April 2014 NARFE Magazine by NARFE

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COVER STORY

sta ying power Why More Feds Are Working Longer

P.22 P.30

how much do you need to Retire?

P.40

state tax review Volume 90 • Number 4

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WashingTon Watch

Postal Bill Would Reduce Workers’ Comp Benefits

A NARFE Win! President’s Budget Omits Chained CPI

Debt Limit Extended Until March 2015

NARFE Meets With OPM Director Archuleta

NARFE Updates Advocacy Toolkit

10 NARFE Bill Tracker Columns

4 From the President 46 Managing Money

Cover Story STAYING POWER. An increasing proportion of the federal civilian workforce is made up of employees who are working past ages when they qualify for full retirement benefits. Why do they do it?

48 The Informed Citizen DEPARTMENTS

14 Questions & Answers 50 For the Record: TSP

Investments, COLA Chart

HOW MUCH DO YOU NEED to Retire? There are lots of rules of thumb. But one thing’s for sure, it takes careful planning to reach retirement goals.

52 NARFE News: Board Realigns Regions; Endorses Reorganization

60 The Way We Worked On the Web

special sections

40 Annual State Tax Review

visit us online at:

www.narfe.org

54 Convention Marketing Topics Announced

like us on facebook:

NARFE National Headquarters follow us on twitter:

@narfehq

ON THE COVER

Illustration by Bill Pragluski, Critical Stages, LLC

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APRIL 2014 | Volume 90 | Number 04

Editor Margaret M. Carter Assistant Editor Ken Fanelli Editorial Administrator Toni Vallario Graphic Design Charlene Gridley Editorial Board Joseph A. Beaudoin, Paul H. Carew Elaine C. Hughes, Richard G. Thissen Editorial Office: narfe magazine 606 North Washington St. Alexandria, VA 22314-1914 Phone: 703-838-7760 Fax: 703-838-7781 Email: communications@narfe.org Advertising Sales: Warren Berger Media People Inc. 122 East 42nd St., Suite 725 New York, NY 10168 Phone: 212-779-7172, ext. 223 Email: wberger@mediapeople.com NARFE for the Visually Impaired On the Telephone: This publication can be heard on the telephone by persons who have trouble seeing or reading the print edition. For more information, contact the National Federation of the Blind NFB-NEWSLINE® service at 866-5047300 or go to www.nfbnewsline.org. On digital audio: Issues of narfe magazine are also available in audio format through the National Library Service for the Blind and Physically Handicapped (NLS). For availability, call 202-727-2142 or your local NLS service provider. The Association, since July 1970, has been classified by the IRS as a tax-exempt labor organization [not a union]; however, dues and gifts or contributions to the Association are not deductible as charitable contributions for income tax purposes.

National Active and Retired Federal Employees Association NATIONAL OFFICERS JOSEPH A. BEAUDOIN, President; natpres@narfe.org PAUL H. CAREW, Vice President; natvp@narfe.org ELAINE C. HUGHES, Secretary; natsec@narfe.org RICHARD G. THISSEN, Treasurer; nattreas@narfe.org

REGIONAL VICE PRESIDENTS

REGION I Arthur Pike (Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) Tel: 207-764-4468 Email: artpike1937@aol.com REGION II Evelyn Kirby (Delaware, District of Columbia, Maryland, New Jersey and Pennsylvania) Tel: 410-604-1141 Email: ekirby@atlanticbb.net REGION III Donald Stewart (Alabama, Florida, Georgia, Mississippi, Puerto Rico, South Carolina and Virgin Islands) Tel: 305-442-6388 Email: dejs33149@aol.com REGION IV Paul E. Johnson (Illinois, Indiana, Michigan, Ohio and Wisconsin) Tel: 812-306-5137 Email: pejohnson@tds.net REGION V Carol R. Ek (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) Tel: 620-241-1131 Email: ek617@att.net

Here’s How to Contact Us… If you want to:

Join NARFE Call (toll-free): 800-627-3394 or go to: www.narfe.org Change your address, phone number or email Call (toll-free): 800-456-8410 Email: memberrecords@narfe.org

REGION VI Jerome S. Smith (Arkansas, Louisiana, Oklahoma, Republic of Panama and Texas) Tel: 903-534-5849 Email: retiredjer@aol.com REGION VII Frank Impinna (Arizona, Colorado, New Mexico, Utah and Wyoming) Tel: 303-482-1747 Email: impinna@gmail.com REGION VIII Helen L. Zajac (California, Guam, Hawaii, Nevada and Republic of Philippines) Tel: 707-644-7565 Email: hlz17@aol.com REGION IX Lanny G. Ross (Alaska, Idaho, Montana, Oregon and Washington) Tel: 360-692-9741 Email: lannyjean@comcast.net REGION X William F. Martin (Kentucky, North Carolina, Tennessee, Virginia and West Virginia) Tel: 540-872-3345 Email: billmartin@narferx.org

For any other NARFE matter:

Call NARFE Headquarters: 703-838-7760 Email: hq@narfe.org Fax: 703-838-7785 Write: NARFE 606 N. Washington St. Alexandria, VA 22314

www.narfe.org

narfe (ISSN 1948-4453) is published monthly by the National Active and Retired Federal Employees Association (NARFE), 606 N. Washington St., Alexandria, VA 22314. Periodicals postage paid at Alexandria, VA, and additional mailing offices. Members: Annual dues includes subscription. Nonmember subscription rate $45. Postmaster: Send address change to: NARFE Attn: Member Records, 606 N. Washington St., Alexandria, VA 22314. To ensure prompt delivery, members should also forward changes of address without delay. Because of the volume involved, NARFE cannot acknowledge nor be responsible for unsolicited pictures and manuscripts, although every reasonable precaution is taken. All submissions become the property of NARFE. Copyright © 2014, NARFE. Advertisements in the magazine are not endorsements of products and/or services by NARFE, unless officially stated in the ad. We shall accept advertising on the same basis as other reputable publications: that is, we shall not knowingly permit a dishonest advertisement to appear in narfe, but at the same time we will not undertake to guarantee the reliability of our advertisers.

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From the President

Sharing mutual concerns

ecently, members of the staff and I met with Katherine Archuleta, the new director of the U.S. Office of

Personnel Management (OPM). NARFE has had a long, positive relationship with OPM. Our Legislative staff members work closely with OPM’s Congressional Affairs team and Office of Health Care Policy, and our Federal Benefits Service specialists consult regularly with their counterparts at OPM.

At this get-acquainted meeting, we shared our concerns about how OPM and NARFE can better serve our mutual constituents – you. Director Archuleta is an experienced human resources and management policy expert and a champion of federal employees, both current and former. And she is committed to making excellent customer

service a priority at the agency. In pursuit of this goal, she is working to modernize OPM’s information technology, provide sufficient staffing for quicker turn-around on the filing of retirement claims, and achieve shorter call-waiting periods at the OPM Retirement Operations call center. Director Archuleta reported, and we agreed, that OPM continues to make significant improvements in clearing the retirement-claims backlog. We also talked about other works in progress, including implementation of the phased retirement program. The phased retirement regulations are under review at the Office of Management and Budget. Director Archuleta’s office will notify us when they are ready to be issued, so that we can help get the word out. Things go smoother when we work together and are on the same page. Face-to-face meetings with key decisionmakers, such as Katherine Archuleta, are important in furthering cooperation and mutual understanding. As this issue went to press, NARFE’s National Executive Board met and made some important preliminary changes to Association operations. I urge you to read the story on p. 52, as well as the full Future of NARFE Committee Report on the NARFE website. We need all members to be fully informed of these important developments.

Joseph A. Beaudoin NARFE national President natpres@narfe.org

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Washington Watch

Postal bill would reduce comp Benefits

Senate committee has approved a bill that would reduce the basic federal workers’ compensation benefit by 2535 percent for workers at or above retirement age. It also

would eliminate the supplemental benefit for injured workers with children or other dependents. The workers’ comp provisions were part of postal reform legislation, S. 1486, approved February 6 by the Committee on Homeland Security and Governmental Affairs. At an earlier meeting, the committee defeated an amendment offered by Sen. Jon Tester, D-MT, to remove the provisions amending the Federal Employees’ Compensation Act (FECA). Because of the committee’s failure to adopt the Tester amendment, NARFE remained strongly opposed to the bill as a whole and urged the committee to reject it. “While FECA compensation is modest, it will never be able to reverse the permanent damage from a debilitating injury or illness,” NARFE President Joseph A. Beaudoin said in a letter to committee members prior to their final action. “The federal prison guard or the 6

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federal law enforcement officer who suffers a severe injury should not be shortchanged in an attempt to reform our national mail delivery system and its finances,” Beaudoin added. “We ask many federal employees to work in dangerous environments, protecting us from domestic and foreign threats. We ought to take care of them when they have suffered injuries carrying out their duties to our nation.” According to the Government Accountability Office (GAO), if the bill were to become law, federal workers disabled as part of their service would receive up to 35 percent less in retirement income than if they were not injured and retired after 30 years under the

Federal Employees Retirement System (FERS). GAO found that these policy changes would have a disproportionate impact on the lowest-wage employees and those who are injured early in their careers. Postal-Only Health Insurance Impact The bill also would make significant changes in health insurance coverage for U.S. Postal Service (USPS) employees and retirees, creating a family of new “postal only” plans within the Federal Employees Health Benefits Program (FEHBP). Several plans would be available to USPS employees and retirees, but fewer than are currently available under the FEHBP. Specifically, any plan that has more than 5,000 postal employees/retirees would be part of the postal plan. At this time, 16 carriers, and many more plans, meet this criteria. USPS employees and their spouses and dependents who are enrolled in the FEHBP auto-

A NARFE WIN! PRESIDENT’S BUDGET OMITS CHAINED CPI matically would be enrolled in the postal plan, or they would be forced to switch plans if their current plan does not also have a postal option. Medicare-eligible USPS retirees would be required to enroll in Medicare Part B if not already enrolled. Those refusing to enroll would lose their health insurance. The Medicare late-enrollment fee would be waived. NARFE remains concerned about this requirement. The measure also would allow the Postal Service to bargain with postal unions to eliminate the FERS defined-benefit annuity for new employees, taking away the guarantee of a major element of their retirement package. NARFE President Beaudoin also shared the Association’s concerns over this change in a statement prior to the action of the Senate committee, saying it represents a slippery slope for the rest of the federal workforce. It is unclear when the bill would be voted on by the full Senate. —By Alan Lopatin, Legislative counsel

state tax review, p. 40

NARFE’s annual review of the state tax treatment of federal retirement annuities appears in this issue on p. 40. NARFE’s Legislative Department compiles the information each year for publication in narfe magazine and posting on the NARFE website. The report also includes sales tax data.

ARFE applauded news that President Obama has abandoned a plan to use the Chained CPI to calculate costof-living adjustments (COLAs) for federal civilian and military retirement annuities, as well as Social Security, veterans and disability benefits, in his Fiscal Year (FY) 2015 budget. Defeat of the Chained CPI is a top NARFE priority. “This flawed proposal should be taken off the table once and for all, and it is heartening to see the president has changed course on the Chained CPI,” said NARFE National President Joseph A. Beaudoin. “Our nation’s seniors, veterans and federal retirees should never be pawns in the budget game.” Adopting the Chained CPI would reduce COLAs by an estimated 0.3 percent per year. Compounded over time, it would result in yearly benefits being reduced by 3 percent after 10 years, 6.2 percent after 20 years and 9.4 percent after 30 years. Obama announced in February that he would not include the Chained CPI in his FY 2015 budget; however, it remains on the table for consideration in budget negotiations. In October 2013, NARFE held a press conference at the U.S. Capitol with other senior organizations and members of Congress opposing the Chained CPI. In November, NARFE participated in a rally against the Chained CPI in front of the White House.

Prior to those events, NARFE members from across the country collected hundreds of thousands of dollars’ worth of coupons to highlight the impact the Chained CPI would have on seniors. Their message to Congress and the White House: “Don’t clip my COLA!” Beaudoin thanked the thousands of NARFE members who clipped coupons, sent messages to their legislators and the president, and wrote letters to the editor. “It is clear that these efforts made a difference,” he said. NARFE supports an inflation index, such as the CPI-E, that better accounts for seniors’ spending. —By Jessica Klement, legislative director

Legislative Resources • Legislative Hotline: A weekly update of legislative news, compiled by the NARFE Legislative Department staff, distributed via email and available by phone (toll-free) at 877-217-8234 and online at www.narfe.org. • Legislative Action Center: A one-stop site to send a letter to Congress, and more, at www.narfe.org.

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Washington Watch

debt limit extended until march 2015

ithout any deadline drama, Congress passed a “clean” debtlimit increase bill, unencumbered by other legislative initiatives. The action restores borrowing authority to the U.S. Treasury to continue financing government operations. The House agreed to the measure 221-201 on February 11, with 28 Republicans joining 193 Demo-

crats in favor of the measure. The Senate cleared the debt-limit increase 55-43 on February 12. The action followed a failed effort by House Republican leaders to attach to the measure legislation to restore a cut in military pension benefits that was part of the December 2013 budget deal. The reduction was to cost-of-living (Continued on p. 12)

NARFE Meets with archuleta

n February, NARFE National President Joseph A. Beaudoin and members of the NARFE staff met with the new director of the Office of Personnel Management (OPM), Katherine Archuleta. Prior to being sworn in as OPM’s 10th director on November 4, 2013, Archuleta held positions within the Departments of Labor and Transportation. She also served as the National Political Director for President Obama’s 2012 reelection campaign. NARFE has a long history of collaboration with OPM, which Beaudoin stressed during the meeting. Beaudoin and Archuleta had an extended discussion about the processing of retirement claims. They also discussed the customer service that both employees and retirees rely on from OPM. Archuleta acknowledged that problems have plagued the system and said she is working to address them early in her tenure. Beaudoin also discussed some of NARFE’s legislative priorities. And he said that NARFE is hoping for implementation of phased retirement for federal employees in the near future. OPM staff at the meeting said that the final regulations, under review at the Office of Management and Budget, will be published soon and agencies can start utilizing this tool shortly thereafter. Beaudoin pledged to help publicize the new option. Beaudoin extended an invitation to Archuleta to speak at NARFE’s 33rd NARFE President Joseph A . Beaudoin disBiennial Convention in Orcusses mutual concerns with OPM Director lando, FL, in August. Katherine Archuleta.

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MYTH vs. REALITY Myth: Federal annuities are the same type of assistance as unemployment compensation and food stamps. Reality: Although all of the named programs are “entitlement” programs, there is a distinct difference between the earned, work-related annuities of federal retirees and the needs-based entitlement programs that meet public policy goals. Federal employees contribute to their retirement, and earn the benefit through their years of dedicated service. Those in the Civil Service Retirement System contribute 7 percent toward their retirement and do not pay into, nor receive, Social Security benefits. Those in the Federal Employees Retirement System (FERS) contribute to their retirement at three different levels, depending on when they were hired. Employees hired before 2013 pay 0.8 percent; those hired in 2013 pay 3.1 percent; and those hired in 2014 pay 4.4 percent. FERS employees are eligible for Social Security and contribute 6.2 percent of earnings into the Social Security fund, the same rate as private employees. The amount of the federal annuity depends on years of service and the average of the highest three years of salary.

