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Retirement Counseling Tips
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Hello and thank you for attending today's webcast on retirement counseling tips My name is Joy Fisher and I'm Patricia Sapol and we are from OPM's benefit officer development and outreach team We have an allotted time of one hour and a half for today's presentation And there will be an opportunity to submit your questions for any questions that you may have. You may email Benefits at opm.gov and the subject line, please add Retirement counseling tips so that we may address your question during today's presentation Our objectives today are counseling and retirement planning tips common causes of retirement delays and retirement resources We will explore key times in the federal career that are significant and optimal times to maximize opportunities to educate our employees on their benefits and retirement planning tools We will also discuss the most common items that contribute to retirement delays and how to reduce or eliminate those errors and Finally, we will share some of the many resources available for retirement planning As we will touch on a variety of topics during today's webcast we want you to have the references that are available from the CSRs and FERS handbook The Code of Federal Regulations, and we will talk about a few of our benefit administration letters specifically submitting a healthy retirement application package as you know the handbook the code of federal regulation and BLS will cover everything from coverage Determining retirement coverage credible service how to plan and apply for retirement and everything in between Retirement counseling is so important throughout the federal career We find optimal times to retire to to teach our choice about retirement from the very start of their employment So from your new hire orientation? planning to key times such as Mid-career pre retirement and the retirement eligible we continue to educate our employees on their benefits and retirement Educating employees about their benefits is a career long process which provides them the Poison needful to set and reach their retirement goals this approach ensures that as life changes Throughout their federal career employees will be equipped with the knowledge and tools they need to make sound decisions Employees should be aware of the agents service requirements for retire the options to enroll and change their benefits and their insurances as life changes and how to navigate those tools and the resources that are available to help them plan financially By identifying addressing these educational needs during key points throughout their federal career We are equipping them and greatly reducing the anxieties that may come as they near retirement When retirement planning is a part of the career planning process Employees would know how to build a solid retirement base to which they can contribute Their throughout their years of their government service The agency is responsible for providing that ploy and all inclusive presentation covering all of their benefits and retirement planning tools As I mentioned the new employee is Although they're coming in fresh and started and have a lot to learn This is a great opportunity to start them off and the right on the right foot with learning about their benefits and their total compensation including their benefits and retirement the newly employer Federal employee at this time.
They are new hired after 2014 are covered under the Federal Employee Retirement System federal employee Was you're sorry? Free so it's um, the Further revised annuity employees So these employees should understand that they are covered by the first and what their contributions should be. So the Employees that are not under a special retirement coverage. They will be contributing 4.4 percent towards first Previously under fers-rae which is first revised and new employees. Those employees were contributing 3.1 percent if they're not under a special retirement coverage and prior to this FERS just Federal Employee Retirement System those employees were contributing point eight percent so although the contributions may vary the benefit remains the same you can find more information on how to determine what type of Contribution these employees are on ba L 14 – 107 which provides additional guidance and also a contribution rate table and Determination table to learn how the employees should be contributing based on their service time since first is a retirement plan that provides benefits from three different sources is Importance for the new employee to understand what they're paying into and why? They will be penny – first which is that basic benefit.
They will contribute to Social Security which list listed on their earnings and leave statement as OASDI standing for old age survivors disability insurance and Also, the new employee is contributing to TSP with an automatic contribution of 3% They should understand how to maximize that TSP benefit by Contributed at least 5% knowing they would get the full agency matching as well of 5% Understanding that if they contribute anything if they don't contribute anything at all The agency provides it automatically 1% contribution They will match dollar for dollar on the first three percent and then 50 cents to the dollar on the next two percentages it Is imperative for employees to understand their service computation date and also know that there's several of them not just one They should understand what their leave service computation date is what service is included in that SCD? They should understand how that affects their leave accrual They should understand what the retirement SCD Covers and what is all what services included in that and why they may differ they definitely want to know about that TSP SED and that it that also Controls their vesting date So with 3 years of civilian service having them vested to keep that TSP contributions the automatic ada seaman contribution so you wouldn't be able to explain to the employees all of their SCDS what in the fest and if there's anything needed to they need to do like Deposits for military service or a civilian service that was not covered under a retirement system To change or if they can change that SCD, especially when it comes to retirement at this stage it is very important for the employees to identify any served previous service that they may have and we want to get those records and Reconstruct that SCD if necessary so that all of those are pool dates are correct You want to make sure the employees understand the resources that are available to them whether that is an internal retirement Calculating tool a benefits tool where they can find out what their there Deductions will be such as the FE HB comparison tool or FEGLI calculator that is on the OPM's website You give them all the knowledge that could equip them with all the knowledge that they need So that they are able to make sound decisions on their benefit election as life changes TSP also offers several bit web website their website offers several videos and Other tools to help those new employees to decide on what they want to contribute whether it's the Roth or the traditional TSP It explains different options on how to maximize their benefit even having TSP calculators So just giving them those tools to navigate the websites.
No understanding What all the tools are available at resource are available to them to equip them or what? They need to make sound decisions for them and their family members Equally important is the pre-retirement Just as important is the new employees where the ploys are not quite eligible for retirement, but they're nearing the pre-retirement stage They should be aware of what they should be Financially preparing for for them and their families they want to make sure they review their records and everything is in, Texas We've already made sure that as a new employee stage that we've identified all service And we've reached out and received all those records We want to make sure that everything is accurate and complete in their records at that time if they need to make changes to their records such as Beneficiary forms they want to make sure they do that.
They have everything up-to-date and accurate at that time They want to start thinking about their health and life insurance and what the requirements are to continue those insurances and to retirements Thinking about survivor benefits planning what a benefits will be available to their survivor upon their passing Thinking about what what is my retirement eligibility date? How are you identify what that dave is and work you towards that date making sure they're both Painting financially and also making sure they have their requirements for benefits to continue that into retirement Financially playing about the commitment date of their annuity Thinking about there are some checklists available on OPM's website in chapter 40. You actually have the CSRs and FERS handbook There are some checklists to help employees to think about what they need to do to plan for their retirement that was from the assurances to Ensuring their records are complete to thinking about survivor insurance of our benefits. Just everything everything in between There are some checklist available in chapter 44 that which is part of one of our references that we showed earlier So at this time, they're already started thinking about their retirement date What will my retirement date be I now understand you've equipped me with the knowledge and tools to understand? What what I need to retire, I understand the age and service requirements, but what is that date? What will that date be that I'll retire So while employees may be to choose any date once they are eligible for retirement for FERS We should advise them that for the let if they retire at the last day of the month Not their annuity will begin to accrue the very next day while CSRs can retire the last day of the month or the First second or third day of the month and their annuity will also begin to accrue the very next day They should understand that while they may choose any day that they are eligible Should they retire in the middle of the month that it will still not begin to accrue for their retirement? annuity until the first other month depending on their retirement system They need to think about leave accruals.
Sometimes we may choose a date of the end of the month for first but it may not necessarily be the end of a pay period so Understanding how the leave accrues and knowing that if you do not work the full pay period the lilee that you're planning on Happening for that lump sum payment may be a little bit different because you did not earn that last Eight hours if you have you know, the amount of service for eight hours Or four hours of sick leave eight hours of annual leave or four hours of sick leave So understanding that that retirement date could affect my leave accrual and so if you're planning but might your gross Leave lump sum payment understanding the differences that may occur because of that Starting to think about that interim pay status and how I need to financially plan and prepare for that What is interim pay that means I'm not going to retire.
I mean I pick my retirement date Am I going to receive that my full retirement right away? No, so understanding that when that annuity is received you will first be in an interim pay status Which is averages anywhere from three to six plus months Before you actually your retirement is actually finalized and you have received your final annuity So that's the women selecting their retirement date We want to think about that. Am I financially prepared for those few months or so of the interim pay status? Again, reminding them about that health and life insurance Continuation making sure they met the requirements to continue that health insurance or that life insurance. Should they want to carry that into retirement? So this always before we select a mid-career Pre-retirement thinking about all those different types of things that we need to help be prepared for So that we can retire happy and stress-free We talked a little bit about leave balances annual leave and sick leave so the annual leave when the ploys retire will be paid out in a lump sum balance and With the taxable income will be based on when that lump sum balance is received So that could be a few weeks after Retirement and that is paid by the payroll agency while credit for sick leave differs for CSRs CSRs offset and first all credible unused sick leave will be Converted and add it to the total service time So for a CSRs employees that may have reached 41 years and 11 months of service Instead of they can actually a seed that maximum benefit of 80 percent by including that sick leave time So it's a great benefit for all of our retirement covered employees.
There is a sick leave conversion chart You may find that it's also a link to one of the references that we showed earlier in the presentation It is the agency's responsibility to provide a retirement annuity estimate the note of the annuity estimate is such important tool for a resource for our employees to properly plan for their retirement, especially Financially we want to provide them all information to make a sound decision so if they have service time that requires your deposit if they have military service that they may want to pay a deposit for or They're retired military and they may want to they're considering waiving that military retirement pay to be included in that civilian time We want to make sure That we provide them all of these different options so that they can make a sound decision And move forward with that decision in their retirement goal They have unpaid deposits and redeposits We want to do the needful just to show them how they can obtain the annuity statement the account statement for that so they even if they choose not to pay that they'll be aware of what the cost is and how to pay that to OPM for that to be credible towards their retirement We want to make sure that they understand that since they're paying into Social Security if they're under FERS That they may be eligible for FERS annuity supplement Which is ll2 if they're eligible for will be paid out to them from OPM until the age of 62 They are that's another counseling tip is you want to make sure they know during interim pay While they are if they are eligible for FERS annuity supplement They would not be paid this supplement during interim pay however it is Retroactive so it will be paid once their annuity is finalized.
But that is definitely a financial planning tip that they need to understand about that first annuity supplement if eligible, but if you have the information Please also include that first annuity supplement in their estimate so that they have all those different sources of income to plan financially for retirement Should they have several different options? They're considering there may be eligible for it a minimum retirement age with ten years of service But also considering postponing that retirement to hopefully avoid that age reduction If you want to show them those options and explain how their benefits will work with both of those options So equip them with all the tools necessary to make a great decision That they can be happy with their retirement plan and reach all of their goals So again going back to that new hire the credible service is so important We want to make sure we have identified and obtained all the records for that employ federal career if there's any previous civilian service for which The deposit needs to be made we want to counsel them on this provide them the information Needed to make the decision and help them with the procedures to submit that application to OPM to start making those payments we want to talk about military service and Understanding that if your FERS employee or depending on when you were hired for CSRs employee that that time is not credible Unless a deposit is paid thinking about that and also understanding that that military service must be paid while at the Agency while you do have an option to pay civilian service after retirement by lump sum payment to OPM Because both have interests that accrue.
It's definitely better to be prepared to do that earlier on in the career that's why those retirement planning options and that planning counseling tools are so important to our employees throughout their federal career So they have the information they need and if they're able to make that deposit that time or at least work towards those deposits They can do so again Military deposit must be paid prior to separating from the agency So our next slide talks about civilian service deposits for CSRs I mentioned that depending on the dates of when service is performed Could determine how those that naughty touch to the service may affect the CSRs employee? So a deposit is the payment for a period of employment retirement deductions were not withheld from salary Employees are not required to make this type of payment for CSRs But they have that option if they want this time to be credible depending on when that service perform they may want to make that deposit so that they maximize their benefit with all of their service a Deposit may be pay for credible civilian service performed before 10/1/82 During which with how many dustin's were not withheld from paid Retirement credit will receive for all of this service whether or not the deposit is paid.
However A lesser deposit is paid in full at retirement that annual benefit will be reduced by 10 percent of the deposit including interest a redeposit is the repayment of retirement deductions that were previously withheld and Refunded plus interest if their ploy to make a redeposit refund for a pyramus service that ended before March 1st of 1991 this monthly annuity will be actually reduced based on the amount of the Redeposit do including interest divided by a factor for their age at retirement if the refund was support period of service that ended after March 1st of 1991 if the Redeposit is not paid.
The employee would not receive credit for the service in the computation of their annuity CSRs employees with a would complete the standard form to 8:03 application to make deposit or redeposit Deposit which is certified by their Human Resources office once submitted to OPM OPM will send the employee an account statement along with payment instructions Once notified of the amounts due employees will have what is needed to decide whether or not to begin those payments? Employees should be counseled at all. They may complete this payment after retirement by lump sum by OPM their annuity would not be Finalized until this decision is reached within the time allotted and this could cause a delay in the final computation computation of their new ateam For our first employees, they also can have non-deduction service Performed before January 1st of 1989 that non-deduction service with a few with a few exceptions such as Peace Corps Vista The we are not eligible to make a deposit after January 1st 1999 for not induction service however service performed before December 30 before January 1st 1989.
They may make a deposit similar to the CSRs If the FERS employee does not make a deposit for non-deduction service that time is not credible at all towards their retirement or eligibility For refunded service If they do not pay for that period of type of service they will receive credit and determine eligibility To retire but what not to receive credit for this service in the computation of the retirement benefit interest is charged on the day of the refund and Compounded annually and interest is charged to the date full payment is made or the day annuity begins. Whichever is earlier We spoke a little bit about military service So we have many of our federal employees that have performed honorable active duty service or it may have even retired from the military we need to explain all of their options in both situations the employees that have had post 19:56 in Military time should know what their options are as far as a military deposit as far as as well as what the deposit amount of DU will be Remember that this must be paid from the a at the agency This must be paid prior to retirement at the agency if the employee is considering like I mentioned earlier waiving that military retirement pay making sure they understand what that involves as well as Providing an estimate of that so they can compare that military retirement pay The deposit old if should they waive it as well as what the civilian retirement will be with that military retirement waived Retirement eligibility is another important aspect of retirement counseling Helping understand why and how employees are eligible will help employees make the right decision in choosing the type of retirement that best meets their needs or wants and needs agencies are encouraged to help employees understand the difference between each type of option and walk them through understanding what each type requires we know that the most common type of retirement is under a regular or voluntary optional retirement where an annuity begins to accrue Immediately now for these for this type of retirement the employee needs to be 60 years old with the minimum of five years or service Or be 60 years old and have 20 years of service on certain employees May also qualify under this voluntary option without any age reduction if under CSRs if there are 55 with 30 years of service and under FERS They may retire at their minimum retirement age are commonly referred to as the MRA Which may be be between 55 and 57 depending on the year? They are born with 30 years of service or other MRI MRA with 20 years of service Now some employees may be interested in retiring under a voluntary early retirement Authority or veera Otherwise known as an early out however They need to understand that this option is only available when the agency is able to provide them with this option Vera is an option used to assist agencies in completing a major personnel or workload change with minimum disruption so in this case employees need to be 50 years old with and have 20 years of service or any age with 25 years of service in order to be eligible to accept Avira early I early-out retirement option The employee must be serving in a covered Position to be able to take this option and be serving in that position for at least 30 days They must separate during the Varia period and be off the rolls by the close of the veera period it's important that employees understand that this is a requirement if they decide to choose a veera option other employees might qualify under a discontinued service retirement And this is a type of retirement available to employees.
