The Foreign Service Journal, July-August 2022

66 JULY-AUGUST 2022 | THE FOREIGN SERVICE JOURNAL RETIREE VP VOICE | BY JOHN K. NALAND AFSA NEWS Contact: naland@afsa.org Threats to Retirement Benefits Since first joining the AFSA Governing Board in 1999, I have seen threats to our retirement benefits rise and fall following changes in the composition of Congress and control of theWhite House. After several years of relative quiet on the threat front, the upcoming November elec- tions seem likely to bring to Congress more voices advo- cating cuts in federal retire- ment benefits. Here is a preview of the issues at stake in case we do start seeing scary headlines about proposals for draconian cuts. First, yes, Congress does have the power to cut benefits being received by current federal retirees.While they cannot touch existing Thrift Savings Plan account bal- ances, they could, for example, reduce existing federal pen- sions or eliminate the annuity supplement paid to retirees under age 62. How likely is it that Con- gress would do something like that with the president signing the legislation? Highly unlikely during the next two years, but my crystal ball gets cloudier after the 2024 presidential election. Likely post-2024 targets include cutting annual cost- of-living adjustments for retiree pensions, reducing the government’s share of federal retiree health care premiums and lowering the rate of return of the TSP G Fund. Also, a future Congress could cut our net retirement income by raising tax rates on income from pensions, Social Security and investments. AFSA, of course, opposes such cuts. Because each would affect all federal employees and retirees, AFSA’s advocacy is primarily through the Federal-Postal Coalition made up of 30 organizations, including the National Active and Retired Federal Employees Asso- ciation and the Civil Service unions. The Fed-Postal Coalition represents 2.7 million federal employees and 2.6 million federal retirees, with members living in every congressional district. The coalition sends letters to Congress, with AFSA as co-signer, and holds monthly meetings, with AFSA participation, to plan advo- cacy efforts. What You Can Do What can you do to protect your benefits? • Maintain your AFSA membership in retirement, so your dues help support the association’s congressional advocacy efforts. • Monitor major develop- ments as reported in AFSA’s Media Digest, digital Retire- ment Newsletter and this column. • Take the potential for benefits cuts into account when casting your ballot in national elections. •Write to your representa- tive and senators urging them to oppose cutting the benefits you earned over a long, chal- lenging career. Not all threats to our financial security in retirement emanate from Pennsylvania Avenue. Choices that we make as individuals can impact our retirement income. For example, if savings in the TSP or other retirement accounts are key to funding your retirement lifestyle, you should review the risk-versus- reward balance of your stock and bond allocations from time to time. If you are most concerned about maintaining the pur- chasing power of those assets over the coming decades, you may wish to hold more of your TSP portfolio in stocks to beat inflation. If your top concern is preserving your current TSP balance for immediate spend- ing needs, you may wish to hold more in bonds to protect your nest egg during market downturns. We also need to be knowledgeable about our benefits to avoid inadvertently undermining our own retire- ment financial security. For example, retirees nearing age 62 face the decision of when to apply for Social Security benefits. Retirees nearing age 65 need to decide whether to enroll in Medicare Part B. There is also the decision of whether to apply for long- term care insurance. Income from post-retirement employ- ment can reduce the annuity supplement or Social Security benefits for retirees in certain age groups. Divorce or remarriage after retirement can impact your benefits. Failure to keep ben- eficiary designations and wills up to date can impact survivor benefits. Helpful Information Information on all these topics is in the Retirement Services section of the AFSA website at www.afsa.org/ retirement. Finally, if you have a spouse or others who depend on your federal retirement benefits, please ensure that they know how to start receiving those benefits if you pre-decease them. Their first step is to notify the Department of State’s Human Resources Service Center at HRSC@ state.gov, 866-300-7419 (toll free), or 843-308-5539 (out- side U.S.). A list of subsequent steps is on page 23 of AFSA’s 2022 Directory of Retired Mem- bers and posted on the AFSA Retirement Services webpage under Annuities. I suggest photocopying or download- ing that information and filing it with your will or other key papers readily accessible to your next of kin. Through your stewardship of your individual benefits and AFSA’s advocacy to protect everyone’s benefits, that financial foundation will con- tinue to support a happy and productive retirement. n