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MASON & ASSOCIATES, LLC

FEFP: Federal Employee YouTube Favorites (EP84)

February 3, 2025

Are you ready to make informed decisions about your federal benefits and financial future? In this episode, Tommy, John and Ben explore the current market landscape and what the start of 2025 could mean for investors, especially those navigating the complexities of federal benefits. They discuss the importance of staying focused on long-term growth despite market volatility and share actionable tips on building a financial plan for the new year, balancing personal goals, tax considerations, and investment strategies.

Listen in as they share lessons learned from top-performing YouTube videos on federal benefits, highlighting topics like survivor benefits and Thrift Savings Plan (TSP) decisions. You’ll learn why these topics resonate with audiences and how they can impact your financial security.

Listen to the full episode here:

What you will learn:

  • The need to prepare for market volatility. (4:20)
  • Why pulling out of the market—whether it's up or down—isn’t the best strategy. (6:00)
  • The power of living intentionally and aligning your actions with your goals. (9:00)
  • Why you should never close your survivor benefits. (15:00)
  • The value of working with a professional to manage your finances and benefits. (21:00)
  • Key insights into the best days to retire as a federal employee. (25:15)
  • Why keeping your Thrift Savings Plan (TSP) open is crucial. (32:50)
  • How the Thrift Savings Plan offers unique competitive advantages. (36:00)
  • Why maxing out your TSP could be a mistake. (42:30)

Ideas worth sharing:

  • “We take risks because there is volatility. We take risks for the chance of having major gains in our portfolio. The market is certainly not a risk-free place to be, not on the stock side, not on the bond side. So, there's a reason that we go after higher returns, and we have to be okay taking the risk associated with those higher returns.”  - Mason & Associates
  • “If you had a million dollars in your TSP and knew it would disappear if you passed away, wouldn’t you want to ensure that asset is protected?” - Mason & Associates
  • "You must be intentional with your life, whether it’s financial, personal, or business.” - Mason & Associates

Resources from this episode:

 

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Read the Transcript Below:

Congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast, hosted by Mason & Associates, financial advisors with over three decades of experience serving you.

John Mason: Welcome to the Federal Employee Financial Planning Podcast, hosted by Mason & Associates. Special message at the beginning of this episode that's releasing in early January of 2025: Mason & Associates is taking on new clients through the first quarter of 2025, and that process starts with an introductory phone call that you can schedule by calling 757-223-9898.

Or requesting that call at masonllc.net. Introductory phone calls are held throughout the year, but introductory meetings where we actually begin the financial planning process will be held January, February, March of 2025, and then we'll delay them and then they'll pick back up again or June or July.

So if you have a transition this year, if you're thinking about retiring, if you have questions on charitable giving, if it's a year where you're going to begin required minimum distributions, if it's one of those big gears and you're looking for help, now's the time to act. Request that introductory phone call at masonllc.net or 757-223-9898.

Tommy Blackburn: Welcome to 2025. We're looking forward to another year. Hopefully it'll be a positive—maybe hope. I always hope it'll be like a relatively steady, kind of tranquil year. I suspect that will not be the case. There's always—I was chuckling, thinking about—I usually get the question from family and friends, like, “What are you guys doing at your firm now?”

And as I thought about it mentally yesterday, it was: what are we not doing? That's the real question because we're constantly iterating and optimizing and trying to make it a better firm and serve our clients better. But here's hope that it'll still be—we'll all enjoy the ride in 2025 is what I'm hoping for.

Ben Raikes: I'm laughing at you already. Tell me, because I know that just asking for a tranquil year now, it's just going to mean that everything changes, right? Within the firm.

I know there's always lots of projects and things that we're working on, but I'm thinking about: Is this the last year of the Tax Cuts and Jobs Act or not? Is that going to get extended? We've already heard murmurs of our own clients asking about the Department of Government Efficiency.

There's an entire new political administration coming in and plenty of people have questions about that. So, I've got fingers crossed, hoping and praying for that calm season, tranquil year, but at least at the beginning of this year, I think, let's be prepared to see some changes and roll with the punches and do a lot of planning as best as we can. But there's some things that kind of remain unknown as of the release of this podcast.

John Mason: So we're welcoming 2025 on December 19th of 2024. And I think that's important because like y'all have both said, there's a lot of potential things changing in 2025, and yesterday, December 18th, was an interesting day in the stock market.

I think all the major indexes fell 2% to 3% or more yesterday, and it was on some news or suggestions that we're going to see less rate cuts in 2025 than we originally anticipated.

And Tommy, him and I talked a little bit this morning about this, and we're like, well, this wasn't a surprise to us.

Inflation's not at 2%, and the economy's kind of seems to be pretty hot. And it doesn't seem like we really need to be stimulating it with lower rates. So from our perspective, this was not necessarily a surprising thing to happen yesterday. But yet the market reacts in a way like this was completely unexpected.

President Trump will take office in January of 2025. Certain amount of those policies are inflationary. A certain amount of things are not guaranteed. And we're not gonna say that it's gonna be a wonderful year or a bad year, but bwe always have to be ready for volatility, and we always have to be ready for change.

And I just say this. I mean, again, it's December 19th and anything could happen over the next 11 days, but ‘23 and ‘24 were both great years for the stock market. 2025 could certainly be that, or it could certainly not be that, or it could certainly be average, right? So we could have good, we could have sort of good, we could have bad, we could have really bad.