NARFE Updates, enhances Legislative ADvocacy Toolkit

ARFE’s Legislative Department has revamped its online Protect America’s Heartbeat Toolkit. The Toolkit provides resources, templates and guides to assist NARFE members and leaders to plan and execute grass-roots advocacy activities. “Protect America’s Heartbeat” is NARFE’s national advocacy campaign, started in 2012, t0 fight back against legislative attacks on federal employees and retirees. The redesigned Toolkit includes a section dedicated to helping in2013-14_PAC_Coupon:2013 Coupon dividual members take action. As

in previous versions, the new one also includes materials for chapter and legislative leaders. Guides will help leaders use their newsletters for legislative activity. They also provide suggestions on ways to include grass-roots actions at chapter meetings and instructions for meeting with legislators and congressional candidates. In addition, fact sheets and issue briefs have been updated so that members can provide the latest information to their members of Congress. Background 3/26/13 PM information Page 1 materials3:42 include on

how much the federal community has been asked to give toward deficit reduction; ongoing legislative threats; and how to respond to common misperceptions about the earned compensation and benefits of federal workers, retirees and survivors. Also updated is state-specific information, including how many federal employees and retirees are in each state. To access the Toolkit, see www. narfe.org/heartbeat/resources. —By Sarah Weissmann, Grass-roots Program Manager

NARFE-PAC CONTRIBUTION FORM Name:______________________________________ NARFE Member Number: _______________________ I would like to make a one-time contribution of: $100 Gold (qualifies for Gold 2013-14 NARFE-PAC lapel pin and a blue NARFE-PAC LEADER hat)

$50 Silver (qualifies for Silver 2013-2014 NARFE-PAC lapel pin) $20 Basic (qualifies for Basic 2013-2014 NARFE-PAC lapel pin) Other: ______ -orI would like to be a Sustainer and make a monthly credit card contribution to NARFE-PAC of: $25/month $10/month

Please find my check or money order enclosed payable to NARFE-PAC Please charge to my credit card (required for monthly contribution) Credit Card Information Type: MasterCard Visa Discover AMEX Card #: ________________________________ Expiration Date: ____ / ____ Name on Card:__________________________ Signature: ______________________________ Date: __________________________________

Other: ______/month (minimum of $10) Monthly contributions qualify you to receive a NARFE-PAC Sustainer lapel pin along with a blue NARFE-PAC LEADER hat.

I do not want to receive any gifts for my contribution marked above.

Mail to: National Active and Retired Federal Employees Association Attn: NARFE-PAC 606 North Washington St. | Alexandria, VA 22314

Only members of the National Active and Retired Federal Employees Association may contribute to NARFE-PAC. NARFE will neither favor nor disadvantage anyone based on the amount of a contribution or the failure to make a voluntary contribution to this political action fund. NARFE-PAC contributions are not deductible for federal income tax purposes.

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Washington Watch

narfe bill tracker The NARFE bill TRACKER is your monthly guide to the congressional legislation that NARFE is following. Check back each issue for updates. ISSUE

Bill Number / Name / Sponsor H.R. 26: Deferred Benefits Adjustment Act of 2013 / Rep. Nydia M. Velázquez, D-NY Cosponsors: 1 (D)

DEFERRED ANNUITIES

supporting federal employees

H.Res. 388: Expressing the sense of the House of Representatives supporting federal employees / Rep. Marcia L. Fudge, D-OH

Latest Action(s)

Provides for the indexation of deferred annuities, including survivor annuities, and for individuals becoming subject to the Federal Employees Retirement System by election. Terminates the entitlement of a survivor who remarries before age 55 to an annuity based on the service of a deferred annuitant who dies before establishing a valid claim for a Civil Service Retirement System annuity.

Referred to the House Committee on Oversight and Government Reform

Recognizes that the work that federal employees perform should be honored and respected. Outlines several ways Congress should not target federal employees.

Referred to House Committees on Oversight and Government Reform, and Ways and Means

Makes any person who has a “seriously delinquent tax debt” ineligible for federal employment or to continue serving as a federal employee.

Approved by the House Committee on Oversight and Government Reform on 3/20/13 Failed to pass the House on 4/15/13

narfe, April 2013, p. 9

narfe, January 2014, p. 10

Cosponsors: 41 (D)

H.R. 249: Federal Employee Tax Accountability Act of 2013 / Rep. Jason Chaffetz, R-UT Tax Delinquency

What Bill Would Do

Cosponsors: None

narfe, July 2013, p. 11

Paid Parental Leave

H.R. 517: To provide that four of the 12 weeks of parental leave made available to a federal employee shall be paid leave / Rep. Carolyn B. Maloney, D-NY Cosponsors: 19 (D)

Pension scam protection

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H.R. 3310: Annuity Safety and Security Under Reasonable Enforcement Act of 2013 / Rep. Matt Cartwright, D-PA Cosponsors: 51 (D)

Allows federal employees to substitute, for four weeks, any available paid leave for any leave without pay available for either the birth of a child or placement of a child for either adoption or foster care.

Referred to the House Committee on Oversight and Government Reform

Requires appropriate disReferred to four House closures regarding “pension committees advance” schemes and caps the interest rates on these narfe, January 2014, p. 11 advances. Also creates a private right of action to allow individuals to enforce these laws in court.

ISSUE

Bill Number / Name / Sponsor H.R. 1367: FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act / Rep. Stephen F. Lynch, D-MA Cosponsors: 3 (D)

Health Care

H.R. 1780: To provide that the only health plans available to the president, vice president, members of Congress and federal employees are those created under the Patient Protection and Affordable Care Act or offered through a health insurance exchange / Rep. Dave Camp, R-MI

What Bill Would Do

Latest Action(s)

Provides the Office of Personnel Management greater oversight authority over the prescription drug contracting and pricing methods of the Federal Employees Health Benefits Program (FEHBP). It requires that pharmacy benefit managers return 99 percent of all rebates, market share incentives and other monies received from pharmaceutical manufacturers for FEHBP business and caps prescription drug prices.

Referred to the House Committee on Oversight and Government Reform

Removes federal employees from the Federal Employees Health Benefits Program (FEHBP) and places them in the health exchanges created under the Affordable Care Act.

Referred to the House Committees on Oversight and Government Reform, Energy and Commerce, and Administration

narfe, June 2013, p. 9

narfe, July 2013, p. 15

Cosponsors: 30 (R) H.R. 3319: Equal Healthcare Access Act / Rep. Darrell Issa, R-CA Cosponsors: 1 (D), 8 (R)

Requires the Office of Personnel Management to administer a health insurance plan for nonfederal employees under the existing Federal Employees Health Benefits Program.

Referred to House Committees on Oversight and Government Reform, Energy and Commerce, and Ways and Means narfe, January 2014, p. 9

H.R. 1795: Social Security Fairness Act of 2013 / Rep. Rodney Davis, R-IL GPO/WEP

FEDERAL PENSIONS

Cosponsors: 79 (D), 30 (R)

Repeals both the Government Referred to the Pension Offset (GPO) and the House Committee on Windfall Elimination Provision Ways and Means (WEP).

S. 896: Social Security Fairness Act of 2013 / Sen. Mark Begich, D-AK

Referred to the Senate Finance Committee

Cosponsors: 13 (D), 3 (R), 1 (I)

narfe, July 2013, p. 16

S. 1678: Public-Private EmEliminates the defined-benefit ployee Retirement Parity Act portion of the Federal Em/ Sen. Richard Burr, R-NC ployees Retirement System (FERS), leaving only Social Cosponsors: 2 (R) Security and the Thrift Savings Plan for FERS employees in retirement.

Referred to the Senate Committee on Homeland Security and Governmental Affairs narfe, February 2014, p. 8

(Continued on p. 12) w w w. n a r f e . o r g

Washington Watch

narfe bill tracker (Continued from p. 11)

Bill Number / Name / Sponsor

ISSUE

H.R. 630: The Postal Service Protection Act / Rep. Peter DeFazio, D-OR Cosponsors: 167 (D), 7 (R)

What Bill Would Do Eliminates the future retiree health benefit prefunding requirement, protects six-day mail delivery and prevents the closure of rural post offices.

S. 316: The Postal Service Protection Act / Sen. Bernie Sanders, I-VT

Cosponsors: 2 (R)

S. 1486: Postal Reform Act / Sen. Tom Carper, D-DE Cosponsors: 1 (R)

debt limit extended until march 2015

(Continued from p. 8)

adjustments (COLAs) for military retirees under age 62. However, full COLAs for these younger military retirees were restored in legislation that cleared the House and Senate separately. Treasury Secretary Jack Lew had urged lawmakers to act expeditiously on the debt-limit increase to avoid a default on the public debt, asserting that “extraordinary measures” traditionally available to the Treasury to manage cash flow in the event of a debt-limit lapse, would be exhausted by February 27. 12

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Referred to House Committees on Oversight and Government Reform and Judiciary Referred to the Senate Committee on Homeland Security and Governmental Affairs

Cosponsors: 28 (D) H.R. 2748: Postal Reform Act / Rep. Darrell Issa, postal reform R-CA

Latest action(s)

Moves the U.S. Postal Service to five-day mail delivery, removes protections for injured workers and eliminates tothe-door delivery in favor of cluster boxes.

Approved by the House Committee on Oversight and Government Reform on 7/24/13

Threatens integrity of the Federal Employees Health Benefits Program by removing postal workers and retirees, cuts workers’ compensation benefits and eliminates Federal Employees Retirement System pension for new hires.

Amended and approved by the Senate Committee on Homeland Security and Governmental Affairs on 2/6/14

The debt-limit increase adopted by the House and Senate and signed by President Obama on February 15 extends borrowing through March 15, 2015, past the congressional midterm elections. It also clears the way for “regular order” in the fiscal year 2015 congressional budget and appropriations process. That process begins with the release of the president’s budget. At press time, the budget was scheduled to be sent to Congress on March 4. The House and Senate then fashion their own budget blueprints. Finally, Congress passes appropriations (spending) bills. —By Alan Lopatin, Legislative Counsel

See story, p. 6

emails needed! BY SHARING YOUR EMAIL address with NARFE, you are helping the Association respond quickly when Congress threatens to change your benefits. Become a member of the Rapid Response Team today! Go to www.narfe.org, log in, then select “Legislation” in the drop-down menu at the top of the page. The invitation to join the NARFE Rapid Response Team is in the center of the page. Or call NARFE Member Records, toll-free, at 800456-8410 and ask to add your email address to your NARFE member record.

Chemistry Casanova Reinvents the Emerald

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Questions & Answers

The following Questions & Answers were compiled by NARFEâ&#x20AC;&#x2122;s Federal Benefits Service Department staff. NARFE does not provide legal, financial planning, or tax advice or assistance.

employees notification of marriage

Q A

I recently married my partner in a state in which same-sex marriage is legal. Who should I notify about this change in my status?

If you are still employed by the federal government, you should contact your human resources department to notify them of your marital status. If you are retired from federal service and are receiving or will receive benefits from the Office of Personnel Management (OPM), you should write to OPM, P.O. Box 45, Boyers, PA 16017. Include a copy of your marriage certificate and provide your retirement claim number when writing to OPM.

eligibility of benefits on Death of employee

I am married to a federal employee and have been told by several people that we have to be married for a 14

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year before any benefits are payable should my husband die. Is that correct?

To be eligible for benefits, you and your spouse must have been married for at least nine months, or there must be a child born of the marriage, or the employeeâ&#x20AC;&#x2122;s death must have been accidental.

two benefits?

I am married to a federal employee who is covered under the Federal Employees Retirement System (FERS). If my spouse pre-deceases me, can I receive a survivor annuity under FERS and my own Social Security benefits?

Yes, you may receive both a FERS survivor annuity and your own Social Security benefits without any offset or reduction. For the spouse of a FERS retiree who dies when the spouse is under age 60 and eligible for a future Social Security benefit, a FERS Spousal Annuity Supplement will be paid by the Office of Personnel Management in addition to the regular survivor annuity until the surviving spouse reaches age 60. We suggest that you contact the local office of the Social Security Administration for information about its benefits.

Advanced sick leave

I have used all my sick leave and was told to get plenty of bed rest due to my pregnancy. Will I be able to ask my agency for advanced sick leave, and what is the maximum

amount I could possibly get if it is approved?

Contact the personnel office of your agency to request advanced sick

leave. An agency may advance up to 240 hours (30 days) of sick leave to a full-time employee.

Life Insurance payout

I am still employed and have just found out I have a terminal illness. How will my Federal Employees’ Group Life Insurance (FEGLI) claims be paid?

The Office of Federal Employees’ Group Life Insurance (OFEGLI) is the administrative unit of Metropolitan Life Insurance Company that pays claims for the Federal Employees’ Group Life Insurance Program. If OFEGLI is paying the beneficiary less than $5,000, the beneficiary will receive a check. If OFEGLI is paying the beneficiary $5,000 or more, the beneficiary will have a choice of two ways to receive the payment: • A check; or • A MetLife Total Control Account, or (TCA). This is an interest-bearing account set up in the beneficiary’s name with Metropolitan Life Insurance Company. If the beneficiary is receiving $5,000 or more and does not make a decision on how to receive payment, a MetLife TCA will be set up in the beneficiary’s name.

retirees Self plus one?

When will we be able to enroll in the “self plus one” option that was mandated for the Federal Employees Health Benefits Program (FEHBP) in the federal budget recently passed by Congress?

While the law allowed the Office of Personnel Management (OPM) to have FEHBP health plans offer a self plus one option, it takes time to receive proposals from the plans and to establish regulations and rules. At the February meeting of the FEHBP Reform Advisory Group, of which NARFE is a member, OPM officials said the new option would not be available until plan year 2016 (enrollment in 2015) at the earliest.

COLA differences

My wife and I are both retired federal employees. I am a Civil Service Retirement System (CSRS) retiree, and she is a Federal Employees Retirement System (FERS) retiree. We recently got our “notice of annuity adjustment” from the Office of Personnel Management. Since the Consumer Price Index increase was less than 2 percent, we thought we would get the same cost-of-living adjustment (COLA). But mine shows a 1.5 percent COLA for 2014. Hers shows 0. Why is this?

Federal retiree COLAs are determined by the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the next. When the change is 2 percent or less, as it was this year, both CSRS and FERS retirees receive the same COLA. When the change is more than 2 percent, but less than 3 percent, FERS retirees receive 2 percent; when it is more than 3 percent, FERS employees receive 1 percent less than the CPI change. However, there are exceptions, based on the age of the retiree and the timing of the retirement: • COLAs for FERS retirees are not provided until the individual reaches age 62, except for disability, survivor benefits and other special provision retirements. FERS disability retirees get the adjustment, except when they are receiving a disability annuity based on 60 percent of their highthree years’ average salary. Also, if a FERS retiree has a CSRS component in his or her retirement, the component is subject to the CSRS COLA. FERS survivor annuitants, however, receive the FERS increase on their entire annuity, even when component service is involved. • To get the full COLA for 2014, a retiree or survivor annuity must have started no later than December 31, 2012. If not, the increase is prorated under both CSRS and FERS. Prorated accounts receive one-twelfth of the increase for each month during the year w w w. n a r f e . o r g

Questions & Answers

that they received benefits. For example, if an individual’s benefit began November 30, 2013, the prorated COLA would be onetwelfth of the full COLA.

how to obtain federal personnel records

How can I get copies of documentation from my Official Personnel Folder for when I was a federal employee?