Who are I'm Voluntarily separated and who receive a written notice of involuntary? separation that written notice will be It needs to be included as part of the retirement package in order to qualify for a DSR annuity examples of DSR include reduction in force abolishment of positions and lack of funds if Separation was due to misconduct. Then the employee will not be eligible for a DSR So it's important to know the distinction and be able to explain to employees the distinction that we'll be able that will qualify them for a DSR Certain employees may qualify for disability retirement if they meet a Comprehensive list of requirement only after an employee has provided the agency with complete documentation of their medical condition and the agency has exhausted all attempts to retain the employee either by Reasonable accommodations or reassignment on their first an employee must have completed at least 18 months of federal civilian credible service in order to apply for it for a disability while under CSRs They must have completed five years of service and be any age Now under this disability provisions employees need to understand that the disability must have occurred prior to Retirement and the disability should be expected to last for more than one year The disability does not have to be work-related in order to receive of annuity from OPM Employees covered under FERS who separate from government service Before meeting the agent service requirements necessary for a voluntary optional Annuity can qualify for a deferred Retirement where they can start collecting their annuity at a later date when their I am turn age 62 or at their MRA if they have 10 years of service Now if a first employee separates after reaching their MI MRA with at least 10 years of service they can postpone Receiving their annuity until the appropriate age to reduce or eliminate the h reduction In with this option the important the key thing to understand is that employees can suspend their health and life insurance benefits Until they start collecting their annuity They they are going to have the option to elect when their annuity can begin But they must start withdrawing at age 62 employees that choose this type of retirement Can later apply directly with OPM by filling the application for deferred or postpone retirement Which is they are I 92 – 19 within sixty days before they want this benefit to begin There are also certain Lawson that allow law enforcement officers air traffic controllers firefighters or military reserve technicians personnel to retire at any age with 25 years of service or at Age 50 with 20 years of service for those of you that are interested in learning more about this special type of retirement We have a separate webcast on our youtube channel called first law enforcement and firefighters special retirement provisions Which discusses in depth the special retirement? For these type of employees keep in mind that an employee may be eligible for more than one type of retirement But as always it is the employees choice on which option to elect.
I Like joy stated agencies are responsible for providing employees with the retirement annuity estimate So when a retiree an employee receives their annuity estimate There may be some questions regarding how their annuity was calculated use age. These are encouraged to use This estimate to allow employees to see which factors were used in calculating their annuity Their first factor as many of you guys know it's the their high three salary which is based on the highest average basic pay earned during any three consecutive years of Service, these three years are usually towards the end of an employee service but be aware that can it can occur at an earlier period if the basic pay was higher during that period the other Factor used in the computation is length of service or years of credible service Which is all periods of credible service both under civilian and military Service in any on use sick leave make sure employees have submitted all deposits and redeposits So that all their service is included in their computation Another key point in employees annuity is the first supplement like joy stated earlier employees must have completed at least one Calendar year of first service and must be under must be under the age of 62 to be eligible The supplement is going to stop when the retiree turns 62 Even if the annuitant is not eligible for Social Security Benefits or if they choose not to apply.
So this is an important aspect to cancel your employees on that It will terminate once they turn 62 Those employees that choose Choza d. Sr. D sr. Or veera Retirement option will receive the supplement once they reach their MRA however, those that have a Are collecting a deferred disability or mi plus ten? Retirement annuity are not eligible to receive the supplement knowing how these factors are used in their Computation will help employees better prepare for retirement and perhaps consider Delaying their retirement that date or even postponing their annuity It's important to also let Your employees know that they will be receiving an annuity payment once a month which is paid each month that covers a period for the previous month that we'll also want to know that AB nuit II payments are a Lifelong benefit and will only terminate on the day the annuitant dies or other terminated events provided by law It's important also to discuss reductions to the annuity use that retirement estimate to help employees understand that they may They may have their annuity to reduce due to several factors The first one is age if the employee retired under the MRA Plus 10 provision.
For example Their benefit will be reduced by 5% For every year that the employee is under age 62 on the date the annuity begins However, the annuity will not be reduced if they've completed at least 30 years of service Or if they have at least 20 years of service and their annuity begins when they reach age 60 Now if they choose to postpone the beginning date of their annuity the H reduction Will be eliminated if they start collecting at age 62 Now the H reduction applies to both CSRs and FERS components Of the annuity if they if they transfer the first and part of their annuities computed under the CSRs provisions CSRs employees retiring under a veera or Adsr incur a 2% reduction for each full year of every month that they're under the age 55 This is a permanent reduction That will not go away when they turns 55.
So make sure the employees understand this that this is a permanent reduction to their annuities another factor that may reduce their annuity is survivor benefits if they're married their annuity will be Reduced for a survivor benefit unless their spouse consents To their election of less than a full survivor benefit if the total the survivor Benefit they elect equals 50% of their benefit. Then the annuity is going to be reduced by 10% Which in if the total equals 25 then the reduction is 5% for CSRs survivor benefits The cost is going to be 2.5 percent of the first 36 hundred of the selected based annuities Plus 10 percent of any remaining selected base Other the reductions to identity will be based on Unpaid or refunded service, like joy explain and remind employees that if they did not pay a deposit for CSRs non-deduction service performed before October 1 82 their annuity will be reduced by 10% of any Deposit owed and if they did not make a redeposit for CSRs refunded service performed before October 1 of 1990 they will have a CSRs portion of their non disability benefit reduced by an Actuarial factor now under FERS employees need to be aware that they will receive.
They will not receive any credit on their annuity for non-deduction service perform after January 1 1989 Now for CSRs offset employees, there'll be a reduction or offset at the age of 62 if they're eligible for Social Security Benefits by an amount equal to the Social Security benefit. They earned as a CSRs offset employee they need to know that the offset is Automatic and will happen if they don't apply for a Social Security benefit employees also need to consider deductions to their monthly annuity for example health and life insurance premiums and federal tax withholdings, which will be we will discuss next on slide number 18 They will need to account for federal and maybe state tax withholdings from their monthly annuity check as well Generally unless they specify a monthly withholding rate amount on their retirement application by submitting a new w-4, or Indicating they want to keep the same withholdings They had as an employee OPM will withhold federal income tax as if they were married and claiming three allowances okay, they may also submit the w-4 PA, which is Their Election of federal income tax withholding to OPM after they retire and Change to change those withholdings and they may also do that those changes online once they are retired OPM will provide a form 1099 – our Detailing the annuity payments received during the previous year I know attends receive this form around the first or second week of February Just in time to file their taxes and engines this may get a lot of questions About this form even after an employee retires So make sure to let them know that OPM is the one that will issue that 1099 are Now if employees wish to have state tax with whole with help from their annuity They must specify a dollar amount of the state tax they want withheld from their payments The withholding must be in whole dollars and the minimum amount They can with we can withhold for state income taxes five dollars they can also do this elections online that can start change or stop state tax withholdings during using the annuitant portal Now in most cases retirees will receive a cost-of-living adjustment or Cola Now it's important to advise employees and make sure that they understand that only in certain situations they will Be allowed to To have this increase in their annuity payments for both CSRs and FERS employees and their Survivorman Dependents that amount will be based on the rate of inflation as measured By the Consumer Price Index the 2019 Cola rate For CSRs this year is 2.8 percent while the first is 2.0 percent and this actually came out in October of 2018 Now the cola rates are going to be Increases are going to be effective on December 1 of each year and are applied to the annuity payments made the following month It will appear on the first business day of January colas for those retired less than one year are actually Prorated according to the date in which they retired for example if an employee retires in January, their first adjustment will be made in January of the following year and will be prorated for 11 months of the cola amount if they retire in February, it will prorate it for 10 months and so forth for CSRs employees, the increased percentage is going to be applied To their monthly benefit amount before any deduction and it's going to be rounded down to the next whole dollar Now the cola for first is a little bit different and your first retirees need to understand that they will not be able to collect To receive a cola increase until after reaching age 62 The first Cola increase is calculated differently than CSRs if the increase in the CPI is 2% or less the cola is equal to the CPI increase if the CPI Inc increases more than 2% but no more than 3% then that cola is going to be adjusted to 2% if the CPI increases more than 3% then the adjustment is 1% less than the CPI increase and that new amount is going to be rounded down to the next whole dollar Additional information on colas can always be found on the OPM website on or on chapter 2 of the CSRs and FERS handbook Now in preparing for retirement employees need to know that their health and life insurance coverage normally must be in effect continuously for at least five years before the retirement date or They'll be ineligible to carry this important benefits into retirement The employees also have to have been retired under an immediate annuity and be covered under the Fe h b on the date of retirement and this is important for employees to understand if they were covered under another coverage either Through their spouses.
Fh we are TRICARE and they would like to continue fvh be on their own as a retiree They must be enrolled prior. So it's always recommended for employees to Enroll during the previous open season before they retire Now OPM has the authority to waive the five-year Participation requirement when it determines that it would be against equity and good conscience not to allow a person to be enrolled in the FE HB program as an annuitant, however They love specifically states that it must be due to exceptional Circumstances so OPM almost never grants this waiver Now the premiums for FHP will be the same for the annuitant as they were for the employee however They will be withheld on a monthly basis rather than bi-weekly basis because the annuitant only receive one Payment a month and they will be deducted on a post aspect Basis since retirees will not be eligible are not eligible from premium conversion Now employees face a very important survivor Benefit decision at retirement if they elect a survivor benefit it can provide their survivors their surviving spouses with both a monthly annuity check and Continuation of their FHP coverage for the rest of their life unless of course, they remarry before age 55 so making sure that employees understand that a surviving spouse Can only carry FHB coverage after the annuitant dies if a survivor annuity was elected without a survivor benefit that spouse loses coverage 31 days after the retirees death Now if the annuity of the retiree or the spouse's survivor annuity doesn't cover the monthly premium the premium Can be paid directly to OPM now there you may have some employees that may want to cancel their FHB either because they're going on their spouses Coverage or for any other reasons they need to understand that they will never be able to re-enroll unless they suspend that to enroll in a Medicare managed care plan or if they're eligible for Medicaid if they do choose to cancel their coverage, it won't be effective until after the starting date of their annuity Okay, it's also good to remind employees that retiring is not a qualifying life event.
They won't be able to change enrollment at retirement However, once they retire they can change their enrollment during the annual open season or when they experience a qualifying Life event if the employee is not eligible to continue health benefits coverage into retirement the agency must advise individuals of the right to temporarily continue coverage on their TCC they must though Understand that they will be responsible for paying both the employee and the government shares of them only monthly premium plus that 2% of ministration charge Now some employees may have already been eligible for Medicare if they're aged 65 for those retirees that are not they will become eligible under both first and SURS when they turn 65 there will be Eligible for Parts A which is hospital insurance and Part B Which is medical or physicians services? The Social Security Administration will automatically contact their retiring about enrolling in these plans They will also have the option to enroll in Medicare Advantage Plans C which is a private health care choice like an HMO or Part D Which is a prescription drug coverage however, they need to be aware for that parts B through D are optional and there is a cost associated with Enrolling in these options Your employees can always visit medicare.gov for more information on the cost and eligibility now once retirees you know elect to enroll in Medicare Medicare will be the primary payer and AF ehb will be secondary This is important because they will need to know how the coordination of benefits will pay out when they receive medical bills Like I mentioned earlier if employed cancers there FHB enrollment as an annuitant they will never be able to enroll in FHB However, they may suspend their enrollment in order to enroll in a Medicare Advantage plan TRICARE Peace Corps Medicare or a similar state-sponsored program Of medical assistance, they cannot suspend their fhb enrollment if they're covered by Medicare Parts A and RB only in Retirement annuitants can only apply to suspend their coverage at any time by contacting our retirement information office and submitting all necessary documentation to show Eligibility for TRICARE during the period beginning 31 days before and ending 31 days after the date They become alleged eligible under TRICARE or another program now once they suspend FHP coverage they can later voluntarily Re-enroll during an annual open season We will send open season packages each year with instructions on how to re-enroll But if they involuntarily lose coverage under one of the programs mentioned on on this slide they can enroll in Fh be effective the date after they lose coverage If provided they provide evidence of in their involuntary loss of coverage Now if they wish to cancer their enrollment for any reasons other than to be covered under families at BHP enrollment They will not be able to re-enroll in FHP and will not be entitled to receive the free 31 day extension of coverage or to enroll in TCC those are the major Differences between cancelling and suspending fhb in retirement Remember it is the agency's responsibility to assist the employee in completing their retirement package But remind employees that there may be some processing delays in their application if there's missing or inaccurate information We found that there were several factors that would cause a process Processing delays in regards to health benefits the single most common error found in retirement package was failure to document the five years of coverage Or from first eligibility and through all periods of eligibility of less than five years We will like documentation of an employee's coverage for their entire career possible But at a minimum we must have proof of the five years of coverage immediately prior to retirement about 12 – 103 Which is titled submitting health or repair retirement packages States some of the acceptable alternative proof of coverage one is they can submit the SF 2809 which is the health benefits election form or the 28 10 the notice of Change in health benefits enrollment as proof.
They can also provide history repros from online enrollments that show The enrollment copies of screenshots or other documentation, but for a more comprehensive list You can always visit that about 12 – 103 Another factor in processing the latest failure to submit the certification of eligibility of the five year enrollment requirement when an employee appears to be eligible under a Veera The certification of eligibility must be submitted with the retirement application We've also published several webcast Describing form by form what information we're looking for to enable Agencies to complete and accurate packages that will avoid delays and in those packages Now it is important for employees to understand we're on life insurance slide number 26 It's important for a place to understand how their FEGLI benefits will change into retirement They need to know how to elect affordable coverage before making a retirement election There are multiple online resources that will help them understand These options and how much they will have to pay per month of the coverage they need The first thing that they need to consider is that just like fe HB, they're eligible to continue Basic and optional life insurance if they have been enrolled in FEGLI for at least five years immediately preceding retirement Employee must also be enrolled in FEGLI on the data retirement lampole will have the option to retain the full amount of their basic FEGLI coverage or elect a coverage reduction for their basic coverage amount they'll have To choose the amount of basic insurance.
They want to continue after age 65 or At retirement if they have already reached a 65 the choices are a 75% reduction a 50% reduction or not reduction But have your employees use that FEGLI calculator on the OPM website to help them determine the value of the various combinations? of the FEGLI coverage It will also help them calculate the premiums for the different combinations of course of coverage And and it will show them how to choose different options And what they will be able to see how the life insurance Carried into retirement will change over time as well This is a great tool where they can quickly and easily find estimates about continued coverage into retirement Coverage for optional coverage life Optional coverage into retirement is a little different when they retired and reach age 65 option 8 coverage automatically begins to reduce by 2% of the pre-retirement amount each month until 25% of the pre-retirement amount remains option a is free once it starts to reduce there is no reduction election to make at the time of retirement for option a Now employees must choose however how many of their option B in or see multiple? coverage they want to continue now the cost of be multiple coverage if they choose to keep it into retirement becomes very expensive and increases with age And retirees must carry Basic insurance in order to elect any of those the three options on like basic enrollment though Optional insurance is voluntary and they must apply for and select the options they need and can't afford again Using that FEGLI calculator on the OPM website will help them determine the best option That they can afford into retirement and that in the option that they need to cover their loved ones Now if the retiree changes their minds once they start collecting their annuities they may cancel Basic or optional at any time unless they have assigned their life insurance they need to know that they cannot increase their coverage after retirement or Reinstated if they had canceled it at retirement Just like fvh B We found several factors with submitting FEGLI documentation for coverage after retirement that would impact an employee's Retirement application again, it's important for employees to know these these type of situations that could delay their application the first common error found is again providing that documentation of five years of eligibility We want to see an employee's coverage for the entire career Wilkes will accept the S of 2017 life insurance election form and the SF 50 showing any FEGLI changes in the five years immediately prior to retirement as acceptable proof of coverage Also be aware that will not we will not accept Corrections on the form any scratch outs wideouts lineups or any other type of Correction actions and either the continuation of life insurance coverage the 28:18 Or the designation of beneficiary for FEGLI which is that standard form 2823 Now new forms must be completed in lieu of any alterations to previous for it for any Corrections made on these forms About 16 – 102 however provides additional guidance on Corrections made on uncertain benefits elections Now employees may also be able to carry their dental vision and long-term care benefits into their retirement They will not have they do not have that five year rule to continue these benefits the only interesting point that employees need to know is that They should contact benefits directly to make arrangements for premium payments prior to receiving an annuity annuitants may enroll as long as they're eligible for fe h b Regardless of their FF PHP status as long as they retire on an immediate retirement under the federal long term care insurance program of or fltcip Retirees and qualified relatives are eligible to continue benefits and just like fedvip They must make arrangements with LTC partners to ensure that there's no interruption of their premium payments There are no government contributions made towards long term care premiums And retirees will have similar option plans plan options to those as they had as employees now unlike fedvip and long-term care employees are not able to continue their flexible spending accounts or FSA's into retirement The law allows FSA along allotments only from salaries not annuities so FSA coverage will terminate However, though it will terminate a retirement.
