yeah. Chris Barfield: people in their forties are asking me when they should sign up for Social Security. I'm like, Don't even think about it. You might not even be able to. Heather: Yeah. Clare: Yeah. Mary: Focus on saving in your TSP right now. That's what you need to worry about. Heather: Right. Yes, focus on Clare: True. Good advice. Heather: yeah, focus on what you can Chris Barfield: Yeah, Heather: do. Chris Barfield: try to get a kid through college. Don't worry about social security. Heather: Yeah. I will say the one thing I I did hear Tammy talk about once when she was talking about Medicare and whether or not to sign up for it was that Medicare was much more I don't know if lenient's the right word, but she was saying that she gave an example of someone who was involved in an automobile accident, I believe, and they needed physical therapy and they needed way more consistent and way more sessions of physical therapy than their regular medical coverage would cover. Chris Barfield: Mm-hmm. Heather: But Medicare would cover it. And Chris Barfield: Right. Heather: those are the kinds of things that made me think like I and that you know, that could a an accident like that where you need physical therapy could happen to anybody. It doesn't matter whether or not you Clare: Yeah. Yeah. Heather: have a pre existing condition or things like that. So Chris Barfield: Yeah, right. I've I've heard people talk about, strokes where they're in ICU for six weeks and the bill would be, a million or two million dollars or whatever, and they come out owing nothing with Medicare and FEHB by the time. Heather: Yeah. Yeah. Chris Barfield: So it's just it's going to be very expensive no matter what. There's

just no way around that. But I think the peace of mind, judging from what I can see now, I don't know. Heather: Yeah. Chris Barfield: Talk to a lot of this question gets asked all the time on these retirement forums, and people are like, all right, I'm eligible. Should I get it? And then you just hear just all kinds of some of some of them is probably some good input, but I don't know. It's it'd be scary, Clare: Wow. Chris Barfield: I think, to now the other thing that does help a little bit is that Blue Cross and some of the other companies will reimburse you part of your Medicare expenses, not very much, like maybe $800 a year or something like that. But it does help offset it. They should come off a lot more because they're they're secondary payer now. So Heather: Yeah. Chris Barfield: they're they're saving themselves a lot Clare: Yeah, exactly. Mary: Yeah. Chris Barfield: of money. They oughta Heather: Right. Chris Barfield: but they do they do pass a little crumb along to you. Clare: Well, thanks for the crumbs, for sure. For sure. Alright. Yeah. Heather: All right. Well, that wraps up all of our health care and open season questions. Thank you. That was very educational. Clare: believe how much I've been retired for over a year and I've learned so much. So Chris Barfield: Yeah. Heather: Absolutely. Clare: yeah, I think I filled everything out okay except the HSA people get ready because after this podcast lands it's Heather: Yeah. Clare: gonna be it's gonna be pretty pretty darn busy but I have one last question just for me again from our audience and thank you all again. What are the biggest mistakes you've seen people make after federal retirement and what could they have done beforehand to avoid them? I know you could go down a rabbit hole with this, but... Chris Barfield: Yeah, that's I think the biggest let me let me separate this into law enforcement and non-law enforcement because it's a hu it's it's totally different. In the law enforcement arena, the biggest mistake that I see, the most common one, is the job has grown to seventy, eighty, ninety percent of their lives. And they're going a hundred percent for twenty, thirty years and it all ends in one day. Clare: Right. Chris Barfield: And then it goes from a hundred miles an hour to zero in eight hours. That's it. There's no halfway house. There's no nothing. It's just it's all or nothing. And Clare: Yep. Heather: Mm-hmm. Chris Barfield: they are not prepared because the job was, 90% of their life and their identity went away. Clare: Yeah. Chris Barfield: And then all of a sudden, those are the ones that are a little bit lost in retirement. these are the ones that are bored on Sunday afternoon. They can't wait to get back and work that case and they're texting you about Clare: Great. Chris Barfield: stuff. That those people really need to work hard at developing a life outside prior to retirement because they are it it can get pretty it can get pretty dark and ugly. I get calls,