Written requests (signed and dated) may be mailed or faxed to the National Personnel Records Center (NPRC), Annex, 1411 Boulder

Boulevard, Valmeyer, IL 62295; fax: 618-935-3014. You will need to provide enough information for the NPRC to identify your records. This information includes: • Full name used during federal employment; • Date of birth; • Social Security number; • Name and location of employing federal agency; • Beginning and ending dates of federal service.

Sick-leave credit

When I retired in 2008, I lost all my unused sick leave. Now they are giving

sick-leave pay. Is NARFE doing anything for past employees who lost their leave?

First, the law does not permit agencies to pay for unused sick leave, as they do for unused annual leave. Public Law 111-84 allows employees who retire under the Federal Employees Retirement System (FERS) to credit their unused sick leave as service time in the computation of their retirement benefits. Second, the law does not apply retroactively to FERS employees who retired prior to 2010. If that had been included, the bill probably would not have passed. To recompute the benefits of FERS

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NARFE at Your Service retirees would have been expensive and very time consuming. Supporting any such bill is not on NARFE’s legislative priority list.

New beneficiary

The beneficiary of my Federal Employees’ Group Life Insurance policy has died. How do I designate a new beneficiary?

Changing your designation of beneficiary requires completion of a new designation form, SF 2823. This form can be filled in and then downloaded from the Office of Personnel Management (OPM)

ROXC3093NARFEbackyardHalfpg.indd1 1 a p r 2 0 14

website. Go to www.opm.gov, click on “Insurance” at the top of the page, then click on “Life Insurance,” then on “Designating a Beneficiary.” Employees also can obtain the form from their agency. Retirees can write to OPM at P.O. Box 45, Boyers, PA 16017. Submit the completed and signed form to your employing office or to OPM if you are retired. To obtain an answer to a federal benefits question, NARFE members should call 703838-7760 and ask for the Federal Benefits Service Department; send your question by postal mail to NARFE Headquarters, ATTN: Federal Benefits; or submit it by email to fedbenefits@narfe.org.

NARFE service officers are available to answer questions and to assist in helping with a variety of benefit matters. Check your chapter newsletter for the name and phone number of your service officer. For the nearest service officer, call NARFE (toll-free) at:

800-456-8410. NARFE Service Centers also are available in some areas. Use the Service Center listings on the NARFE website,

www. narfe.org.

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Cover Story

When Royce Forman started his career as a federal employee at Wright-Patterson Air Force Base in 1959, Dwight Eisenhower was president, a first class domestic U.S. postage stamp cost four cents and the few computers that existed occupied entire rooms. Now, 55 years later, the 83-year-old Forman continues in his job as a structural integrity engineer and scientist at NASAâ&#x20AC;&#x2122;s Johnson Space Center (JSC), where he has worked since 1967. He is the senior engineer overseeing fracture mechanics technology, testing and development at JSC, where he refines the NASGROâ&#x201E;˘ software, which he developed. NASGRO is a suite of programs that help

More Federal Workers Are Staying on the Job Longer. Why do they do it? By David Tobenkin

Illustration by Bill Pragluski, Critical Stages, LLC

w w w. n a r f e . o r g

More Federal Workers Are Staying on the Job Longer engineers analyze fatigue crack growth, and assess the structural life of materials and the effects of stress on aviation and outer space equipment, such as space shuttle payloads and the International Space Station. Forman, though, has no plans to retire. “I’m not interested in pursuing outside hobbies like golf or fishing – none of that,” he says. “I will work as long as my good health remains, but would consider retiring if the cutbacks in the NASA budget eliminate the funding of my research.” Forman is far from alone in his commitment to continuing federal service past standard retirement age. Notwithstanding a trend of increased retirement claims caused by the baby boomer cohort reaching retirement age and federal employee disgust at the treatment they and their benefits receive on Capitol Hill, an increasing number of feds are spending their 60s, 70s and, in some cases, 80s, working for Uncle Sam. An increasing proportion of the federal civilian workforce is made up of federal employees who are working past ages when they qualify for full retirement benefits. The proportion of federal civilian employees age 60 and older has grown from 6 percent of civilian federal employees in 2000 to 12.6 percent as of June 2013, according to Office of Personnel Management (OPM) Fedscope data, which excludes certain civilian agencies, such as the U.S. Postal Service and intelligence agencies. The percentage of those age 65 and older has increased from 1.6 percent to 4.2 percent over the same period. Their continuance in government has had a ripple effect in many areas, including staffing levels, continuity, and relationships between intergenerational sets of federal workers. The presence of so many older workers, for example, poses both a human capital opportunity and a looming challenge for the federal workforce. A February 2013 Government Accountability Office (GAO) report, High Risk Series: An Update, found that federal agencies are facing “a wave of potential retirements.” Governmentwide, around 30 percent of federal employees on board at the end of fiscal

year 2011 will become eligible to retire by 2016, the report found. The GAO report determined eligibility to retire by computing “the date at which the employee would be eligible for voluntary retirement at an unreduced annuity using age at hire, years of service, birth date and retirement plan coverage,” says Robert Goldenkoff, GAO’s director of strategic issues. OPM has had difficulties in the past accurately forecasting federal employee retirements, with previous OPM predictions of the rate of likely retirements proving in hindsight to be far above the actual number. But annual federal retirement claims filings have increased substantially and steadily in recent years, rising 56 percent from 2010 to 2013 – from 73,322 in 2010 to 93,709 in 2011; 106,550 in 2012; and 114,697 in 2013, according to OPM data. This leads some to wonder if a long-anticipated retirement tsunami has begun to materialize.

WHY THEY STAY

Whether a flood of retirements will or will not occur is difficult to forecast, because such retirement statistics are aggregations of the complex decisions of individual employees, such as Forman, as to whether to leave federal service. “Retirement is a personal decision with many factors as to why people do and don’t retire,” says Sean Morris, a principal at Deloitte Consulting LLP and leader of its Federal Human Capital practice. “You are seeing older workers, in part, because people are living longer than they did and are healthier. Also, we are coming off an economic downturn, and the general rule is that it takes 11 years to recover from a major recession, and we are only half-way through that. And I would contend that many of the baby boomers eligible to retire but

The proportion of federal civilian employees age 60 and older has grown from 6 percent in 2000 to 12.6 percent in 2013.

not choosing to do so joined the workforce when it was particularly appealing to be a federal public servant and serve the USA. Many of them are committed to continuing to achieve the missions of their agencies.” The results of a narfe magazine survey of readers similarly suggest that multiple considerations and employee calculations underlie older federal employees’ decisions to stay put. Perhaps typical is the response of one Department of Defense employee: “I have continued to work for a number of reasons, primarily financial ones,” says Karla Berezoski, a 71-year-old Naval Research Laboratory security and administrative support employee. “My retirement IRA lost at least half of its value when the stock market plummeted; I have been helping to support my daughter and her two children while she gets established in a new career; and I had other financial obligations that I needed to satisfy. I also feel a certain amount of obligation to my agency, supervisor and coworkers to stay until there is someone available to take over my duties.” For others, financial considerations are not paramount in their decisions. They say they are staying out of a sense of duty to their agency, their unit or to the country. “If I retire, the [full-time employee] position will be lost in my unit, which would seriously weaken it,” says a 76-year-old curator and research scientist in his 42nd year of federal service who says he plans to work until he turns 80 years old. Other feds stay at their jobs for the sheer enjoyment that it brings them. There is nowhere else that they would rather be. “I am continuing to work because I love my job, the work and my colleagues,” says John E. Nordin, a 71-year-old supervisory attorney in the U.S. Attorney’s Office for the Central District of California. “I pretty much call my own shots, and handle as many or as few cases as I wish. Most of my time is devoted to supervision. I have no immediate plans to retire and may work until I am 75. Of course, that could change if my health declined or if the supervisors whom I greatly respect were replaced by persons of lesser ability.” Others say that they plan to work on because they have little to retire to. “Most of my family is in heaven, and I never married, had children or discovered a passion/hobby that I want to pursue,” says C. Lee Page, a consumer affairs specialist at the Federal Deposit Insurance Corporation. “I

became eligible to retire at age 55, with 31 years’ service, in June 2013. I’ve taken both the midcareer and end-of-career retirement seminars, and it was at the end-of-career session that I realized I’d be retiring . . . to do what?”

AN INCREASINGLY SUPPORTIVE ENVIRONMENT

An overriding reason for deciding not to retire is that continuing to work will not necessarily deprive many federal employees of an ample period of retirement. Americans are living longer and are healthier than in the past, with U.S. life expectancy at birth growing from 67 years for males and 75 years for females in 1970, to 76 years and 81 years, respectively, in 2010, according to a University of Washington study. And if they are mentally and physically able to perform their jobs, there is no reason that they must retire. With the exception of a narrow range of law enforcement and similar positions involving unusual physical demands, there are no federal civilian employment age limits. Moreover, most federal employees who are age 40 and older cannot be removed from their positions or otherwise discriminated against because of their age, under the Age Discrimination in Employment Act of 1967 (ADEA). For some, the physical demands of work have been eased by new workforce arrangements such as telework. Dolores Ryan, a 63-year-old configuration management analyst in the Department of Veterans Affairs’ Office of Information near Albany, NY, with 31 years of service, began teleworking full-time in October 2012. If not for telework, the wear and tear of her 18-mile daily commutes and harsh Albany winters would have caused her to retire, Ryan says. Some say they have held off retiring because of the promise of phased retirement, a new federal program that will offer federal employees part-time schedules for which they would be compensated through partial salary and annuity payments. The phased retirement program was approved by Congress in 2012 but awaits OPM’s final implementation before this option is available to federal employees.

EFFECT ON FEDERAL AGENCIES

For many agencies, the retention of older workers is a mixed blessing. On the one hand, it slows the deparw w w. n a r f e . o r g

More Federal Workers Are Staying on the Job Longer ture of institutional knowledge, keeps skilled labor in place and offers mentoring possibilities for younger employees. On the other hand, it can block the progression and development of less senior staff and can lead to immediate, large-scale human capital challenges if departures are widespread and sudden. Different agencies have adopted various responses toward aging workforces, a 2009 GAO report found. Titled Older Workers: Enhanced Communication Among Federal Agencies Could Improve Strategies for Hiring and Retaining Experienced Workers, the report found that agencies it reviewed with particularly high proportions of older federal workers (including the Department of Housing and Urban Development, the Social Security Administration and the U.S. Agency for International Development) shared common challenges and had taken different approaches in adapting to them. Until 2011, the U.S. Small Business Administration (SBA) had a similarly high percentage of employees eligible to retire, a period during which it was projected that 48 percent of the full-time SBA employees (not including disaster temporary employees) would have been eligible to retire within five years. In November 2011, the agency offered a Voluntary Early Retirement Authority/ Voluntary Separation Incentive Payment (VERA/ VSIP) option, and the percentage eligible to retire within five years declined to 23 percent after the VERA/VSIP. “We continue to pay particular attention to this group, because these employees still represent about a fifth of all of our employees,” says Bridget Bean, the SBA’s chief human capital officer. “We try to determine where those employees are located, in what program offices, and which are in mission-critical positions, so that we can understand their impact and the opportunities they present. We try to pay attention to them, persuade them to be a part of the team as long as we can and work with them to help transfer their knowledge to newer employees.” Narfe magazine survey respondents reported a wide range of interactions with younger colleagues and managers. Many say they have encountered no difficulties and have been prized by younger managers and colleagues for the experience they bring to the table. However, other survey respondents say that younger colleagues have openly expressed frustration

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that the respondents’ continued employment was blocking their advancement at the agency. Still others report increasing challenges, such as the burden of staying current with new technologies and the psychological challenges of adjusting to a workforce in which a steady stream of colleagues retires. The SBA’s Bean says there are workforce strategies that can address intergenerational employee tensions. “You do have tensions regarding advancement potential, where younger employees want to grow and learn but positions are encumbered. The question is how to reconcile that with the merit principles we hold dear. We’ve responded by, in collaboration with our union, creating teams across generations, with more than 150 employees of different ages and seniorities, from GS-4s to SESers, from across the agency that seek to address challenges that they couldn’t do in traditional teams, such as looking at the biggest risks at the agency and how we should address them. “In addition to fostering joint projects with younger employees, we also try to make sure that older employees are not isolated by supporting efforts to address their specific needs. For example, we have an affinity group for the 50-plus group of employees who are empty nesters to give them an opportunity to volunteer to serve their communities. Those types of programs also are valuable because they can help employees to grow as a whole person, outside of their employee boxes.” A considerable number of narfe

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More Federal Workers Are Staying on the Job Longer magazine survey respondents cited issues that, if accurate, may constitute age discrimination under the ADEA. Some survey respondents alleged that management had tried to force out older workers or motivate them to move on by excluding them from activities or, alternately, by increasing their workloads or volume of duties so as to frustrate them. The ADEA forbids age discrimination against those age 40 and older when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoffs, training, fringe benefits and any other term or condition of employment. Harassment based on age, such as slurs or derogatory comments, is illegal if it is so frequent or severe that it creates a hostile or offensive work environment or if it results in an adverse employment decision (such as the victim being fired or demoted). A full guide to prohibited age (and other) discrimination practices is available at the Equal Employment Opportunity Commission’s (EEOC) website at www1.eeoc.gov//laws/practices/index. cfm?renderforprint=1. Federal workers have 45 days to contact an agency EEO counselor from the date of the discriminatory incident to challenge the incident. Unlike other EEO claims, federal workers also can file an ADEA lawsuit without first contacting their agency’s EEO office, provided they notify the EEOC 30 days in advance. Either way, federal workers who believe they have been discriminated against must take action in order to protect their rights, notes Ray Peeler, an EEOC senior attorney adviser.

THE RETIREMENT CALCULUS

While many narfe magazine survey respondents say that their retirement plans reflect their desire to maximize their retirement benefits, such calculations can depend on a host of factors. Eligibility for “non-reduced” benefits within the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) depends on the employee’s years of service and age, says Brian Thoms, a certified financial planner and vice president at Ameriprise Financial Services, Inc., who says that approximately 80 percent of his clients are federal employees. “For CSRS, you either have to be 62 years old with five years of service, 60 with 20 years, or 55 with 30 years. For FERS, you have to be age 62 with 20 years of service to get a multiplier of 1.1 percent instead of 1.0 percent 28

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and, generally, at least 62 to receive cost-of-living adjustments,” Thoms says. “That being said, even when your pension is ‘non-reduced,’ it still goes up every year you work for the government (both formulas include multiplication by years of service), the exception to this being the CSRS benefit, where your pension cannot go above 80 percent of your high three years of income (which usually takes 41 years and 11 months of federal government service).” “For Social Security, most people’s ‘full retirement age’ is reached between ages 66 and 67, depending on the year that you were born,” Thoms says. “However, it will continue to increase for everyone − by 8 percent each year for those born in 1943 or later − until age 70 if you wait to file for your benefits, or file and suspend. I usually run a break-even analysis for my clients, which will tell someone how long they have to live for it to make sense to wait until 70 to take their benefits.” Thoms also notes that there are numerous other considerations that factor into determining the optimal time to retire. The most difficult, he says, are the subjective factors that come into play. “In the end, I would define retirement by when you have the financial freedom to stop working,” Thoms says. “We want to obviously try and maximize your federal benefits, but usually people also want to retire young enough to enjoy it,” Thoms says. “The problem that I’ve run into is that many people just don’t know how to identify when they’ve reached that point of financial freedom. Running a retirement analysis to be sure they’ve reached that point is an essential step before you file your retirement papers.” For those who have run the numbers but find that conflicting factors still weigh both for and against retiring, sometimes intuition may be the best guide. “I was told by friends that I would know, intuitively, when it was time to move on. I found that to be very true. There was nothing suddenly compelling me to retire, but I just knew it was time to move on,” says Dorothy Weir, who retired from the Dallas Military Entrance Processing Station as an education services specialist on the last day of 2012 at age 69. “I have no regrets for staying until I was almost 70, but I am aware that my vibrant retirement years were shortened.” —David Tobenkin is a freelance writer based in the greater Washington, DC, area.

