Monthly Archives: September 2024

Do you like surprises? You might like the surprise of getting some money in the mail that you weren’t expecting or the surprise of a visit from a dear friend you’ve not seen in years. 

But how about an unpleasant surprise? What if you’re surprised to learn that your retirement income has fallen short of replacing your paycheck and you realize that the only solution is to work longer or continue with your plan to retire and then learn to live on less.   

A far better solution is to be prepared so that retirement is not filled with unpleasant surprises but is a planned event with the plan starting early in your career. Between your starting date and ending date, some twists and turns may take you off course, but with a plan, you can get back on track to find your way to a financially secure retirement.   

Compare planning for retirement to planning your next vacation. Most of us don’t wake up and say, “It’s time to go on a vacation today.” For some of us, the fun is in the planning. How are we going to get there? What do we need to pack? What are we going to do once we get there? How much is it going to cost? The answers to these questions might require a plan to save money well ahead of the vacation to cover the cost of the trip. We may need to compare when we shop for airfares, rental cars, and hotels. Exploring travel websites will take time to learn the best places to visit and how much the activities will cost. If you enjoy the details of planning a vacation, then preparing for retirement might become more manageable for you. For others, retirement planning can be tedious and considered a complicated chore.    

When you plan for your retirement, you will enjoy the following benefits. Here are some ways to get started or to check to be sure that you are on track: 

1. Plan your retirement date: Do you know when you become eligible for an “immediate, unreduced” retirement benefit under FERS?  Do you understand how your length of service will be determined and how much credit you’ll receive for sick leave that is leftover at retirement?  Explore the retirement planning resources at the Office of Personnel Management’s Retirement Center. Learn more by attending a pre-retirement or midcareer planning program, if available at your agency.  You can also find webinars online through the National Active and Retired Federal Employees Association, The National Institute of Transition Planning, and other online training events.    

2. Plan your savings: Small increments of investing paycheck by paycheck over your career, is far better than feeling the panic in the final years to try to squeeze 30 years of saving into the last five years of your career (and realizing this is an impossible task). Check out the Thrift Savings Plan’s online learning events. FINRA can help you learn more about managing your retirement investments and the Securities and Exchange Commission has tools at https://www.investor.gov/. Or consult your fiduciary financial planning professional.  

3. Reevaluate insurance needs: After electing your health insurance and life insurance coverage when you were first hired, it is important to determine if you need to make changes as your life and needs change. The basic “value” plan health insurance may not be the best option if you have been diagnosed with a chronic health problem or if you are expecting your first child. The same can be said for life insurance. Do you know how much life insurance you need to protect your family in the event of your untimely death?  Have you checked the price of FEGLI to see the premium increases on the optional coverage every five years? Do you know the rules for continuing your insurance in retirement? To learn more about your valuable insurance, learn more at www.opm.gov/insure. You can also find insurance calculators as well as other financial planning tools at https://www.dinkytown.net/insurance.html  

4.  Plan for longevity: Retirement can last for decades. I once asked my Uncle Steve how he prepared for his retirement in 1980. Uncle Steve retired at 55 under CSRS from the Department of Air Force. He thought about it briefly and said, “I submitted my retirement application about 30 days before I turned 55. At the end of the month of my 55th birthday, I retired.” Uncle Steve passed away in 2012 after spending 32 years living out his life after retirement which was longer than the career that he retired from. Fortunately, his “single benefit” retirement plan replaced more than 50% of his wages and it included annual cost of living adjustments that allowed his retirement to keep pace with inflation so that he and Aunt Helen could live comfortably throughout their retirement. Under this plan, there was no need to rely on a substantial amount of retirement savings or even Social Security, the only requirement was to start early and finish after completing a career of continuous federal employment.  The Center for Retirement Research at Boston College has some informative articles that can get you started:  https://crr.bc.edu/publications/   

5. Plan for Long-Term Care: Along with longevity comes a greater risk of needing long-term care. Having LTC insurance isn’t the only way to prepare for this possibility. There are ways you can plan to age in place, or you can explore a continuing care community for retirees who are independent but may later need some assistance. Learn more at https://acl.gov/ltc and https://www.ltcfeds.com/. Veterans may explore special long-term care benefits available through the “Aid and Attendance” program. This benefit is designed to provide financial aid to help offset the cost of long-term care for those who need assistance with the daily activities of living such as bathing, dressing, eating, toileting, and transferring. The Veterans Administration also provides resources for veterans who need long-term care and assistance.
6. Plan for Social Security: Social Security retirement benefits, also an essential piece of FERS, have a full retirement age of 67 for those born in 1960 or later and only 70% of the benefit payable for those who file for benefits at age 62. An important thing to understand about Social Security is the progressive nature of the benefit formula that provides a greater replacement of pre-retirement earnings for lower wage earnings and a lesser replacement for those with higher lifetime wages. 
7. Plan for taxes in retirement: Tax planning will help you realize that your gross retirement is a lot more than the net amount that hits your bank account on the first day of every month of retirement. Not only will you pay federal income tax, but many states also tax federal retirement and TSP withdrawals.  States are much more tax friendly when it comes to Social Security, with only eight states that tax your SSA retirement benefits (Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont). Have you estimated your net income in retirement after taxes and insurance premiums are withheld? Check out the following publications from the IRS (or consult your professional tax advisor): 