Clare: Yeah. Chris Barfield: these guys are these are some, some tough dudes, SWAT guys, whatever. they're they're in tears. They're they're lost, The it's Clare: It's a lot. Mm-hmm. It's a lot. Mm-hmm. Chris Barfield: you know, so prepare for retirement is now I don't generally see that in the regular side. That's why I wanted display like Law enforcement has a tendency to let the job become their life, their identity. regular FERS typically doesn't have that same problem. But but it's just it's still the same issue, is that all of a sudden you have all of this time on your hands that you need to know what to do with, and sitting around the house waiting for the 430 dinner special is not gonna be a recipe Heather: Yeah. Clare: Bye. Chris Barfield: for a good long retirement, you know? So Clare: Right, right. Chris Barfield: Preparing for retirement is probably the the biggest one. People are just they put it off and all of a sudden it's there and they're they're just stressed. They're stress they don't know what they're gonna do. and then once they're in retirement, people are gonna argue with me about this, but using some of their T S P like like people sh more people should be using their T S P than are using their T S P I think. Clare: Okay, Chris Barfield: So Clare: okay, good, very good, thank you, Heather: Right. Clare: very good. Mary: If someone listening is a year away from retirement, what are the three things you'd want them to do now? Chris Barfield: A year away from retirement, they need to get a good idea on their numbers. They need to have a comparison. They need to know one number, the makeup number. You know, if you retire, you are 20,000 a year short, you're 30,000 a year short, you're 40,000 a year short, whatever that, you need to know what that number is. That is the most important thing. Because then you can determine: can you afford to retire? It's not a it's not like a nebulous idea, do you feel like you can retire or whatever? It's literally math. Can you make up 30 grand a year or 50 Mary: Right. Right. Clare: Right, right. Chris Barfield: grand, whatever the number is, can you make that up? Can you make that up with TSP withdrawals or work in the part time job at that store that you love? If you can do that, then you can retire. It doesn't matter how you feel. If you can't do that, then you need to figure something else out before you're eligible to retire. The other thing that the other reason you need to know that number is If your makeup number is forty thousand dollars a year, for let's say, you are only working for about forty thousand dollars a year because they'll pay you everything but that if you just retired and stayed home. You're only Clare: True. Chris Barfield: short 40 Heather: Well. Chris Barfield: grand. So you're if you don't like your job at 100, then you probably don't like it at 40, So Clare: Right? Heather: Ha ha ha. Chris Barfield: so you need to know your makeup number. That's that's the number

one. And then number two, you need to have you know somebody Help you decide on the decisions that you're going to make about FEGLI FEGLI is very expensive if you keep that in retirement. Somebody help you walk you through the survivor benefit, walk you through some TSP stuff. Those are that's really and then finally just don't wait too long to start the process. Whatever the next chapter is gonna be, if it's gonna be working or it's gonna be whatever it is, you're starting a business, go ahead start it now. At least get the paperwork out of the way. Just just hit the ground running. Clare: Yeah. Good. Yeah, something like that. Mary: or a podcast, right, Heather? Heather: Podcast. Yeah. Start Chris Barfield: Podcasts, yeah. Heather: start learning that now. Chris Barfield: Yeah. Clare: Yeah, Chris Barfield: th you you no matter what it is, there's a steep learning curve in the beginning if it's something you never did, right? Yeah. Clare: or a craft business so they didn't take off. For sure, for sure. Yay, awesome. Mary: yeah. Heather: Absolutely. Absolutely. Chris, our last actual question for you is just tell Chris Barfield: Okay. Heather: us what your favorite part of retirement is. Clare: Yes. Chris Barfield: Freedom. Clare: Nice. Chris Barfield: That is that is easy to to not have to Heather: That's great. Chris Barfield: ask another person if I can go visit my kid today because the office Heather: Mm-hmm. Chris Barfield: is busy or whatever. just yeah, the freedom that you can do whatever you want. You can you can travel the world. You can literally do whatever you want. Like no one's stopping you. You don't get need to get permission from anybody. You can go do whatever you want. Heather: Great. Clare: It's an amazing thing. Chris Barfield: After so many years of be careful what you say