Are you sleeping with a millionaire? – Federal News Network
It’s probably safe to assume that hardly anybody (politicians notwithstanding) joins the government planning to become rich. But you could be well on the way to millionaire status if:
- You’ve been a civil servant for a long time, with an average GS grade of 12.5 in the Washington, D.C. metro area or 10.3 in the rest of the country,
- You took a long range approach to your Thrift Savings Plan investments, going heavily in the C and S stock funds even or especially during down times like the 2008-09 Great Recession,
- Own or are close to paying off a long-range mortgage in hot property areas such as Austin, San Francisco-San Jose, D.C. and its suburbs — including the soon-to-be hub of Amazon HQ2, or
- If you managed to stay married to your long-time spouse through thick and thin and if any children didn’t go to an Ivy League school.
If you can tick off those boxes there is a good chance you have or will leave an estate easily worth $1 million or more. That’s the good news.
The downside is you might not be around to see where it goes or when the people you want to benefit from it will get it. Enter tax and estate attorney Tom O’Rourke. He’s a former IRS employee who has spent decades advising Washington-area feds in building, keeping and passing on estates to the people they want to get it.
The good news is that O’Rourke is my guest on today’s Your Turn, which airs 10 a.m. EDT on 1500 AM in the D.C. area or streaming at www.federalnewsnetwork.com. Questions for him can be sent to email@example.com before showtime.
He gave me a head’s up of what he plans to cover on today’s show:
“When many federal employees hear the term ‘estate planning,’ their immediate reaction is I am a fed and I don’t have an estate. I am not rich. This is an understandable reaction for many folks who live paycheck to paycheck, but it may well be an incorrect assertion.
“Many individuals who always seem to run out of money a day or two before payday may actually be very well off. This is especially true for federal employees who are entitled to an annuity when they retire. The cost for a lifetime annuity that pays $40,000 per year with a 2 percent cost of living adjustment for a person who retires at age 62 is approximately $1.2 million.
“In addition, many people own homes that have appreciated significantly since they were purchased. Another common benefit for many federal employees is life insurance that pays a significant death benefit. The common feature of all of these benefits is that none of them are payable immediately. This may well prove the adage that you are worth more dead than alive.
“Even if a person does not have any of these benefits, they still have an ‘estate’ even though it may be modest. If an individual has anybody, including themselves, that they care about they need an estate plan. This estate plan should include beneficiary designations — essential for federal employees — and more than likely either a will or a trust. Moreover, it is highly advisable for all individuals over the age of 18 to have financial and medical powers of attorney. This can avoid significant costs and delays in the event of disability.
“Finally, if you wish to accumulate an estate of significant size, the best way to do so for any federal employee is to participate to the fullest extent possible. The TSP has proven not only to be a great investment, but also allows you to minimize taxes.”
Shows will be archived on our page for future listening.
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