1. Tax Guide to U.S. Civil Service Retirement Benefits

2. Individual Retirement Arrangements IRAs  

3. Filing season reminder: Social Security benefits may be taxable

8. Plan for those who depend on you financially: One of the most critical elections you may have to make as you retire, especially if you are currently married, is the election of a survivor benefit. Do you and your spouse understand both the cost and the value of this election? Did you know that your spouse has a right to this benefit, by law? If you choose to provide a partial or no survivor benefit for your spouse, you will need their notarized consent. To learn more about survivor benefits, check out some earlier Retirement Planning columns such as Survivor Benefit Confusion, Part One and Part Two  

Unfortunately, the days of coming into federal service straight out of high school, college, or the military and then starting the retirement countdown clock for the double nickel birthday are long gone with the old Civil Service Retirement System which was closed to new hires starting in 1984. Today’s retirement for federal civilian employees goes by a different name: FERS. It is no longer a single benefit plan that attracts graduates to work their way up the GS pay scale in the same position at the same federal agency. Many federal employees come from private industry careers or have retired from active-duty military service, and some come for experience in the public sector to take those skills and the experience to help them climb the corporate ladder. Of course, there are still many federal workers who complete a career in federal service and retire in much the same way as my Uncle Steve.   

Do yourself a favor, if you haven’t started, consider making a retirement plan. If you have a plan, be sure to reevaluate sometimes and update when needed. If you are already retired, congratulations!

The federal government’s 401(k)-style retirement savings program saw each of its portfolios grow in value for the second straight month in August.

The Thrift Savings Plan’s international (I) fund was the top performer of the program’s five core offerings, finishing last month 3.15% in the black. So far this year, the I Fund has grown 12.30%.

The common stocks of the C Fund posted gains to the tune of 2.42% in August, bringing its 2024 performance to 19.50%. And the small- and mid-size businesses of the S Fund eked out a 0.25% increase last month. Since January, the S Fund has increased 9.99%.

The fixed income (F) fund also continued to inch higher, gaining 1.43% in August. So far this year, the F Fund is up 3.14%. And the government securities of the G Fund grew by their statutorily mandated rate of 0.35% last month. So far in 2024, the G Fund has increased 2.97%.

Each of the TSP’s lifecycle funds, which shift toward more conservative investments as participants get closer to retirement, similarly posted gains last month. The L Income Fund, which is designed for people who have already begun making withdrawals, increased 0.98%; L 2025, 1.10%; L 2030, 1.69%; L 2035, 1.82%; L 2040, 1.93%; L 2045, 2.04%; L 2050, 2.13%; L 2055, 2.38%; L 2060, 2.38%; L 2065, 2.38; and L 2070, 2.39%.

So far this year, the L Income Fund has gained 6.25%; L 2025, 7.16%; L 2030, 10.64%; L 2035, 11.38%; L 2040, 12.12%; L 2045, 12.75% ; L 2050, 13.38%; L 2055, 15.58%; L 2060, 15.59%; and L 2065, 15.59%.

Year-to-date figures are not yet available for the L 2070 Fund, as it just launched in July.

On June 28, 2024, the Supreme Court’s 6-3 decision in Loper Bright Enterprises v. Raimondo abolished the Chevron doctrine, ending its 40-year influence on how courts review agency legal decisions. This ruling dramatically affects how federal agencies like FEMA, HUD, and HHS, interpret laws, with wide-reaching implications for agency leaders and the people they serve.

Eliminating Chevron deference means courts will no longer automatically defer to agencies’ interpretations of ambiguous laws. Judges will have more authority to interpret statutes, possibly leading to more judicial challenges and overturned agency decisions. The decision will affect FEMA and set a precedent for other federal entities, potentially leading to a more fragmented regulatory landscape that results in longer timelines for resolving challenges or appeals to an agency’s interpretation of its authorizing statute. 