We can have a lot of outcomes, and remember the markets guys don't move linear, and how we get to averages is we have really good years and bad years; that's how we average 7% to 11% or whatever stat we want to look at; we don't get that average by steady linear growth every year.

Tommy Blackburn: Oh, and that's what I guess, to me, was like not surprising about it, right?

Like, volatility is normal, and we've been up for quite a while. So, I agree to the macroeconomic things helped it make sense, but also it just was like when you have a good run, your market is usually looking for a reason to exit. Volatility is normal. Short term, it's a voting. The market's a voting machine. Long term, it's a weighing machine.

And that's what we're planning for, is the weighing machine. Actual corporate profits, economy growing. So we tried. It's easy to get caught up in the moment, but that's why we have to stay long-term focused and not try to guess what the market is going to do over any short period of time.

Ben Raikes: Well, and just a point to add on what John had said before. So, you said ‘23 and ‘24 were great years in the market, and I agree with that, with just a small caveat. ‘23 was a bad year in the market until about October through the end of the year, which I think kind of just ties this whole thing together in a nice bow.

If you're trying to make decisions, “should I be in, should I be out,” which way the wind is heading? Yeah. Maybe you go out of the market in September of 2023, and you miss 10% or 15% in just a couple of months.

We don't have to get into our whole investment strategy, but again, staying invested in the market through the bad, through the good, just to make sure that you get the good days in the mix of everything and the mix of all the noise, I think is very important.

John Mason: Well, this is why we take risks. We take risks because there is volatility. We take risks for the chance of having major gains in our portfolio. And yesterday is a reminder that the market is certainly not a risk-free place to be, not on the stock side, not on the bond side.

So, there's a reason that we go after higher returns, and we have to be okay taking the risk associated with those higher returns. And yesterday is an emotional ride for folks. And we've long, at Mason % Associates, used poker chips to describe survivor benefits and other concepts. For our audience, I want you to visualize right now poker chips, a million dollars worth of poker chips sitting on a table right in front of you.

And yesterday, the market goes down 3%, and those poker chips go right back to the house. And we somehow forget that we started the year with 800,000 poker chips, and now we have a million.

So, the fact that we gave up 3% of that yesterday—the human brain is so crazy that we think all of that should have been ours and we should never fall below the highest value that we saw as of a week or two ago, whenever the high was.

So even me personally, I have to remember and go back to where we were in 2021, 2022, 2023, where we were six months ago. And yes, I don't like seeing my accounts down 3% in a day, but it is still significantly higher than where it was 18 to 24 months ago, even though it's emotionally hard to get back some of those chips.

Tommy Blackburn: Agree. As we think about if we want to pivot from the market, I know we want to hit on a few things today. Just as I thought about at the beginning of a year, what am I normally thinking about? It's planning out the entire year, really. So, end of a year where we are technically right now, as we record this into the beginning of next year. It's thinking through like, what is 2025? What can I anticipate right now?

Some of that is, hopefully, really where I think we usually want to go is it's about fulfillment in life. Like, let's think about what trips do we want to take? What time are we going to spend with our family? Let that be our goals. And then begin filling in everything around it from a financial perspective.

I always start, close of a year has you thinking about taxes. And making sure that there are no surprises there, that we've taken care of everything we need to going into the beginning of the year. Are there any estimated payments we need to make? Any contributions to accounts? Any funding, distributions, charitable giving, like all these things?

Even at the beginning of the year, start thinking about these. Are there required minimum distributions this year we need to take? So, start laying out your tax plan, your financial plan, as well as, of course, that life plan, for the year to start with. I think those are a lot of where my mind is. Yes, almost calendar management too, of just how is the calendar going to fill in throughout the year?

John Mason: So, we do like a partner meeting offsite quarterly, where all of the partners get together. Bobby joins as our Chief Operating Officer, and we've reviewed the quarter. We set rocks, which are like big goals that we want to try and hit. And sometimes we're good at hitting the rocks and other times we're not, but the idea is you have to put your rocks in first, and then you can put in the pebbles, and then you can put in the sand. If you do that in the right order, you can fit a lot more into the jar than doing it sand, pebble, big rocks.

And Tommy, I love your thought process here, which is to treat your personal life like you treat a business. Do an end-of-year business plan and 2025 forecast, and start putting those rocks in place, whether it's financial rocks, vacation rocks, whatever it may be. Don't think life's just going to happen. You must be intentional with it, whether it's on the finance side, the personal side, or the business side.

Yesterday, I wrote down some goals for 2025 as it relates to vacation and travel and stuff like that. If you don't put it on the calendar, it's not going to happen. We've got to be very intentional.

Tommy Blackburn:I agree. Good forcing mechanisms.

John Mason:So, we're going to do something a little bit different this episode. So many of you have been listening to the Federal Employee Financial Planning Podcast for over three years now, as we head into year four.

And as we continue this, we wanted to also reflect a little bit on our YouTube channel, which is youtube.com/@fedemployeefinancialplanning. I know we're really creative with our names here.

But we also post these videos, the podcast videos, on YouTube, but we have some shorter-form content as well. And please, don't be too upset with us because we haven't released many new videos recently, but going into 2025, one of our goals is to scale some of these short-form videos.

And what we wanted to do today, Ben, was review some of our short-form videos, the ones that have been the most popular. We kind of wanted to dissect them in this episode, why we think those videos are most important.

I don't know if it's ironic or timely, but the videos that we're going to talk about today also fit very nicely with—it's January. Let's get your January financial plan in order.