However Any reimbursable expenses made prior to the retirement will be reimbursed or paid once the claim is submitted Let's talk about tsps We all know TSP offers several options for withdrawing the monies from from your account when making the decision about what to do with their funds employees should be encouraged to think about their income needs and the Lifestyles, they would like to have after retirement Hopefully they'll be TSP millionaires where they won't have to worry so much But that may not necessarily be the case for most of us The decision that retirees will have to make on withdrawing their money Depends on their specific goals do they need money right away? For an important purchase do they want to avoid paying taxes for as long as possible? They want to receive a payment every month that they want guaranteed income to last them a lifetime So considering all these options o their personal goals, it's what it's going to help them determine What kind of withdrawal options? They want to take retirees will have two main options for withdrawing their TSP fund They can make either a partial withdrawal or a full withdrawal Under a partial withdrawal a well It allows them to make a one-time-only withdrawal and leave the rest of the money in the TSP fund until a later date They can also withdraw their money all at once over Over a period of time or they can purchase an annuity that will make payments to them for life For maximum flexibility though.
They can choose any combinations of the full withdrawal options Now if they decide to leave their money in the TSP, they will no longer be able to make contributions Into that cap will we continue to but but their funds will continue to accrue interest TSP will notify them that they must at what point they need a start receiving payment They essentially taking withdrawing the funds by April 1 of the year following the year in which they turn age 70 and a half so at 17 and a half years old.
They will have to start making some of the those withdrawals Really the withdrawal decisions should be based on whether or not they have other resources of retirement income All of their resources, you know Should be taken into account when making this decisions now They should also be aware of possible tax penalties On early withdrawals in general TSP withdrawal payments are subject to federal income tax however Different tax rules will apply to different withdrawal options as well as to the type of money whether it was traditional or Roth contributions that are included in that funds in the fund Now while in retirement retirees will not be able to make contributions or take out TSP loans But they can they can also they can certainly move the funds around do and make interfund transfer as They wish there's a great deal of resources available on the TSP website that can help employees Determine the best TSP withdrawal option for them They have access to retirement income calculators and monthly payment calculator in different publications on cash out taxes distributions and also information on possible of changes in withdrawal options Now once agencies complete counseling employees about their benefits and retirees It's important to sit down and review the completed application With the employee ensuring that all blocks are properly marked and that it has been signed explained to the employee how their retirement application will be processed by your agency and then later by OPM Explain to them how agencies will audit in An organized a retirement package to make sure the certified Sam your Federal service The agency checklists are completed as well as FHP and FEGLI documentation is included then they will send the applications to OPM after payroll certifies all the deductions You know another talking point would be to Know making sure the employee understands that OPM cannot begin to process a retire minuite Until after receiving a completed application and all supporting documentation of that employees service history Explain how OPM's respire I'm sorry payrolls responsibility ended up in the process or authorized to make that final paycheck of a Lump sum payment for unused annual leave.
They're also responsible for issuing and closing out the IRR Whether it's the SF 2809 Hundred for first Which reflects all the service history all the salary history and the contributions and then forwarding that information to OPM If the retirees get a thorough understanding of how the process works it will make them feel more comfortable with the process Which in turn can alleviate many misunderstand? misunderstandings after retirement Now always encourage Verifying service. It's the next slide site number 32 I think it's important to always encourage employees to do their due diligence when there's missing Service history in their packages allow them the opportunity to find missing documents on their own Maybe you know providing them with the key contacts if needed now if they're not successful, then the agencies certainly step in and Try to find the information through their sources by first contacting, you know the federal records Center or by checking their retirement data viewer or EHR I now if that agencies benefit officers does not have access to it EHR I They can contact their OPM liaison for more information on how to request access now if none of these sources work agencies can always fax the request for a missing service history to our boyars at Fax number seven two four seven nine four six six three three now Remember that that fax number is only to be used by agencies Processing Herman estimates and if employee is requesting information on their own they can always write OPM for that request right directly to our operation retirement operations mailing address, which is in one of our upcoming slides Priority is always going to be given to the agency request because they're processing retirement estimates so, um, the agency will always get the priority for that information now if all else fails OPM will complete the verification at retirement of any missing a service upon receipt of the application and the rest of the records However, this can cause significant delays in the processing of that retirement Again employees should be aware of some of the most common errors in process in retirement so that they can avoid making them and avoid having their package delayed and hopefully assisting the agencies in trying to fill in any of the gaps This information again can be found about 12 – 103 which discusses submitting healthy retirement packages The first one is missing periods of credible civilian and military Services again all periods of credible civilian and military services must be listed on that certify summary of service Also, if a married applicant elects less than the full survivor annuity Remember the spousal consent must be provided and the election On the application must agree with the spousal spousal consent This will require certification by a notary so the notary signature they must match the spouses signature date That's very important the retirement application must not be turned in a More than a year later from the date that the notary signed application.
We actually have Received a lot of those inquiries regarding the different dates After the notary signs that certification and of course a marriage certificate must always be included with those with those elections Now for each period of service not covered by retirement contributions Or FICA only service all pay rates and effective dates must be listed on the application Lastly if an employee is receiving or had previously applied for military retired pay ur benefits From the VA in lieu of military Tire pay make sure to attach copies of the military services service determination if the employees military disability retirement was service-connected & incurred in a combat or caused by an instrumentality of war This information is needed to assure correct credit for that military service.
It's applied to to their their benefit Now the main thing to remember about a retirement application is that it must be complete In an original form signed by the applicant in Inc and dated and all questions must be answered in all applicable boxes checked Checked in all areas requiring initials also need to be initial So reminding employees of all these little things and walking them through the process will help avoid a lot of these common errors Now here's the summary of our roles in assisting employees throughout their pre and post retirement journey active federal employees need to know who they can contact for advice and Retirees should also know that correct points of contact after separation For example before they retired, you know, their keep on key contact should be an agency's benefits representative Or their retirement counselor They can also access OPM website for retirement planning resources such as the FEGLI calculator and the bull ballpark estimator During their retirement process employees should keep in contact with their retirement counselors Make sure that all their information is correct.
All the documentation is submitted updated addresses are give if they Need to make any beneficiary changes they should do. So at this point if they need to update their records on a divorce or a death These are some of the you know, the retirement cancer is the key contact there after retirement then Retirees, you know will have OPM a sore point of contact They'll receive their claim number CSA number, which is essentially almost like an employee ID number after OPN receives their application a Password will be emailed to them to their that mailing address on file now. We encourage all Retirees to read all the OPM mailings Even if it doesn't look like it's a valid or legit OPM correspondence You know OPM's still sense a lot of snail mail.
So it's it would be good for them to make sure that they're reading Anything that they receive from us? They can always call or log into returned retirement services. Our retirement services is essentially a port and all-night portal where employees can Essentially have access anywhere anytime They can make all these changes change their withholdings their mailing address that can change along ments Set up checking or savings allotments change their direct deposit information and also view and print their annuity statements or the verification of income, which I know a lot of agencies Receive requests or at least information on where to get those so services online as a key point I didn't mean to skip page 30 or it's like 35 I wanted to go back to it and just remind everybody of our the OPM retirement operations contact Information their main phone number in the email address now local employees and retirees can stop by our retirement information walk-in office located here in our main building if they wish here a 1900 street room 18:23 that's always an option. Like I said for our local employees and retirees And the business hours for that is 8:00 to 4:00 p.m Eastern Standard Time Monday through Friday or 8:30 to 3 p.m.
On Fridays Here is just some additional talking points to have with your employees as they get ready to retire encourage them to keep their families in the loop about a Lot of their retirement benefits how to contact OPM regarding survivor benefits the forms that they will need to be Completed, you know where to find their retirement claim number that CSA number also Provide information to their families about other benefits. They may be eligible for under military Service or Social Security? Provide their families with life insurance payout information their TSP account information also bank account You know bank account Information and and where their benefits are being are currently being paid Also any unpaid compensation that they're eligible for all these key things will help families Sort of Navigate and and you know these these benefits that retirees are eligible eligible for That could assist them in in that process They also need to remember to keep their designations of beneficiary current if they do not remember who they have designated They can always complete new forms to ensure.
The appropriate person is Designated and will receive those benefits upon their death. All the forms can be downloaded online And again, make sure that you know employees are Reminded that upon retirement to read all all of our OPM correspondence We have now reached the end of our webcast as we wait for questions to come in Which may be emailed to benefits at opm.gov and again add? Retirement counseling tips in the subject line. I Want to take this opportunity to mention that we have had some agency to inquire about Corrections needed for the standard form two eight to one that agency certification of insurance due to the retroactive pay adjustment for those retired after that January 6 the answer is no there is not a need to Correct.
The standard form 28 24 Mewtwo that retroactive pay adjustment However, the individual retirement record must be accurate and correct must be accurate We also want to announce that we have receiving many many inquiries regarding our upcoming benefits conference Yes There will be a benefit conference coming up pretty soon and information will be forthcoming Through our benefits listserv at this time We can only announce that the location is in Florida and it will be held in a week in August or September And will wait for any questions that may come. Thank you for attending our webcast All right the the first question I have worked for several agencies as a Military spouse will this slow down the process of receiving my full retirement benefits And also I understand it can take up to 90 days before you receive full benefits. Is this true? I Can relate to that question as a military spouse I also have worked in many agencies The great thing is like I mentioned the first part of the presentation Is so important when we transfer or as a new hire to identify all of the agencies we've worked for So that the agency can collect the information you should be able to see all of your service in your official personnel folder or opf to verify that all your service is there so so there are many employees veteran throughout their federal career that may move and have several agencies that they work for but as Opf should contain all of that service.
So you should be able to obtain review that and make sure that everything is complete fear So I encourage you to do that. I Agree with joy, and also making sure in recognizing if there's any gaps in Service history and how that will change your service computation dates And I believe there is a second part to the question Yes, I understand. They can take up at least 90 days before you receive full retirement benefits. Is this true? Receiving to that period between you know receiving interim pay and the full monthly annuity Yes, it really just depends on an employee's retirees Application package will whether you know, there's any missing information But there's anything that needs that they did that OPM will need to clarify with the agency But yes for the most part we anticipate About 90 day 90 to 120 days for for that full annuity to kick in All right the second question where can an employee find their retirement SCD our agency does not use a retirement summary benefits report like other agencies do That is definitely a part I would I would talk with your retirement counselor about is you're correct You only see that leave SCB in most cases people are aware of that leave SCD Because our length of a service awards it kids using that leave as CDL So what's printed on the standard form 50? Also is showing that leave service competition date and as I mentioned depending on your service whether there was temporary service or you have unpaid military service that Leave a CD and retirement service computation date definitely can differ So I would reach out to they may be coded but each agency works differently So, this is a question for your Human Resources office.
Just That what your retirement service computation date is they have some internal? Systems that sometimes do show that you can see what your retirement service computation data is So you may want to check there as well, but your agency will be the content for that All right next question Can you elaborate more on the interim payment payment? I'm assuming is less than the full the final retirement paycheck. How much less is it? Normally interim pay could be anywhere between 75 to 85 percent of your full Annuity benefit that you would receive once your retirement package is fully adjudicated here at OPM, so if we encourage Retirees to think about that and and and try to work that into their financial planning once they retire If they have other sources got income if they need to tap into their TSP funds just thinking about You know how that that interim pay that, you know, the the the difference between the interim pay in the annuity the full annuity benefit can impact their their finances within that period All right, next question where can an individual go to learn more about military deposits You can find information on OPM gov and we do have some tabs available on for about service there are several options webcast also on our youtube channel that talk specifically about military deposits there the agency it may also have it on their internal website as far as where how do you request your earnings is that's usually The first step is use utilizing your dd-214 Requesting that those earnings from DFAS and once you obtain those earnings you would submit that to your agency to receive a military military Deposit estimate and payment procedures.
So it's kind of two ways. You can't find general information Like I said on our website, we have a webcast specifically for military deposits explaining Everything and also our CSRs and FERS handbook talks about Military service as well. But so it's a combination of those things from from the resources that I mentioned there and I'm still working with your agency on what the Procedural process is for obtaining that military deposit information and making a decision on that Next question how far in advance should a retirement package be submitted to ensure it is completed in time Well If they're referring to in time before the date of retirement I mean normally agencies will Make sure that a retirement package is completed at the time of retirement then it will Be sent to payroll and then submit it to OPM but always work with your retirement counselor as far as a meeting those specific Return or requirements of when they want you to have a complete Retirement package, it may be that you know They want you to start working on it six months prior to your elective date if that's not reasonable then maybe three months out but always work with the retirement counselor on and having those discussions on Submitting your retirement packages in a timely manner before your retirement is official All right next question If this state withholding forms included with the retirement package will OPM apply the requested state withholding upon adjudication So during interim pay as we mentioned the federal taxes will be taken out once the Annuity is finalized that isn't the opportunity to start your state taxes.
You can also do this on services online We just show a slide where students you receive that information Which will be a booklet included to show that your annuity is finalized and what those final details of your retirement Are you may at that time that could be your trigger to remind you that oh I need to get my state taxes started up again and go all right on services online It's a quick and easy way to make those changes to your state taxes once everything is finalized Under the postpone retirement Is there any special requirement to be completed to suspend their fhb and FEGLI option until they apply for their retirement? No, there's no special requirement besides the the main or you know, the main factors of continuing FHP and FEGLI into retirement.
Just meeting those those recurring the five-year the you know prior five years of enrollment before retirement So just meeting those essential requirements before postponing or before suspending your benefits And postponing your Retirement or your annuity really so now there are no special requirements besides the the main eligibility factors How far back can you buy back Temporary government work time before like a service I was told that there was talk about extending the original cutoff date to a later date range for A first employee at this time The date remains the same being that the the only deposit service eligible to make a deposit rather that non-deduction service Eligible to make a deposit is the service performed prior to January 1st 1989 Okay If the employee has been under TRICARE and not fhb for their entire federal career are they able to enroll in fhb at retirement Yes, the five year Requirement period can include the time the employee is covered under TRICARE as long as they were covered under an FHP Enrollment at the time of retirement for planning purposes.
The employee may want to consider enrolling in Fvh be planned during the open season. Like I said just prior to their retirement date So it's important to know to understand the difference between being enrolled in FHP at the time of retirement and being eligible to carry FHP into retirement while they may have Met the five year Requirement period with TRICARE they still have to be if they want to Keep or enroll in FHP in to retire as a retiree, then they must have been enrolled in FHP Themselves prior to retirement Okay, when is the next training opportunity We have a few more webcasts scheduled this year on June 25th.
