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Letter from the Editor
If you're reading this
newsletter, it means you have survived another fiscal year end - not
that you aren't still waiting for the 2012 budget! There is usually a
collective sigh, especially from the financial people, as another year
comes to an end.
During the past month,
if you have managed the time to read your emails or the newspapers, you
know that there has been an unusually large amount of press on federal
benefits. Late last week, a USA Today headline proclaimed, "Federal
retirement plans almost as costly as Social Security." Using their own
research and analysis, the article outlined the big picture of the
costs associated with federal benefits and why they believe it is
under-funded.
Click here to go directly to the article.
We'll continue to
closely watch all proposed legislation affecting federal benefits as
everything from the High 5 to larger pension contributions to an
entirely new retirement system continue to be discussed.
Happy autumn -
Cordially,
John Sklenar
CPA/PFS, CFP
ChFEBC, Chartered Federal Emloyee Benefits Consultant
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In This Issue
1. Alphabet Soup
2. Economics 101
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Bridge Would Be Cheaper
A
60-year old individual who has just retired would need a present value
lump-sum of $138,000 to pay for his/her 3 rounds a week golfing habit
assuming a 22.4-year life expectancy, an average round of golf cost of
$36, a 4% annual rate of inflation on the cost of golf, a static +3%
rate of return on the savings and no lost golf balls!
Source: Center for Disease Control, BTN Research
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Economics 101
The 3rd quarter is
over, and good riddance! The equity markets were all over the
map, behaving like a manic-depressive, up one week and down the
next. With all of the volatility it was hard to keep things in
perspective. If we step back from the stock markets and focus on
the measurements of the economy, it's easier to grasp where we
are. Things are difficult, no doubt, but we are adjusting to the
new trends of lower debt and slower growth.
Two of the most telling
components of our economy are wage growth as reported by the Bureau of
Labor Statistics, which has been modest as reported and even negative
when adjusted for inflation, and consumer credit as reported by the
Federal Reserve. By this measure, consumers are reducing the
amount of credit they have outstanding in all areas except student
loans. These two different measurements point to something
different - an era of less.
As we move through the
2010s it appears we are following the path of less credit, less debt,
and less earnings. These trends translate into muted, if not
falling, demand. While some areas have been showing increases
lately, car sales remain well below the levels of the 2000s, and home
sales are near record lows. The ripple effects through the
economy are clear and will create lasting effects. One of the
most significant outcomes of these trends is higher unemployment.
As citizens of the
nation and investors, we have to stay focused on the larger trends, as
they will eventually overwhelm the day-to-day gyrations of
markets. With the trends \outlined above firmly in place, this is
a time for heightened caution, where preserving the wealth and
standards of living that you worked so hard to build becomes the main
focus.
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Coastal States
Depending
on how you interpreted last month's quiz, the US state with the longest
coastline is either Michigan (lower 48) or Alaska (all 50). We would
have accepted either answer - Ken Higle with BLM in Hines, Oregon, was
the first to reply with Michigan and was the prize winner.
Congratulations, Ken!
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Man's Best Friend
Cat-lovers
aside, the most popular pet by far in the United States is the dog.
There are now many popular hybrids such as the golden-doodle,
labra-doodle, and cock-a-poo. Of the pure breds, what is the most
popular breed of dog (according to the AKC). Hint: It's been the most
popular for the past 10 years.
Be the first to email us with the correct answer and win a prize.
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Contact Us
202 West 7th St.
Carroll, IA 51401
Phone: 866-792-6668(toll free)
712-792-6400 (local)
712-792-6670 (fax)
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Alphabet Soup
FEHB 2012 Style
The
updated premiums and coverages are out for the 2012 FEHB Open Season
that will begin on November 14 and run through December 12. If you're
hoping to avoid this annual opportunity to review and change your
health benefits, here are some things you may want to consider before
you tell yourself your current plan is fine.
During
each Open Season for Federal Employees Health benefits, federal
employees, retirees and their qualified survivors have the option to
enroll in, change or cancel their health plans. You are allowed to move
from one plan to another with no exclusions for pre-existing
conditions. This exceptional provision allows you to move to a more
comprehensive plan even if you had a major health event in the past.
This is true for all enrollees including current and retired
participants.
When
evaluating health coverage, premiums are usually the first component
that gets consideration. Of course, the cost of coverage, particularly
your share, is important. However, overall out-of-pocket expenses also
deserve your attention.
For
example, if you are in a plan with higher premiums, you should expect
your deductibles and co-pays to be lower (although this isn't
guaranteed). If you only use your insurance to go to the doctor for an
annual exam, the lower deductibles and co-pays won't do you much good
and you're probably paying more for your overall healthcare than you
need to.
On
the other hand, if you've chosen a lower-cost option based on premiums
alone (and not what it covers), if you have significant healthcare
issues, you may quickly incur out-of-pocket expenses that have your
overall healthcare expenses soaring. Understanding your and your
family's current health requirements can help you make the decision for
the appropriate plan.
Only
about 8% of federal employees actually change health plans each year.
The hassle factor of reviewing your options may make you want to avoid
the process. Making sure you are in the "right" health plan for your
situation can save you money either in premium dollars or out-of-pocket
expenses.
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Cash Is King
Revolving credit, which includes credit card debt, peaked in September 2008 (i.e., 3 years ago) at $972 billion. Since then the nationwide total of revolving credit has fallen 18.5% to $792 billion.
Source: Federal Reserve
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TSP Returns
The
summer was not a great time the majority of the TSP Funds and moving
into fall hasn't improved those returns. Listed below are the current
monthly and year-to-date returns, by fund.
G Fund
September - .16%
YTD - 2.01%
F Fund
September - .65%
YTD - 6.55%
C Fund
September - (4.56%)
YTD - (6.36%)
S Fund
September - (7.84%)
YTD - (12.46%)
I Fund
September - (7.08%)
YTD - (12.84%)
L Income
September - (.99%)
YTD - .25%
L 2020
September - (3.22%)
YTD - (3.72%)
L 2030
September - (4.05%)
YTD - (5.25%)
L2040
September - (4.69%)
YTD - (6.45%)
L2050
September - (7.16%)
YTD - Not available - fund started in February 2011
Returns provided by www.fedsmith.com |
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