Ben Raikes: I was going through the videos, John, that we have, the short-term videos on YouTube that we've shot over the last couple of years. And I'm looking at the top four videos. And we'll go over exactly what those are here in a couple of minutes. But the other thing that I noticed was, John, all of the top four videos are you. man.

I mean, I don't know if you're just more handsome than the rest of us, if you're a better speaker than us. I mean, maybe it's all the above, but I'm gonna step my game up in 2025, and I'm gonna make one of those top four videos. So you're not gonna hold the top spot forever, man.

John Mason: Hey, I love the competition.

All three of us are going to go after the top video. I think it comes—like we said last time, it's a passion thing. I think you got to get a little more passion and animated, more hand gestures, and you'll probably take over the top spot.

Ben Raikes: I was initially the one that was posting some of these YouTube videos.

And, man, I'll tell you, it is. To whomever is doing this, and this is not what we do first, we're financial advisors first, we do this educational aspect second.

But finding the right hand gesture, the right place when you're looking at the camera, where the lighting is good, it's no easy feat. I know we're digressing here a little bit, but it's been fun posting these YouTube videos. We love reading the comments and seeing how you all are interacting with them.

And it also gives us kind of good insight on what people are thinking when they ask questions in the videos and they say, "Hey, you know, I haven't heard this before. This is something that's new to me. This has been great advice.” We really take that to heart and appreciate when we know that we're helping out a large audience as well.

John Mason: Awesome, Ben. So why don't you share with the audience what videos are we going to talk about today? And I think you looked at lifetime videos or lifetime views and I also just pulled it up on YouTube.

Our most views over the last 90 days, so I'll be curious to see if any of those lineup is the same.

Ben Raikes: Yep, so I think the ones that we'll take a look at today are: ‘Best Days to Retire as a Federal Employee,’ ‘Don't Close TSP,’ ‘Don't Max TSP,’ and ‘Don't Decline Survivor Benefits.’

So, a couple of those things have things in common. TSP has always been popular, and anything that screams, “Don't do this.” It's almost as if people are more worried about making a mistake than they are hearing, hey, here's what you should or shouldn't do.

Tommy Blackburn: Subversion.

Ben Raikes: Exactly.

John Mason: So don't stop listening to this podcast now. Continue all the way till the end.

Tommy Blackburn: Wait till you get that golden nugget at the end.

John Mason: So, the videos you just hit, Ben, those are all in the top six over the last 90 days too. So we've really got something. We've really found something. These are lifetime views, as well as the last 90 days.

So let's pick apart the survivor benefit one first, but let's talk about what we talked about in that video, Tommy, why we think that that's consistently, I mean, we have 1300 views of that in the last 90 days and even more over the lifetime. So what are we talking about there? Why is it important? Why do we think it's resonating?

Tommy Blackburn: I'm curious. Ben, did you say we had a comment that was worth the airing on this podcast? Or no? If not, we can run into it. I remember you were sharing a comment. I don't know if it's actually applicable to what we're talking about.

Ben Raikes: You keep going, and I'll look at it right now.

Tommy Blackburn: Okay, so survivor benefits; we're big fans of survivor benefits. We're also big fans of never saying things in an absolute form. So, we will give some room to say there can be circumstances, while rare, that maybe not taking survivor benefits, could make sense, but we think it's extremely rare.

So, we're big fans of taking those survivor benefits, in particular, whether it's military survivor benefits or our federal survivor benefits. And the reason we feel this way, and it even dovetails into Social Security some as well, and that for a married couple with Social Security, we're going to have two checks, two Social Security benefits when we've both met the requirements.

But when one of us passes, one of those checks is going away. We can't do anything about it. The higher check remains, the smaller one disappears. So, we're going to lose that source of income. And then the other is, one of the attractive things about a military career or a federal career is this pension.

And it's because everybody, to some, maybe doesn't know how to exactly value it, but recognizes there's tremendous value in it. We have a better idea of what it's actually valued at. And you're usually talking about millions of dollars to replicate that income stream. You worked your entire career to get it.

So then, paying 6% for military or 10% for federal to protect that for your spouse, as well as some ancillary things that are connected to it, and that's pre-tax amounts, so it's even less when you tax-adjust it, how do we not insure that asset is tremendous.

John Mason: It's one of your largest assets, and leaving it uninsured is, seems like not the prudent thing to do.

And as we think about why this video resonates, Ben, I jotted down contrary, right, so we're contrarians, if you're a life insurance salesman or maybe a financial planner who isn't as educated on federal employee benefits as we are, I've heard you can do better with life insurance. Okay, like maybe you're not qualified to give that advice.

So our video ‘Do Not Decline’ is contrarian to what many other people are positioning out there. I also wrote down that a lot of people we think declined survivor benefits because they're scared of retirement or they don't feel empowered or they don't know what retirement is actually going to look like.

So then we get penny-wise and pound-foolish.

Ben Raikes: Yeah. And John, I think one of the powerful things that you said in that video was, and it's something that we fully believe here, is if you need that extra 10% to retire, then the simple answer is you can't retire, right?

If you say, "Hey, I can't pay an extra 300. I needed that extra 300 or 400 a month, whatever it may be, to be able to retire and do all the things that I want to do," you're probably not ready to retire.

And you need to work with somebody to be able to tell you exactly what that looks like. The other powerful example is Tommy said, is, "If you had a million dollars in your TSP and you knew that if you retired and then walked in front of a bus the next day, that TSP turned into zero, we would all be panicking and saying, 'What exactly can I do to make sure that this TSP will stick around for my spouse?'”

