An important consideration for your retirement lifestyle: Can you afford it?

Terry Gerton Well, we had a lot of conversations on how federal civilians should think about retirement or not, but we are going to take a little different torsion this morning. We are going to talk about what’s going on after your retirement, right? You are a pro for that.

ABE GRUNGOLD Yes, Terry, I retired three years ago from Federal Service after 36 years and I planned my retirement. It took me three years to think about how much money I will retire? What will I retire, and if my plan to stay busy will not work, what is my backup plan? Thus, in 2025, there will be two retirement tsunamis requests for federal retirees. The first is due to the delayed retirement which will take effect on September 30, all those who take the acquisition. And then there will just be a wave of retirees at the end of December 31. So do these people have a plan? What will be their plan? And many of them will always be young. So, will they work full time or retired part-time? Or will they simply play pickleball and play retired golf? You must have a plan.

Terry Gerton Well, I am a failure with two withdrawn. Obviously, I am back to work. So, my plans have not proven very well, but my husband succeeded quite well for retirement. What are the myths that most people need to get out of their heads early so that they can have a successful and pleasant retirement?

ABE GRUNGOLD You must have this plan, and it must be a flexible plan and there must be contingencies. Say that you want to work full time and start working full time and you realize that the version is not for you. So you say, maybe I will find a part-time position. I have many friends to the government who retire. They will do interesting things. One of them has a farm with farm animals and agricultural equipment. Another will renovate his mother’s house. So they take these very large careers which are different from them, but it is something they want to do. And that’s something they will appreciate. It is therefore an important factor. You have to find something you want to do. Now there are other people who volunteer. I have a friend who volunteers in a food bank, then he helps people with disabilities with exercise programs, so they continue to exercise even if they have a handicap. So he remains busy doing a lot of volunteer work. This is something he wants to give back to the community. So there must be a kind of value if you are going to work or if you are going to do something else in return.

Terry Gerton Well, one of the advice I hear most often is to find something that keeps both your mind and your engaged body. It can be work, it may be to volunteer, it may be something else entirely, but don’t think you are just going to sit on the sofa for your retirement.

ABE GRUNGOLD Exactly. Listen, I launched my business three years before leaving Federal Service and I play golf. I go to the gymnasium. I don’t want to work full time, but I want to keep my mind active and staying in good physical health is important by playing golf and other things. I don’t want to injure myself on the pickleball field. I have a lot of friends who hurt themselves, but there are a lot of things you can do, but sometimes you are bored and you should have an alternative plan. What else can I do? And going back to work is not a bad thing if you came out for a year to play golf and travel. Some people are bored. But another great thing to consider is: how are you going to finance everything you are going to do on the retirement? I have a lot of friends and neighbors who renovate their house. They travel, they buy expensive cars, they do all kinds of things that require large sums of money. Will their flow of retirement income be able to manage all of this? They must think about it.

Terry Gerton I speak with Abe Grungold. He is retired federal director and owner of AG Financial Services. Very well, let’s think about this cash flow. What are the likely sources in cash for a federal employee who is now retired? Where should they think about it? How should they think of budgeting?

ABE GRUNGOLD It’s very good. If you are still young, let’s say that you are 57 years old, you reach your minimum retirement age and you will get your government annuity and you think of working, you may not want to take social security right now. You may want to postpone social security on a later date. Now, if you are going to work part -time, you can collect Social Security and not have reduced services, so you have to think about these amounts. Now retired, you can also get from your TSP. Many people just want to get 2% or 3% of their TSP and use this money to travel with it. It’s good, but you have to budget. You must budget if you are going to renovate your home or if you are going to make some costly cruises or trips. You need a budget and think about where you are going to draw this retirement income. And from a personal level, I collected savings obligations that I bought more than 30 years ago from the federal programs of savings bonds they had for employees. It is therefore something that I planned to do and I use these funds to do various things in my life. So that’s something you need to think of. You have to plan, you need a budget.

Terry Gerton What are the big differences in a retirement budget from a work budget? Obviously, the source of income, but what type of expenses might need to think that they will have retired that they could not have had while they work, or that could be different?

ABE GRUNGOLD Well, a great thing, and even of my personal experience, these are the costs of health care. You must have good health insurance, which you go to continue with your retirement fehb insurance, or whether you are on a drug and you will have a medication supplement. You must have good health care because there are many unexpected things that happen. You could fall on the pickleball field. You can have a sudden illness. Do you have to look at what your health plan provides? How much is the maximum of the pocket? What are the franchises? And especially with drugs, because drugs can be very, very expensive and you should monitor this carefully.

Terry Gerton Well, the rate of inflation of health care costs is double the rate of general economic inflation, so you should also think of cost increases.

ABE GRUNGOLD Oh, of course, everything goes up, everything. You go to the store, you buy a car, everything will have an increased value compared to what you have experienced while you work several years earlier. So yes, you have to plan it all and expect it to happen. And a large part of what’s going on, they are retired, they meet with friends. They have lunch, breakfast, dinner and they do not realize how excessive entertainment is so excessive that you have all this free time in your hands. Where you worked before, you got out, you have fun, which is great, but at the end of the week, it is starting to add up.

Terry Gerton It is an excellent reminder that even if you look forward to retirement, you must be sober about cash flows, expenses and intelligent choices so that you can take advantage of this retreat over a longer period.

ABE GRUNGOLD Absolutely. You know, and there are ways to cut certain expenses. Maybe you don’t need this expensive life insurance policy. Maybe you don’t need three or four streaming services on your television. Maybe you don’t need other luxury items that you really don’t seem to use now that you have all this time free and you play. You can therefore reduce some of these monthly expenses and something to think each year. Maybe you don’t need two cars. I have a lot of neighbors, they just use a vehicle between a married couple. It is therefore something to consider.