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By William Matthews

How much

m ney do you need to

retire? It depends . . .

Some financial advisers say you will need enough income to replace 75 percent to 85 percent of your preretirement income. Others say 55 percent will do. And still others insist that you will need 110 percent. Hereâ&#x20AC;&#x2122;s another approach: 11 times your final salary, if you are age 65. That drops to 9.4 times if youâ&#x20AC;&#x2122;re 67 and climbs to 13.5 times if you are 62, claims human resources firm Aon Hewitt. Or how about this: 25 times your pre-retirement living expenses minus the amount you will receive from Social Security and annuities? Too confusing? How about a nice round number: $1 million?

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w w w. n a r f e . o r g

How Much Money Do You Need to Retire?

A multi-billion dollar industry prospers by trying to answer this question. But according to retirement experts, whatever formula you use, it almost always takes careful planning and decades of working and saving to achieve retirement goals. Thanks to retirement annuities, a stellar 401(k)-type savings plan and continued health insurance, long-term federal employees are among those best prepared for post-employment life. A lot of others, however, are not. “Broadly, we see a one-third, one-third, onethird division” among workers approaching retirement age, says Jean Young, senior research analyst at the Vanguard mutual fund company’s Center for Retirement Research. That is, only about one third of workers reach retirement age with enough to retire comfortably. Another third “can get there if they make changes in behavior that are doable,” Young says. Key among the needed changes is saving more – perhaps 20 percent or more of their income. “And then you have a third that don’t have a shot,” Young says. Workers in that unfortunate group typically have had lower-income jobs, unsteady employment and managed to accumulate little or no savings. So they’re left with few choices: scrape by on Social Security, count on the kindness of relatives or keep working. Anthony Webb, a senior research economist at the Boston College Center for Retirement Research, sees an even bleaker picture. On average, households approaching retirement age – between 55 and 64 – have just $120,000 in retirement accounts, he says. That’s a small fraction of the amount needed for a 25- or 30year retirement. “More than half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65, which is above the current average retirement age,” and even if they tap unconventional income sources, such as a reverse mortgage on their homes, Webb writes in the latest update of the National Retirement Risk Index. 32

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“They face a number of unpalatable choices: save more, postpone retirement or accept a sizeable drop in their standard of living,” he said in an interview. The United States is not a nation of savers. The U.S. savings rate fell to 4.2 percent last November, according to the Commerce Department. That’s far less than the 10-20 percent savings rate that many retirement experts say is necessary to build the savings needed to support a comfortable life after work. The picture is brighter for many federal government employees. Generally, “a federal employee who has spent an entire career in government will have no problem reaching retirement goals,” says Tammy Flanagan, senior benefits director for the National Institute of Transition Planning, Inc. Under the older Civil Service Retirement System (CSRS), federal workers who are at least age 55 and have worked for the government at least 30 years can retire with annuity payments worth about 65 percent of the average of their highest three years of pay. Add to that money saved in the federal Thrift Savings Plan (TSP), and federal workers under CSRS can easily replace 70-80 percent of their preretirement pay, Flanagan says. Federal workers covered by the newer Federal Employees Retirement System (FERS) and who work for 35 years receive 35 percent of their highest three years of pay plus Social Security, which, depending on salary, is another 20 to 25 percent of pay. Add to that what they have saved in the TSP plus a government match of up to 5 percent, and they, too, can easily meet the income replacement goal of 70-80 percent, she says. But to earn those benefits, workers have to put in long federal careers. A generation ago, it was not unusual for people to graduate from high school or college, join the federal government and stay until retirement, Flanagan says. Today, that’s less common. “I’m running into a lot more employees who came in (to the federal government) in midcareer,” she says. It’s part of a national trend. According to

the Bureau of Labor Statistics, workers born between 1957 and 1964 have an average of 11 jobs by the time they are age 46. That variety might make working life more interesting, but it can reduce federal retirement benefits substantially. And in the private sector, job-hopping employees may not become fully vested in private pensions, which are increasingly scarce anyway, so they will have to rely more on personal savings for retirement income. RULES OF THUMB So, back to the original question. What is needed for a comfortable retirement? There are lots of rules of thumb: a particular percentage of your pre-retirement income, a certain multiple of your estimated retirement expenses, an impressive – or daunting – lump sum. “But they’re just that, rules of thumb,” says Young of Vanguard. To know for sure whether you are in a position to retire, “you really need to understand your own expenses and how they might change in retirement,” she says. The rules of thumb are based on broad assumptions, she adds. “You need to understand your own spending.” Still, the rules of thumb provide a place to begin planning. One of the most-cited rules is that you will need 70 percent to 80 percent of your preretirement income to maintain your current standard of living. Young prefers 75 percent to 85 percent, but notes that those with higher incomes will need a lower replacement percentage, and those with lower incomes will need a higher one. The logic behind the rule is that retirees need less income because their expenses go down. Here’s why: Taxes are lower because taxable income decreases, Social Security and Medicare taxes end when you stop working, Social Security benefits are partially or fully tax-free, and there are extra tax deductions for people over age 65. Also, retirees no longer have to save for retirement, and work-related expenses such as commuting and work cloth-

ing can be eliminated. The RETIRE Project at Georgia State University estimates that a household with an income of $50,000 will need about 80 percent of that – $40,000 – to maintain the same standard of living in retirement; but a household that earned $20,000 will need to replace 94 percent in retirement. That’s because lower-income earners generally cannot afford to save as much for retirement, and since they pay less in taxes while working, the tax breaks they gain from retiring will be smaller. Meanwhile, a household that earned $90,000 needs to replace 78 percent – or $70,200 – to maintain the same standard of living in retirement. But rules of thumb typically fail to account for a variety of variables, says Webb of Boston College. They don’t consider that expenses decline when children grow up and leave home and that mortgages are often paid off. On the other hand, they don’t account for increased expenses in health insurance and long-term care. Nor do they factor in expenses such as travel that are more likely to be higher early in retirement but lower later on, he says. So while a rule of thumb is a good starting point, he says, it’s essential for retirees and would-be retirees to factor in their personal circumstances. David Blanchett, who heads retirement research at Morningstar Investment Management, agrees. “While a replacement rate between 70 percent and 80 percent is likely a reasonable starting place for most households, the actual replacement goal can vary considerably.” In his analysis, replacement rates can be

Rules of thumb fail, typically, to account for a variety of variables. w w w. n a r f e . o r g

How Much Money Do You Need to Retire?

as low as 54 percent or as high as 87 percent, he wrote in a November report, Estimating the True Cost of Retirement. A newer method for estimating the savings needed for retirement concludes that you will need to save 11 times your final salary. That plus Social Security should do it, says human resources consulting firm Aon Hewitt. Here’s how Aon Hewitt figures this: “The amount needed at retirement age to cover retirement expenses through an average life expectancy (age 87 for males, age 88 for females) is 15.9 times pay,” the company says in a 2012 report. “This assumes the cost of goods and services and medical expenses will increase over time due to inflation. “Since Social Security will pay for some of these expenses, the employee will need to have saved 11.0 times pay at retirement through their employer plans and their own savings.” So if your final salary was $50,000 a year, you’ll need $550,000 in retirement savings. If you made $90,909, you’ll need $1 million. Unhappily, Aon Hewitt says its analysis indicates that most people who are saving for retirement are falling short. “Approximately 70 percent of those who put money into employer-sponsored savings plans are not on track to retire with adequate financial resources,” the company says. Another approach to calculating retirement needs is to look not at savings or final salaries, but at spending. This rule of thumb says to save 25 times your estimated annual postretirement spending. Here’s a hypothetical example offered by the financial services firm Charles Schwab: Your annual expenses will be $70,000 a year. You will get $22,000 a year from Social Security, so you can subtract that. And you’ll have $12,000 more coming in from a pension, rental property or other sources, so subtract that, too. That leaves $36,000. Multiply $36,000 by 25 and that’s

what you will need in savings to retire – $900,000. The assumption here is that you’ll withdraw 4 percent of that sum each year. At that rate, your savings will last 25 years – longer if it’s invested well enough to outpace inflation. Here’s an even older rule of thumb: $1 million. Invested wisely, a million dollars should produce a 4 percent annual return, or $40,000 a year in income. But the value of $40,000 will be steadily eroded by inflation. To offset that, you will need to withdraw a bit more than $40,000 each year. Even so, your $1 million nest egg should last for 30 years, Young says. Retirement Reality When Kim Newlin, a Commerce Department statistician, was preparing to retire, he analyzed his expenses and concluded he would need 68 percent of his income each year to live comfortably. To test the accuracy of his calculations, Newlin decided to live on 68 percent of his income for the next three years. He invested the rest in inflation-proof bonds. “I wanted proof that we could live on 68 percent. Once you retire, it’s pretty hard to go back,” he says. “We did very well living on 68 percent,” he says. “But we’re a fairly conservative couple. We don’t splurge or eat out or go to the movies very much. We keep our cars for a long time.” After nine years in retirement, Newlin offers this advice: “You have to be willing to decide what is a need versus what is a want. Food, clothing and shelter you’ve got to have. The other things are nice to have. You’ve got to be able to live conservatively.” Newlin says his federal annuity’s cost-ofliving increases haven’t always kept up with rising prices, and that has caused him to spend less on nonessentials such as travel. “But we have not felt too squeezed.” This year, since he will turn 70-1/2, he will have to begin withdrawing money from his individual retirement accounts. That, he says, might give him “more money than I know what to do with.”

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How Much Money Do You Need to Retire?

When Kosuke Vasquez dreamed of retiring from the Environmental Protection Agency in Virginia, he envisioned “doing some traveling with my wife, going back home to Hawaii, trading in the car for a motorcycle, fixing up the house.” He planned a retirement budget equivalent to 70 percent of his final pay. His CSRS annuity would provide 66 percent, and investments and a part-time job would make up the rest. “I was very confident prior to retiring that I had saved enough,” Vasquez says. But that was before his wife suffered “catastrophic health issues.” Previously, she had earned about

Invested wisely, your $1 million nest egg should last 30 years. 40 percent of the household income. “I have changed my goals in order to make the money last,” Vasquez says. Health care costs and home repairs consumed half of the $120,000 he had in his TSP, and his children, who had just graduated from college, needed financial help. Fortunately, he says, he also had money invested in mutual funds. “I’m still fairly confident that we will be okay, but I have set my sights lower,” Vasquez says. “My retirement is nothing like I imagined. I am glad I saved as I did while working for the government. Although the money has not gone for travel, a motorcycle or other dreams, it was there when I needed it to repair the house, help my children and take care of my wife, who is now disabled. I am her primary caregiver, and to be able to do that makes me feel very fortunate. I am truly grateful for what I have.” Retirement has proven pretty Spartan for Arne Sampe. 36

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When the Sacramento Army Depot closed in 1993, Sampe, a systems analyst, was left with two choices – a long-distance commute to another Army job, or retire. “I couldn’t commute 50 miles a day to work,” he says. So he opted for retirement. Sampe started retirement planning based on “the general advice” that he would still need about 80 percent of his working pay. But when he compared that amount to his expected lifestyle, he decided that 60 percent would be adequate. “I decided not to have a wild lifestyle.” In addition to his CSRS annuity, Sampe was eligible for Social Security benefits from nonfederal employment. But his federal annuity triggered the Windfall Elimination Provision, which he says cut his Social Security by more than half, leaving him with just $69 a month to augment his CSRS payment. “I can live on 60 percent,” he says. “But there aren’t any extensive trips or lavish vacations – but I didn’t do that before retirement. If I had to make a house payment, I couldn’t do it.” Sampe says his spending has changed in retirement: “Recreation decreased, travel decreased, transportation increased, food increased, housing costs increased, impulse buying decreased, medical costs increased.” “I do not believe that most working people can save enough to meet [retirement] goals.” Instead, retirement income should be paid by employers, he says. But the trend is for employers to provide less. “I anticipate that in 20 years, most employees not on employer retirement plans will either be on Supplemental Security Income (for the aged and disabled), dead or rioting,” Sampe says. “The current systems do not support blue-collar workers. I do foresee a retirement crisis coming.” But then there are people like Louis Bornman. “I came up with a retirement income that was at least 115 percent of my last year’s basic pay,” says Bornman, a research analyst who retired in 2011 from the Army with a military pension based on active-duty and reserve

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How Much Money Do You Need to Retire?

service, a FERS annuity based on a civilian career and a healthy investment account. In that retirement trifecta, Bornman emphasizes the importance of savings. “I tried to make the maximum Thrift Savings Plan contribution and get the maximum matching contribution I could get for at least the last 15 years of employment,” Bornman explains. “I knew that I had to try to get at least $500,000 into the TSP to be able to make a reasonable return after retirement and to have that money last 20 to 30 years.” Since retiring, Bornman says he moved his TSP into an IRA, and his investments have grown by $60,000 despite withdrawing $2,000 a month. “You have to sacrifice in the early years to put as much as you possibly can into your TSP to maximize your matching contributions,”

Bornman advises. “I remember times I was really tight on money, but I did not reduce my contributions.” And as his salary increased, so did his TSP contributions. “I knew that the TSP savings would be able to make a huge difference in my financial comfort level when I retired,” he says. “I had studied what that money could grow to, and I did not want to retire poor.” And he didn’t. —William matthews is a freelance writer based in virginia.

NARFE State Tax Review Thinking of relocating in retirement? Be sure to see NARFE’s review of state taxation of federal annuities, p. 40.

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Special Section

State Tax Treatment

Federal

States With No Personal Income Taxes Alaska Florida Nevada

New Hampshire1 South Dakota Tennessee2

1 New Hampshire: Taxes interest/dividend income at 5% if it exceeds $2,400 (single) or $4,800 (couple). $1,200 exemption for residents age 65+.

Texas Washington Wyoming

2 Tennessee: Taxes certain interest/dividend income at 6% if it exceeds $1,250 (single) or $2,500 (couple).

States Exempting Total Amount of Civil Service Annuities Alabama Hawaii Illinois Kansas Kentucky1

Louisiana Massachusetts Michigan2 Mississippi New York

1 Kentucky: Amount attributable to service prior to January 1, 1998, is exempt. See below for taxation of annuities attributable to service on or after January 1, 1998. 2 Michigan: Full exemption only applicable to taxpayers born before 1946. See below for taxation of federal (and other) pension income for taxpayers born 1946 and later.