We will have a furka Question and answers webcast we will also have a deferred of postpone retirement and face retirement updates webcast on August 6 of this year We have two scheduled furka classes coming up as well. May 7th and July 9th All right the next question can you repeat the fax number for verifying service to OPM Yes, that fax number is seven two four seven nine four six six three three Next could you explain the postponed retirement again, the difference between deferred and postponed? This is explanation actually on our website on under retirement on opm.gov under retirement, it does show you all of the different retirement types Deferred retirement as we know it you can earn an annuity with only five years of service But you may not yet have the age So you defer your retirement to receive the benefits once you've method the age as well as service you can apply to OPM to receive that retirement why postpone retirements for employees that have at least 10 years of service and they're also Postponing not not receiving that benefit right away maybe they're trying to avoid an early age reduction like the minimum retirement age plus 10 so they may postpone their retirement and and meet the requirements because they've had that five years of Their health insurance and that 10 years where they can postpone pickup that benefit at a later date and also at that time Continue health and life insurances.
So it's a difference and the The lift of service required as well as the eligibility to continue benefits between the deferred versus the postponed and the MRA Plus 10 as well Several retirement options Okay, next question how long does it say does it currently take opium to make decisions on disability retirement cases? Well, you know it's always it's very unique Every every disability retirement package is very unique In that you know medical examiners must determine eligibility for each specific case So at this time now there is no specific timeline Some disability retirement applications get adjudicated a little bit faster than others and it all depends on the unique circumstances of the medical condition and of that specific applicant Okay Mmm is the retirement pay and Social Security supplement payment issued in one check or will separate checks be received The first so if you know the first annuity supplement Will be included in your as part of your a monthly annuity payment there will not be a separate check issued Because it's part of your first annuity compensation benefit essentially after retirement And Just a common here.
We got a few questions about the proposed move to GSA Currently there are no anticipated changes and how retirement services does does business And with that it's 2:30. We will respond to the rest of the questions in the inbox that we did not get to.
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Retirement Counseling Tips
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Hello and thank you for attending today's webcast on retirement counseling tips My name is Joy Fisher and I'm Patricia Sapol and we are from OPM's benefit officer development and outreach team We have an allotted time of one hour and a half for today's presentation And there will be an opportunity to submit your questions for any questions that you may have. You may email Benefits at opm.gov and the subject line, please add Retirement counseling tips so that we may address your question during today's presentation Our objectives today are counseling and retirement planning tips common causes of retirement delays and retirement resources We will explore key times in the federal career that are significant and optimal times to maximize opportunities to educate our employees on their benefits and retirement planning tools We will also discuss the most common items that contribute to retirement delays and how to reduce or eliminate those errors and Finally, we will share some of the many resources available for retirement planning As we will touch on a variety of topics during today's webcast we want you to have the references that are available from the CSRs and FERS handbook The Code of Federal Regulations, and we will talk about a few of our benefit administration letters specifically submitting a healthy retirement application package as you know the handbook the code of federal regulation and BLS will cover everything from coverage Determining retirement coverage credible service how to plan and apply for retirement and everything in between Retirement counseling is so important throughout the federal career We find optimal times to retire to to teach our choice about retirement from the very start of their employment So from your new hire orientation? planning to key times such as Mid-career pre retirement and the retirement eligible we continue to educate our employees on their benefits and retirement Educating employees about their benefits is a career long process which provides them the Poison needful to set and reach their retirement goals this approach ensures that as life changes Throughout their federal career employees will be equipped with the knowledge and tools they need to make sound decisions Employees should be aware of the agents service requirements for retire the options to enroll and change their benefits and their insurances as life changes and how to navigate those tools and the resources that are available to help them plan financially By identifying addressing these educational needs during key points throughout their federal career We are equipping them and greatly reducing the anxieties that may come as they near retirement When retirement planning is a part of the career planning process Employees would know how to build a solid retirement base to which they can contribute Their throughout their years of their government service The agency is responsible for providing that ploy and all inclusive presentation covering all of their benefits and retirement planning tools As I mentioned the new employee is Although they're coming in fresh and started and have a lot to learn This is a great opportunity to start them off and the right on the right foot with learning about their benefits and their total compensation including their benefits and retirement the newly employer Federal employee at this time.
They are new hired after 2014 are covered under the Federal Employee Retirement System federal employee Was you're sorry? Free so it's um, the Further revised annuity employees So these employees should understand that they are covered by the first and what their contributions should be. So the Employees that are not under a special retirement coverage. They will be contributing 4.4 percent towards first Previously under fers-rae which is first revised and new employees.
Those employees were contributing 3.1 percent if they're not under a special retirement coverage and prior to this FERS just Federal Employee Retirement System those employees were contributing point eight percent so although the contributions may vary the benefit remains the same you can find more information on how to determine what type of Contribution these employees are on ba L 14 – 107 which provides additional guidance and also a contribution rate table and Determination table to learn how the employees should be contributing based on their service time since first is a retirement plan that provides benefits from three different sources is Importance for the new employee to understand what they're paying into and why? They will be penny – first which is that basic benefit.
They will contribute to Social Security which list listed on their earnings and leave statement as OASDI standing for old age survivors disability insurance and Also, the new employee is contributing to TSP with an automatic contribution of 3% They should understand how to maximize that TSP benefit by Contributed at least 5% knowing they would get the full agency matching as well of 5% Understanding that if they contribute anything if they don't contribute anything at all The agency provides it automatically 1% contribution They will match dollar for dollar on the first three percent and then 50 cents to the dollar on the next two percentages it Is imperative for employees to understand their service computation date and also know that there's several of them not just one They should understand what their leave service computation date is what service is included in that SCD? They should understand how that affects their leave accrual They should understand what the retirement SCD Covers and what is all what services included in that and why they may differ they definitely want to know about that TSP SED and that it that also Controls their vesting date So with 3 years of civilian service having them vested to keep that TSP contributions the automatic ada seaman contribution so you wouldn't be able to explain to the employees all of their SCDS what in the fest and if there's anything needed to they need to do like Deposits for military service or a civilian service that was not covered under a retirement system To change or if they can change that SCD, especially when it comes to retirement at this stage it is very important for the employees to identify any served previous service that they may have and we want to get those records and Reconstruct that SCD if necessary so that all of those are pool dates are correct You want to make sure the employees understand the resources that are available to them whether that is an internal retirement Calculating tool a benefits tool where they can find out what their there Deductions will be such as the FE HB comparison tool or FEGLI calculator that is on the OPM's website You give them all the knowledge that could equip them with all the knowledge that they need So that they are able to make sound decisions on their benefit election as life changes TSP also offers several bit web website their website offers several videos and Other tools to help those new employees to decide on what they want to contribute whether it's the Roth or the traditional TSP It explains different options on how to maximize their benefit even having TSP calculators So just giving them those tools to navigate the websites.
No understanding What all the tools are available at resource are available to them to equip them or what? They need to make sound decisions for them and their family members Equally important is the pre-retirement Just as important is the new employees where the ploys are not quite eligible for retirement, but they're nearing the pre-retirement stage They should be aware of what they should be Financially preparing for for them and their families they want to make sure they review their records and everything is in, Texas We've already made sure that as a new employee stage that we've identified all service And we've reached out and received all those records We want to make sure that everything is accurate and complete in their records at that time if they need to make changes to their records such as Beneficiary forms they want to make sure they do that.
They have everything up-to-date and accurate at that time They want to start thinking about their health and life insurance and what the requirements are to continue those insurances and to retirements Thinking about survivor benefits planning what a benefits will be available to their survivor upon their passing Thinking about what what is my retirement eligibility date? How are you identify what that dave is and work you towards that date making sure they're both Painting financially and also making sure they have their requirements for benefits to continue that into retirement Financially playing about the commitment date of their annuity Thinking about there are some checklists available on OPM's website in chapter 40. You actually have the CSRs and FERS handbook There are some checklists to help employees to think about what they need to do to plan for their retirement that was from the assurances to Ensuring their records are complete to thinking about survivor insurance of our benefits. Just everything everything in between There are some checklist available in chapter 44 that which is part of one of our references that we showed earlier So at this time, they're already started thinking about their retirement date What will my retirement date be I now understand you've equipped me with the knowledge and tools to understand? What what I need to retire, I understand the age and service requirements, but what is that date? What will that date be that I'll retire So while employees may be to choose any date once they are eligible for retirement for FERS We should advise them that for the let if they retire at the last day of the month Not their annuity will begin to accrue the very next day while CSRs can retire the last day of the month or the First second or third day of the month and their annuity will also begin to accrue the very next day They should understand that while they may choose any day that they are eligible Should they retire in the middle of the month that it will still not begin to accrue for their retirement? annuity until the first other month depending on their retirement system They need to think about leave accruals.
Sometimes we may choose a date of the end of the month for first but it may not necessarily be the end of a pay period so Understanding how the leave accrues and knowing that if you do not work the full pay period the lilee that you're planning on Happening for that lump sum payment may be a little bit different because you did not earn that last Eight hours if you have you know, the amount of service for eight hours Or four hours of sick leave eight hours of annual leave or four hours of sick leave So understanding that that retirement date could affect my leave accrual and so if you're planning but might your gross Leave lump sum payment understanding the differences that may occur because of that Starting to think about that interim pay status and how I need to financially plan and prepare for that What is interim pay that means I'm not going to retire. I mean I pick my retirement date Am I going to receive that my full retirement right away? No, so understanding that when that annuity is received you will first be in an interim pay status Which is averages anywhere from three to six plus months Before you actually your retirement is actually finalized and you have received your final annuity So that's the women selecting their retirement date We want to think about that.
Am I financially prepared for those few months or so of the interim pay status? Again, reminding them about that health and life insurance Continuation making sure they met the requirements to continue that health insurance or that life insurance. Should they want to carry that into retirement? So this always before we select a mid-career Pre-retirement thinking about all those different types of things that we need to help be prepared for So that we can retire happy and stress-free We talked a little bit about leave balances annual leave and sick leave so the annual leave when the ploys retire will be paid out in a lump sum balance and With the taxable income will be based on when that lump sum balance is received So that could be a few weeks after Retirement and that is paid by the payroll agency while credit for sick leave differs for CSRs CSRs offset and first all credible unused sick leave will be Converted and add it to the total service time So for a CSRs employees that may have reached 41 years and 11 months of service Instead of they can actually a seed that maximum benefit of 80 percent by including that sick leave time So it's a great benefit for all of our retirement covered employees.
There is a sick leave conversion chart You may find that it's also a link to one of the references that we showed earlier in the presentation It is the agency's responsibility to provide a retirement annuity estimate the note of the annuity estimate is such important tool for a resource for our employees to properly plan for their retirement, especially Financially we want to provide them all information to make a sound decision so if they have service time that requires your deposit if they have military service that they may want to pay a deposit for or They're retired military and they may want to they're considering waiving that military retirement pay to be included in that civilian time We want to make sure That we provide them all of these different options so that they can make a sound decision And move forward with that decision in their retirement goal They have unpaid deposits and redeposits We want to do the needful just to show them how they can obtain the annuity statement the account statement for that so they even if they choose not to pay that they'll be aware of what the cost is and how to pay that to OPM for that to be credible towards their retirement We want to make sure that they understand that since they're paying into Social Security if they're under FERS That they may be eligible for FERS annuity supplement Which is ll2 if they're eligible for will be paid out to them from OPM until the age of 62 They are that's another counseling tip is you want to make sure they know during interim pay While they are if they are eligible for FERS annuity supplement They would not be paid this supplement during interim pay however it is Retroactive so it will be paid once their annuity is finalized.
But that is definitely a financial planning tip that they need to understand about that first annuity supplement if eligible, but if you have the information Please also include that first annuity supplement in their estimate so that they have all those different sources of income to plan financially for retirement Should they have several different options? They're considering there may be eligible for it a minimum retirement age with ten years of service But also considering postponing that retirement to hopefully avoid that age reduction If you want to show them those options and explain how their benefits will work with both of those options So equip them with all the tools necessary to make a great decision That they can be happy with their retirement plan and reach all of their goals So again going back to that new hire the credible service is so important We want to make sure we have identified and obtained all the records for that employ federal career if there's any previous civilian service for which The deposit needs to be made we want to counsel them on this provide them the information Needed to make the decision and help them with the procedures to submit that application to OPM to start making those payments we want to talk about military service and Understanding that if your FERS employee or depending on when you were hired for CSRs employee that that time is not credible Unless a deposit is paid thinking about that and also understanding that that military service must be paid while at the Agency while you do have an option to pay civilian service after retirement by lump sum payment to OPM Because both have interests that accrue.
It's definitely better to be prepared to do that earlier on in the career that's why those retirement planning options and that planning counseling tools are so important to our employees throughout their federal career So they have the information they need and if they're able to make that deposit that time or at least work towards those deposits They can do so again Military deposit must be paid prior to separating from the agency So our next slide talks about civilian service deposits for CSRs I mentioned that depending on the dates of when service is performed Could determine how those that naughty touch to the service may affect the CSRs employee? So a deposit is the payment for a period of employment retirement deductions were not withheld from salary Employees are not required to make this type of payment for CSRs But they have that option if they want this time to be credible depending on when that service perform they may want to make that deposit so that they maximize their benefit with all of their service a Deposit may be pay for credible civilian service performed before 10/1/82 During which with how many dustin's were not withheld from paid Retirement credit will receive for all of this service whether or not the deposit is paid.
However A lesser deposit is paid in full at retirement that annual benefit will be reduced by 10 percent of the deposit including interest a redeposit is the repayment of retirement deductions that were previously withheld and Refunded plus interest if their ploy to make a redeposit refund for a pyramus service that ended before March 1st of 1991 this monthly annuity will be actually reduced based on the amount of the Redeposit do including interest divided by a factor for their age at retirement if the refund was support period of service that ended after March 1st of 1991 if the Redeposit is not paid.
The employee would not receive credit for the service in the computation of their annuity CSRs employees with a would complete the standard form to 8:03 application to make deposit or redeposit Deposit which is certified by their Human Resources office once submitted to OPM OPM will send the employee an account statement along with payment instructions Once notified of the amounts due employees will have what is needed to decide whether or not to begin those payments? Employees should be counseled at all.
They may complete this payment after retirement by lump sum by OPM their annuity would not be Finalized until this decision is reached within the time allotted and this could cause a delay in the final computation computation of their new ateam For our first employees, they also can have non-deduction service Performed before January 1st of 1989 that non-deduction service with a few with a few exceptions such as Peace Corps Vista The we are not eligible to make a deposit after January 1st 1999 for not induction service however service performed before December 30 before January 1st 1989. They may make a deposit similar to the CSRs If the FERS employee does not make a deposit for non-deduction service that time is not credible at all towards their retirement or eligibility For refunded service If they do not pay for that period of type of service they will receive credit and determine eligibility To retire but what not to receive credit for this service in the computation of the retirement benefit interest is charged on the day of the refund and Compounded annually and interest is charged to the date full payment is made or the day annuity begins.
Whichever is earlier We spoke a little bit about military service So we have many of our federal employees that have performed honorable active duty service or it may have even retired from the military we need to explain all of their options in both situations the employees that have had post 19:56 in Military time should know what their options are as far as a military deposit as far as as well as what the deposit amount of DU will be Remember that this must be paid from the a at the agency This must be paid prior to retirement at the agency if the employee is considering like I mentioned earlier waiving that military retirement pay making sure they understand what that involves as well as Providing an estimate of that so they can compare that military retirement pay The deposit old if should they waive it as well as what the civilian retirement will be with that military retirement waived Retirement eligibility is another important aspect of retirement counseling Helping understand why and how employees are eligible will help employees make the right decision in choosing the type of retirement that best meets their needs or wants and needs agencies are encouraged to help employees understand the difference between each type of option and walk them through understanding what each type requires we know that the most common type of retirement is under a regular or voluntary optional retirement where an annuity begins to accrue Immediately now for these for this type of retirement the employee needs to be 60 years old with the minimum of five years or service Or be 60 years old and have 20 years of service on certain employees May also qualify under this voluntary option without any age reduction if under CSRs if there are 55 with 30 years of service and under FERS They may retire at their minimum retirement age are commonly referred to as the MRA Which may be be between 55 and 57 depending on the year? They are born with 30 years of service or other MRI MRA with 20 years of service Now some employees may be interested in retiring under a voluntary early retirement Authority or veera Otherwise known as an early out however They need to understand that this option is only available when the agency is able to provide them with this option Vera is an option used to assist agencies in completing a major personnel or workload change with minimum disruption so in this case employees need to be 50 years old with and have 20 years of service or any age with 25 years of service in order to be eligible to accept Avira early I early-out retirement option The employee must be serving in a covered Position to be able to take this option and be serving in that position for at least 30 days They must separate during the Varia period and be off the rolls by the close of the veera period it's important that employees understand that this is a requirement if they decide to choose a veera option other employees might qualify under a discontinued service retirement And this is a type of retirement available to employees.
