Federal Retirement Investment Advisers, LLC
After 25 years as a federal employee, Alexis found there was a limited number of Investment Advisors that provided service to those not deemed high net worth individuals. In addition, many did not understand the intricacies and complexities of the CSRS and FERS and the specific needs of civil servants. Alexis then formed Federal Retirement Investment Advisers, LLC, in order to provide financial planning and investment advice to current and former federal employees. He has been investing in the equity markets for 25 years and has a passion for personal finance, the investment markets, and seeing others set goals and achieve their dreams.
Alexis is a Registered Investment Adviser Representative, having passed the Series 65 examination administered by FINRA on his first attempt. He also has the distinctive designation of the Chartered Retirement Planning Counselor℠, the nation’s premier retirement planning credential. This credential marks him as a specialist rather than a general practitioner in the area of retirement planning. Alexis takes pride in establishing a rapport with clients by listening to their needs and goals. He then maps out a game plan to get to where the clients want to be in retirement or any stage of life.
BS, Electrical Engineering, University of Miami
MS, Industrial Engineering, University of Central Florida
Masters of Space Systems, Florida Tech
Masters of Space Systems Management, Florida Tech
Disclosures: Federal Retirement Investment Advisers, LLC is a registered investment adviser in Orlando, Florida and may only transact business or render personalized investment advice in those states and international jurisdictions where we are registered or otherwise excluded or exempted from registration requirements. Any communications with prospective clients residing in states or international jurisdictions where this firm and its advisory affiliates or registered representatives are not registered or licensed shall be limited so as not to trigger registration or licensing requirements. The purpose of this article is for information distribution on products and services. Nothing in this article is intended as legal or tax advice. Please consult with your independent legal or tax adviser to seek advice based on your particular circumstances. Carefully consider your investment objectives, risk factors, and charges and expenses before investing. Investing involves risk, including possible loss of principal. Diversification and asset allocation may not protect against market risk. For additional information about Federal Retirement Investment Advisers, LLC, including fees and services, please contact our office for our disclosure statements as set forth on Form ADV. Our Form ADV is also available at the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov).
Dividenfs yes, stock splits no.
Dividends can be designated as ordinary or qualified. Ordinary dividends are the more common type. They are taxed as ordinary income. Qualified dividends are taxed at 0%, 15% or 20% depending on your tax bracket.
Stock splits have no bearing on tax. This is when a company awards you more shares of their stock when they "split" and the price is adjusted proportionally. Your total value invested in the company remains the same. If you own 1 share of a $100 stock and it splits into 2 shares, each share is worth $50. Your total investment remains at $100.
Hope this helps.
Thank you for your service! It's always exciting while a little unnerving to start a new career.
Please keep in mind that your FERS Special Retirement Supplement (SRS) will be reduced by $1 for every $2 you make over the Social Security Income Limit, which is $16,920 for 2017. So if you make $50,000 in your new position, you would be $33,080 over the limit. Your penalty is 1/2 of that, $16540. Your SRS would be reduced by $16540. Once you turn 62, your social security (if you decide to take it) this reduction would continue until you reach your full retirement age.
Now on to your specific question. Social Security benefits are based on the highest 35 years where you earned the most, inflation adjusted. So if your income the next few years would replace lower income (possibly early in your career) then yes, your social security benefit would increase. And yes, you can receive the FERS SRS and then not apply for social security when that comes to an end at age 62. Hope this helps your decision. Please consult with a financial professional so you have all the facts about your specific situation that can't be covered in a short Q&A article.
I'm very impressed that you are asking the right questions at a young age, Part of winning the game is having a good game plan going in.
The matching 4% the company offers on the 401K is like free money. Therefore, I usually recommend you contribute at least this much. However, it concerns me you have no emergency savings and you are carrying some credit card debt. FIrst order of business is building up an emergency cushion that you can tap if you lose your job or if there is another immediate need for cash. Three to six months of expenses, not necessarily pay, is what is typically recommended you have on hand.
You can also pay off the credit card debt right away. Paying high interest credit card debt will zap your wealth quickly. Once you have an emergency savings cushion, this should help prevent falling into the credit card trap again.
After those items have been taken care of, then you can focus on saving as much as you can in the 401K. You'll get the matching 4% and it will also serve as a tax deferred investment. Good luck to you!
If you are starting out with $686,250 and adding $16,000 per year, you should easily have $848,819 in 7 years. In fact, you will probably have more than that based on historical returns of a diversified portfolio.
But I'm not sure that's the question you are asking.
You may be asking if $848,819 is enough money for you. The first step is finding out how much money you think you will need to live on per year. Then deduct your sources of income like social security and any pensions or annuities you may have. What is left is the gap you will need to fund.
Many financial planners have historically advocated a withdrawal rate of 4% from retirement accounts as a safe amount to pull out. I think that is a little high as 3% is a more conservative amount people should consider for their individual situation. 3% of $848,819 would yield $25,465. Combining this with your social security benefit would give you about $50,000 per year.
Your income requirements minus the $50,000 is what you will need to make up either through additional savings before you retire, a part time job in retirement or a drifferent investment approach to yield higher savings.
The funds inside your IRA should continue to grow if they are properly invested, regardless of whether you are adding additional money every year.
Your options include cashing out the IRA, converting it to a ROTH IRA and just letting it be. If you have other IRAs, they can all be consolidated so that is another option.
If you cash out your IRA and you aren't 59 1/2 then there would be a 10% penalty on the amount you pull out. Plus regular income taxes on the same amount. Please carefully consider this option as it may come with unintended consequences in terms of penalties and taxes.
You can convert the IRA to a ROTH IRA. A ROTH IRA is a type of IRA in which you pay the taxes up front (now) and the invested funds grow tax free. These are a good tool for those who are in a low tax bracket but expect to be in a higher tax bracket later. The thinking is you pay your taxes now when they are low instead of later when they are high. Another benefit of the ROTH IRA is that the money you have already paid taxes on invested, can be pulled out at any time without penalty. That can't be done in a regular IRA. Another benefit is that you aren't mandated to begin slowly pulling the money out of a ROTH when you are 70 1/2 as you would in a regular IRA.
You can also just leave the account as is if it is well invested in a diversified portfolio and watch it grow. You could then begin withdrawing the funds when you are 59 1/2.