Again, penny wise and pound foolish, working with somebody that can tell you the power of that TSP. I think we hit all the big points on that video, but this is one where we all feel really, really passionate about this topic.

John Mason: There's so many misunderstandings. Like most people don't know it's pre-tax.

Most people don't know there's a pop-up feature where if your non-federal employee spouse dies first, your pension pops up to the full amount.

Tommy Blackburn: And, and just to stay on there for a second, John, that is not common, folks, like when the cost of it and that is just a blanket cost versus being actuarial adjusted on who's going to get it and life expectancy. That's odd in and of itself.

So, we've already got that benefit. It's priced effective or priced pretty efficiently advantageously, but that pop up feature—that's unheard of in the private sector, right?

So, again, another benefit on the military. What is it? 30 years and age 70? Is that right? 360 months in age 70, you stopped paying for it? So, you have some unique features here that make it even more attractive. And, just wanted to, I felt like it was worth putting a little passion behind those features.

Ben Raikes: And, Tommy, that was the comment on the video, was there's someone who said here, “Hey, I've been to a ton of seminars. I've listened to a lot of YouTube videos. I thought I knew everything about this. I had no idea that if your spouse dies first, you stop paying those premiums.”

And so it's, again, good to know that we're making a difference, that we're telling people something that may not be common knowledge out there.

And yes, that is very, very, very rare. I don't know of another pension that does that.

John Mason: So a couple of things they are not talking to you. That's the water cooler financial planner. That's Suze Orman, Clark Howard, or any financial planner who doesn't specialize. They're not talking to you because they're talking to people who do not have your federal employee benefits.

So they're not talking to you. You are very special. You're special because you have access to a pension and an SPP plan that most people don't. So remember that they're not talking to you. You are very special.

And oh, by the way, the people that you think that want to help you, they're not actually physically allowed to do that, right? Like, you can't ask your HR department to give you advice on what to do with survivor benefits. They can just share with you the rules. And then, unfortunately, these folks can, I think—not meaning to demean them or be disrespectful—they can say things like, “I've heard you can do better with life insurance.” or “I don't know if you want to do that. It's pretty expensive.”

They say these leading things, where it's like, it's detrimental to one's thought process because maybe you went into it thinking survivor benefits was a deal, and your buddy at the water cooler said it's expensive or HR said “I don't know.” And then they start giving you these doubts, and it's like, man, you need somebody that can put it all into context.

And then passions are, word of the day is, the people who present survivor benefits, good or bad, probably don't have enough passion or life experience behind what this does and how it impacts real people, and we do.

And I think that comes through in the videos, guys, is that we've been helping people take survivor benefits since, like, 1990, and we have real-life experience serving widows and widowers of federal employees who have died, whose life is okay because they have SBP.

And by golly, I am so frustrated. You should not be able to present survivor benefits on a retirement class or give advice if you've never had to look a widow or widower in the eyes and explain to them how life's gonna be okay. You are not qualified. Period. To be giving this advice.

Tommy Blackburn: Love it, John. And as I think about the value of these benefits. Oh, yeah. I mean, that's the example, is that survivor you leave behind and putting them in a good situation and somebody you supposedly care about. And my guess is you do and you're just not thinking about this.

But we've got cost-of-living adjusted pensions on top of that. So, that's also uncharacteristic of anything that's—I mean, pensions are not common to begin with. Then if you do have it in the private sector, it's not cost-of-living adjusted. So it's keeping pace and probably actually becoming more valuable because not everything in your life goes up with inflation, but your income stream, that pension benefit does. So, that makes it more valuable.

And thinking about the survivor benefit, well, military is where my mind went for a second on this one. John is in Virginia now, and every state has different ways they treat these things, but in Virginia, you now get a portion of your military retirement tax-free, at least state-tax-free.

So, you still pay federal, but it was in 2024, it’s $30,000 that you get to exclude in Virginia. And it's going to go up to $40,000. And your survivor gets that same benefit if they take your pension. So, it's again, more and more valuable because we now have a state tax-free income stream. No doubt.

John Mason: So we're going to link these videos in the description below.

So on your normal app or if you're watching on YouTube, we're going to do our best to link to all these videos. And I just wanted to read some of these comments. One is: “I appreciate this. I've been debating what to do. My wife's family history indicates that she could go first, but there's no guarantee.

We looked into a larger term insurance policy, but it was more expensive than survivor benefits. Your comment about not being ready to retire if you can't afford the cost was powerful. The cost really is a drop in the bucket for us with our investments and pensions. Thank you for the sage advice.”

Great to know.

“Thanks for sharing, my man. You found a topic that's difficult to navigate, not well understood, and lacking almost any YouTube content. Thanks for the video. I'd love to see more content on this topic. From my experience, if you talk to an insurance salesman, they'll definitely show the superiority of life insurance.

However, a guaranteed benefit is valuable, and you explain that perspective of electing the full survivor benefit. Federal HR seminars seem to stay away from this topic.”

Ben Raikes: Wow. Wow. John, you left out the best one.

John Mason: “No spouse, no problem.”

Ben Raikes:There we go.

Tommy Blackburn: You got a good chuckle out of us on that one.

Ben Raikes: So we get some heartfelt comments, and then we get some funny ones that we like those mixed in there too.