Who are I'm Voluntarily separated and who receive a written notice of involuntary? separation that written notice will be It needs to be included as part of the retirement package in order to qualify for a DSR annuity examples of DSR include reduction in force abolishment of positions and lack of funds if Separation was due to misconduct. Then the employee will not be eligible for a DSR So it's important to know the distinction and be able to explain to employees the distinction that we'll be able that will qualify them for a DSR Certain employees may qualify for disability retirement if they meet a Comprehensive list of requirement only after an employee has provided the agency with complete documentation of their medical condition and the agency has exhausted all attempts to retain the employee either by Reasonable accommodations or reassignment on their first an employee must have completed at least 18 months of federal civilian credible service in order to apply for it for a disability while under CSRs They must have completed five years of service and be any age Now under this disability provisions employees need to understand that the disability must have occurred prior to Retirement and the disability should be expected to last for more than one year The disability does not have to be work-related in order to receive of annuity from OPM Employees covered under FERS who separate from government service Before meeting the agent service requirements necessary for a voluntary optional Annuity can qualify for a deferred Retirement where they can start collecting their annuity at a later date when their I am turn age 62 or at their MRA if they have 10 years of service Now if a first employee separates after reaching their MI MRA with at least 10 years of service they can postpone Receiving their annuity until the appropriate age to reduce or eliminate the h reduction In with this option the important the key thing to understand is that employees can suspend their health and life insurance benefits Until they start collecting their annuity They they are going to have the option to elect when their annuity can begin But they must start withdrawing at age 62 employees that choose this type of retirement Can later apply directly with OPM by filling the application for deferred or postpone retirement Which is they are I 92 – 19 within sixty days before they want this benefit to begin There are also certain Lawson that allow law enforcement officers air traffic controllers firefighters or military reserve technicians personnel to retire at any age with 25 years of service or at Age 50 with 20 years of service for those of you that are interested in learning more about this special type of retirement We have a separate webcast on our youtube channel called first law enforcement and firefighters special retirement provisions Which discusses in depth the special retirement? For these type of employees keep in mind that an employee may be eligible for more than one type of retirement But as always it is the employees choice on which option to elect.
I Like joy stated agencies are responsible for providing employees with the retirement annuity estimate So when a retiree an employee receives their annuity estimate There may be some questions regarding how their annuity was calculated use age. These are encouraged to use This estimate to allow employees to see which factors were used in calculating their annuity Their first factor as many of you guys know it's the their high three salary which is based on the highest average basic pay earned during any three consecutive years of Service, these three years are usually towards the end of an employee service but be aware that can it can occur at an earlier period if the basic pay was higher during that period the other Factor used in the computation is length of service or years of credible service Which is all periods of credible service both under civilian and military Service in any on use sick leave make sure employees have submitted all deposits and redeposits So that all their service is included in their computation Another key point in employees annuity is the first supplement like joy stated earlier employees must have completed at least one Calendar year of first service and must be under must be under the age of 62 to be eligible The supplement is going to stop when the retiree turns 62 Even if the annuitant is not eligible for Social Security Benefits or if they choose not to apply.
So this is an important aspect to cancel your employees on that It will terminate once they turn 62 Those employees that choose Choza d. Sr. D sr. Or veera Retirement option will receive the supplement once they reach their MRA however, those that have a Are collecting a deferred disability or mi plus ten? Retirement annuity are not eligible to receive the supplement knowing how these factors are used in their Computation will help employees better prepare for retirement and perhaps consider Delaying their retirement that date or even postponing their annuity It's important to also let Your employees know that they will be receiving an annuity payment once a month which is paid each month that covers a period for the previous month that we'll also want to know that AB nuit II payments are a Lifelong benefit and will only terminate on the day the annuitant dies or other terminated events provided by law It's important also to discuss reductions to the annuity use that retirement estimate to help employees understand that they may They may have their annuity to reduce due to several factors The first one is age if the employee retired under the MRA Plus 10 provision.
For example Their benefit will be reduced by 5% For every year that the employee is under age 62 on the date the annuity begins However, the annuity will not be reduced if they've completed at least 30 years of service Or if they have at least 20 years of service and their annuity begins when they reach age 60 Now if they choose to postpone the beginning date of their annuity the H reduction Will be eliminated if they start collecting at age 62 Now the H reduction applies to both CSRs and FERS components Of the annuity if they if they transfer the first and part of their annuities computed under the CSRs provisions CSRs employees retiring under a veera or Adsr incur a 2% reduction for each full year of every month that they're under the age 55 This is a permanent reduction That will not go away when they turns 55. So make sure the employees understand this that this is a permanent reduction to their annuities another factor that may reduce their annuity is survivor benefits if they're married their annuity will be Reduced for a survivor benefit unless their spouse consents To their election of less than a full survivor benefit if the total the survivor Benefit they elect equals 50% of their benefit.
Then the annuity is going to be reduced by 10% Which in if the total equals 25 then the reduction is 5% for CSRs survivor benefits The cost is going to be 2.5 percent of the first 36 hundred of the selected based annuities Plus 10 percent of any remaining selected base Other the reductions to identity will be based on Unpaid or refunded service, like joy explain and remind employees that if they did not pay a deposit for CSRs non-deduction service performed before October 1 82 their annuity will be reduced by 10% of any Deposit owed and if they did not make a redeposit for CSRs refunded service performed before October 1 of 1990 they will have a CSRs portion of their non disability benefit reduced by an Actuarial factor now under FERS employees need to be aware that they will receive.
They will not receive any credit on their annuity for non-deduction service perform after January 1 1989 Now for CSRs offset employees, there'll be a reduction or offset at the age of 62 if they're eligible for Social Security Benefits by an amount equal to the Social Security benefit. They earned as a CSRs offset employee they need to know that the offset is Automatic and will happen if they don't apply for a Social Security benefit employees also need to consider deductions to their monthly annuity for example health and life insurance premiums and federal tax withholdings, which will be we will discuss next on slide number 18 They will need to account for federal and maybe state tax withholdings from their monthly annuity check as well Generally unless they specify a monthly withholding rate amount on their retirement application by submitting a new w-4, or Indicating they want to keep the same withholdings They had as an employee OPM will withhold federal income tax as if they were married and claiming three allowances okay, they may also submit the w-4 PA, which is Their Election of federal income tax withholding to OPM after they retire and Change to change those withholdings and they may also do that those changes online once they are retired OPM will provide a form 1099 – our Detailing the annuity payments received during the previous year I know attends receive this form around the first or second week of February Just in time to file their taxes and engines this may get a lot of questions About this form even after an employee retires So make sure to let them know that OPM is the one that will issue that 1099 are Now if employees wish to have state tax with whole with help from their annuity They must specify a dollar amount of the state tax they want withheld from their payments The withholding must be in whole dollars and the minimum amount They can with we can withhold for state income taxes five dollars they can also do this elections online that can start change or stop state tax withholdings during using the annuitant portal Now in most cases retirees will receive a cost-of-living adjustment or Cola Now it's important to advise employees and make sure that they understand that only in certain situations they will Be allowed to To have this increase in their annuity payments for both CSRs and FERS employees and their Survivorman Dependents that amount will be based on the rate of inflation as measured By the Consumer Price Index the 2019 Cola rate For CSRs this year is 2.8 percent while the first is 2.0 percent and this actually came out in October of 2018 Now the cola rates are going to be Increases are going to be effective on December 1 of each year and are applied to the annuity payments made the following month It will appear on the first business day of January colas for those retired less than one year are actually Prorated according to the date in which they retired for example if an employee retires in January, their first adjustment will be made in January of the following year and will be prorated for 11 months of the cola amount if they retire in February, it will prorate it for 10 months and so forth for CSRs employees, the increased percentage is going to be applied To their monthly benefit amount before any deduction and it's going to be rounded down to the next whole dollar Now the cola for first is a little bit different and your first retirees need to understand that they will not be able to collect To receive a cola increase until after reaching age 62 The first Cola increase is calculated differently than CSRs if the increase in the CPI is 2% or less the cola is equal to the CPI increase if the CPI Inc increases more than 2% but no more than 3% then that cola is going to be adjusted to 2% if the CPI increases more than 3% then the adjustment is 1% less than the CPI increase and that new amount is going to be rounded down to the next whole dollar Additional information on colas can always be found on the OPM website on or on chapter 2 of the CSRs and FERS handbook Now in preparing for retirement employees need to know that their health and life insurance coverage normally must be in effect continuously for at least five years before the retirement date or They'll be ineligible to carry this important benefits into retirement The employees also have to have been retired under an immediate annuity and be covered under the Fe h b on the date of retirement and this is important for employees to understand if they were covered under another coverage either Through their spouses.
Fh we are TRICARE and they would like to continue fvh be on their own as a retiree They must be enrolled prior. So it's always recommended for employees to Enroll during the previous open season before they retire Now OPM has the authority to waive the five-year Participation requirement when it determines that it would be against equity and good conscience not to allow a person to be enrolled in the FE HB program as an annuitant, however They love specifically states that it must be due to exceptional Circumstances so OPM almost never grants this waiver Now the premiums for FHP will be the same for the annuitant as they were for the employee however They will be withheld on a monthly basis rather than bi-weekly basis because the annuitant only receive one Payment a month and they will be deducted on a post aspect Basis since retirees will not be eligible are not eligible from premium conversion Now employees face a very important survivor Benefit decision at retirement if they elect a survivor benefit it can provide their survivors their surviving spouses with both a monthly annuity check and Continuation of their FHP coverage for the rest of their life unless of course, they remarry before age 55 so making sure that employees understand that a surviving spouse Can only carry FHB coverage after the annuitant dies if a survivor annuity was elected without a survivor benefit that spouse loses coverage 31 days after the retirees death Now if the annuity of the retiree or the spouse's survivor annuity doesn't cover the monthly premium the premium Can be paid directly to OPM now there you may have some employees that may want to cancel their FHB either because they're going on their spouses Coverage or for any other reasons they need to understand that they will never be able to re-enroll unless they suspend that to enroll in a Medicare managed care plan or if they're eligible for Medicaid if they do choose to cancel their coverage, it won't be effective until after the starting date of their annuity Okay, it's also good to remind employees that retiring is not a qualifying life event.
They won't be able to change enrollment at retirement However, once they retire they can change their enrollment during the annual open season or when they experience a qualifying Life event if the employee is not eligible to continue health benefits coverage into retirement the agency must advise individuals of the right to temporarily continue coverage on their TCC they must though Understand that they will be responsible for paying both the employee and the government shares of them only monthly premium plus that 2% of ministration charge Now some employees may have already been eligible for Medicare if they're aged 65 for those retirees that are not they will become eligible under both first and SURS when they turn 65 there will be Eligible for Parts A which is hospital insurance and Part B Which is medical or physicians services? The Social Security Administration will automatically contact their retiring about enrolling in these plans They will also have the option to enroll in Medicare Advantage Plans C which is a private health care choice like an HMO or Part D Which is a prescription drug coverage however, they need to be aware for that parts B through D are optional and there is a cost associated with Enrolling in these options Your employees can always visit medicare.gov for more information on the cost and eligibility now once retirees you know elect to enroll in Medicare Medicare will be the primary payer and AF ehb will be secondary This is important because they will need to know how the coordination of benefits will pay out when they receive medical bills Like I mentioned earlier if employed cancers there FHB enrollment as an annuitant they will never be able to enroll in FHB However, they may suspend their enrollment in order to enroll in a Medicare Advantage plan TRICARE Peace Corps Medicare or a similar state-sponsored program Of medical assistance, they cannot suspend their fhb enrollment if they're covered by Medicare Parts A and RB only in Retirement annuitants can only apply to suspend their coverage at any time by contacting our retirement information office and submitting all necessary documentation to show Eligibility for TRICARE during the period beginning 31 days before and ending 31 days after the date They become alleged eligible under TRICARE or another program now once they suspend FHP coverage they can later voluntarily Re-enroll during an annual open season We will send open season packages each year with instructions on how to re-enroll But if they involuntarily lose coverage under one of the programs mentioned on on this slide they can enroll in Fh be effective the date after they lose coverage If provided they provide evidence of in their involuntary loss of coverage Now if they wish to cancer their enrollment for any reasons other than to be covered under families at BHP enrollment They will not be able to re-enroll in FHP and will not be entitled to receive the free 31 day extension of coverage or to enroll in TCC those are the major Differences between cancelling and suspending fhb in retirement Remember it is the agency's responsibility to assist the employee in completing their retirement package But remind employees that there may be some processing delays in their application if there's missing or inaccurate information We found that there were several factors that would cause a process Processing delays in regards to health benefits the single most common error found in retirement package was failure to document the five years of coverage Or from first eligibility and through all periods of eligibility of less than five years We will like documentation of an employee's coverage for their entire career possible But at a minimum we must have proof of the five years of coverage immediately prior to retirement about 12 – 103 Which is titled submitting health or repair retirement packages States some of the acceptable alternative proof of coverage one is they can submit the SF 2809 which is the health benefits election form or the 28 10 the notice of Change in health benefits enrollment as proof.
They can also provide history repros from online enrollments that show The enrollment copies of screenshots or other documentation, but for a more comprehensive list You can always visit that about 12 – 103 Another factor in processing the latest failure to submit the certification of eligibility of the five year enrollment requirement when an employee appears to be eligible under a Veera The certification of eligibility must be submitted with the retirement application We've also published several webcast Describing form by form what information we're looking for to enable Agencies to complete and accurate packages that will avoid delays and in those packages Now it is important for employees to understand we're on life insurance slide number 26 It's important for a place to understand how their FEGLI benefits will change into retirement They need to know how to elect affordable coverage before making a retirement election There are multiple online resources that will help them understand These options and how much they will have to pay per month of the coverage they need The first thing that they need to consider is that just like fe HB, they're eligible to continue Basic and optional life insurance if they have been enrolled in FEGLI for at least five years immediately preceding retirement Employee must also be enrolled in FEGLI on the data retirement lampole will have the option to retain the full amount of their basic FEGLI coverage or elect a coverage reduction for their basic coverage amount they'll have To choose the amount of basic insurance.