Chevron deference, a doctrine established in the 1984 Supreme Court case Chevron U.S.A., Inc. v. Natural Resources Defense Council, allowed courts to defer to federal agencies’ reasonable interpretations of unclear laws. This doctrine acknowledged the expertise of these agencies and granted them flexibility to execute complex laws. 

Particular to the emergency management industry, the Robert T. Stafford Disaster Relief Act (Stafford Act) is broad and general, allowing flexibility in FEMA’s eligibility determinations for their programs, such as Public Assistance, Building Resilient Infrastructure and Communities, and the Hazard Mitigation Grant Program.  

The most significant impact could be felt on FEMA eligibility decisions, especially those based on unclear laws. These decisions are now more likely to face judicial scrutiny, which could lead to an increase in appeals and legal challenges, prolonging resolution times and raising costs for applicants and stakeholders. 

The ruling could also affect second appeals in FEMA’s PA, BRIC, and HMGP programs. Previously, agency discretion often led to upheld decisions. Now, courts might only review these decisions by deferring to FEMA’s expertise. This change could reopen appeals from the past six years and offer new chances to challenge FEMA’s authority, especially when its goals and program intentions are considered. 

Eliminating Chevron deference will not only impact future FEMA determinations, but it could potentially alter previous determinations as well. Determinations from the past six years could be contested, potentially triggering a review of many previous decisions. This would cause a backlog and raise the administrative load on FEMA and state/municipal applicants facing these issues in court. 

FEMA is not alone in facing a new regulatory landscape following the Supreme Court’s decision. There are also implications to HUD’s interpretations of Section 8 Housing Choice Voucher Program, Community Development Block Grant -Disaster Recovery, Public Housing programs, Fair Housing Initiatives Program,  HOME Investment Partnership (HOME) Program, and numerous others.

Health and Human Services (HHS) also may anticipate challenges to states’ interpretations of Medicare and Medicaid use of funds, and eligibility interpretations of Temporary Assistance for Needy Families , Children’s Health Insurance Program, program requirements for Head Start and Early Head Start Programs, and the grant allocations, eligibility, and compliance choices made for Substance Abuse and Mental Health Services Administration Programs.

Collectively, programs impacted by the Supreme Court ruling serve tens of millions of Americans and the changes it brings will have real-world implications. FEMA may soon revise its policies and guidelines on disaster relief to make eligibility decisions less dependent on unclear statutory interpretations and more based on clear, defensible legal language. Good in theory, but it also diminishes the flexibility required to meet the unique challenges each disaster poses.

The Increased litigation that may follow the ruling could force FEMA to spend more on legal defense and compliance, possibly reducing funds for program implementation. This too might limit FEMA’s flexibility in designing programs tailored to specific needs. 

The Supreme Court’s decision on Chevron deference is creating a whole new world for federal agencies like FEMA, HUD, and HHS and how they interact with the courts. Without the judicial deference that has existed for decades, these agencies must interpret laws under increased legal scrutiny, likely leading to significant policy shifts in areas like emergency management and housing with real world implications for the Americans who rely on these programs. Successfully navigating this new terrain will require federal agencies to reevaluate law implementation and establish processes for closer collaboration between legal experts and policymakers.

Mark Misczak is president of National and International Programs for Tidal Basin Group. He spent most of his career serving in leadership roles at the Federal Emergency Management Agency.

President Biden formalized his plan to provide civilian federal workers with an average pay increase of 2% next year, in a letter to congressional leaders Friday.

Last March, Biden first announced the pay raise plan as part of his fiscal 2025 budget proposal, marking a significant decrease from previous pay raises of 5.2% in 2024 and 4.7% in 2023. Friday’s announcement confirms that, if implemented, federal employees will see an across-the-board boost of 1.7% to basic pay and an average 0.3% increase to locality pay, a slight departure from the traditional 0.5% of the overall raise figure being set aside for locality adjustments..

“We must attract, recruit, and retain a skilled workforce with fair compensation in order to keep our government running, deliver services and meet our nation’s challenges today and tomorrow,” Biden wrote. “This alternative pay plan decision will continue to allow the federal government to employ a well‑qualified federal workforce on behalf of the American people, acknowledging wage growth in the labor market and fiscal constraints.”

Each year, the president must issue an alternative pay plan by the end of August determining that an “economic emergency” precludes much larger automatic increases in locality pay from automatically taking effect, in accordance with the Federal Employees Pay Comparability Act. The move has been largely perfunctory since the law was enacted in 1990.

Biden’s 2% average pay raise plan falls well short both of the expectations of federal employee groups, after the last two years’ worth of increases broke decades-long records as the federal government sought to keep up with inflation. And it falls short of the long Democratic priority of maintaining pay parity between civilian federal employees and military service members—service members are slated to receive a 3.5% pay increase next year, in addition to a series of targeted pay increases directed at the service branches’ lower ranks.

