Are you living in the wrong place? Would you be better off financially if you moved a few miles, or across country, and got a tax break on your federal or state annuity, private pension or Social Security? And the move took you somewhere where the cost of living was much lower? Worth checking out, right?

When people shop for a place to retire they consider lots of things: Weather, living costs, proximity (or not!) to relatives. And last, but definitely not least, the tax situation: What will moving from your current location do to your civil service annuity, your Social Security check and others sources of income? The short answer is, it depends. In some cases a lot.

Picking the “best” of the 50 states, tax-wise, can mean hundreds of thousands extra dollars that will be yours, not the Great State of Whatever, for as long as you are retired. Which could be several decades. More time, in some cases, than you actually worked. A time when there won’t be anymore pay raises, and keeping up with inflation will be one of your primary concerns. Feds retired under the CSRS program, people who get Social Security and military retirees have considerable protection. They get a COLA (cost of living adjustment) each January to help them keep pace with inflation in the previous year. Last January they got a 3.9% catch-up under CSRS and Social Security, while FERS retirees under a different system got 2.9%.

No matter how stoic you want to be, in general having more money is better than having less money! So how do you do that? A good start is the worth-its-weight-in-gold April issue of NARFE magazine. Members of the National Active and Retired Federal Employees get it monthly. Along with other info including lobbying and legislative updates. The April issue is always a hot one because it includes a 50 state tax roundup. Things you should know, but probably didn’t, that might influence your decision to move when you retire. Or if you can work remotely, move now! And the differences are both huge and complex in many situations. For example:

• In Nebraska public and private pension income is FULLY TAXED. Lots of caveats, but you need to know that if you are searching property in Omaha.
• On the other hand, New York State, which you’d think would be pretty hardball in this area, Social Security, federal, state and local retirement benefits are EXEMPT from taxes. As they are in New Jersey and a surprising number of states.
• North Dakota exempts Social Security and military retired pay from state taxes. Other sources, including income from CSRS and FERS, are subject to state tax.

And the beat goes on. Some of the exemptions are very complex. In some cases they depend on how long a resident worked before getting a pension. In others a limited amount of the retirement benefit is state-tax free. But the rest is taxable. Some let you keep some or all of your retirement income but only if you are a certain age. Or disabled.

If you are confused now, just wait. In this case the federal worker-retiree association has done all the work. It’s available to members in the April issue of the NARFE magazine. And NARFE has given Federal News Network readers special access to the tax rundown. Check it out.

Nearly Useless Factoid

By Daisy Thornton

Babies cry in the accent of the language of their parents, which they hear while still in the womb.

Source: Scientific American

Worried about how you will survive the next recession? Concerned that it will be worse than the 2007-09 downturn? While you’re at it, maybe you should worry about the recession-after-next. And the one that follows it. Because stuff happens!

During that early 2000s super Bear Market, millions of investors lost billions of retirement nest egg dollars. The stock market plunged almost 50%. A heart-stopper for most investors. Especially if they are close to retirement, and even more so if already retired on a fixed pension. Many moved their TSP and 401(k) into “safer” bonds or treasury securities to protect them from losses. But they missed out on the stock market rebound.

Many private sector employees were also forced to take pay cuts ranging from 5-25% in order to protect their jobs. And some companies — including several well-known investment management giants — stopped giving their own employees matching 401(k) contributions, so they could stay afloat. Federal workers did without pay raises for two years. But there were no recession-triggered layoffs. In fact, many agencies grew. The TSP continued to give investors a matching government contribution of up to 5%. Further proof that it’s nice to be in a plan that covers members of Congress too. And workers with enough time in service continued to get WIGs (within-grade raises) worth about 3% every one, two or three years based on their time in government.

Benefits expert Tammy Flanagan said don’t focus entirely on the next recession, whether it is two years, or two weeks, away. Her advice: “What about the next recession. And the next few recessions? Be prepared because it is always something: War, recession, the roof of your house caves in. Always something.” Her advice, particularly for people who are retirement eligible or close to retirement is: Think about waiting. Maybe a delay of two years. In an earlier column, she pointed out that an $80,000 per year fed who works an extra two years — from 60 to 62 — will boost their starting annuity by almost $30,000. That’s also important because while CSRS retirees get full cost of living adjustments no matter when they retire, FERS retirees don’t get any COLA until age 62. Then it’s minus 1% if inflation exceeds 3%. Currently it is running much, much higher. So are you ready? For retirement, the next recession, or both? The Employee Benefit Research Institute says many retirees — federal and private — are not well prepared for retirement. Among other things it says:

• Many retirees say they wish they’d saved more. They may seem obvious but by the time you’ve learned that lesson it may be too late.
• Also, most retirees seem to do better if they have a financial advisor, though many don’t. Or didn’t until later.
• The EBRI also says that 9 out of 10 retirees who have financial advisors feel the value they got “outweighed the cost” of such an advisor.

Nearly Useless Factoid

By Daisy Thornton

Source: Science.org

The Office of Inspector General community is taking a closer look at diversity, equity, inclusion and accessibility trends across different agencies’ IG reports.

IG offices now have the ability to use a new tagging option when publishing documents to Oversight.gov, to flag reports specifically related to DEIA issues, and “allow more comprehensive and up-to-date research going forward,” an Aug. 10 compendium said.

The DEIA tagging option came after the Council of the Inspectors General on Integrity and Efficiency (CIGIE) created a DEIA working group last year, in an effort to advance diversity-related efforts across the OIG community. As part of its fiscal 2023 through 2027 strategic plan, CIGIE said it intends to look internally at DEIA advancements in its own workforce.

But those advancements aren’t limited only to the internal OIG community. In the compendium it released on Wednesday, the DEIA working group said it recognized there is “an inherent connection” between DEIA initiatives from stakeholders, and the reports that IG offices publish.