Other Exemptions NOTE:

AGI=Adjusted Gross Income CSRS=Civil Service Retirement System FERS=Federal Employees Retirement System HH=Head of Household IRA=Individual Retirement Account MFJ=Married Filing Jointly MFS=Married Filing Separately QW=Qualified Widow(er) RR=Railroad Retirement SS=Social Security

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North Carolina3 Oregon4 Pennsylvania Tennessee

3 North Carolina: Annuities not taxed if the individual had five years of government service as of August 12, 1989. If otherwise, see below. 4 Oregon: Annuities of those who retired before October 1, 1991, are not taxed. Those who retired after October 1, 1991, are taxed only on that portion of the annuity attributable to government service after October 1, 1991.

Alabama: Federal retirement, military retirement, state pension income, SS are exempt. Income from certain defined-benefit pension plans is exempt.

benefits are exempt.

Arizona: $2,500 exclusion for federal, military, and Arizona state and local pension income. SS and RR are exempt. Additional personal exemption for all residents age 65+. May subtract qualifying long-term care premiums if itemizing deductions.

California: SS and RR are exempt. Additional $106 personal exemption for residents age 65+. Residents age 65+ with AGI below $67,521 who qualified as HH in 2011 or 2012 by providing a household for a qualifying individual who died during 2011 or 2012 may claim a tax credit of 2% of their income, up to a maximum of $1,272. All private and public pensions are taxed.

Arkansas: Exempts up to $6,000 in federal retirement, military, in-state and out-of-state state or local government and private pension income. IRA distributions can be included as part of the exemption if the taxpayer is age 59-1/2+. SS and Tier 1 and Tier 2 RR

Colorado: $20,000 pension/ annuity exemption for all taxpayers between the ages of 55 and 64. $24,000 pension/annuity exemption for all taxpayers age 65+. Exemption applies to SS, RR and other qualifying retirement income (including

Tax Year

Annuities federal civil service annuities and military retirement). Connecticut: SS is exempt if federal AGI is $50,000 or less (if single or MFS), or $60,000 or less (if MFJ, HH or QW with dependent child). Exempts 50% of federally taxable military retirement pay. Delaware: Taxpayers age 60+ may exclude $12,500 of investment and qualified pension income (including out-of-state and federal government pensions), and qualify for an additional tax credit of $110. Taxpayers under age 60 may exclude $2,000. Taxpayers age 65+ (or blind) are entitled to an additional standard deduction of $3,250 (if not itemizing). Single or MFS taxpayers age 60+ as of December 31, 2013, or totally disabled, may exclude $2,000 if earned income is less than $2,500, and AGI is $10,000 or less. If MFJ and both spouses are age 60+ as of December 31, 2013, or totally disabled, may exclude $4,000 if earned income is less than $5,000, and AGI is $20,000 or less. SS and RR are exempt. District of Columbia: Taxpayers age 62+ may exclude $3,000 of military, federal and DC government pensions. For taxpayers age 62+, DC or federal government survivor benefits are exempt from DC tax. SS and Tier 1 RR are exempt. Georgia: Taxpayers who are age 62-64, or permanently and totally disabled regardless of age, may exclude $35,000 of retirement income. For taxpayers age 65+, the retirement income tax exclusion is $65,000. Retirement income includes income from pensions and annuities, interest income, dividend income, net income from rental property, capital gains income and

This roundup of state tax treatment of federal annuities and other tax information was compiled by the NARFE Legislative Department. It is presented for informational purposes only and does not constitute professional tax advice. Please consult a tax professional for advice in preparing tax returns. The information also is available on the NARFE website, www.narfe.org.

income from royalties. Up to $4,000 of the maximum allowable exclusion may be earned income. SS and RR are exempt. Hawaii: Federal retirement, military retirement, state or county retirement system pension income, SS, Tier 1 RR benefits and qualifying distributions from employer-funded pensions are exempt. Additional personal exemption of $1,144 per person age 65+. Idaho: SS and RR are exempt. Retirement benefits deduction available for CSRS annuitants who established CSRS eligibility prior to 1984, who are age 65+, or 62+ and disabled, in the amount of $30,396 (if single) or $45,594 (MFJ) minus SS and RR received. Retirement benefits deduction also available for military retirees. Persons using MFS status are not eligible for the retirement benefits deduction. May deduct health insurance and qualified long-term care premiums (within limits). Illinois: SS, RR and income from any qualified employee benefit plan are exempt (including federal civil service annuities). Indiana: SS and RR benefits are exempt. Taxpayers age 60+ may exclude up to $5,000 of military retirement income. Taxpayers age 62+ may deduct up to $2,000 of a federal civil service annuity minus the total amount of any SS or RR benefits. Additional personal exemption of $500 if federal AGI is less than $40,000 for residents age 65+. May deduct from income premiums paid for long-term care insurance through the Indiana Partnership. Iowa: Taxpayers age 55+ may exclude up to $6,000 (if single) or $12,000 (if MFJ) of pension or annuity income (including civil service annuities),

self-employed retirement plan income, deferred compensation, IRA benefits or other retirement plan benefit income (not including SS). 89% of federally taxable SS benefits are excluded. RR benefits are exempt but used to calculate amount of federally taxable SS benefits. Additional $20 personal exemption credit for those age 65+. Kansas: Federal, RR, military, in-state/local pensions are exempt. SS is exempt if federal AGI is $75,000 or less; otherwise, only federally taxable benefits taxed. Additional $850 deduction for those age 65+ ($700 each if MFJ or MFS). Kentucky: Federal civilian and military retirement annuities attributable to service prior to January 1, 1998, are excluded. Annuities attributable to service after January 1, 1998, are included as pension income, of which taxpayers may exclude up to $41,110. SS and RR benefits are exempt. May deduct amount of health, dental and long-term care premiums. Louisiana: SS is exempt. Federal retirement annuities are exempt. In addition, persons age 65+ may exclude up to $6,000 of annual retirement income from their taxable income. Maine: SS and RR are exempt. May deduct $6,000 of eligible pension income, including federal civil service annuity income, from federal AGI. Except for military income, the $6,000 deduction must be reduced for SS and RR benefits. Additional standard deductions: for individuals, $1,500 if age 65+; for MFS, MFJ or QW, $1,200 per spouse or person who is age 65+. Longterm care premiums are deductible. Maryland: SS and RR are exempt. If age 65+, may exclude up to $27,800 in pension income, reduced by SS or w w w. n ar f e . o r g

RR benefits. Additional $1,000 exemption for residents age 65+. Additional $5,000 exemption for military retirement income received by an individual of any age or the surviving spouse or ex-spouse of the individual if the individual was a member of an active or reserve component of the U.S. military, an active duty member of the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, the Coast and Geodetic Survey, or a member of the Maryland National Guard. Massachusetts: SS, civil service annuities are exempt. Additional exemption of $700 for individuals age 65+. Michigan: For taxpayers born before 1946, SS, RR, military retirement annuity, and all state and federal pension income is exempt. Private pension income is exempt up to $48,302 (individual filers) or $96,605 (MFJ), reduced by the amount of any public pension deduction claimed. Also may deduct interest, dividends and capital gains up to $10,767 (individual filers) or $21,534 (MFJ). For taxpayers born in 1946-1952, before the taxpayer reaches age 67, public and private pension income is exempt only up to $20,000 (single) or $40,000 (MFJ), and no deduction is allowed for interest, dividends and capital gains. After reaching age 67, taxpayers born in 1946-1952 are allowed a $20,000 (single) or $40,000 (MFJ) subtraction against all income, but are ineligible for this income subtraction if claiming a military or Tier 2 RR pension exclusion. For taxpayers born in 1953 or later, SS, RR and military pensions are exempt. But there is no public or private pension exemption or interest, dividends and capital gains exemption before the individual reaches age 67. Once 67, those taxpayers may elect either to exempt up to $20,000 (single) or $40,000 (MFJ) without any exemption 42

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for SS, RR or military retirement and no personal exemptions, or they may elect to exempt SS, military and RR and claim personal exemptions. Additional details for the 2013 tax year are available at: www.michigan. gov/documents/taxes/4884_Inst_ 443078_7.pdf. Minnesota: RR is exempt. Mississippi: Qualified retirement income (including federal retirement annuities and SS) is exempt. Additional exemption of $1,500 for residents age 65+. Missouri: Taxpayers with AGI under $85,000 (single, HH, MFS, QW) or $100,000 (MFJ) may exempt the greater of $6,000 or 100% of any federal, state or local pension income, up to a maximum of $35,939 per taxpayer. Taxpayers with AGI under $25,000 (single, HH, QW) or $32,000 (MFJ) or $16,000 (MFS) may exempt $6,000 of private pension income. Taxpayers with AGI over these limits must reduce their private pension exemption dollar for dollar as income exceeds the limit. Taxpayers age 62+ or disabled with an AGI under $85,000 (single, HH, MFS, QW) or $100,000 (MFJ) may exempt 100% of the taxable amount of SS or SS disability benefits, but must reduce the exemption dollar for dollar as income exceeds the limit. Additional exemption (60%) for military pension income. May deduct long-term care premiums. Montana: Taxpayers with AGI under $32,480 may exclude $3,900 of pension income; for AGI above $32,480, the pension income exclusion is reduced $2 for every $1 of AGI above $32,480. RR benefits are exempt. Additional exemption of $2,280 if age 65+. Taxpayers age 65+ may exempt $800 of interest income reported as federal AGI or $1,600 if MFJ. Nebraska: Tier I and II RR benefits are exempt.

New Jersey: SS and RR benefits are exempt. Taxpayers age 62+ may exclude up to $10,000 (MFS), $15,000 (single) or $20,000 (MFJ) of pensions, annuities and IRA withdrawals, provided gross income is not more than $100,000. In addition, taxpayers age 62+ with earned income (from wages, net business profits, distributive share of partnership income and net prorata share of S corporation income) of $3,000 or less, and with gross income not more than $100,000, may exclude other nonpension retirement income up to the maximum exclusion amount. If ineligible for SS or RR, entitled to deduct an additional $3,000 (single, MFS) or $6,000 (MFJ, HH, QW). Military pensions are exempt. Additional $1,000 personal exemption for residents age 65+. If taxpayers can recover all civil service retirement contributions in the first three years, can use the three-year rule, in which annuities are not taxed until total employee contributions have been recovered. If not, must use the general rule method, in which a portion of annuity is excluded from taxation. New Mexico: Taxpayers age 65+ or blind may qualify for additional exemption of $8,000 if federal AGI is less than $15,000 (MFS), $18,000 (single) or $30,000 (MFJ, HH, QW). The exemption reduces as income increases, with no exemption if income is over $25,500 (MFS), $28,500 (single) or $51,000 (MFJ). RR is exempt. If age 100+, exempt from state income tax but only if centenarian cannot be claimed as a dependent by someone else. New York: State and federal pensions exempt completely. An additional pension and annuity income exclusion of up to $20,000 is available to persons age 59-1/2+. SS and RR are exempt. North Carolina: Pursuant to the North Carolina Supreme Court’s decision in Bailey v. State of North Carolina, the state may not tax certain

Tax Year

retirement benefits received by federal civil service and military retirees or retirees of the state of North Carolina and its local governments if the retiree has five or more years of creditable service as of August 12, 1989. If retirees in those categories did not have five years of service as of August 12, 1989, they may deduct the amount included in federal taxable income or $4,000, whichever is less. This deduction also applies to retirement benefits paid to former teachers and state employees of other states and their political subdivisions regardless of the five-year service date. If MFJ and both spouses received federal, state or local government retirement benefits, each may deduct up to a maximum of $4,000. If an individual’s federal taxable income includes retirement benefits from a private retirement plan, a deduction of up to $2,000 may be available. If an individual received both government and private retirement benefits, the maximum deduction is the total amount included in federal taxable income or $4,000, whichever is less. North Dakota: RR is exempt. May exclude 40% of net long-term capital gains and qualified dividends. Ohio: SS and RR are exempt. General retirement income credit available in an amount starting at $25 if qualifying retirement income is at least $500, and maxing out at $200, if qualifying retirement income is $8,000 or more. Residents age 65+ are entitled to a $50 tax credit per return. Military pension income is exempt. Taxpayers who served in the military and receive a federal civil service retirement pension are eligible for a limited deduction if any portion of their federal retirement pay is based on credit for their military service. These retirees can deduct the percentage (in terms of years of service) of the amount of their federal retirement pay that is attributable to their military service. May deduct long-term care premiums.

Oklahoma: SS is exempt. Each individual may exclude 100% of retirement benefits received from federal CSRS, including survivor benefits, paid in lieu of Social Security to the extent that these benefits are included in the federal AGI. Note: Retirement benefits paid under FERS do not qualify for this exclusion. However, for retirement benefits containing both a FERS and a CSRS component, the CSRS component will qualify for the exclusion. Individuals may exclude their FERS retirement benefits or Oklahoma state employment retirement benefits or other qualifying retirement income up to $10,000. Individuals may exclude the greater of 75% of their military retirement benefits or $10,000. Additional personal exemption of $1,000 if age 65+ and federal AGI is $15,000 or less (single), $25,000 or less (MFJ), $12,500 or less (MFS), or $19,000 or less (HH). Oregon: Federal civil service annuities of those who retired before October 1, 1991, are not taxed. Those who retired after October 1, 1991, are taxed only on that portion of the annuity attributable to government service after October 1, 1991. Taxpayers age 62+ may qualify for retirement income credit (see worksheet regarding line 34) if household income is below $22,500 (or $45,000 if MFJ) or elderly tax credit (40% of federal credit), but may not claim both. SS and RR benefits are exempt. Additional standard deduction if age 65+ of $1,200 (single, HH), $1,000 each spouse age 65+ (MFJ, MFS and QW). Pennsylvania: SS, RR, federal civil service, military retirement benefits and other employer-sponsored retirement plan benefits exempt. Distributions from IRAs, if age 59-1/2, are exempt. Rhode Island: RR is exempt. South Carolina: If below age 65, may deduct $3,000 of qualified

retirement income (including federal retirement annuities). If age 65+, may deduct $10,000 of qualified retirement income (including federal retirement annuities). All individuals age 65+ are entitled to a $15,000 deduction from income, reduced by any deduction claimed for qualified retirement income. SS and RR are exempt. Tennessee: Tax applies only to certain interest and dividend income, not wages and salary or pension income. Any person age 65+ is taxexempt if total annual income, from any and all sources, is $33,000 or less, or $59,000 or less for joint filers. An exemption of $1,250 ($2,500 if MFJ) is allowed against total taxable interest. Utah: Taxpayers age 65+ may be entitled to a retirement credit of up to $450 ($900 MFJ). Taxpayers under age 65, born before January 1, 1953, and with eligible retirement income may qualify for a credit up to 6% of eligible retirement income with a cap of $288. Vermont: RR is exempt. Virginia: Taxpayers age 65+ whose birthdate is on or before January 1, 1939, may claim an age deduction of $12,000 (available for each person or spouse if MFJ). If birthdate is on or between January 2, 1939, and January 1, 1949, the $12,000 age deduction is reduced by $1 for every $1 that adjusted federal AGI exceeds $50,000 (single) or $75,000 (MFJ, MFS). SS and Tier I RR benefits are exempt. Additional personal exemption of $800 if age 65+ or blind. Long-term care premiums are eligible for deduction if not claimed as an itemized deduction on federal return and if not used as the basis of the Virginia Long-Term Care Insurance Credit. West Virginia: $2,000 of military, federal retirement and state pensions is exempt. Additional exemption for military pension income up to $20,000. RR is exempt. Taxpayers age w w w. n ar f e . o r g

Tax Year

65+ or surviving spouses may exclude the first $8,000 each of any remaining non-exempt income. Wisconsin: Federal civil service retirement payments are exempt from state income tax if: 1) individual retired from the system before January 1, 1964; 2) individual was a member of the system as of December 31, 1963, retiring at a later date and

the payments received are from an account established before 1964; or 3) individual is receiving payments from the system as a beneficiary (survivor) of an individual who met condition 1 or 2. If age 65+, may exempt up to $5,000 of retirement income if federal AGI is less than $15,000 or $30,000 (MFJ). Additional personal exemption of $250 if age 65+. SS and RR benefits

are exempt. Military retirement pay and retirement pay related to service with the Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration or the commissioned corps of the Public Health Service are exempt. Long-term care insurance premiums may be exempt (exceptions exist to this general rule).