John Mason: Yeah, so no spouse, no problem, but get this, if this man or woman gets married at 75 to a 35-year-old, guess what? Survivor benefits becomes an option because we didn't decline SBP when we retired. So now, all of a sudden, a marriage and retirement could qualify us to elect SBPs.

So, no spouse, no problem for right now. But, hey, keep that in mind.

Ben Raikes:And you still pay 10% even though you're 35 years older.

Tommy Blackburn: Yeah, I didn't know that's why you went with the 35-year-old. Somebody just, yeah. Man, the federal government lost out on that one.

John Mason: Alright, so how about we head over—where do we want to go next, guys? Do you want to do ‘Best Days to Retire’?

Ben Raikes: Let's do ‘Best Days.’ And then the last two TSP ones will kind of tie in with each other a little bit.

John Mason: Okay. So in the ‘Best Days to Retire’, we probably talked about CSRS days, what days to pick, as well as first days. And why do we think this video has resonated and been so popular?

Ben Raikes: I think that this is just a question that everybody has on their mind when they're filling out that retirement paperwork. They have to put a day. They've probably heard something from their brother that's a federal employee of what he did.

They probably heard somebody at the water cooler that said this is what they did. And they're just searching out there really when people fill out these retirement applications. No one's trying to do what's best.

They're just trying to not make a mistake. So when you have, ‘Best Days to Retire’, I think that resonates with a lot of people that are filling out that application. They say, “I have no idea. Here's what I heard. Maybe this John Mason guy can help me out a little bit.”

Tommy Blackburn: So, Ben, I think you're correct in that people haven't been through this before. It's scary. And so they are trying to make sure they don't make a mistake.

But I truly suspect a lot of it is also, “I'm going to get every cent that I'm owed. So I'm going to figure out exactly what the best day to retire is. Because I'm not leaving anything on the table.”

And as we think about it, I think all of us agree, like the best day to retire, there are some common things to keep in mind, which is we want to pick the end of a month. So it's effective the next month if we're federal, if we're first, and then the first check is the following month versus if you do it separately. You could go two months.

CSRS, I think, is the first two or three days of a month that you essentially could do that as well, if not the end. Those are some good ones to follow. You can try to do the end of a pay period or the end of a year and get your most annual leave paid out.

I think we think about it more of like just make sure you get the timing on the month right. That's what's more critical. And then, it should just be when you're ready to retire. Like, we don't need to worry about getting every little thing maximized here.

It should be like, do you actually want to retire at that time of year? Do you want to retire going into January, or would you rather retire going into the spring when you can get outside and enjoy life? What are you mentally ready for? Then let's back into those other, like, that's the rock.

Now let's just fill in some of these other pieces around it. We don't have to make sure we use every hour of sick leave. I mean, let's keep the big picture in mind.

John Mason: The best day to retire, like you said, Tommy, is when you can afford to do it, and when you're emotionally and physically ready to do it, and ready to use your resources to fulfill you in a different way.

Some people never retire, and that's okay too. But, I guess it starts with: When do I hit certain milestones, like MRA plus 30, 62 and 5, like when have I hit these milestones, when have I bought back my military time, when have I done all of the things, established my high three? So, it's like: When's the best time to retire? When's the best year to retire? And then, what's the best day to retire? Out of all three of those, really the most insignificant is the day. Right?

Like the best time frame of my life, the best year of my life, and then when we get down to the very granular, I don't think the video is clickbait because I do think it provides educational information around, you don't want to have a delay for no reason.

So, last three days of the month, like you said, we talk about end of a pay period, end of a month, the three or four times a year that that crosses over. But there's so much more to this than just picking January 30th, for example. And go ahead, Ben.

Ben Raikes: No, no, I was just going to say, well said and illustrate. I mean, maybe the stars align for you and you're that person that's retiring at the end of a month, at the end of the year, at the end of a pay period.

So, December 31st, 2024, all the stars align. You're like, “Yes, I did it. I picked the right day.” But you have to wait until January of next year to get your 1.1% boost. Then, obviously, you want to wait another month, regardless of whether that's at the end of a month, or a pay period, or whatever it may be.

So, I think, yes, you guys are a hundred percent right. The best day might not always be the best time overall for your financial plan and when you should or shouldn't retire.

John Mason: You picked the best day, but now you're subject to a MRA plus 10 reduction for the rest of your life.

Tommy Blackburn: I guess, to also be aware, sometimes we hear this: where folks are like, "I gotta get that promotion. And once I get that promotion, then my high three will be there, and I'll go."

And it's like, well, just make sure you understand your high three, right? It's 36 consecutive months. So, just getting that promotion and retiring one month later didn't do you much good, because you only had one month at that pay. So, those are some common things to keep in mind.

Hopefully, I think we've done a good job of, yeah, here are the big things and filling around it.

John Mason: So if you're retiring this year, definitely watch the video again. We'll link it below. Pick your best day. Assume, hopefully, you have a financial plan in order. Hopefully, you've done all of these things and confirmed all the things.

And now we really are down to maximizing our leave, our annual leave, picking the best day and the best time to retire. Take a look at the video. And if you're hoping we can help you make that decision, you better start quick because the end of the year will be here before we know it. And it does take us a few months to get clients on boarded.

So a couple of things, comments from this video, which are fun. If you need an annual leave payout to pay your bills before retirement, you're probably not ready to retire. So storing all of your annual leave, waiting for that big check to cover you during the adjudication period, I think that's a very well-thought-out comment from one of the users here.