They want to continue after age 65 or At retirement if they have already reached a 65 the choices are a 75% reduction a 50% reduction or not reduction But have your employees use that FEGLI calculator on the OPM website to help them determine the value of the various combinations? of the FEGLI coverage It will also help them calculate the premiums for the different combinations of course of coverage And and it will show them how to choose different options And what they will be able to see how the life insurance Carried into retirement will change over time as well This is a great tool where they can quickly and easily find estimates about continued coverage into retirement Coverage for optional coverage life Optional coverage into retirement is a little different when they retired and reach age 65 option 8 coverage automatically begins to reduce by 2% of the pre-retirement amount each month until 25% of the pre-retirement amount remains option a is free once it starts to reduce there is no reduction election to make at the time of retirement for option a Now employees must choose however how many of their option B in or see multiple? coverage they want to continue now the cost of be multiple coverage if they choose to keep it into retirement becomes very expensive and increases with age And retirees must carry Basic insurance in order to elect any of those the three options on like basic enrollment though Optional insurance is voluntary and they must apply for and select the options they need and can't afford again Using that FEGLI calculator on the OPM website will help them determine the best option That they can afford into retirement and that in the option that they need to cover their loved ones Now if the retiree changes their minds once they start collecting their annuities they may cancel Basic or optional at any time unless they have assigned their life insurance they need to know that they cannot increase their coverage after retirement or Reinstated if they had canceled it at retirement Just like fvh B We found several factors with submitting FEGLI documentation for coverage after retirement that would impact an employee's Retirement application again, it's important for employees to know these these type of situations that could delay their application the first common error found is again providing that documentation of five years of eligibility We want to see an employee's coverage for the entire career Wilkes will accept the S of 2017 life insurance election form and the SF 50 showing any FEGLI changes in the five years immediately prior to retirement as acceptable proof of coverage Also be aware that will not we will not accept Corrections on the form any scratch outs wideouts lineups or any other type of Correction actions and either the continuation of life insurance coverage the 28:18 Or the designation of beneficiary for FEGLI which is that standard form 2823 Now new forms must be completed in lieu of any alterations to previous for it for any Corrections made on these forms About 16 – 102 however provides additional guidance on Corrections made on uncertain benefits elections Now employees may also be able to carry their dental vision and long-term care benefits into their retirement They will not have they do not have that five year rule to continue these benefits the only interesting point that employees need to know is that They should contact benefits directly to make arrangements for premium payments prior to receiving an annuity annuitants may enroll as long as they're eligible for fe h b Regardless of their FF PHP status as long as they retire on an immediate retirement under the federal long term care insurance program of or fltcip Retirees and qualified relatives are eligible to continue benefits and just like fedvip They must make arrangements with LTC partners to ensure that there's no interruption of their premium payments There are no government contributions made towards long term care premiums And retirees will have similar option plans plan options to those as they had as employees now unlike fedvip and long-term care employees are not able to continue their flexible spending accounts or FSA's into retirement The law allows FSA along allotments only from salaries not annuities so FSA coverage will terminate However, though it will terminate a retirement.
However Any reimbursable expenses made prior to the retirement will be reimbursed or paid once the claim is submitted Let's talk about tsps We all know TSP offers several options for withdrawing the monies from from your account when making the decision about what to do with their funds employees should be encouraged to think about their income needs and the Lifestyles, they would like to have after retirement Hopefully they'll be TSP millionaires where they won't have to worry so much But that may not necessarily be the case for most of us The decision that retirees will have to make on withdrawing their money Depends on their specific goals do they need money right away? For an important purchase do they want to avoid paying taxes for as long as possible? They want to receive a payment every month that they want guaranteed income to last them a lifetime So considering all these options o their personal goals, it's what it's going to help them determine What kind of withdrawal options? They want to take retirees will have two main options for withdrawing their TSP fund They can make either a partial withdrawal or a full withdrawal Under a partial withdrawal a well It allows them to make a one-time-only withdrawal and leave the rest of the money in the TSP fund until a later date They can also withdraw their money all at once over Over a period of time or they can purchase an annuity that will make payments to them for life For maximum flexibility though.
They can choose any combinations of the full withdrawal options Now if they decide to leave their money in the TSP, they will no longer be able to make contributions Into that cap will we continue to but but their funds will continue to accrue interest TSP will notify them that they must at what point they need a start receiving payment They essentially taking withdrawing the funds by April 1 of the year following the year in which they turn age 70 and a half so at 17 and a half years old. They will have to start making some of the those withdrawals Really the withdrawal decisions should be based on whether or not they have other resources of retirement income All of their resources, you know Should be taken into account when making this decisions now They should also be aware of possible tax penalties On early withdrawals in general TSP withdrawal payments are subject to federal income tax however Different tax rules will apply to different withdrawal options as well as to the type of money whether it was traditional or Roth contributions that are included in that funds in the fund Now while in retirement retirees will not be able to make contributions or take out TSP loans But they can they can also they can certainly move the funds around do and make interfund transfer as They wish there's a great deal of resources available on the TSP website that can help employees Determine the best TSP withdrawal option for them They have access to retirement income calculators and monthly payment calculator in different publications on cash out taxes distributions and also information on possible of changes in withdrawal options Now once agencies complete counseling employees about their benefits and retirees It's important to sit down and review the completed application With the employee ensuring that all blocks are properly marked and that it has been signed explained to the employee how their retirement application will be processed by your agency and then later by OPM Explain to them how agencies will audit in An organized a retirement package to make sure the certified Sam your Federal service The agency checklists are completed as well as FHP and FEGLI documentation is included then they will send the applications to OPM after payroll certifies all the deductions You know another talking point would be to Know making sure the employee understands that OPM cannot begin to process a retire minuite Until after receiving a completed application and all supporting documentation of that employees service history Explain how OPM's respire I'm sorry payrolls responsibility ended up in the process or authorized to make that final paycheck of a Lump sum payment for unused annual leave.
They're also responsible for issuing and closing out the IRR Whether it's the SF 2809 Hundred for first Which reflects all the service history all the salary history and the contributions and then forwarding that information to OPM If the retirees get a thorough understanding of how the process works it will make them feel more comfortable with the process Which in turn can alleviate many misunderstand? misunderstandings after retirement Now always encourage Verifying service. It's the next slide site number 32 I think it's important to always encourage employees to do their due diligence when there's missing Service history in their packages allow them the opportunity to find missing documents on their own Maybe you know providing them with the key contacts if needed now if they're not successful, then the agencies certainly step in and Try to find the information through their sources by first contacting, you know the federal records Center or by checking their retirement data viewer or EHR I now if that agencies benefit officers does not have access to it EHR I They can contact their OPM liaison for more information on how to request access now if none of these sources work agencies can always fax the request for a missing service history to our boyars at Fax number seven two four seven nine four six six three three now Remember that that fax number is only to be used by agencies Processing Herman estimates and if employee is requesting information on their own they can always write OPM for that request right directly to our operation retirement operations mailing address, which is in one of our upcoming slides Priority is always going to be given to the agency request because they're processing retirement estimates so, um, the agency will always get the priority for that information now if all else fails OPM will complete the verification at retirement of any missing a service upon receipt of the application and the rest of the records However, this can cause significant delays in the processing of that retirement Again employees should be aware of some of the most common errors in process in retirement so that they can avoid making them and avoid having their package delayed and hopefully assisting the agencies in trying to fill in any of the gaps This information again can be found about 12 – 103 which discusses submitting healthy retirement packages The first one is missing periods of credible civilian and military Services again all periods of credible civilian and military services must be listed on that certify summary of service Also, if a married applicant elects less than the full survivor annuity Remember the spousal consent must be provided and the election On the application must agree with the spousal spousal consent This will require certification by a notary so the notary signature they must match the spouses signature date That's very important the retirement application must not be turned in a More than a year later from the date that the notary signed application.
We actually have Received a lot of those inquiries regarding the different dates After the notary signs that certification and of course a marriage certificate must always be included with those with those elections Now for each period of service not covered by retirement contributions Or FICA only service all pay rates and effective dates must be listed on the application Lastly if an employee is receiving or had previously applied for military retired pay ur benefits From the VA in lieu of military Tire pay make sure to attach copies of the military services service determination if the employees military disability retirement was service-connected & incurred in a combat or caused by an instrumentality of war This information is needed to assure correct credit for that military service. It's applied to to their their benefit Now the main thing to remember about a retirement application is that it must be complete In an original form signed by the applicant in Inc and dated and all questions must be answered in all applicable boxes checked Checked in all areas requiring initials also need to be initial So reminding employees of all these little things and walking them through the process will help avoid a lot of these common errors Now here's the summary of our roles in assisting employees throughout their pre and post retirement journey active federal employees need to know who they can contact for advice and Retirees should also know that correct points of contact after separation For example before they retired, you know, their keep on key contact should be an agency's benefits representative Or their retirement counselor They can also access OPM website for retirement planning resources such as the FEGLI calculator and the bull ballpark estimator During their retirement process employees should keep in contact with their retirement counselors Make sure that all their information is correct.
All the documentation is submitted updated addresses are give if they Need to make any beneficiary changes they should do. So at this point if they need to update their records on a divorce or a death These are some of the you know, the retirement cancer is the key contact there after retirement then Retirees, you know will have OPM a sore point of contact They'll receive their claim number CSA number, which is essentially almost like an employee ID number after OPN receives their application a Password will be emailed to them to their that mailing address on file now.
We encourage all Retirees to read all the OPM mailings Even if it doesn't look like it's a valid or legit OPM correspondence You know OPM's still sense a lot of snail mail. So it's it would be good for them to make sure that they're reading Anything that they receive from us? They can always call or log into returned retirement services. Our retirement services is essentially a port and all-night portal where employees can Essentially have access anywhere anytime They can make all these changes change their withholdings their mailing address that can change along ments Set up checking or savings allotments change their direct deposit information and also view and print their annuity statements or the verification of income, which I know a lot of agencies Receive requests or at least information on where to get those so services online as a key point I didn't mean to skip page 30 or it's like 35 I wanted to go back to it and just remind everybody of our the OPM retirement operations contact Information their main phone number in the email address now local employees and retirees can stop by our retirement information walk-in office located here in our main building if they wish here a 1900 street room 18:23 that's always an option.
Like I said for our local employees and retirees And the business hours for that is 8:00 to 4:00 p.m Eastern Standard Time Monday through Friday or 8:30 to 3 p.m. On Fridays Here is just some additional talking points to have with your employees as they get ready to retire encourage them to keep their families in the loop about a Lot of their retirement benefits how to contact OPM regarding survivor benefits the forms that they will need to be Completed, you know where to find their retirement claim number that CSA number also Provide information to their families about other benefits. They may be eligible for under military Service or Social Security? Provide their families with life insurance payout information their TSP account information also bank account You know bank account Information and and where their benefits are being are currently being paid Also any unpaid compensation that they're eligible for all these key things will help families Sort of Navigate and and you know these these benefits that retirees are eligible eligible for That could assist them in in that process They also need to remember to keep their designations of beneficiary current if they do not remember who they have designated They can always complete new forms to ensure.
The appropriate person is Designated and will receive those benefits upon their death. All the forms can be downloaded online And again, make sure that you know employees are Reminded that upon retirement to read all all of our OPM correspondence We have now reached the end of our webcast as we wait for questions to come in Which may be emailed to benefits at opm.gov and again add? Retirement counseling tips in the subject line. I Want to take this opportunity to mention that we have had some agency to inquire about Corrections needed for the standard form two eight to one that agency certification of insurance due to the retroactive pay adjustment for those retired after that January 6 the answer is no there is not a need to Correct. The standard form 28 24 Mewtwo that retroactive pay adjustment However, the individual retirement record must be accurate and correct must be accurate We also want to announce that we have receiving many many inquiries regarding our upcoming benefits conference Yes There will be a benefit conference coming up pretty soon and information will be forthcoming Through our benefits listserv at this time We can only announce that the location is in Florida and it will be held in a week in August or September And will wait for any questions that may come.
Thank you for attending our webcast All right the the first question I have worked for several agencies as a Military spouse will this slow down the process of receiving my full retirement benefits And also I understand it can take up to 90 days before you receive full benefits. Is this true? I Can relate to that question as a military spouse I also have worked in many agencies The great thing is like I mentioned the first part of the presentation Is so important when we transfer or as a new hire to identify all of the agencies we've worked for So that the agency can collect the information you should be able to see all of your service in your official personnel folder or opf to verify that all your service is there so so there are many employees veteran throughout their federal career that may move and have several agencies that they work for but as Opf should contain all of that service.
So you should be able to obtain review that and make sure that everything is complete fear So I encourage you to do that. I Agree with joy, and also making sure in recognizing if there's any gaps in Service history and how that will change your service computation dates And I believe there is a second part to the question Yes, I understand. They can take up at least 90 days before you receive full retirement benefits. Is this true? Receiving to that period between you know receiving interim pay and the full monthly annuity Yes, it really just depends on an employee's retirees Application package will whether you know, there's any missing information But there's anything that needs that they did that OPM will need to clarify with the agency But yes for the most part we anticipate About 90 day 90 to 120 days for for that full annuity to kick in All right the second question where can an employee find their retirement SCD our agency does not use a retirement summary benefits report like other agencies do That is definitely a part I would I would talk with your retirement counselor about is you're correct You only see that leave SCB in most cases people are aware of that leave SCD Because our length of a service awards it kids using that leave as CDL So what's printed on the standard form 50? Also is showing that leave service competition date and as I mentioned depending on your service whether there was temporary service or you have unpaid military service that Leave a CD and retirement service computation date definitely can differ So I would reach out to they may be coded but each agency works differently So, this is a question for your Human Resources office.
Just That what your retirement service computation date is they have some internal? Systems that sometimes do show that you can see what your retirement service computation data is So you may want to check there as well, but your agency will be the content for that All right next question Can you elaborate more on the interim payment payment? I'm assuming is less than the full the final retirement paycheck. How much less is it? Normally interim pay could be anywhere between 75 to 85 percent of your full Annuity benefit that you would receive once your retirement package is fully adjudicated here at OPM, so if we encourage Retirees to think about that and and and try to work that into their financial planning once they retire If they have other sources got income if they need to tap into their TSP funds just thinking about You know how that that interim pay that, you know, the the the difference between the interim pay in the annuity the full annuity benefit can impact their their finances within that period All right, next question where can an individual go to learn more about military deposits You can find information on OPM gov and we do have some tabs available on for about service there are several options webcast also on our youtube channel that talk specifically about military deposits there the agency it may also have it on their internal website as far as where how do you request your earnings is that's usually The first step is use utilizing your dd-214 Requesting that those earnings from DFAS and once you obtain those earnings you would submit that to your agency to receive a military military Deposit estimate and payment procedures.
So it's kind of two ways. You can't find general information Like I said on our website, we have a webcast specifically for military deposits explaining Everything and also our CSRs and FERS handbook talks about Military service as well. But so it's a combination of those things from from the resources that I mentioned there and I'm still working with your agency on what the Procedural process is for obtaining that military deposit information and making a decision on that Next question how far in advance should a retirement package be submitted to ensure it is completed in time Well If they're referring to in time before the date of retirement I mean normally agencies will Make sure that a retirement package is completed at the time of retirement then it will Be sent to payroll and then submit it to OPM but always work with your retirement counselor as far as a meeting those specific Return or requirements of when they want you to have a complete Retirement package, it may be that you know They want you to start working on it six months prior to your elective date if that's not reasonable then maybe three months out but always work with the retirement counselor on and having those discussions on Submitting your retirement packages in a timely manner before your retirement is official All right next question If this state withholding forms included with the retirement package will OPM apply the requested state withholding upon adjudication So during interim pay as we mentioned the federal taxes will be taken out once the Annuity is finalized that isn't the opportunity to start your state taxes.
You can also do this on services online We just show a slide where students you receive that information Which will be a booklet included to show that your annuity is finalized and what those final details of your retirement Are you may at that time that could be your trigger to remind you that oh I need to get my state taxes started up again and go all right on services online It's a quick and easy way to make those changes to your state taxes once everything is finalized Under the postpone retirement Is there any special requirement to be completed to suspend their fhb and FEGLI option until they apply for their retirement? No, there's no special requirement besides the the main or you know, the main factors of continuing FHP and FEGLI into retirement. Just meeting those those recurring the five-year the you know prior five years of enrollment before retirement So just meeting those essential requirements before postponing or before suspending your benefits And postponing your Retirement or your annuity really so now there are no special requirements besides the the main eligibility factors How far back can you buy back Temporary government work time before like a service I was told that there was talk about extending the original cutoff date to a later date range for A first employee at this time The date remains the same being that the the only deposit service eligible to make a deposit rather that non-deduction service Eligible to make a deposit is the service performed prior to January 1st 1989 Okay If the employee has been under TRICARE and not fhb for their entire federal career are they able to enroll in fhb at retirement Yes, the five year Requirement period can include the time the employee is covered under TRICARE as long as they were covered under an FHP Enrollment at the time of retirement for planning purposes.