State Sales Taxes I With Average Combined City and County Rates Alabama* Alaska Arizona*† Arkansas* 1 California*† Colorado*† Connecticut*† Delaware 2 Dist. of Col.*† Florida*†^ Georgia*† Hawaii* 3 Idaho* Illinois 4 Indiana*† Iowa*† Kansas*

4.0 I 8.48% 0.0 I 1.69 5.6 I 7.15 6.5 I 9.18 7.5 I 8.41 2.9 I 7.39 6.35 I 6.35 0.0 I 0.0 5.75 I 5.75 6.0 I 6.62 4.0 I 6.98 4.0 I 4.35 6.0 I 6.78 6.25 I 8.13 7.0 I 7.0 6.0 I 6.78 6.15 I 8.13

Kentucky*† 6.0 I 6.0% Louisiana*† 4.0 I 8.89 Maine*† 5.5 I 5.5 Maryland*†^ 6.0 I 6.0 Massachusetts*†6.25 I 6.25 Michigan*† 6.0 I 6.0 Minnesota*†^ 6.875 I 7.18 Mississippi* 7.0 I 7.0 Missouri* 5 4.225 I 7.51 Montana 0.0 I 0.0 Nebraska*† 5.5 I 6.79 Nevada*† 6.85 I 7.93 New Hampshire 0.0 I 0.0 New Jersey*†^ 7.0 I 6.97 New Mexico*† 6 5.125 I 7.26 New York*†^ 4.0 I 8.48 N. Carolina* 4.75 i 6.9

N. Dakota*† 5.0 I 6.6% Ohio*† 5.75 I 6.8 Oklahoma* 4.5 I 8.72 Oregon 0.0 I 0.0 Pennsylvania*†^ 6.0 I 6.34 Rhode Island*†^ 7.0 I 7.0 S. Carolina*† 6.0 I 7.19 S. Dakota* 4.0 I 5.83 Tennessee* 7 7.0 I 9.44 Texas*†^ 6.25 I 8.15 Utah* 8 5.95 I 6.68 Vermont*†^ 6.0 I 6.14 Virginia*^ 9 5.3 I 5.62 Washington*† 6.5 I 8.87 West Virginia* 10 6.0 I 6.04 Wisconsin*† 5.0 I 5.43 Wyoming*† 4.0 I 6.04

KEY: * Prescription drugs are exempt † Food is exempt ^ Nonprescription drugs are exempt Additional exemptions and varied rates for particular sales may apply. 1 Arkansas: Taxes food at 1.5%. 2 Delaware: Imposes a gross receipts tax on the seller of goods (tangible or otherwise) ranging from 0.1037% to 2.0736%. 3 Hawaii: Does not technically have a a sales tax but imposes a general excise tax of 4% of the gross receipts of most businesses. 4 Illinois: Taxes qualifying food, prescription and nonprescription drugs at 1%. 5 Missouri: Taxes food at 1.225%. 6 New Mexico: Does not have a sales tax but imposes a gross receipts tax instead, which has a similar effect, on persons

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engaged in business in New Mexico. In almost every case, the tax is passed to the consumer, either separately stated or as a part of the selling price. Rate varies within the state from 5.125%-8.8675%. Deductions are available, including for prescription drugs and qualifying food sales. 7 Tennessee: Taxes food at 5.0%. 8 Utah: Includes a 1.25% tax levied by local governments. Taxes food at a state rate of 1.75% with local additions of up to 3%. 9 Virginia: Includes statewide local tax of 1%. Taxes food for home consumption at 2.5%, which includes statewide local tax of 1%. There is an additional 0.7% state tax imposed in the localities that make up Northern Virginia and Hampton Roads. 10 West Virginia: Taxes food at 3%.

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Technology Breakthrough

Managing Money

claiming social security benefits: 1

onventional wisdom suggests claiming Social Security benefits as early as possible; but considering the healthier lifestyles and longevity

of today’s retirees, the best financial strategy may be to hold off until one’s full retirement age (FRA), or even longer. In fact, if you are married, divorced or widowed, there are various strategies you can use to get a bigger piece of the Social Security pie. This month, we will cover the basics of Social Security; next month, we’ll look at how you may use claiming strategies to your advantage.

Your primary insurance amount (PIA) is the monthly benefit you are eligible to receive at your FRA, which is the age a person becomes entitled to full or unreduced retirement benefits. FRA depends on the recipient’s year of birth. While it was originally set at age 65, FRA has increased over the years to account for longer life expectancies. It now falls between 66 and 67 for those born after 1943. You can claim Social Security retirement benefits as early as age 62, but your benefits will be permanently reduced by doing so. While the amount of reduction depends on the number of months you collect prior to your FRA, the maximum reduction for claiming at age 62 is 25 percent for those with an FRA of 66 and 30 percent for those with an FRA of 67. 46

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It is also possible to delay your Social Security benefits beyond your FRA for a bigger benefit. For each month you delay beyond your FRA, you will receive delayed retirement

By Mark A. Keen,

CFP®

his benefit until age 70, he will receive the 8 percent DRCs for each of the four years he delayed, increasing his benefit by 32 percent to $2,640 (not including any cost-of-living adjustments). If you are married, your spouse may be entitled to a spousal benefit based on your work history – even if he or she has never worked and doesn’t qualify for a benefit on his or her own. The spousal benefit is equal to 50 percent of your PIA if claimed at FRA, but spousal benefits may be claimed as early as age 62 for a reduced amount. If your spouse is entitled to his or her own benefit, but it’s less than 50 percent of

Claiming early or delaying benefits can affect your Social Security income. credits (DRC) equal to 8 percent for each year you delay, up to the maximum age of 70. Let’s look at an example to see how claiming early, or delaying benefits, affects one’s Social Security income. Let’s assume John, age 62, recently retired and is eligible to receive a $2,000 monthly Social Security benefit at his FRA of 66. If John claims at 62, his benefit will be reduced 25 percent to $1,500 per month. Alternatively, if John delays

your PIA, the spousal benefit will be added to his or her own benefit so that the combined amount is equal to 50 percent of your PIA (assuming the spousal benefit is claimed at FRA or later). Note: Your spouse may only claim a spousal benefit once you have filed for your own benefit. (We will discuss this in more detail next month.) And unlike a worker’s benefit, spousal benefits do not increase if they’re deferred beyond FRA.

FINANCIAL TOOLS NARFE offers an online retirement calculator and other financial planning tools. Find out more at www.narfe.org/ federalbenefits.

A surviving spouse may be eligible for a survivor benefit if he or she had been married to the deceased spouse for at least nine months. The survivor benefit is equal to the deceased spouse’s PIA if he or she died prior to collecting benefits, or the deceased spouse’s actual benefit if he or she died after collecting benefits. This is important because claiming a reduced benefit prior to attaining FRA will result in a reduced survivor

benefit for your spouse as well. Having said that, a survivor benefit will not be less than 82.5 percent of the deceased spouse’s PIA. A spouse may collect survivor benefits as early as age 60, but they will be permanently reduced based on the number of months collected before FRA. Also, a surviving spouse will not collect two Social Security benefits; he or she will receive the higher of their own benefit or the survivor benefit. In May’s “Managing Money” column, we will explore Social Security rules for divorced individuals, two strategies only available once you attain FRA and how the various strategies can increase your lifetime Social Security income. Mark A. Keen, CFP®, is partner, Keen & Pocock, 10300 Eaton place, Fairfax, VA, and an investment adviser representative and registered principal of The Strategic Financial Alliance, Inc. (SFA). Securities and advisory services are offered through SFA. Email: mkeen@keenpocock.com.

Quality, Affordable Travel since 1967! Cajun Country & Western Caribbean Cruise 12 Days

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Departs October 10, 2014. Fly into Houston and visit NASA’s Space Center that houses a replica of the space shuttle before boarding Norwegian Cruise Line’s Jewel for your seven-night cruise. Enjoy 17 different dining options plus many other on board amenities as you sail to Cozumel, Mexico; Belize City, Belize; and Roatan, Bay Islands, Honduras. Disembark back in Houston for the start of your Cajun Country adventure. Stop in Lake Charles and enjoy a tSour of Lafayette’s Charpentier Historic District. Travel to Avery Island where you will tour the Tabasco Pepper Sauce Factory followed by a visit to one of the Antebellum Mansions. Finally it’s New Orleans where you will enjoy a city tour of ‘The Big Easy’ including the French Quarter, colorful Bourbon Street and Lake Pontchartrain. *PPDO. Based on inside stateroom (Cat. IF), upgrades available. Plus $299 tax/service/government fees. Alternate October departure dates available. Seasonal charges may apply.

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Travel with other NARF E Members!

w w w. n a r f e . o r g

The Informed Citizen

Congressional voting

he best yardstick for NARFE members to use to determine whether their senators and representatives support NARFE is floor voting in the Senate and House. The October 2012 issue of narfe magazine included a nine-page centerfold pullout section, “How Congressional Behavior Should Inform Our Own.” This biennial explanation and tabulation is the longest running feature in the magazine – dating back to 1982 – and appears in October of election years. Not to be overlooked in this display is the career summary for each legislator. Reviewing these displays of a much larger number of votes shows most legislators have mixed records. Few have “never” supported the NARFE position. While the biennial snapshot and historical summary are available for members on the NARFE website (see sample, left below), our Legislative Action Center allows anyone to display a Vote Scorecard for the current Congress (7 House and 3 Senate votes) or earlier Congresses. Our Legislative Action Center provides another even easier

way to display just the votes of your congressional delegation – two senators and one representative – with just the input of your ZIP code or ZIP+4. Using this feature allows you to display votes from 2003 to the present. (See sample, right below.) If you need a reprint of the October 2012 voting display, a current display based on just your

http://www.narfe.org/legislation (select “Issue and Position Papers”) 48

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By Christopher Farrell, Legislative Representative

own senators and representative or an entire state delegation, just send your name and address to NARFE Scorecard on Congress, 606 N. Washington St., Alexandria, VA 22314-1914, or email the Legislative Department at leg@narfe.org, placing “NARFE Scorecard on Congress” in the subject line, or phone 703-8387760 and ask for the Legislative Department. NARFE’s Legislative Hotline usually provides links to important floor votes where NARFE has taken a position. House and Senate roll call votes are made available online within 24 hours. The gateways to floor votes are: For the House: http://clerk. house.gov/evs/2014/index.asp For the Senate: www.senate. gov/pagelayout/legislative/a_ three_sections_with_teasers/ votes.htm.

http://capwiz.com/narfe/keyvotes.xc/?lvl=C

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2013

‘14

2013

For the Record

Thrift Savings Plan Monthly Returns G FUND

F FUND

C FUND

S FUND

I FUND

March

0.13%

0.07%

3.75%

4.69%

0.88%

APRIL

0.12%

1.02%

1.93%

0.65%

5.32%

MAY

0.12%

(1.78%)

2.34%

2.71%

(3.12%)

June

0.14%

(1.53%)

(1.34%)

(0.99%)

(2.77%)

JULY

0.18%

0.13%

5.10%

6.88%

5.29%

AUGUST

0.18%

(0.48%)

(2.89%)

(2.76%)

(1.31%)

SEPTEMBER

0.19%

0.99%

3.14%

5.89%

7.41%

OCTOBER

0.19%

0.89%

4.60%

2.94%

3.38%

NOVEMBER

0.18%

(0.35%)

3.05%

2.49%

0.75%

DECEMBER

0.19%

(0.56%)

2.54%

2.94%

1.51%

JANUARY

0.21%

1.58%

(3.45%)

(1.91%)

(4.03%)

FEBRUARY

0.18%

0.62%

4.58%

5.43%

5.58%

YTD

0.39%

2.21%

0.97%

3.42%

1.32%

LAST 12 MO

2.03%

0.55%

25.44%

32.45%

19.66%

10 yr

3.61%

5.25%

7.12%

10.79%

8.39%

L INCOME

L 2020

L 2030

L 2040

L 2050

MARCH

0.73%

1.69%

2.12%

2.44%

2.71%

APRIL

0.67%

1.58%

1.91%

2.13%

2.41%

MAY

0.19%

0.33%

0.43%

0.51%

0.53%

JUNE

(0.30%)

(0.94%)

(1.20%)

(1.40%)

(1.59%)

JULY

1.21%

2.95%

3.72%

4.29%

4.83%

(0.39%)

(1.22%)

(1.60%)

(1.87%)

(2.11%)

SEPTEMBER

1.12%

2.71%

3.40%

3.90%

4.42%

OCTOBER

1.01%

2.23%

2.75%

3.11%

3.47%

NOVEMBER

0.58%

1.24%

1.54%

1.74%

1.93%

AUGUST

‘14

DECEMBER

0.58%

1.25%

1.56%

1.77%

1.98%

JANUARY

(0.42%)

(1.57%)

(2.04%)

(2.35%)

(2.71%)

FEBRUARY

1.15%

2.73%

3.44%

3.94%

4.44%

YTD

0.73%

1.12%

1.33%

1.50%

1.61%

LAST 12 MO

6.29%

13.63%

17.00%

19.49%

21.87%

THIS CHART is provided as a service to NARFE members who enrolled in the Thrift Savings Plan while employed by the federal government. Retirees are not eligible for enrollment. These returns are net of the effect of accrued administrative expenses and investment expenses/costs. Percentages in () are negative. Source: TSP G Fund: Government securities (specially issued to the TSP) F Fund: Government, corporate and mortgage-backed bonds C Fund: Stocks of large- and medium-size U.S. companies S Fund: Stocks of small- to medium-size U.S. companies (not included in the C Fund) I Fund: International stocks of 21 developed countries L Fund: Invested in the G, F, C, S and I Funds (The proportion of L Fund balance invested in each of the individual TSP funds depends on the L Fund chosen.) 50

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Stocks Rally after major selloff After the worst selloff in seven months, a rally in February brought the S&P 500 Index to record levels. Speculation that the Federal Reserve will continue to support the economy and improvement in consumer confidence buoyed stock prices as Treasury prices fell. Investors speculated that the weakness in housing and hiring reported in February might be a result of the severe winter weather. And on February 27, Fed Chair Janet Yellen said that the central bank may change its strategy for reducing asset purchases should the economy weaken. —BY william H. Jacobson, Deputy Chief investment officer of the Thrift Savings Plan

Countdown to COLA

he Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.38 percent in January. To calculate the 2015 cost-of-living adjustment (COLA), the indices of July, August and September 2014 will be averaged and compared with the 2013 third-quarter average of 230.327. The percentage increase, if any, determines the COLA. January’s index, 230.040 is down 0.12 percent from the base. Benefits awarded under the Federal Employees’ Compensation Act (FECA) to individuals suffering work-related injuries or illnesses are adjusted according to each calendar year’s percentage change in the CPI-W. January’s index is 0.38 percent higher than the December 2013 base index of 229.174. The CPI represents purchases of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Included are various government fees, such as water charges, auto registration fees, and sales and excise taxes. Month

CPI-W

Monthly % Change

% Change from 230.327

October 2013

229.735

-0.3

-0.26

November

229.133

-0.26

-0.52

December

229.174

+0.02

-0.50

January 2014

230.040

+0.38

-0.12

February March April May June July August September

Donate to NARFE Programs Support Alzheimer’s Research Write your chapter number on check; make it payable to: NARFE-Alzheimer’s Research and mail to: Alzheimer’s Association 225 N. Michigan Ave., 17th Floor Chicago, IL 60601-7633

NARFE members contributed for Alzheimer’s research: $11 Million Fund

$10,702,354*

*Total as of January 31, 2014 100% of all contributed funds go to Alzheimer’s research.