What else? “The best day for me to retire is the day after I win the lottery. The heck with picking the best day of the month or pay period.”

Well, got news for you. You've hit the lottery as a federal employee because you have a wonderful pension and it's probably worth in excess of millions of dollars.

So you didn't realize that lottery winning in a day. It was a lottery winning over a lifetime of good career and good financial planning decisions. But federal employees, you are the secret multimillionaires out there and you've hit the lottery, and we want to make sure that you're maximizing that and taking survivor benefits in those things.

Let's see what else here.

Ben Raikes: MRA. “I will eat bread if I have to.”

John Mason:That's awesome.

Ben Raikes:Yeah. No, it's amazing to see the various comments we get through here. And again, love interacting with people, but that's kind of the big picture that we talked about before, right? Maybe you are at MRA and you can retire.

Maybe you're even taking a reduction, but you just say, man, it is not worth a single extra day going to this job. Then minimum retirement age, again, maybe that's the time you got to go.

John Mason: I like it. Awesome. So let's transition guys to some TSP videos. We have ‘Don't Close Your TSP.’ That's been a pretty popular video over the last couple of years.

And maybe I don't think this one stirred up any controversy with clients of Mason & Associates. That was the next one. ‘Don't Max Your TSP.’ So ‘Don't Close Your TSP.’ What are we talking about in this video? Why was it important? Highlights that y'all want to share?

Ben Raikes: John, I think the premise of this video is essentially you said it in our last podcast that we did, that the Thrift Savings Plan is absolutely a wonderful accumulation vehicle. It is not necessarily the best distribution vehicle.

So just kind of some highlights off the top of this video is, okay, well, if we're taking distributions from TSP, one, we can't really control the federal withholding. There is no state withholding on the TSP. We can't control which funds we sell when we take distributions from the TSP. And then just in general, if you're having to work with the TSP service line or go online and set up distributions, which you may or may not know what they are, it can just be a hassle.

So it's great to have your automatic payroll deductions come in. They're automatically invested in one of the five funds. It's a great accumulation vehicle, but there are some definite headaches when it comes to taking some money out of the TSP.

So those are reasons that you would move money out of the TSP. I guess I'm contradicting myself. Some of the reasons you would keep it open are, one, Maybe Tommy, you can talk about are Bailey Act and some of the provisions on why you would keep that TSP open. And then talk about the fact that if we keep it open, we can always put money back in.

Tommy Blackburn: Yep, that's pretty much—that's a lot of that story there. So, Ben gave you all the reasons to move money out or just some different features of it.

But ultimately, as we said in the previous podcast, which might actually air after this one—we'll see what order we do them in—it’s a tool. It is a tool and there's no need to get rid of that tool prematurely. So, we can almost empty TSP if we think that makes sense.

And as long as we leave some money behind, some nominal amount—I think it has to be over a thousand—we usually don't get that low. The account remains open, which means it's a revolving door. So, we can do, it used to be, I guess it's still technically a TSP-60, but I think you have to do it all online now, but you can move funds back into—you can move pre-tax funds at least back into TSP.

So, one, I get passionate about this one and I love—I actually love having this in our back pocket, particularly anytime I talk to anyone on an intro call—and that's whether they're going to become a client or not.

And the reason that I love this is one: it takes a little bit, if it does make sense to work together, it takes a little bit of the fear away of just—if this doesn't work out, we will help you move funds back to what you know and are comfortable with.

And the other one is, and this is honestly where I probably love it even more, is when we're talking to folks and I know it's not going to make sense for us to work together, but I want to arm them when they go talk to another professional or salesman. Which is, they may not know—whoever you talk to next may not know—that you don't have to close TSP.

And as long as you keep it open, you can move funds back. And I want you to know that so whoever you work with in the future, they don't close that door willingly or unwillingly so that you have that option available to you.

And I have had a client story. They were military and before us, a salesman got a hold of them and closed out their TSP. They then did a federal career, so TSP became an option again. And this was the untruth of when I was working with them. They were like, oh, they said, like, you have to get it out of TSP and there's no going back, this and that. I was like, well, they, I'm sorry to tell you, they were either uninformed or they intentionally lied to you. That was not the truth. So it's just a nice safety feature to have it there.

Other reasons are, not to try to put out every reason out there, but some of them is, like, if we want to do these things called backdoor Roth conversions, a lot of times it doesn't make sense or isn't applicable, but if it is, we can move pre-tax funds back to TSP for a moment in time, do that backdoor conversion so there's no tax on it. There's some technical things, some more digging to understand here, but it is, yeah, it's just another flexible tool to have in your pocket.

John Mason: Sure. Yeah. TSP has competitive advantages. We have an episode that we discussed competitive advantages and disadvantages for TSP. Pre-59 and a half distributions are a wonderful way to utilize a TSP or 401k.

And I love what you said, Tommy, about being able to transfer assets back into Thrift Savings Plan in the event that we need to use it as a tool, or in the event that we are firing or terminating a relationship with another advisor. And let's face it, TSP is getting better every year. We talked about in-plan Roth conversions that are coming.

We've talked about other enhancements as far as frequency of distributions and what's available. So, really there's no reason not to keep it open until such a time, maybe at 73 when RMDs kick in. At 73 or 75, maybe it's just cumbersome at this point, and we're okay. It's like we probably don't need this vehicle.

If you have a relatively shorter life expectancy and you want things to be a little easier on your spouse, consolidating everything into one or two accounts versus many accounts could be helpful. I've lived through that this year and it was sure nice not to have one more beneficiary claim for him to do when the inevitable happened.