Stakeholders do not work inside IG offices, but they are affected by the decisions and actions of OIG, the working group said. They include federal agencies, individuals, Congress and recipients of federal funding or program benefits.

The purpose of this new DEIA compendium, in part, is to let stakeholders “increase their awareness of DEIA projects across the IG community,” the working group said.

The compendium came shortly after a June report, which detailed a “roadmap” for IG offices to enhance the inclusion of DEIA-related reports. The efforts “will allow all OIGs to increase their professionalism and effectiveness of their personnel and will aid in the establishment of a well-trained and highly skilled workforce,” CIGIE’s report said. Additionally, CIGIE highlighted in its strategic plan its goal of enhancing awareness, knowledge and understanding of DEIA principles by hosting activities and other types of training.

As part of this latest compendium, the DEIA working group compiled a list of past DEIA-related reports to Oversight.gov, between fiscal 2014 and 2021, though the list is not exhaustive, the group said.

“We believe the document can be used to discuss, learn about and generate project ideas for OIGs,” the working group said.

Those reports cover a broad swath of DEIA topics, including trends in promotions and professional development, as well as agency recruitment, hiring and staffing, and more. Many of the reports, for example, centered on the effectiveness of agencies’ human resources offices. In one report from 2021, the IG office for the Justice Department said that “dated, incomplete and disorganized” HR policies hindered the agency’s ability to fill vacant positions with high-quality candidates.

The challenges have “the potential to negatively impact the ability of DOJ components to recruit, hire and retain a high-performing and diverse workforce,” the report said.

Other reports that the working group included looked at agencies’ accessibility efforts. In one 2020 report, for example, the IG office for the Office of Personnel Management evaluated the agency’s disability process for retirement services, and found issues with the timeliness and tracking of those cases.

“Retirement services could not support that it met its requirement to annually reevaluate cases initially approved for disability retirement on a temporary basis until the annuitant reaches age 60,” the report said.

OPM Director Kiran Ahuja has also discussed efforts to improve retirement services for federal employees. The agency, for example, is in the process of piloting an online retirement application.

Many of the reports that the working group included in the collection also related to agencies’ compliance with an executive order from former President Donald Trump on combating race and sex stereotyping, which President Joe Biden revoked on his first day in office.

The now-rescinded EO previously banned agencies from creating training, workshops, forums or similar programming that teaches or advocates “divisive concepts,” such as “an individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex,” and “an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously.”

Although the working group, and the OIG community as a whole, are trying to push forward more DEIA initiatives, there are obstacles to achieving those goals. Notably, unfilled IG positions across the government pose a risk to the OIG community’s ability to effectively function, the working group said.

“A significant number or extended period of IG vacancies among the membership also has an obvious impact on the ability of CIGIE to achieve consensus on community-wide efforts,” CIGIE’s strategic plan said.

Thanks to the New Normal — a hot and highly visible European war and record inflation — lots of long-time feds have gotta be saying what-am-I-doing here? Especially those people who, after two years working from home, are now being ordered back to the office. Many are likely reading the headlines and crunching numbers: It is better to be retired from the government than to keep working for it?

More than 70% of the federal workforce is age 40. In the private sector only 54% are that age or older. With so many retirement-eligible, many are likely crunching the numbers to decide if it is better to be retired from government than working for it. Both financially and emotionally. Tens of thousands of federal and postal workers could retire tomorrow on full benefits! Working longer always means more money earned in salary. At a larger starting annuity when they do retire. But is it worth it? Especially at a time like this when inflation is at a 40 year high. And cost of living adjustments for federal retirees are double those of pay raises for workers. In January of this year CSRS retirees got a 5.9% COLA. FERS retirees got 4.9%. The 2022 pay raise for white collar civil servants at Defense, HHS, IRS and other agencies was 2.7%. It is almost certain that the 2023 COLA, for those who are retired or retire in time, will be larger. Probably much larger than the 2023 pay pay raise. Maybe twice as big!

All of the above are food for thought both for the growing number of retirement eligible feds and tens of thousands of younger employees who are stuck on the promotion ladder. If there is a surge in retirements — especially at places like Defense, the IRS, FAA, Homeland Security and the Social Security Administration — that could create tens of thousands of higher paid vacancies. Social Security has already begun rehiring retired employees to help with its pandemic-induced backlog. The same for the IRS.

Self-appointed experts have been predicting a tidal wave of government retirements, a “tsunami,” since the late 1990s. While the numbers were on their side, the mass exodus didn’t happen. Still hasn’t. On the plus side the government is an excellent employer in many regards. Federal workers got pay raises of 2.5% and 2.9% during the downturn, while non-feds were being fired or taking salary cuts (of 5-25%) or lost employer-matches to their 401k plan to keep their companies afloat. And their reduced paychecks coming.

Given all that’s happening (and may be ahead), retirement has become a serious consideration. Each year, lots of retirement eligible workers look at the value of the coming pay raise vs. the retiree COLA and look for ways to get both. For many the plan is to retire at the end of the year and get both the full COLA on their starting annuity PLUS payment of their unused annual leave at the new higher January pay rate. Great in theory but not in action. Last week we ran a chart that shows the breakdown. What happens if feds retire early, mid-year or wait until November? What does that do to their first, January COLA?

Those who retired on or before December 2020 would have gotten the full January 2022 COLA of 5.9% or 4.9%. But if they waited until March 2021 their COLA would drop to 4.4% (CSRS) or 3.7% (FERS). Each month they delayed retirement would reduce their 2022 COLA. Those retiring as late as November got only 0.5% and 0.4% last January.

Nearly Useless Factoid

By Robert O’Shaughnessy

Source: Reader’s Digest