Federal Employees need to be mindful of this in 2023!
Here are some fresh updates Federal Employees need to be aware of:
- The month of July saw promising returns in TSP accounts for many federal employees. Despite most TSP funds being down for the year, several funds saw a positive trend in the past month. The following are the July returns for key funds and their overall year-to-date (YTD) returns:
- G Fund (July): 0.26%
G Fund (YTD): 1.41%
- F Fund (July): 2.47%
F Fund (YTD): -7.86%
- C Fund (July): 9.22%
C Fund (YTD): -12.58%
- S Fund (July): 10.32%
S Fund (YTD): -20.48%
- I Fund (July): 5.15%
I Fund (YTD): -14.77%
However, while a return of 10.32% in the S fund may motivate individuals to go all in on a single fund, there are three key concepts investors need to keep in mind: asset allocation, risk tolerance, and time horizon.
- If not properly allocated, a TSP participant’s investment portfolio may see heavy turbulence in unstable markets as we have experienced in the past 12 months. Having a diversified portfolio that includes exposure to various equities and bonds, helps shield investors from market volatility.
- Determining the correct allocation for your needs will require you to review your risk tolerance. An investor with a higher risk tolerance may be more willing to accept greater market volatility in the pursuit of higher potential returns while an investor with a lower risk tolerance may be willing to forgo some potential return in favor of reduced market volatility.
- Risk tolerance is often closely tied with an investor’s time horizon. Investors with longer time horizons may be comfortable with investments that offer higher potential returns, at a higher risk level. Additionally, a longer time horizon provides more opportunities to ride out the bear markets and see positive returns overall. However, investors with a shorter time horizon (such as those approaching retirement) may need to consider market volatility and financial objectives when evaluating investment options to focus on retirement goals, wealth preservation, and income generation.
- A key benefit exclusive to federal employees is the Federal Employees Health Benefits (FEHB) Program. This allows employees and their family to meet their healthcare needs at highly competitive costs. In 2022 alone, the FEHB costs increased by just 2.4% compared to a 14.5% increase in Medicare Premiums. The 2022 FEHB open season has been announced to run from November 14, 2022, through December 12, 2022. With the open season approaching, here are some questions you may want to consider when determining whether you should make any changes for the upcoming year:
- Did I have coverage issues? If so, what additional coverage will I need next year?
- Was I able to get the medications/prescriptions needed?
- Did I have to pay high prescription copayments?
- Are the labs, doctor’s offices, hospitals, and outpatient facilities available in my immediate area and covered by my current FEHB plan?
- Did I encounter unanticipated expenses that I thought were covered in my current plan, but were not?
- Are you signing up for Medicare soon?
- While changes for Medicare rates are pending, the Centers for Medicare & Medicaid Services (CMS), released the 2023 standard Medicare Part D coverage (Drug Coverage) projections on July 29, 2022. While it seems that inflation has increased prices across all industries, CMS currently projects a 1.8% decrease in the Part D coverage premium. This would imply a premium of $31.50 in the upcoming year, down from $32.08 in 2022. The final numbers will be released in September of 2022 and the Medicare Open Enrollment period for 2023 coverage will run from October 15, 2022, through December 7, 2022.
Have any questions about the above topics or on how the economic landscape will impact your wealth? Our team of Fiduciary Financial Advisors can help answer your federal employee questions and help you navigate the opportunities available to you!
We are PlanVest Financial, Inc – a Registered Investment Advisory firm. Advisors on the PlanVest Federal team hold various designations such as CERTIFIED FINANCIAL PLANNER™ (CFP®) and/or Chartered Federal Employee Benefits Consultant (ChFEBC℠). Our team proudly continues to serve former & current federal employees.
We offer no-cost, no-obligation consultations with our federal advisory team along with a free Federal Employee Benefits Analysis Report.
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All the best,
The PlanVest Federal Team
Brust, A. (2022). July was promising for TSP returns. Federal News Network. https://federalnewsnetwork.com/tsp/2022/08/july-was-promising-for-tsp-returns/
Centers for Medicare & Medicaid Services (CMS). (2022). CMS Releases 2023 Projected Medicare Basic Part D Average Premium. CMS. https://www.cms.gov/newsroom/news-alert/cms-releases-2023-projected-medicare-basic-part-d-average-premium
Damp, D. (2022). FEHB Open Season for 2023 Plans – Higher Costs on the Horizon. Federal Employees Retirement Planning. https://fedretire.net/fehb-open-season-for-2023-plans-higher-costs-on-the-horizon/
FMG Suite. (2022). Asset Allocation. PlanVest Financial. https://www.planvestfinancial.com/resource-center/investment/asset-allocation
Zurndorfer, E. (2021). 10 Thrift Savings Plan Mistakes Federal Employees Should Avoid. My Federal Retirement. https://www.myfederalretirement.com/tsp-mistakes/