Tommy Blackburn: A couple more example, I think, teed it up, and I just wanted to hit on it. So, you're 100% correct. Yeah, particularly that end of life stuff, consolidation in particular, where we can assist. Because it's under our management and much easier for everybody involved than having to go to these outside institutions. But we talked about MRA and like best day to retire.

So, this is another one of those scenarios where if we retire before 59 and a half, well, if we take an IRA distribution, now we have a 10% penalty. And so, this is a common planning technique. We'll deal with clients who this is applicable. We'll move funds back if we need distributions back to TSP.

And it will happen. Usually, they don't need monthly distribution of TSP, but maybe they just went and bought an RV, and they needed distribution. Well, let's avoid the 10% penalty. Let's move it back, and we'll take it from there. Some states have special treatments, like North Carolina, where depending on the facts and circumstances.

It could be a state tax-free distribution. So, this is where having an advisor who knows you, knows your benefits, is tax-savvy, all of these things, um, is very helpful. And being able to zoom out and see the bigger picture too, like John said, there are situations where this is no longer helpful, and it's time to fully consolidate.

John Mason: So don't freak out, audience, if you’ve closed your TSP. Life's okay. So don't, don't TSP, life's okay. Vanguard, Fidelity; there's a lot of other low-cost platforms out there that you can transfer funds to and have a similar experience to what you would have had inside of the Thrift Savings Plan. And let's also make sure we call out that when I started my career, you were allowed one in-service distribution, and the next distribution, you had to close your TSP.

So, when we talk about it wasn't a great distribution vehicle, it was really quite terrible from like 2010 through 2000 and whenever, ‘18, ‘19, ‘20, when the rules changed, and it was really quite terrible. Then it got more flexible, then it allowed for quarterly, you could do many retirement distributions and you could do like one a quarter in-service.

I don't even know what the rules are now because it's become so much more flexible, it's not remembering what the rules are. It was important before. Well, it's not so important.

Tommy Blackburn:You couldn't get it wrong back then.

John Mason:Yeah. So, we did help early in my career a lot of people closed their TSP because it was essentially one-and-done.

And now, once that rule changed, we believe it just really enhanced our ability to establish client relationships for the lack of fear that, man, this isn’t a revocable decision when in fact it's not.

So, couple comments guys. “Thank you for your advice. No one has mentioned that you can put money back in. You know your stuff. I wish more federal employees were curious about retirement.”

“I'm 62 and just retired six weeks ago. I've been thinking about transferring my TSP to Vanguard, but we'll give some consideration to leaving $10,000 in TSP. I'm leaving TSP because I want to do Roth conversions, and TSP will not allow that. If I did, I would consider leaving more money there.”

Well, for you, Mr. Subscriber, hopefully, if you're not a subscriber, hopefully you are, in-plan Roth conversions are coming, so your wish looks like it is right around the corner in 2026. Let's see.

“Roth. Is there a difference between Roth and traditional?”

Yes. So you can't move the Roth money back. I don't know if they're going to change that or not, but that's certainly a nuance is that you can't move Roth money back into Thrift Savings Plan. That's a good call, Ben.

Tommy Blackburn: Well, and that's really true for retirement plans, right? Not just TSP; that's true for 401ks as well.

John Mason: And then here's one. “It's so freaking cheap. Never close the account.” Period and all exclamation marks. Yes, it is inexpensive, but I'm pretty sure there's fidelity S&P 500 index funds with zero expense ratio.

And, and I guess I would have to assume if zero is less than 0.03, then TSP may not always be the cheapest option, although it is very cost-effective. And here's another one.

“Would you recommend closing and moving it to an annuity?”

Annuities are another tool. And if you've been explained and educated on why annuities make sense in the context of your overall financial plan, sure, an annuity could be part of your plan, but we would still recommend leaving an account balance there for some time and just be aware, make sure you understand surrender charges and things like that.

So let's close out guys with the next video. And this one was controversial, Ben. So I think you should take the lead. ‘Don't Max Your TSP.’ So bad boy, Ben, take it over.

Ben Raikes: Do not max your TSP. You heard it right. Do not max your TSP. I'm going to caveat this, and I think we caveated this in the video, but all of the kind of, I'm using “advice” in air quotes, that we give on our YouTube videos is just general education.

So this may or may not apply to you specifically. And the reason they're all pointing the finger at me and laughing a little bit is we had a couple of clients that reached out and said, “Hey Ben, I'm maxing my TSP right now. I just saw this video that says I don't have to. What in the heck is going on here?”

And you know what? Right? Rightly so, right? If you're maxing your TSP, and now we release a video that says, “Hey, by the way, you don't have to do that,” I would be confused as well. What maxing your TSP gets to is, particularly if you're someone that's in the last, let's call it two, three, four years of your retirement, and you've been putting $30,000 in per year.

Once you get to that point in your career, you've already more or less earned your years of service. You've already accumulated the maximum amount of money into your TSP. If you drop down from $30,000 a year to $25,000 a year, or $20,000, or even $15,000, in the long run, your financial plan is already set, and that additional money that you put into your TSP or your 401k is not going to make a monumental impact on the ability for you to retire.

So what we'd rather see you do is, okay, rather than 30, let's do 20. And that extra $10,000 that we have this year, we're going to put in new floors in the house, or we're going to take that family vacation that we've been wanting to take, or we're going to do whatever it may be with that money.