on social media, be careful what you text. Heather: Yeah. Chris Barfield: you we're too busy, you not everybody can get off for Christmas. Somebody has to work, Heather: Yeah. Chris Barfield: it's all of that stuff is gone, So Clare: Yeah, that's a good feeling. Yeah, that stuff money Heather: Absolutely. That's great. Mary: I remember you had a short video that Clare: can't buy. Mary: you had a short video a couple years or last year that I sent to you Clare and it was where you said they were literally pay you to not come to work and it really stuck with me. Chris Barfield: Right. They pay every year Clare: Yep. Chris Barfield: they pay me more money to stay away from the office. Every year. Heather: Mm. Mary: But when you think about Clare: Yep. Mary: it like that, it's wow, right? It really puts it in a perspective. Clare: Yeah, for sure. Chris Barfield: Yeah. Yeah. I used to get in trouble Heather: Absolutely. Chris Barfield: if I didn't show up. Now they pay me to not show up. That's a that's a much better gig. It's way better. Clare: Hahaha Mary: That is awesome. Heather: That's awesome. That's great. Clare: For sure. Heather: Chris, remind us of your website. Chris Barfield: Barfieldfinancial dot com Heather: And we can sign up for your newsletter there, right? Chris Barfield: Yep, you can sign up. Everything on that website's free. There's resources to run your own numbers. if you if you're not hearing Heather: That's huge. Chris Barfield: back from HR, there's a spreadsheet on there. I've got a new spreadsheet we just did to estimate taxes in retirement. there's all kinds of articles. I like to say it cures financial illiteracy and insomnia both at the same time. So you can you can knock both of them out. Clare: there you go. There you go. Mary: Hahaha Heather: Perfect. Well a light reading before bedtime. and you still have a YouTube channel, you're doing some videos once in a while. Chris Barfield: Yeah, I have I'm on pretty much all the social stuff. So Instagram, everything's under Barfield Financial, LinkedIn, YouTube, Instagram, Heather: Perfect. and Chris, again, we just can't thank you enough for being here. We really appreciate it. Appreciate your support. Appreciate you putting us in your newsletter and and posting us on your social media. So we've we've enjoyed Mary: Yes. Chris Barfield: Yeah, absolutely. I love doing it. Heather: that. You are a wealth of information. Clare: And thank you for helping us. Yes. Mary: Thank you. Chris Barfield: Yeah. Heather: And we hope you'll Clare: Yeah. Heather: come back and join us again one day 'cause I'm sure there are a million more questions. Thank you. Chris Barfield: Any time. Yeah. My my wife and I will both come on and we have like a domestic in the on the on on screen. Mary: That'd be great. Clare: Yeah Heather: we definitely would love to talk to your wife and talking to both of you together would be fun one day too. We'll have to we'll work that out. Clare: Yeah. Yes. Chris Barfield: Ha ha ha Mary: That would be fun. Heather: again, Mary and Clare, thank you guys Thank you to all of our listeners. please subscribe on YouTube, Apple, Spotify so you don't miss any episodes. And until next time, this is Fed Chicks and this is where it gets real. Bye. Cheers. Thanks, Chris. Clare: Bye everyone. Cheers. Cheers. Thank you, Chris. Mary: Bye. Thanks, Chris. Chris Barfield: See ya. See ya. heather: We have some exciting news. Our official FedChicks merchandise store is launching Tuesday, November tenth. Visit FedChicks.com to check out our official FedChicks shirts, hats, tumblers, and slate coasters. We're excited to finally share our merchandise with you and we really appreciate your continued support of the FedChicks podcast. Heather: And that wraps up another episode of Fed Chicks. Thanks so much for spending your time with us. If you enjoyed this episode, please take a minute to like, subscribe, share, and leave us a review. It really helps other women in federal law enforcement find the show. Make sure you subscribe to our YouTube channel and you're following us on Instagram and Facebook so you don't miss behind-the-scenes moments, episode updates, and a few stories we probably shouldn't tell, but do anyway. Have an idea for an episode, want to share your story, or be a guest? We'd love to hear from you. Email us at FEDChicks@gmail.com or leave a comment wherever you're listening. And just a quick reminder: this podcast is for entertainment and informational purposes only. The views and opinions expressed here are our own and do not represent any agency or the federal government. Nothing we share should be considered financial, career, or retirement advice. Until next time, this is FedChicks and this is where it gets real.