Financial insurance: Don’t quit your day job (Federal)! | | Federal News Network

While Mike Causey is away, please enjoy this episode that was originally published on June 28, 2022.

Worried about how you’ll survive another recession? Worried it will be worse than the fall of 2007-09? While you’re at it, maybe you should worry about the recession—later. And those who follow it. Because things happen!

In the early 2000s, the Super Bear Market, millions of investors lost billions of dollars in retirement. The stock market fell almost 50%. A heart-stopper for many investors. Especially if he is about to retire, and…

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Worried about how you’ll survive another recession? Worried it will be worse than the fall of 2007-09? While you’re at it, maybe you should worry about the recession—later. And those who follow it. Because things happen!

In the early 2000s, the Super Bear Market, millions of investors lost billions of dollars in retirement. The stock market fell almost 50%. A heart-stopper for many investors. Especially if they are close to retirement, and especially if they retire on a fixed pension. Many have moved their TSP and 401(k) into “safe” bonds or treasury securities to protect them from losses. But they missed out on the stock market rebound.

Many private sector workers were also forced to take pay cuts ranging from 5-25% to protect their jobs. And some companies — including several well-known investment management giants — stopped giving their employees matching 401(k) contributions, so they could keep going. Federal workers went without pay for two years. But there was no recession that caused it. In fact, many organizations grew. The TSP continued to offer investors a government-matched interest rate of up to 5%. Further proof that it’s good to be in a system that also involves members of Congress. And employees with enough time in the service continued to get WIGs (average grade increases) worth about 3% every year, two or three years depending on their time in government.

Profits expert Tammy Flanagan said don’t focus too much on the next recession, whether it’s two years from now, or two weeks from now. His advice: “What about the next recession?” And the next little recession? Be prepared because it’s always something else: War, recession, your roof caves in. His advice, especially for people who are eligible for retirement or who are about to retire, is this: Consider waiting. Maybe two years late. In the first section, he said that $80,000 per year is fed to those who work two more years – from 60 to 62 – will increase their basic income by about $30,000. This is also important because while CSRS retirees get full life adjustment benefits even after retirement, FERS retirees don’t get any COLA until age 62. So it’s a 1% deduction if inflation goes over 3%. Now it’s moving very, very high. So are you ready? Retirement, another recession, or both? The Employee Benefit Research Institute says many retirees — federal and private — are not properly prepared for retirement. Among other things it says:

  • Many retirees say they wish they had saved more. It may seem obvious but by the time you learn the lesson it may be too late.
  • Also, many retirees seem to do better with a financial advisor, although many do not. Or they didn’t until later.
  • The EBRI also says that 9 out of 10 retirees who have a financial advisor feel the value they received is “more than the cost” of such an advisor.

Almost a Useless Factoid

By Daisy Thornton

Research shows that challenging the scientific consensus is directly linked to more knowledge. That is, those who disagree more with the issues of scientific consensus tend to have a lower level of knowledge, but show more confidence in their beliefs on this issue.

Source: Science.org