Another important part to consider is, even if we're not maxing TSP, it doesn't mean we want to go completely down to zero. I think we still want to be smart with our contribution strategy into the platform. Let's at least get our 5% match, but work with your advisor and determine, “Hey, Ben. Hey, Tommy. Hey, John. Is this something that I need to continue to do?”

And I don't know why Tommy Blackburn's just been holding in a laugh for about a minute and a half. But what do you got to say, Tommy?

Tommy Blackburn: I was just thinking, John had his nickname, I have a lot for you. And as this one was happening, I was thinking, I was like landmine Ben, stepping on landmines.

And he didn't even, it's almost like John pushed him on the one where John put the message out. And then Ben is like, Oh, I got caught black about everywhere he goes, he's just stepping on landmines. That's what I've been chuckling or like collateral damage been, it just seems to be like.

Ben Raikes: We'll start wearing that black jacket.

Tommy Blackburn: Yeah. Yeah. You catch a lot of it. You're all correct. So I was just laughing and chuckling about you and all of our, the fun we have as a group. And I think the main thing here, like you said, is it's kind of just about fulfillment, right? Of are we accomplishing our goals? Are we already funding those? And then are we not being fulfilled in life? Are we missing out on things? We don't need to max TSP just to do it.

Take it a little bit further. If we're actually accomplishing everything we want to do, which is, truthfully, most of our clients anyway, then we definitely want to still be tax-savvy, and we might as well save in a tax-advantaged account.

So, I think maybe that was some of the controversy here, was like, no, the message was: if you are going without, if you are not living your best life because you are putting maxing TSP ahead of it, then we have a difference of opinion here. If you're living your best life, and you just have money to save, then we should do it in the most tax-efficient way we can.

John Mason: A lot of federal employees follow a similar path. They start off in their career maybe not highly compensated, and then over time they get the step increases, the pay raises, and by the time we see them, they're 13, 14, 15, or SES. And life's pretty good and cash flow is good, and we can certainly maximize TSP.

But what happens is, at least from a lot of the clients we see, is the bulk of the wealth, guys, ends up in Thrift Savings Plan. So maybe we have a million or 2 million or $500,000 all in TSP that's not accessible until 59 and a half slash retirement, but we're 50 years old.

We're 55. We know we can retire. We've had a good financial plan. We know we have a pension. We know the assets are there, but we're like stuck. We've got this pot of money that's inaccessible for a decade. Well, if we look at like three variables in life—health, wealth, and time—we have those three. It kind of stinks that your wealth, both your pension and your TSP, is inaccessible until you retire.

And if that's a decade or more away, we're not able to use our wealth, we're losing our time, and what else? We're also losing our health. So all three things are not great. So what we're just suggesting is that if there's a way to unlock some of your wealth today, if there's a way to unlock some of the potential today to enjoy some of the fruits of your wealth, one of the only ways we can do that, if all of your wealth is in TSP, is stop adding more to it once you know you can retire.

And Tommy and I, we were working with a young client a few years ago, whose cash flow was really tight. He had like a million dollars at like 45 years old already in TSP. And you should have seen their face when we were like, let's drop it down to 5% so we can go buy some clothes. Right? Like going to buy new clothes is much more important for you right now than socking money away into TSP.

And so that's what we're talking about here. And that's why this video is so important. Again, it's contrarian. It's different than what many people are thinking.

Here's another message: if you 100% base your TSP distributions and how you're going to live your retirement based on what you need, you're going to leave a whole pile of money to somebody.

If you don't spend it, somebody else will when you pass away. If you base all of your spending on what you need, let's face it, many people don't need for much. If you have good pensions and good social security. So basing your spending on need maybe is not the best pathway forward.

And that's kind of, again, what we're talking about in this video, is allowing you to think a little bit differently about your assets and like unlocking some of this potential, and understanding that maybe 25 years ago all of your spending had to be needs-based, but now you've earned the right for it to be a little more discretionary or a little bit more frivolous, if you will.

Or a little bit, you're paying for time, you're paying for luxury, you're paying for convenience. All of these things maybe you couldn't do earlier in your career, but you can do now. So guys, this was fun. I don't know if we'll ever be able to do this one again in a different format, but I enjoyed this.

Ben Raikes: This has been a blast. Like I said, 2025, Ben Raikes is going to be at the top of that chart, so just keep looking out, man. With a flag. Bring it on, baby. Bring it on.

John Mason: Thank you, audience. Thank you, clients, for tuning in to another episode of the Federal Employee Financial Planning Podcast. We'll link all these videos in the description below, as well as on YouTube.

We look forward to a phenomenal 2025, whatever it may be. Volatile, not volatile; crazy, not crazy. We're excited to be on this journey with you, both as your advisor if you're a client, as well as your host, and educators on the Federal Employee Financial Planning Podcast.

Remember, if you have a transition coming or you're looking for personalized advice, we are taking new clients, and that process starts with a no-fee introductory phone call, 757-223-9898 or masonllc.net.

Thanks again. Hope you enjoyed this kind of fun recap episode as we celebrate three years of producing this content for you, the federal employee. We'll see you here next time on the Federal Employee Financial Planning Podcast.

The topics discussed on this podcast represent our best understanding of federal benefits and are for informational and educational purposes only, and should not be construed as investment, financial planning, or other professional advice.

We encourage you to consult with the office of personnel management and one or more professional advisors before taking any action based on the information presented.