The employee may want to consider enrolling in Fvh be planned during the open season. Like I said just prior to their retirement date So it's important to know to understand the difference between being enrolled in FHP at the time of retirement and being eligible to carry FHP into retirement while they may have Met the five year Requirement period with TRICARE they still have to be if they want to Keep or enroll in FHP in to retire as a retiree, then they must have been enrolled in FHP Themselves prior to retirement Okay, when is the next training opportunity We have a few more webcasts scheduled this year on June 25th.
We will have a furka Question and answers webcast we will also have a deferred of postpone retirement and face retirement updates webcast on August 6 of this year We have two scheduled furka classes coming up as well. May 7th and July 9th All right the next question can you repeat the fax number for verifying service to OPM Yes, that fax number is seven two four seven nine four six six three three Next could you explain the postponed retirement again, the difference between deferred and postponed? This is explanation actually on our website on under retirement on opm.gov under retirement, it does show you all of the different retirement types Deferred retirement as we know it you can earn an annuity with only five years of service But you may not yet have the age So you defer your retirement to receive the benefits once you've method the age as well as service you can apply to OPM to receive that retirement why postpone retirements for employees that have at least 10 years of service and they're also Postponing not not receiving that benefit right away maybe they're trying to avoid an early age reduction like the minimum retirement age plus 10 so they may postpone their retirement and and meet the requirements because they've had that five years of Their health insurance and that 10 years where they can postpone pickup that benefit at a later date and also at that time Continue health and life insurances.
So it's a difference and the The lift of service required as well as the eligibility to continue benefits between the deferred versus the postponed and the MRA Plus 10 as well Several retirement options Okay, next question how long does it say does it currently take opium to make decisions on disability retirement cases? Well, you know it's always it's very unique Every every disability retirement package is very unique In that you know medical examiners must determine eligibility for each specific case So at this time now there is no specific timeline Some disability retirement applications get adjudicated a little bit faster than others and it all depends on the unique circumstances of the medical condition and of that specific applicant Okay Mmm is the retirement pay and Social Security supplement payment issued in one check or will separate checks be received The first so if you know the first annuity supplement Will be included in your as part of your a monthly annuity payment there will not be a separate check issued Because it's part of your first annuity compensation benefit essentially after retirement And Just a common here.
We got a few questions about the proposed move to GSA Currently there are no anticipated changes and how retirement services does does business And with that it's 2:30. We will respond to the rest of the questions in the inbox that we did not get to.
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The Case for $20,000 oz Gold – Debt Collapse – Mike Maloney – Silver & Gold
Jason 0 Comments Retire Wealthy Retirement Planning
If you know how the world financial system works you know the game
that you're playing and if you don´t know the game
and the rules that we're playing by you are going to get slaughtered, you are going to get slaughtered. Ever since the Federal Reserve was born,
we have been living under a lie. In order for us to mantain the levels
we've got and to maintain the prosperity Obama has to be twice as far in debt
when he leaves office than when he came in, or the whole thing
is starting to collapse.
The Federal Reserve, they're buying
bonds directly from the Treasury. This is Quantitative Easing,
they're calling it, and that means there's
an emergency going on. I can see that there was not anything in history as far as finances goes, that was
as much as a sure thing as gold and silver accounting for the
expansion of the fiat currency supply. There is absolutely no chance
in hell that this won't happen, right now it takes about 15000 to
20000 dollars an ounce of gold. I believe that there's going
to be a deflation first and then all of the
world's central banks will start printing like crazy to get us
out of that deflation and Ben Bernanke will be leading the charge. You can´t have a debt that is 10
times the size of your economy. It's not posible. Everything comes
to its screeching halt first. I've got to show you the world's stock markets and real estate bubbles have to continue crashing because all it is is the market trying to seek fair value.
It's trying to seek equilibrium, this is what the markets do. It is their job. Basically, you know, our entire currency system is imaginary, it doesn't really exist. It's just that
we're all dreaming the same dream. If anybody chooses to wake up… it's over with. Thank you very much! I'm Mike Maloney author of the bestselling book
on precious metals investing, Guide to Investing in Gold
and Silver, is part of the Rich Dad series that
Robert Kiyosaki started, the original book. Robert
Kiyosaki says: write a book no other instructions: write a book, and so I start writing this book two and a half years of
research and writing probably 30 hours a week, every week for two and a half years.
It's a very well researched book.
The one thing I really worry about is perpetuating misinformation,
I want it to be accurate and then I tried to boil it down and
make it real simple. I read all these books by economists like Milton Friedman Murray Rothbard, Ben Bernanke, if you get a chance to
read some Ben Bernanke, don't! He is a horrible author, just horrible. They're all trying to write over each
other's head and impress each other And by doing so, they make
economy sound so complex that everybody thinks well,
I can't understand economics. It's really simple. Economics is very simple if you
boil it down to its essence and it's not that difficult to
understand and that's what I tried to do in my book.
For the people that
have not read my book, about 75% of it is not about investing in gold and silver,
it's some history of money and then how the world economy works
and what could potentially happen you know, where we came from,
where we are today and what could potentially happen. By the way, I really couldn't care less
about gold and silver, I don't want gold and silver, it's just in its
cycle right now, it's a stupid lump of metal that doesn't have cashflow or
spinoff dividend yields. And so I don't
want gold and silver, it's just that right now
I don't want anything else. They're just in their cycle right now
and they're going to be outperforming everything else, in my opinion
from all of my research, and they're going to be able
to buy a whole lot more other stuff.
A whole lot more real estate, whole lot more stocks, whole lot more oil wells, farmland, all the true wealth. It's in the buildings, the businesses,
the farmland that is out there, and people get this
picture in their head that if there is an economic disaster,
if there were some sort of collapse that it's going to be like this nuclear
wasteland afterwards, it's not. All the buildings still are going
to be there, the apartment buildings. It's just that they're all going to be on sale. The problem is when investments are
on sale nobody buys, the public comes charging in, and they
chase investments after they're going up.
Gold and silver get hot whenever they're going up and
as soon we see them take a dip, it's like sales turn off like a
light switch, most of the time. And I don't want anybody to get slaughtered. I really don't want these bad things
to happen, I just think that all the evidence is there. What our leaders have done
to the economic system is going to cause these things to
happen and it's inevitable, and I'm trying to warn
as many people as possible as quickly as possible.
My company has a mission, to get as much gold and silver
in the hands of the middle class as quickly as possible, because when there's great economic upheaval,
there is great political change, and usually goes along with it In the hyperinflation in
Weimar Germany in 1923, this hyperinflation ended on November 15th, 1923.
On November 8th, one week before the end of the hyperinflation, Hitler's storm troopers pointing machine guns at the front
door of the Burgerbraukeller where there was a political meeting,
this big beer hall where there about 3000 people
listening to politican speeches and on that night
he took the stage at gun point and to this literally captive audience
gave a speech that changed the world.
Nobody knew the name Hitler,
nobody knew who he was until he gave this speech to a newly empoverished middle class people that were scared and
looking for somebody to lead them, and here this charismatic guy takes
the stage, gives them a scapegoat and says "I know the way out of this". The next day, those
people in that beer hall followed him to try to do
a military… a coup to take over the government and it failed. He was imprisoned, he was tried for high treason, his trial went on for an entire month, and during that month he
had the ear of the nation. He was covered in every newspaper all across Germany, and the judges were
sympathetic to his beliefs so they let him go on for hours
on end with the speeches and that's when he gained power
was when the middle class was scared. The middle class defines a
country with their vote. The country, as the middle class
goes so goes the country, and so what I'm worried about is not the loss of my
financial well being, it's the loss of capitalism,
it's the loss of our quality of life, it's the loss
of our freedom of choice.
That's what I'm worried about, and I know that there are certain people
that I'm not going to be able to reach. Joe-six-pack, I refer to
the guy that comes out of his beer and
football induced coma at the very end of the bull market and
comes charging in and buys at the peak. I can't do anything for him.
I'm hoping that I can do
something for all of you. These are wealth cycles. If you have
two asset classes that are rising, you have for instance, let's say
that this is real estate on the bottom and on the top here
we've got precious metals. Precious metals in this last decade here, precious metals outperformed
real estate and stocks but everything went up. Stocks went up, bonds went up, real estate went up
and so did commodities and precious metals. Is that possible? Can everything go up?
Think about it for a minute. If we've only got so much stuff in
society and if you've got these 3 or 4 asset classes and everybody rushes toward one, pushing
it to a bubble shouldn't it be drawing currency away from the others?
Shouldn't the others be going down? Well, they didn't in the last decade.
And what's happening here if you've got
two things that are going up, if you're invested in this one down here, when you've got to sell, you can't
buy as much as this one. If you're invested in this one, when you
sell you can buy more of this one. They're both rising in price, this one is falling in value when you sell it you can't
buy as much gold, or food or oil. Your house is worth half as much
in oil, as oil was 10 dollars a barrel in 1999. So your house measured in oil has crushed,
the stock market measured in oil has crushed. If you start looking at your home
or all of your investments and you divide them by something
else, you measured them in the price of a bushel of wheat, a pound of copper, a ton of iron shares of the Dow or ounces of gold, you're going to discover something. These two things that
they're going up, eventually the people that are invested
in this one realize that the smart investors realize that
it's going into a bubble,they sell and they buy undervalued asset, and then this trend reverses.
It can't go on for ever, and if it did, if gold outperformed real estate
for ever, there would come a day where one ounce of gold would buy
the entire planet and we all know that that can't happen.
Right? So, eventually one becomes overvalued
and the other one becomes undervalued and the cycle reverses, and then it reverses again, and what is happening is that they're
printing currency about this rate and that's the reason you can't see it.
People would say: "well, at least my house is worth a
100.000 dollars more than it was in the year 2000", or "it's worth 20 per cent more" Well, in fact if the inflation was 40 per cent
it actually went down in value.
They'd say that, you know, they looked
at the stock market and the Dow right know is just
barely above its 2000 high. In the last decade stocks
have gone sideways for a decade. We've had inflation during that time,
they inflated the currency supply. So, if you start measuring one thing with
another thing, so you're measuring stuff against stuff instead of using
currency, what you discover is that everything is trapped
in this valuation channel, where it goes from overvalued to undervalued
to overvalued and undervalued again, and the thing that you're
measuring it with is doing the exact opposite mirror wave. The trick is sell the overvalued asset near the peak if you can, find the undervalued asset
and I call this wealth cycles.
And if you can do that, it's a road to true wealth, you're
escaping that valuation channel. Here is a real example,
this is the Dow measured in points. And what are points? Points are derived by the dollar value of the
underlying stocks, so basically its points are dollars, and one of the reasons that
they measure it in points is just like when you go to Las Vegas, they take your
currency and they give you chips. Now they're pieces of plastic, so
you don't care, you're just having fun. So change it to points, and it's not as bad as if
"Wow, you lost so many dollars" "it went down so many points". Anyway, that's the Dow
measured in points, but if you go every month during this
entire graph from the year 1900 to today, and each day you take the points on the Dow
and divide it by the price of gold you get how many ounces of gold one
share of the Dow is worth, and this is what it looks
like measured in gold. It's not going anywhere, it's got a mean of about 4 ounces of gold,
which means that the price of gold should be one quarter of the
points of the Dow and then things will sort of be in equilibrium.
It's fair value when the Dow is only four
times the price of gold, but what you see here is that it goes into, it goes from fair
value into a bubble 18 ounces of gold, it crashes down to 2 ounces,
another bubble of 28 ounces of gold because the bubble was bigger, because they print more currency in
the meantime, when it crashed it went down to one ounce of gold. There was a
day in 1980 when gold was 850 and the Dow was at 850 points, one ounce of gold bought the Dow.
Conversely, if you cash out you could only buy one ounce of
gold with the proceeds of your stocks, and then we're going on to the
biggest bubble in history. There's no time in history,
this point in 1999 – 2000 there's no time that gold
was as unloved and ignored as in that time period. It was no
nation's money and it had gone down for 20 years, it was "the worst investment
you can possibly make", nobody wanted it.
Take this, This is the price of the Dow measured
in gold. Flip it upside down and you've got the price of
gold measured in the Dow. Put these two things together, and what you find is
that there's a cycle here and if you've written
stocks up to 1929 and then sold your
stocks and bought gold, and then in 1932 gone to gold … and then, gone
back to stocks I mean, and then in 1980 go back into gold, and so on, uh… this is the road to true wealth,
I mean, you're making massive gains here. I show two hypothetical
families in my book and one goes from 35 bucks to
11.000 bucks over that time period and the other one goes
from 35 bucks to 11 million and that is the difference,
one family creates a dynasty the other one didn't even break even.
This is the Gold-Dow ratio instead of the
Dow-Gold ratio, so you're measuring gold's value per ounce measured in what
percentage of a share of the Dow that it would buy, and what is showing is that gold is nowhere near a bubble,is very
undervalued here and still has to go up, the mean should be 25 per cent or more. and in every bubble in history
and in nature, I used to be an electronics engineer in physics, when something is out of whack, when it
reverse back to the mean it overshoots. if it's more out of whack, when it
reverses to the mean, it overshoots further, so I'm expecting the day where the price of gold would be
double or more the points on the Dow.
This is the Silver-Dow ratio. Silver has just I mean, the gains here
should be immense. This is just gold
for the past decade. I just challenge anybody to go and find
an index or stock or anything, that looks that good over
the last 10 years. This is a perfect chart, it's very bullish, there's nothing here saying gold, in this information that you're looking at,
this is what technical analysts look at when they're trying to figure out whether
to buy an asset or sell an asset, and this is saying that gold is probably going to continue
rising, there's nothing bearish in that signal. This is the SP 500 over the
last decade, so representing stocks of the 500 largest companies
in America and there is gold. uh… Here we have silver and I recently spoke at the 8th annual
banking conference in Socci Russia, this is the big banking conference
for all of Europe and Russia. And I was showing them this
at the very end, they cut me off it was really interesting.
I was running out of time, and you hear this voice
come over the loudspeaker and it is their Finance
Minister in their parlament, telling me: "mister Maloney, mister Maloney,
you've got to stop now mister Maloney" they were trying to cut me off,
I was presenting this information they did not want presented
at this conference, and then he comes up to me afterwards, he's got
a copy of my book that he bought, he wants it signed! Oh, by the way, please visit our
table afterwards, we're giving away, these are 100 trillion dollar bills, they are real,
they are from Zimbawe, we are giving away 20 quatrillion dollars at my table, so…
Uh… come and get your 100 trillion! OK, so… what I showed here was that
there is an inverted head-and-shoulders and this works just as well upside down,
as it does rightside up, you can see the head hanging,
it's like this guy hanging from his feet. This is the head and shoulders
that I'm tracing out here in blue, and then, you draw across the neckline, and you invert that
head in a predicted move and you see this, if you watch my…if you google "10 dollar oil" you'll see a video where he's cutting me off, and
I'm sort of flashing through this, I don't get a chance to describe it, but
I was predicting that silver would make a big move and guess what? That's what silver did. It doubled from where it was. This is the spot price of silver.
