Financial Advice for Federal Employee

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steelerfan
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Financial Advice for Federal Employee

Post by steelerfan » Mon May 14, 2018 8:20 am

I am retired US Army and have been working for the Federal Gov't (US Army) as a civilian GS employee for 12 years. I want to retire in about 8 years. For the last 4-5 years, I have been using a financial advisor who specializes in Federal Retirees. The fee only advice I get is pretty limited, but what I like to see is her projections for retirement.

2 years ago her projections showed that when I turn 100, I will only have $85K left in retirement funds. Just this month, she ran the projections again and it showed I will have upwards of $900k left when I turn 100. When I asked her about the huge difference, she said that I had been doing very well the last 2 years and that the assumptions going forward were reflecting more optimism.

I have since emailed her back for more clarification since the 2 numbers ($85k and $900k) are so very different. She has not yet responded.

My questions for the BH community are:

1. Does this make any kind of sense?
2. Do I need a second opinion?
"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Cullom Davis

dbr
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Re: Financial Advice for Federal Employee

Post by dbr » Mon May 14, 2018 8:29 am

There are numerous models available for doing this problem that you can run yourself. The old warhorse standby is www.firecalc.com. But there is also CFireSim, iORP, Retirement Optimizer, the Vanguard and Fidelity planners etc. I prefer the models that use historic data so you don't have to guess future performance. No such model can give you a specific outcome but rather a range of possible outcomes. Run FireCalc and look at the end results for all the possible outcomes that are displayed on the graph.

bsteiner
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Re: Financial Advice for Federal Employee

Post by bsteiner » Mon May 14, 2018 8:32 am

A small change in the assumptions can result in a large change in the results over a very long time period.

dbr
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Re: Financial Advice for Federal Employee

Post by dbr » Mon May 14, 2018 8:41 am

bsteiner wrote:
Mon May 14, 2018 8:32 am
A small change in the assumptions can result in a large change in the results over a very long time period.
In a run of the mill run of FireCalc at 4% withdrawal rate for 30 years, the final asset value starting with $750k can range from 6 of 117 samples reduced to zero (failures) and a range on the rest from $46k to $8.7M.

Most likely this advisor does not know what she is doing and seemingly also does not know how to explain the nature of the problem.

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steelerfan
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Re: Financial Advice for Federal Employee

Post by steelerfan » Mon May 14, 2018 7:38 pm

dbr wrote:
Mon May 14, 2018 8:29 am
Run FireCalc and look at the end results for all the possible outcomes that are displayed on the graph.
So, I followed your advice and the results were very encouraging.

From Firecalc:
"Here is how your portfolio would have fared in each of the 99 cycles. The lowest and highest portfolio balance at the end of your retirement was $280,000 to $11,524,256, with an average at the end of $4,715,006. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 48 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%."
"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Cullom Davis

SagaciousTraveler
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Re: Financial Advice for Federal Employee

Post by SagaciousTraveler » Mon May 14, 2018 7:47 pm

Steelerfan,

I get a bit worried when I see 'Specializes in Federal Retirees'. I've seen my fair share of people get swindled by taking money out of their TSP and 'investing' it with said person. Also heard of some pension shenanigans.

As a fellow federal employee and vet, I want to make sure you are ok. Granted if you are on this website, worrying about you is most likely a moot point. :sharebeer

golfCaddy
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Re: Financial Advice for Federal Employee

Post by golfCaddy » Mon May 14, 2018 7:53 pm

If you project 50 years into the future, slight changes in your return assumptions can make big changes in the end value of your account.

trueblueky
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Re: Financial Advice for Federal Employee

Post by trueblueky » Mon May 14, 2018 7:53 pm

Steelerfan,
You don't need to pay for advice.

Figure your military retirement, future FERS retirement, future Social Security, approximate future value of TSP. See what your retirement income would be for various retirement dates.

Pick the appropriate L Fund and leave it alone. There are places where you can get advice on timing TSP -- ignore them. Max your TSP; see if Roth makes sense in your situation.

Retired fed

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steelerfan
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Re: Financial Advice for Federal Employee

Post by steelerfan » Wed May 16, 2018 12:45 pm

SagaciousTraveler wrote:
Mon May 14, 2018 7:47 pm
Steelerfan,

I get a bit worried when I see 'Specializes in Federal Retirees'. I've seen my fair share of people get swindled by taking money out of their TSP and 'investing' it with said person. Also heard of some pension shenanigans.

As a fellow federal employee and vet, I want to make sure you are ok. Granted if you are on this website, worrying about you is most likely a moot point. :sharebeer
HAHA. No need to worry. The advisor has never encouraged me to take money from my TSP L2030 or transfer my money from my two VG TR2030 funds. I have given her a total of a few hundred dollars over the last 5 or 6 years!
"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Cullom Davis

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steelerfan
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Re: Financial Advice for Federal Employee

Post by steelerfan » Wed May 16, 2018 12:51 pm

trueblueky wrote:
Mon May 14, 2018 7:53 pm
Steelerfan,
You don't need to pay for advice.

Figure your military retirement, future FERS retirement, future Social Security, approximate future value of TSP. See what your retirement income would be for various retirement dates.

Pick the appropriate L Fund and leave it alone. There are places where you can get advice on timing TSP -- ignore them. Max your TSP; see if Roth makes sense in your situation.

Retired fed
Thanks. So I used my financial advisor's future projections for military retirement, FERS, SS, TSP, and VG Roth IRAs to plug into the FireCALC website and got great results. However, going forward, I would not know how to project new numbers. Is there a website you know of that will project mil ret, FERS, SS, TSP, and IRAs?
"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Cullom Davis

trueblueky
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Re: Financial Advice for Federal Employee

Post by trueblueky » Wed May 16, 2018 1:51 pm

steelerfan wrote:
Wed May 16, 2018 12:51 pm
trueblueky wrote:
Mon May 14, 2018 7:53 pm
Steelerfan,
You don't need to pay for advice.

Figure your military retirement, future FERS retirement, future Social Security, approximate future value of TSP. See what your retirement income would be for various retirement dates.

Pick the appropriate L Fund and leave it alone. There are places where you can get advice on timing TSP -- ignore them. Max your TSP; see if Roth makes sense in your situation.

Retired fed
Thanks. So I used my financial advisor's future projections for military retirement, FERS, SS, TSP, and VG Roth IRAs to plug into the FireCALC website and got great results. However, going forward, I would not know how to project new numbers. Is there a website you know of that will project mil ret, FERS, SS, TSP, and IRAs?
Unfortunately, no.
Social Security can project SS, and you can adjust the estimated future earnings. FERS is a simple 1% times years times high-three salary until you qualify for 1.1% multiplier.

i-Orp is overall good for combining all this; you need to input the numbers for pensions and SS, and current balance and contributions for TSP/IRAs.

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