Your charitable contribution is tax-deductible to the fullest extent allowed by law.

Enclosed is my NARFE-Alzheimer’s contribution: $ Every cent that is contributed is used for research. Please circle: Mr. Mrs. Miss Ms. Name: Address: City: State: ZIP: Chapter Number: Credit Card Information: MasterCard VISA If you have any questions, write to: Discover AMEX National Committee Chair Card Number: Jane Rodgers, P.O. Box 234 Expiration Date: (mm)/ (yy) Wadesville, IN 47638-0234 3-Digit Security Code: Name: (please print) Email: ajrodgers@tds.net Signature

Join the Silver CIrcle Clip this contribution form and mail to: NARFE Silver Circle, 606 N. Washington St. Alexandria, VA 22314

•For a contribution of $25 or more, you will receive a Silver Circle pin, and your name will be listed in narfe magazine with other contributors. •For a contribution of $1,000 or more, your name will be placed on the “Wall of Fame” at NARFE Headquarters.

YOUR CHARITABLE CONTRIBUTION IS TAX-DEDUCTIBLE TO THE FULLEST EXTENT ALLOWED BY LAW.

Enclosed is my Silver Circle contribution: $ ID # (ID # may be found on your narfe magazine label or your NARFE membership card)

Name: Address: City: Silver Circle contributions are NOT deductible for federal income tax purposes.

Installment Plan Wall of Fame 12-month installment plan

Give to the Scholarship and Disaster Funds

Please mail coupon and check to: FEEA 3333 S. Wadsworth Blvd., Suite 300 Lakewood, CO 80227

All donations go to the NARFE General Fund to support NARFE programs and operations.

State:

ZIP:

My check is enclosed

(Please make check payable to NARFE Silver Circle.)

Please charge my credit card Card type MasterCard VISA Discover AMEX Card Number: Expiration Date: (mm)/ (yy) Name: (please print)

Signature

Make check payable to: NARFE-FEEA Disaster Fund or NARFE-FEEA Scholarship Fund.

Date

YES!

Date

I would like to help with my contribution.

Please check appropriate box(es). To make credit-card contributions, call 800-338-0755. Scholarships are available to children, grandchildren and great-grandchildren of federal civilian retirees and current federal employees who are NARFE members. NARFE-FEEA Disaster Fund

Amount: $

NARFE-FEEA Scholarship Fund

Amount: $

Name: Address: City:

State:

ZIP:

NARFE News

Scholarship entry Deadline April 25

Regions realigned; reorg endorsed

ARFE would get the most dramatic reorganization of its 92-year existence under a long-term plan endorsed by the National Executive Board at its February 24-27 meeting. National President Joseph A. Beaudoin called the meeting “the most important Board meeting NARFE has ever held.” Signaling the critical need to change the Association’s current structure and its determination to lead the transformation, the Board agreed, as a first step, to cut in half the number of regions represented on the Board from 10 regions to five (see map, above). That change is within the authority of the Board to accomplish by itself. The Board also agreed to offer bylaw amendments that, if adopted, would: • Reduce the number of National Officers from four to two, retaining only a National President and National Treasurer and abolishing the National Vice President and National Secretary positions; • Make membership in chapters optional, rather than mandatory as it has been since 1988; and • Open membership in the Association to everyone, not just those entitled to an annuity from the federal government, and provide a youth membership for individuals under the age of 26. Amending NARFE’s National Bylaws would require a two-thirds vote at the NARFE National Convention in August.

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The proposed changes are aimed at freeing up scarce resources for other uses, increasing membership and starting to align the Association’s structure more closely with its mission. The changes outlined above were among those recommended by the Future of NARFE Committee, a 12-member panel appointed by Beaudoin in 2013 to develop a vision for the Association’s future. Committee co-chair Evelyn Kirby, Region II vice president, and committee member Ted Jensen, former Maryland Federation president, presented the committee’s report. The 26-page document describes NARFE’s current situation as one of declining membership, less member participation, over-reliance on dues revenue and a lack of focus of resources on NARFE’s core legislative mission. The report makes 35 recommendations to move the Association in a new direction. (The report may be found at www.narfe. org. Log in and click on the Future of NARFE Committee banner.) In addition to the proposed immediate changes, additional farreaching changes are envisioned, following strategic planning to draft an implementation schedule and adoption of additional bylaw amendments at future conventions. Among other things, the recommendations would establish a new governance structure along congressional district lines. NARFE members in each congressional

The 2014 NARFE Scholarship competition closes April 25. The application appears on p. 53, or go to www.narfe.org and click on the image in the graphic carousel to access the application and “A Guide to NARFE’s Annual Scholarship Awards Program.” Winners will be notified in August. Questions? Email natvp@narfe.org.

district would elect a member to serve as a “Congressional District Leader,” or CDL, responsible for legislative advocacy in the district. The CDLs in a state would, in turn, elect a “State Representative,” who would have responsibility for senatorial and state government advocacy, as well as coordination of statewide coalitions. The current federation structure would be phased out. The state representatives in each region would elect a member of the board of directors. These individuals would no longer be referred to, or function as, regional vice presidents but would be national policy makers. The five elected directors could appoint two or more additional directors from outside NARFE (for example, business leaders or former elected officials). The directors would choose, from among their number, a president and treasurer. Neither of the officers would work at NARFE Headquarters. Instead, an executive director would manage operations and would be hired by, and be accountable to, the board. After lengthy discussion and some disagreement with individual proposals, the Board unanimously agreed to endorse the report with minor modifications, including exempting Panama and the Philippines, which do not have representatives in the U.S. Congress, from some of the recommendations. –By Margaret M. Carter, editor

NARFE 2014

SCHOLARSHIP APPLICATION Applicants: • Must be high school seniors planning to attend an accredited college full-time in the fall/winter of 2014. • Must have a grade point average of at least 3.0 on an unweighted 4.0 scale. • Must be sponsored by a parent, grandparent or great-grandparent who is a current NARFE member. (Step-parents, stepgrandparents, etc., can also sponsor.) Sponsor must be living at the time application is submitted. • Must provide your email address on the application. Your application receipt will be sent to this email address; please add “confirmation@feea.org” to your address book. • Must provide the following materials in your packet: r Official 2014 NARFE scholarship application. Photocopies are acceptable. r Full transcript, including fall/winter 2013 grades. Report cards and photocopies are acceptable. If mailed separately by the school, must arrive by program deadline. r Copies of American College Testing (ACT) or Scholastic Aptitude Testing (SAT), or other entrance examination scores. (Home-schooled students must provide equivalent of transcript and test scores as applicable.) r List and brief description of any awards or volunteer/ community service activities (not to exceed two pages). r Written recommendation from a teacher or counselor, on school or other official letterhead. r One stamped, self-addressed #10 envelope r Essay

ESSAY TOPIC INFORMATION The essay must be typed, double-spaced, not more than two pages on the following topic: Federal employees have built bridges and roads, walked on the moon, developed vaccines, saved lives and made many other invaluable contributions to our country. What can be done to improve the public’s perception of civil service, and ensure that federal employees are recognized and appreciated for the work they do every day? All of the above materials (except transcript, if necessary) must be mailed in the same 9”x12” (or larger) envelope, postmarked no later than April 25, 2014, to: NARFE Scholarship Awards, c/o FEEA, 3333 S. Wadsworth Blvd., Suite 300, Lakewood, CO 80227. DO NOT FOLD MATERIALS. DO NOT USE STAPLES OR PAPER CLIPS. Please note: All materials submitted with the application will become the property of FEEA and will not be returned under any circumstances. If needed, make a copy of the information for yourself before mailing. A total of 60 scholarships of $1,000 each will be awarded. Applicants will be notified of the judges’ decision by the end of August. A list of winners and their sponsors will appear on the NARFE website at www.narfe.org, and will be published in the December issue of narfe magazine. The NARFE Scholarship Program is administered by the Federal Employee Education & Assistance Fund (FEEA) and is made possible by your tax-deductible contributions to the NARFEFEEA Scholarship Fund, 3333 S. Wadsworth Blvd., Suite 300, Lakewood, CO 80227. For more information, obtain a copy of NARFE publication F-105, A Guide to NARFE’S Annual Scholarship Awards Program. To get your copy, send an email to natvp@narfe.org; download it from the NARFE website, www.narfe.org; or call Headquarters and ask for the Office of the National Vice President.

Please complete the following. Incomplete applications and applications sent to NARFE Headquarters will not be considered. Student’s Name:______________________________________

I am taking college courses in high school: o Yes

Complete Home Address:

NARFE Member’s Name: ______________________________

____________________________________________________ ____________________________________________________

Relationship to Applicant: o Father o Mother o Grandfather o Grandmother

Home Telephone: _____________________________________

NARFE Member No.: __________________________________

Email Address: _______________________________________

Chapter No.: ________________________________________

Applicant’s Grade Point Average (GPA): __________________ (Applicants must have a cumulative GPA of at least 3.0 on an unweighted 4.0 scale)

Member’s Complete Home Address:

College or University (planning to attend): ________________ ____________________________________________________ (Must be a college freshman by fall/winter 2014)

o No

____________________________________________________ ____________________________________________________ Member’s Telephone: _________________________________ Member’s Email Address: ______________________________

NARFE National Convention August 24-28

rlando Deadlines

candidate statements: Deadline EXTENDED to April 1 Resolutions: No later than May 13 Delegate Forms: June 28 Registration: August 1 Proxy Forms: August 9

Membership Marketing Topics Announced NARFE has announced the topics for the Convention’s Breakfast/ Lunch-and-Learn membership marketing programs. Each will be presented twice. • The Importance of Brand. Whether you are promoting Coca Cola or NARFE, marketing efforts must be mindful of branding. An organization is defined by perception. While many imagine that “brand” equates to a logo, the term refers to the impact that a brand or logo represents. Come hear stories of success and failure, and how top brands remain relevant in the eyes of their target audience. Presenter: Rick Whalen, president, Marketing General, Inc. Whalen has more than 30 years of experience building successful marketing and advertising programs for both nonprofit and for-profit organizations. • Be the Brand: Communications Techniques and the NARFE Pitch. So, you have secured a table at an event likely to attract potential NARFE members, or you have met up with a former federal colleague. Now, how do you capitalize on the opportunity? Learn how to make NARFE a valued brand for active and retired federal 54

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employees. Identify communication techniques that can increase your rate of success in recruiting and retaining members. Presenter: Martha Nall, retired extension professor, program and

staff development, University of Kentucky. A NARFE member, Nall worked with county extension agents in program development, volunteer management and leadership development.

Travel Arrangements Hotel Registration Rosen Centre Hotel 9840 International Dr. Orlando, FL 32819 800-204-7234 www.RosenCentre.com NARFE Rate: $95 + 13.63% tax =$107.94 single/double occupancy per night. Additional person: $20. For NARFE group rate, please use Group Code 50485. Reservation Cutoff Date: Monday, July 21

Airline Discounts Delta Airlines, www.delta.com. When booking online, select Meeting Events Code and enter the meeting ID: NMGND in the box provided on the Search Flight page. A direct ticket charge of $25 will apply if booking by phone (800-328-1111). United Airlines, www.united.com. When booking online, enter the Z Code: ZQJH, then the Agreement Code: 825302. A $25 service fee will be collected per ticket for all tickets issued by phone through United Meetings reservations, 800-426-1122.

special needs www.NARFEfl.US. Click on “Orlando Area Information” for companies supplying scooters, oxygen and other medical equipment.

NARFE 2014 National Convention Orlando, Florida August 24-28

PREREGISTRATION FORM NARFE ID #:_ _________________________________ Name:______________________________________ Address:_____________________________________ ___________________________________________ Name for badge:_______________________________ Chapter #:___________________________________ Location:_ ___________________________________

Please check: o (Guest) Member o (Guest) Nonmember

o Delegate* o Delegate-at-Large* o Alternate*

*NOTE: This is NOT a voter registration form. Voter registration is confirmed by your chapter on Form C/14-2. n n n n

A nonrefundable fee of $75 (payable to NARFE) must accompany this form. Onsite registration fee will be $90. Each attendee must complete a separate registration form. Form must be postmarked by August 1, 2014.

Notify in case of emergency: Name:______________________________________ Phone Number:_ ______________________________ Form C/14-4

o Charge to my credit card: o MasterCard o VISA o Discover o AMEX Card#:_ ____________________________________ Expiration Date:_________ /_ ______

Make check payable to NARFE and send to: NARFE, Treasurer’s Office 606 N. Washington St. Alexandria, VA 22314-1914

BANQUET REGISTRATION FORM

August 28, 2014 NARFE ID #:_ _________________________________ Name:______________________________________ Address:_____________________________________ ___________________________________________ Chapter #:___________________________________ Nonmember Guest:_____________________________

(mm)

(yy)

Name on card (print):___________________________ Signature:_ _________________________________

NARFE 2014 National Convention Orlando, Florida August 24-28

n n n n n n

Tables will be assigned on a first-come, first-served basis. Tables seat 10 people. RESERVATIONS LIMITED TO 2,000 PEOPLE. Groups wishing to sit together should submit only one request specifying number of seats desired. Please attach name list. A receipt will be mailed to you by August 1 acknowledging payment and showing your table assignment. All banquet tickets will be held for pickup at the convention registration area at Junior Ballroom F, 1st Floor. BANQUET REFUNDS AVAILABLE ONLY IF RESERVATIONS ARE CANCELLED 72 HOURS PRIOR TO THE BANQUET.

Please reserve _ _____ tickets at $65 each, total $_______ Form C/14-16

Make check payable to NARFE and send to: NARFE, Treasurer’s Office 606 N. Washington St. Alexandria, VA 22314-1914

o Charge to my credit card: o MasterCard o VISA o Discover o AMEX Card#:_ ____________________________________ Expiration Date:_________ /_ ______ (mm)

(yy)

Name on card (print):___________________________ Signature:_ _________________________________

Active and Retired Federal Employees ...

