Here’s an interesting retirement case study for you.
Let’s take a former active duty veteran who resigns after 7 years of service and enters the civilian workforce in the year 2000. This purely hypothetical employee in turn contributes to a Defined Contribution plan (401k or TSP) during his years as a working stiff. He or she contributes to the maximum ‘match’ amount of the employer’s plan- That is, when the employer matches up to 50% of contributions on up to 10% of salary, he contributes 10%. When he is a Federal Employee, he contributes 5% to get the most of the TSP automatic and matching contributions (5% of salary). (Stop me if you’ve figured out who the hypothetical employee is by now).
Recently the WSJ posted an article about all the bookkeeping, tax filing, legal, and administrative fees necessary to operate a company’s 401(k) program
on behalf of its employees. This, by the way, is on TOP of the expense ratios charged within the mutual fund investments available inside the Plan.
If you work for a small company, these administrivia fees add up (and NOT in your favor). Vanguard – the low cost provider of all things investing- estimates these charges as totaling 0.25% in a very large company plan, and 0.58% for a smaller company plan.
It’s been a busy last few weeks.
Posts have been a bit light as I’ve spent my efforts on fighting a malware attack on the blog (more about this later). This focused my time on the administrivia of running the Gubmints blog instead of providing good content. But don’t worry- There’s plenty more to come.
I’ve been receiving lots of inquiries about how to calculate a Military Service Credit Deposit to ensure proper calculation of the FOUR Service Computation Dates for federal employees. I decided to model the Gubmints SCD Audit service and pricing similar to the Service Record Audit that Association of the United States Navy (AUSN) provides to its members who are up for a promotion board (I had my service record audited prior to my O-5 board and was very happy with the Navy Service Record Audit provided by AUSN).
For those of you Feds who are Veterans, I’m offering a new service to calculate and/or Audit your Military Service Credit Deposit. I’ll do this both for veterans with Full Retirement (20+ years Active Duty) or discharged Veterans with a DD-214.
You can find out more about the Military Service Credit Deposit audit service by clicking ‘SCD Audit‘ above in the Navigation Bar. Feedback is always welcome!
Mmm- Yeah, I’m gonna have to ask you to save much more for retirement, okay?
Defined-Benefit Pension Programs (like your FERS Annuity and/or Military Retirement Pension) are headed the way of the Dodo Bird. Here’s a recent example.
The State of California recently illustrated the difficulty of running a Defined-Benefit Pension program. CALSTRS (the California State Retirement System) is a juggernaut of a pension fund that is designed to support almost 500,000 teachers, state employees, and municipal employees in retirement. Continue reading