But consternation from federal employee unions and some Democrats—who have instead endorsed the 7.4% average pay raise as proposed by the Federal Adjustment of Income Rates Act—thus far has not led to concrete action to override the president’s plan. Appropriations bills in both the House and Senate are silent on federal employee compensation, effectively endorsing the president’s 2% raise plan.

In order for the president’s pay plan to be implemented in January, Biden must issue an executive order by the end of the year finalizing the raise, after which the Office of Personnel Management will publish pay tables for each locality pay area. The raise then would go in effect for the first full pay period of 2025.

The Office of Personnel Management on Thursday reminded agencies that they must provide their employees with paid administrative leave for time spent during the workday to vote on Election Day.

In accordance with a 2021 Biden administration executive order promoting voting access, OPM in 2022 began requiring agencies to provide federal employees up to four hours of administrative leave to vote in federal, state, local, tribal and territorial elections, which can be used both on Election Day and during early voting. Additionally, agencies must provide an additional four hours of paid leave to employees who serve as election judges or observers.

In a memo to agency heads Thursday, acting OPM Director Rob Shriver reminded agencies of the new voting leave rules. In 2022, federal workers employed by several agencies, including the Government Publishing Office, the Veterans Affairs Department, Transportation Security Administration, Social Security Administration and the Defense Department reported difficulty in getting their employers to honor the policy.

“As explained in OPM’s March 2022, guidance, agencies should allow employees to use up to four hours of administrative leave for voting in connection with federal general election day and in connection with each election event (including primaries and caucuses) at the federal, state, local, tribal and territorial level,” Shriver wrote. “[Agencies also] should allow employees to use up to four hours of administrative leave per leave year to serve as a non-partisan poll worker or non-partisan observer, and this leave is in addition to any administrative leave an employee uses to vote.”

The memo also clarifies one policy as it pertains to federal employees who serve as poll workers: those employees are not required to return compensation or other fees they receive in connection with their service to their employing agency.

The National Science Foundation has allocated over $70 million to a new initiative that works to connect artificial intelligence and bioscience research spaces.

Unveiled on Wednesday, five different projects will receive funding from BioFoundries, NSF’s new program that brings facilities and equipment together with researchers to develop new solutions for the U.S. bioeconomy, which includes fields like biological sciences, geosciences, biomaterials, chemical biology and bioengineering. NSF’s awardees will leverage AI and machine learning tools to process the large volumes of data required by these disciplines in order to model and scale novel advancements.

“Our main goal is really advancing our competitiveness and growing the bioeconomy for these programs,” Sridhar Raghavachari, NSF’s program officer for Biological Centers, Facilities and Additional Research Infrastructure Cluster, said on a Wednesday press call. He emphasized protein design as a leading theme for the research projects NSF is funding, noting that the predictive analytics AI offers can help extrapolate how a protein sequence can unfold and function. This advancement could spell major innovations in drug development, agricultural science and more.

“It’s really great to be living [in] this holy grail era,” he said. 

Five recipients will split a total of $75 million in funding. All recipients are led by academia, featuring participation from the University of Pennsylvania and the University of Puerto Rico; the University of Georgia; the University of Illinois at Urbana-Champaign; the University of California at Santa Barbara, Riverside and California Polytechnic Pomona; and the University of Delaware. 

Each recipient will form a biofoundry working with the NSF. Specific research areas include using AI to help develop RNA molecules and delivery vehicles; protein design and cellular engineering and development; and microorganism research, among others.

“We would like to see large numbers of use-inspired AI, ML protein designs from all around the United States with many different applications,” Raghavachari said. “And, more importantly, we want to create this robust and independently supported protein design and characterization tools, and we want it to be widely used by startups, industry and academia.”

The ultimate goal of the BioFoundaries funding is to strengthen the larger U.S. bioeconomy. Identified by the White House’s Office of Science and Technology Policy as a leading emerging field, biotechnology development stands to impact the larger global technological and socioeconomic space in the coming years. 

“There are estimates that by the year 2030, the bioeconomy is going to contribute 1 million jobs to the U.S. economy, and that’s only five years away from where we are today,” Susan Marqusee, NSF assistant director for Biological Sciences and head of the NSF Biological Sciences Directorate, said on the press call. “I like to think about this as: The living world…has evolved to solve so many problems… Evolution has figured out a way for organisms to survive in almost all situations — extreme temperature, very dry areas, etc, the depth of the ocean, at very high pressures — so in addition, as society, we’ve developed, or can develop, the technology to harness and engineer these solutions for benefit to society.”