JOIN NARFE TODAY!

National Active and Retired Federal Employees Association The only organization dedicated solely to protecting and preserving the benefits of all federal workers and retirees, NARFE informs you of any developments and proposals that affect your compensation, retirement and health benefits, AND provides clear answers to your benefit questions.

Who Should Join?

Three Easy Ways To Join 1. 2. 3.

N A R F E M E M B E R S H I P A P P L I C AT I O N n YES. I want to join NARFE. n Mr. n Mrs. n Miss n Ms. Full Name ________________________________________ Street Address ____________________________________ Apt./Unit ________________________________________

I am a (check all that apply) n n n n n

Active Federal Employee Active Federal Employee Spouse Annuitant Annuitant Spouse Survivor Annuitant

n Please enroll my spouse

City _______________________ State _____ zIp ________

Spouse’s Full Name ________________________________

phone (__________) _______________________________

Spouse’s Email ____________________________________

Email____________________________________________

NARFE respects the privacy of our members. Personal information is used to provide content and relevant communications to our members, and will not be sold or rented to third parties without your express permission.

Choose Your Membership Type o eNARFE Chapter Online Membership – $40 NARFE’s electronic chapter. Receive narfe magazine by mail each month, and all other communications by email and on eNARFE.org. Get important updates and legislative action alerts, and have access to the eNARFE blog.

o Local Chapter Close-to-Home Membership – $40*

PAYMENT OPTIONS n Check, Money Order or Bill pay (payable to NARFE) n Bill me (NARFE membership will start when payment is received.) n Charge my: n MasterCard n VISA n Discover n American Express Card No. _____________________________________ Expiration Date _________ /_________

Aﬃliation with the NARFE chapter closest to your home. Receive narfe magazine each month; attend meetings, often with invited speakers; network; and get involved in grass-roots lobbying eﬀorts.

Name on Card _________________________________

Chapter Aﬃliation: Chapter # __ __ __ __(if known, otherwise enroll me in the chapter closest to my zIp code).

Date _________________________________________

*First-year dues. Subsequent years, $40 plus local chapter dues.

Total Dues $40 First-Year Dues X __________ = __________ per person # Enrolling Total Dues

yyyy

Signature _____________________________________

MAY WE THANK SOMEONE? If applicable, please provide the name, membership and chapter number of the member who introduced you to NARFE: Recruiter’s Name __________________________________ Recruiter’s Membership ID __________________________ Recruiter’s Chapter Number _________________________

MAIL THIS APPLICATION TO NARFE Member Records / 606 N. Washington St. / Alexandria, VA 22314-1914

NARFE’s Dues Withholding Program What is dues withholding? It is a dues-payment method that gives NARFE members (retirees) the option of having their annual NARFE membership dues deducted from their annuities on a monthly basis. How does it work? One-twelfth of your total dues is automatically deducted from your monthly annuity. Your monthly deduction is determined by the following formula: (National dues ÷ 12) + (Chapter dues ÷ 12) = Total Monthly Deduction

Advantages • Save 15% off your annual membership dues! • Sign up your spouse and double your savings! • You’ll never get another dues reminder from us! • Your monthly payment is affordable and convenient! • You may cancel your dues withholding at any time! Application process It takes 60-90 days to process your application. Once the process is complete, you will receive a special membership card distinguishing you as a NARFE dues-withholding member.

To learn more about dues withholding, call 800-627-3394. Retirees, spouses of retirees and annuitant survivors are eligible for dues withholding.

NARFE Dues Withholding Application for Retirees n YES. I want to enroll in NARFE’s Dues Withholding Program (Annual dues of $34 plus Chapter dues of record to be withheld annually.) Social Security Number (9-digit number)

–

Civil Service Annuity Number

–

C S

–

(Include prefix, CSA or CSF) (Include any applicable suffix)

n Mr. n Mrs. n Miss n Ms. Full Name _______________________________________

NARFE MEMBERSHIP INFORMATION

Street Address ___________________________________

NARFE Membership ID ____________________________________

Apt./Unit________________________________________

NARFE Chapter Number____________________________________

City _________________________ State _____ ZIP _____

n YES. I Also Authorize My (NARFE Member) Spouse’s Dues To Be

Phone (__________) ______________________________ Email ___________________________________________ Date of Birth _________ /_________ / ____________________ dd

yyyy

Withheld From My Annuity. (Additional annual dues of $34 plus Chapter dues of record to be withheld annually.) If YES, enter spouse’s information below. Spouse’s Name ___________________________________________ Spouse’s Membership ID ___________________________________

AUTHORIZATION (Withholding will begin in 60-90 days). No payment should be forwarded with application. I authorize the United States Office of Personnel Management to make appropriate deductions from my annuity payments, not to exceed the amount certified by the National Active and Retired Federal Employees Association as the amount of dues for which I am annually obligated, in accordance with elections I make below, and to pay the deducted sum to the National Active and Retired Federal Employees Association (NARFE). This authorization shall also apply to any and all dues changes certified by NARFE membership in accordance with elections I make below: Please allow 60-90 days for processing.

I understand that this authorization shall be valid until NARFE receives and processes my written notice of cancellation in accordance with its agreement with the Office of Personnel Management and that any disputes regarding this authorization shall be a matter between NARFE and myself. I hold the Office of Personnel Management harmless for any erroneous allotment deduction made pursuant to this authorization. ___________________________________________________________________________ _______________________________

Signature of Annuitant or Survivor-Annuitant

Date

Dues payments and gifts or contributions to NARFE are not deductible as charitable contributions for federal income tax purposes. MAIL THIS FORM TO: NARFE, ATTN: Member Records, 606 N. Washington St., Alexandria, VA 22314-1914 www.narfe.org 800-627-3394 rr@narfe.org Do not send money with this form

DW-2 (08/12)

Member Perks

NARFE Member Perks

are designed to provide NARFE members with a quality option in their search for commonly used products and services. NARFE makes no guarantee on any products and services listed, and encourages its members to shop and compare before making a decision on any financial matter.

Credit Union

NARFE Premier Federal Credit Union 800-328-1500 www.NARFEpremierfcu.org As a member of NARFE, you have the privilege of joining NARFE Premier Federal Credit Union, which has been serving members since 1935. We offer extensive services at competitive rates to members nationwide. Your savings are federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. For more information, call the number above, email jparish@narfepremierfcu.org or visit the website.

insurance

NARFE Insurance Services 800-233-5764 www.narfeinsurance.com Designed and administered by Marsh U.S. Consumer, a service of Seabury & Smith, Inc., exclusively for NARFE members: Senior Whole Life, Term Life, Medicare Supplements, Hospital Income Plan, Short Term Recovery Insurance, Pet Insurance, Accidental Death & Dismemberment, Cancer Care, Enhanced Dental Insurance and Long Term Care. Go to the website for more information on these programs.

GEICO 800-368-2734 NARFE members with good driving records may be eligible for quality automobile insurance from GEICO. Ask about the NARFE discount available to members in many states. Call to58

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day for your free, no-obligation rate quote. Be sure to mention that you’re a NARFE member! • Discount amount varies in some states • Discount not available in all states or in all GEICO companies • One group discount applicable per policy.

Federal Long Term Care Insurance Program 800-LTC FEDS www.LTCFEDS.com Make long-term care insurance part of your retirement plan. With benefits designed specifically for the federal family, the Federal Long Term Care Insurance Program offers a smart way to help protect savings and assets, and remain independent should you need long-term care services someday. Start planning for the future. Visit www.LTCFEDS.com today.

Vacation rentals

Government Employees Travel Opportunities® 877-867-3639 www.getravelop.com/narfe Offers government employees, retirees and their families 7-night stays for only $349 on accommodations at popular destinations worldwide. Book online and save on your next vacation stay.

hotels

Choice Hotels International 800-258-2847 www.choicehotels.com With 6,000 hotels in the United States and throughout the world, Choice Hotels® offers something for everyone. Join the Choice Privileges® rewards program and earn points with every qualifying stay toward free nights, Airline Rewards, gift cards and more. As a NARFE member, receive 20% off your next stay at participating hotels when you use Special Rate ID 00801967. This offer is subject to availability and cannot be combined with any other offer. Advance reservations required.

Wyndham Hotel Group 877-670-7088 As a member of NARFE, you will receive up to 20% off the “Best Available Rate” at participating locations. Call and give the agent your special discount ID number, 8000002694, at time of booking to receive discount. Whether you are looking for an upscale hotel, an all-inclusive resort or something more cost-effective, we have the right hotel for you... and at the right price. So start saving now. Call our special member-benefits hotline 877-670-7088 and reserve your room today at one of these fine hotels: Wyndham Hotels and Resorts®, Days Inn®, Ramada Worldwide®, Super 8®, Wingate By Wyndham®, Baymont Inns and Suites®, Hawthorn Suites® By Wyndham, Microtel Inns and Suites®, Howard Johnson®, Travelodge® and Knights Inn®.

car rentals

National You Drive A Hard Bargain. Receive up to 20% off rentals at National Car Rental. To make a reservation call National Car Rental at 1-800-CAR-

RENT® and reference Contract ID 5282909.

Alamo Drive Happy® with Alamo® where NARFE members receive year-round discounts. Call 1-800-462-5266 and reference Contract ID 262544.

Avis The employees/owners of Avis offer guaranteed low rates and quality services to members of NARFE. Call 800-331-1441 and mention ID# A991900.

*State restrictions apply. Call or visit website for details.

Bekins Van Lines 800-248-4810 www. narfe@bekins.com All NARFE members will receive discounted pricing for all interstate shipments. Discount will apply to packing and moving services and valuation protection. All intrastate shipments, local moves and international moves will be competitive based on your geographical location. Please mention you are a NARFE member and ask for Traci.

emergency services

narfe merchandise

NARFE General Store 855-99NARFE (855-996-2733) www.narfegeneralstore.com Official NARFE name badges, customizable logo products and plaques.

MASA 800-423-3226 Medical Air Services Association has been the industry leader in prepaid emergency assistance services for more than 30 years. NARFE members have experienced MASA’s “peace of mind” services since 2001. Now NARFE members are entitled to even more: air ambulance transportation, helicopter transportation, ground ambulance, vehicle return, mortal remains transport, and much more! Call MASA Today. It Could Save Your Life!

3. Atrial Fibrillation 4. Peripheral Arterial Disease. You will receive a confidential written report within 21 days. Life Line Screening and NARFE encourage you to share these test results with your doctor. All four screenings cost just $135. To schedule an appointment, please call the number above and give the operator code number BKHN075 or visit the website. Coverage may vary and may not be available in all states.

education

Ivy Bridge College 877-615-9246 http://ivybridge.tiffin.edu/ narfe Want to earn your associate’s degree before you transfer to a four-year school? Ivy Bridge College offers a variety of degree programs that will help put you on the right track. No matter which program you choose, an education with Ivy Bridge will provide you with a solid foundation for a rewarding future. NARFE members and their families can enjoy an exclusive 5 percent savings on tuition at Ivy Bridge, a unique online institution that provides a highly supported pathway to a bachelor’s degree. To learn more, call or visit the website.

Moving services

NARFE Member HomeBenefits 800-666-9203 http://narfe. myhomebenefits.com • Earn thousands in cash-back rewards when you buy or sell a home* • Shop competitive mortgage rates, receive discounts on closing costs, plus take advantage of your VA Loan Benefits • Receive preferred pricing on interstate moving services with the nation’s most trusted moving company – Allied Van Lines!

health screening

Life Line Screening 800-324-9906 www.lifelinescreening.com/ NARFE

NOT A MEMBER?

Life Line Screening, America’s leading provider of community-based preventive health screenings, will conduct the following screenings using state-of-the-art ultrasound technology in your neighborhood:

TURN TO PAGE 56: Fill out the Membership Application and mail it to NARFE to receive all the perks of being a NARFE member.

1. Stroke/Carotid Artery 2. Abdominal Aortic Aneurysm

GO ONLINE: It’s easy to join online at www.narfe.org. Click “Join NARFE.”

Call (Toll-Free) 800-627-3394.

w w w. n a r f e . o r g

The Way We Worked

governmentâ&#x20AC;&#x2122;s daily gazette In this circa 1960 photo, a U.S. Government Printing Office (GPO) employee operates one of the machines binding an edition of the Federal Register. The Federal Register was authorized under law in 1935 to help print and distribute public documents. Today, the Register is published every federal working day and is available online by 6 a.m. It contains Presidential Documents, including executive orders and proclamations; Rules and Regulations, including policy statements and interpretations of rules; Proposed Rules, including petitions for rulemaking and other advance proposals; and Notices, including scheduled hearings and meetings open to the public, grant applications, administrative orders and other announcements of government actions. 60

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Did you know? In addition to documenting the actions of federal agencies, the Office of the Federal Register administers the Electoral College for presidential elections and the constitutional amendment process. Those responsibilities were given to the Office of the Federal Register in 1950 by President Harry S. Truman in a government reorganization.

Co N nt o ra ct

r d ife tte an y L Be d ter un at So r B e ng Lo

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IMPORTANT CONSUMER INFORMATION: Jitterbug is owned by GreatCall, Inc. Your invoices will come from GreatCall. All rate plans and services require the purchase of a Jitterbug phone and a one-time set up fee of $35. Coverage and service is not available everywhere. Other charges and restrictions may apply. Screen images simulated. There are no additional fees to call Jitterbug’s 24-hour U.S. Based Customer Service. However, for calls to an Operator in which a service is completed, minutes will be deducted from your monthly balance equal to the length of the call and any call connected by the Operator, plus an additional 5 minutes. Monthly minutes carry over and are available for 60 days. If you exceed the minute balance on your account, you will be billed at 35¢ for each minute used over the balance. Monthly rate plans do not include government taxes or assessment surcharges. Prices and fees subject to change. 1We will refund the full price of the GreatCall phone and the activation fee (or set-up fee) if it is returned within 30 days of purchase in like-new condition. We will also refund your first monthly service charge if you have less than 30 minutes of usage. If you have more than 30 minutes of usage, a per minute charge of 35 cents will be deducted from your refund for each minute over 30 minutes. You will be charged a $10 restocking fee. The shipping charges are not refundable. Jitterbug and GreatCall are registered trademarks of GreatCall, Inc. Samsung is a registered trademark of Samsung Electronics Co., Ltd. ©2013 Samsung Telecommunications America, LLC. ©2013 GreatCall, Inc. ©2013 by firstSTREET for Boomers and Beyond, Inc.

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Visa MC Discover ® Network AmEx Check When you pay by check, you authorize us to use information from your check to clear it electronically. Funds may be withdrawn from your account as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.

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Haband #1 Bargain Place, Jessup, PA 18434-1834 Card # ________________________________________ Exp.: _____/_____ Mr. Mrs. Ms. ____________________________________________________ Address __________________________________________ Apt. # _______ City & State _____________________________________ Zip ___________ Phone/Email ___________________________________________________ I enclose $________ purchase Imported On-line Quick Order price for these shirts, plus WHAT HOW $5.99 shipping and handling. 7YK–1HX8R SIZE? MANY? In GA add tax.

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