This is the price of silver IOUs,
the price of gold and silver is determined by people going:
"I owe you 5.000 ounces of silver, I owe you 5.000 ounces of silver, I owe
you 5.000 ounces of silver and handing this things out, and they're trading this IOUs
on the Commodities Exchange and that's what determines
the worldwide spot price. Now you can do this naked…it's called the
naked shorts. If you don't have the silver to cover it, if you're not sitting on a
pile of silver and you are writing IOUs, you can still sell them. And some big banks do this, like
J.P.Morgan and they crash the market and then come in and cover their shorts,
they buy those IOUs back at a lower price than they sold them for
and they get to make the spread. They fleece the public and
some funds that invested in silver for hundreds of millions
of dollars by doing this, and they do it, they've
done it on a regular basis. But Silver fell too low this
time and so did gold, and investors that were looking for physical
realized that it was just too cheap, and they all had to get some
and shortages developed, and all across India, Europe
and North America the cupboards were bare.
There were 3 months
where we can only get one silver product
at a time, and we had no gold. We didn't have gold and my
dealer shipped for 3 months and I deal with 4 of the world's largest
wholesalers and they could not find gold for us. People don't realize how much gold
and silver there is on the planet. There are 6.6 billion
people on the planet, there are only 2.2 billion
ounces of gold. That's a third of an ounce per person. Silver is even
more rare. There's only about 14th of an ounce per person.
That means that 14 people have to
share that same one ounce of silver. And right now, you can get a whole lot for your currency. uh… I'm going to take a little detour here. I did not define the difference
between currency and money, and you will hear me say: currency, currency,
currency, over and over and over again. Back…before World War One, uh…
Each note the Treasury issued,
each dollar in existence in the United States would say that there have been deposited
within the United States Treasury 20 dollars in gold coin, and payable
to the bearer upon demand. The money was in the vault, the currency was a note they
gave you, it was a claimcheck, only a claimcheck on
the money. The same as if you go to the dry cleaners
and give them your shirt, and they gave you a
claimcheck for your shirt.
The value is that shirt at the
dry cleaner's, not the piece of paper that says that
you own that shirt. So our currency that circulated, was the paper US dollars,
and they were claimchecks on money, and people do not understand that
money has to be a store of value. Only gold and silver
qualify as money. They have all the attributes that
you need. They are portable, durable, divisible, fungible… and then money
is a store of value over long periods of time. One of the things that
I always start with is how currency is created, because if you know
how the world financial system works you know the game
that you're playing.
And if you don't know the game
and the rules that we're playing by you're going to get slaughtered, you're going to get slaughtered. So this, just by knowing this,
increases your odds just a hundred fold of winning. So…uh… "When you or I write a check
there must be sufficient funds in our account to cover the check, but when the Federal
Reserve writes a check there is no bank deposit
on which that check is drawn. When the Federal Reserve writes a check it is creating money". And that is "Putting it Simply" from the Boston
Federal Reserve's website. Basically, the way this works is: the trader of the
United States is the US Treasury.
Uh… but every country has the
equivalent to our Treasury so the Treasuries around the world uh… create a bond and, what is a bond?
A bond is just an IOU: Loan me a trillion bucks and I promise
that over a 30-year period, I'm going to pay you back 2 trillion That's basically a bond, an IOU. And there's something in the middle
here called open market operations, that I'm gonna just show
you real quickly, but the open market operations
is just a shell game that obscures what is truly going on. So banks show up at the
Treasury Auctions, primary dealers they're called, and then the Federal Reserve comes along
and through open market operations, they write a check to the bank
and they buy that bond from the bank, so the Federal Reserve
ends up with the bond but then the next month those banks show at the
Treasury Auctions again. Now the Treasury has the dollars and the Federal Reserve has the bond,
and this process repeats itself over and over and over again. And there is a build up of
dollars at the Treasury and bonds at the Federal Reserve, So, we borrow currency into existence
with an IOU, that bond, and the Federal Reserve opens
up the bigger checkbook that doesn't have a single penny in it, and writes a bad counterfeit check and hands that to the Treasury, dollars spring into existence, then the Treasury deposits that in
the various branches of the government and the government does
some deficit spending, on social programs, public works and war, and then they pay those government workers, the contractors
and the soldiers.
And all of those people deposit
in their private banks, "Banks create money by 'monetizing'
the private debts of businesses and individuals". Federal Reserve Bank of New York. So, now the miracle of fractional
reserve lending comes in to play. Fractional reserve lending
is just what it says. They reserve a fraction
of what they've got, if you go to the bank
and you deposit 100 dollars, the bank is allowed to keep 10 dollars
in your checking acount in case you want some
of that 100 dollars, and they get to steal 90
dollars of it without telling you.
Your checking account never has
the balance that it says it's got in there. They have borrowed most
of that currency out of there, and they're going to
loan it to other people. When those people sign their loan,
currency actually gets created because you had a 100 dollars on deposit, and they have 90
so now there's 190. Then, they go and buy something, that's
the reason they're taking out a loan. And they buy a house or a car, or someyhing like that, and when they buy that thing, the seller then deposits it in his
bank account so that 90 dollars get deposited and then they get to go
and steal 90 per cent of that meaning 81 dollars, so now there's 271 dollars
on deposit. Can everybody see how the currency supplies is getting
magnified by the banks here? And that process happens over
and over and over again, and under a 10 per
cent reserve ratio, every dollar deposited
can create another 10.
So if you deposit a trillion in base
money, you can create 10 trillion, uh… And that is basically it, there is nothing else.
Our entire currency supply is either IOUs or receipts for IOUs. That's all that it is. It's all an imaginary agreement
and it is all giving value because you experienced yesterday
that the dollar purchased you something, so you expect that is
going to tomorrow. So you have this agreement that is, basically, you know, our entire currency system is imaginary. It doesn't really exist, it's just
that we're all dreaming the same dream. If anybody chooses to wake up, it's over with. So it's really just a couple
of bucks that is whipped up in this little voodoo hocus pocus
scheme here, where the Treasury and the Federal Reserve
write IOUs for each other, a check is an IOU,
a bond is an IOU, and they swap IOUs: dollars
spring into existence.
A dollar is a receipt
or a claimcheck: an IOU! Then the rest of the currency supply is a bunch of numbers that the
bank type in their computers. They don't exist. In my book, I call things money until I get to the point
where I define what money is. And the difference between money and
currency and from that point forward, I only call gold and silver money, and I call everything else currency, but in the original manuscript, when I start talking about the massive
currency creation that is going on, and how banks are just debasing their
currency supply all over the world and how this Mandrake
mechanism works, I start referring to it as
the numbers supply. the M3 number supply, uh… the base number supply because they're just numbers that somebody made up.
I can write numbers on a post-it and hand them out like this. They make them up, they type them
in a computer, it is nothing but a supply of numbers, How many numbers are there? It's infinite! So it's nothing but a number supply.
But it becomes real when you work for some of that currency supply, that number supply, and at that point, it now represents your blood,
sweat, labor, ideas and talent. You are what gives the
currency supply value. It would have no value without you. And the way that that value is enforced
this is the really cruel joke here. Let's say you save a part of that
currency supply, so you can pay tax to the tax collector in the
United States, that is called the IRS, so that they can turn that over to
the Treasury so the Treasury can pay the principal plus the interest on that bond which was paid for
with a check from nothing. So, you can see that, right? Everybody sees how this works? Now, there's another joke. There was interest
due on that bond.
Let me ask you, if you borrow a
dollar into existence and it's the only dollar that exists on the entire
planet but you promise to pay back 2 dollars, Where do you get the second dollar? Has anybody got the answer on that one? You borrow it into existence. When people say they're
just printing money, they're wrong. First of all, they're printing currency,
but they're borrowing currency into existence. The Fed doesn't just print money, what they do is they
indebt us in the future.
Everyone of these loans that we
took out of the bank that created the vast majority of our currency supply,
95 per cent of our currency supply, roughly, has been created by the banks uh… i think actually is 93
percent now and the Federal Reserve
created about 7 percent but uh… before the financial crisis the actual physical paper dollars
are what the Federal Reserve and the Treasury creates it's known as base, they call it
base money, I call it base currency uh… and then we create the rest of the currency supply by going to the bank and borrowing for home or something like
that or buying dinner and sign our credit card. When you sign a credit card receipt
you've expanded the currency supply of the planet. The problem with this system is that every single month
there is a payment due on that bond for the principle
plus the interest and there's payments due on your home
mortgages and on your cars and on your credit cards every single month you've got to make a payment on that currency that you borrowed into
existence and on the balance sheet that payment extinguishes the currency
that you borrowed into existence, so the currency supply
starts to collapse.
This system requires that we go deeper into debt every month
than were the previous month, we have to always borrow more
currency into existence than we are extinguishing
every single month or the whole thing
starts to collapse, and I'll show you what that
collapse looks like in a minute but first I'm going to show you the
base money, this is the these are the physical paper dollars
uh…
It's basically cash in circulation plus the deposits that the big commercial
banks have at the Federal Reserve uh… all of the banks have a checking
account at the Federal Reserve and their deposits are redeemable in
paper dollars so it's a measurement of how many paper dollars exist. It took 200 years to go from
zero dollars in existence to 825 billion dollars, then came along, came
the financial crisis of 2008 and it has only taken two and
a half years to triple that. We are now at about uh… 2.4 trillion dollars of base money from 825 just two-and-a-half years ago, so this looks like the currency supply
of the planet is just exploding when you look at this and most economists and newsletter writers
are talking about inflation, inflation inflation is right around
the corner, this is going to happen.
I believe that we're going
to have, I wrote in my book we would have the
threats of deflation followed by big inflation which we have already
had, that's what this is, followed by a real monetary deflation
which is the collapse of the currency supply: inflation, deflation are properly referred to as an expansion
or contraction of the currency supply prices follow but there's a delay, uh… and so uh…
consumer price inflation keeps your eye off the ball.
If you can look at what's
happening in the currency supply you're seeing into the future. And I believe that there's
going to be deflation first and then all of the
world central banks will start printing like crazy to
get us out of that deflation and Ben Bernanke will be
leading the charge, and so back in March of 2006 uh… the Federal Reserve hid the broadest measure of
the currency supply, the currency supply
that is M1, M2 and M3 uh… M1 is uh… cash in circulation uh… plus checking, checking accounts uh… M3 was the broadest measure that
incorporated the most different types of of bank deposits and so on, not at all the entire currency supply,
the entire currency supply is actually total credit so about 53 trillion
today and it's uh…
Stalled and started to shrink. But M3, they used to
publish it every month it was the uh… measurement of the
currency supply that most newsletter writers and uh… on the news
that they would report and the Fed hid it from us
in March of 2006 claiming that it was too expensive
to compile all this information and that it was useless anyway that you
couldn't glean anything from M3 that you couldn't get from M2. Now, here's the real kicker. There is a… uh… M3 is… you take a whole bunch
of different monetary aggregates that the Fed publishes and you add them
together and you get M3. The only one that they don't publish
I believe it's uh… uh… euro-dollars I can't remember,
I believe it's euro-dollars, it was 0.6 percent of M3 so you can still reconstruct M3
off of all the other monetary aggregates plus minus
0.6 percent accuracy and there are several companies that do this,
shadow stats, shadow government statistics or shadowstats.com, is one of them, it's by John Williams. He's
one of the people that does and all the people that do their data agrees, so I'm like 99.4 because is there a 0.6
percent plus minus, I'm 99.4 percent sure that this information is correct, and what you see here is that
there's a little collapse going on of the currency supply up here, and it's not huge we've gone from
you know this would be 15 so about 14.7 trillion dollars down
to just under 14 trillion dollars in M3, but base currency is a component of the M3 that red part
on the bottom is part of it, and they've been pushing
that up like crazy Why? Because there's a credit
collapse going on right now.
When you deduct the base money from the credit based portion of this part of M3, so the portion of what we
borrow into existence what happens is that it shows this enormous
collapse going on. This is M3 minus base money and there's a 1.7 trillion-dollar collapse of the currency
supply, it's about 13 percent, Now, there's no time in history that this has
happened, this goes back to nineteen sixty except the beginning
of the Great Depression, that was the last time the currency
supply contracted was, the beginning of the
Great Depression. Usually there's a time lag
between stuff like this happening and the public feeling it so the Federal Reserve is borrowing currency
into existence like crazy and they're now doing direct purchases
of bonds from… They don't even go through that open market
operations shell game, that keeps you from
seeing what's going on, they're buying bonds directly from the
Treasury, this is Quantitative Easing they're calling it and that means there's
an emergency going on.
They're telling us that
everything's fine, that, you know all of their emergency efforts cured
everything, and the economy is OK what the hell is this right here? why in just the past couple of months
this is part of the quantitative easing why is the currency expanding? from uh… 2 trillion to 2.4? If everything was fine, the Federal Reserve
would not be doing that! They're scared shitless,
so it's happening they're doing anything they can to
prevent this deflationary collapse that I predicted in my book uh… you know I first started buying gold
when it was 325 bucks an ounce, actually it was 315 uh… 326 for golden eagles uh… that was October 2002, by April 2003 I had discovered silver and I was all in. I can see, I was reading in 2001 and 2002 I was researching what was going on in
the global economy every single day, I was addicted to it. And by October of 2002 I
started making my commitment and by April of 2003
I was all in. In 2004 I started speaking on it.
In 2005 I incorporated goldsilver.com
and became a precious metals dealer and start writing my
book and that was published in 2008, so I didn't just bet my portfolio
on it, I bet my entire life on it. I can see that
there wasn't anything in history as far as finances go that
was as much of this sure bet, a sure thing as gold and silver accounting for the
expansion of the fiat currency supply.
Gold and silver are denominated in this fiat currency, these digital numbers
that they type into the computers and paper notes so they just run off the
printing press and it's all borrowed into existence. Periodically throughout history
for the past 2400 years they have done this. This is… the lower line is the value of
the gold held at the Treasury so the uh…
The number of ounces
of gold times the price. The upper line is the currency in
circulation, base money. And that this is from the
year 1918 and here we have the stock market crash in 29
and these are the bank runs of the 30 where people
were asking for gold. But they printed too many receipts for
gold. If you can go back to before World War One these two lines
would converge. They diverge there and we've
created this lie where we were creating all these receipts for gold,
these claimchecks on gold that didn't exist.
When people wanted it, Roosevelt had to make private ownership
of gold illegal because there was a run on gold, and in the United States
americans could not own gold. And then a year later they
unpegged the dollar from gold and the dollar's value plummeted, so that it took, it went from
taking 20 dollars to purchase one ounce of gold uh…it then required 35 dollars to purchase,
so they called it a change in the price of gold, they can't change the price of gold
when you're on a worldwide gold standard, and gold has, you know, it's got
a certain intrinsic value.
The dollar fell. And so… what's amazing is accounted for
the currency supply. This is the free markets in the will of
the public forcing the government hands forcing them to change the rules.
Here's the same chart again uh… but now I've taken the
dates out further, so you can see uh… World War Two, the expansion
of the currency supply then in 59 uh… Charles de Gaulle,
the president of France uh… says we want our gold, other countries
started jumping on board and gold started leaving the vaults. Then I'm taking it out further
because that one goes out to 1971 In 1971 we go off of gold
but there's another line here, a blue line. how many here would say the credit
cards are replacing cash in circulation? Credit cards are replacing
cash in circulation. I believe they are and when you sign
a credit card receipt and you paid that merchant, the merchant's checking
account does not know the difference between credit card currency
that you created and cash that the Federal
Reserve created.
It can't tell the difference and that
currency that you created circulates until somebody saves it up and
pays down credit card debt. And so uh… I add that to the currency supply. Once Nixon took us off of gold, and
gold became a separately traded commodity/currency uh… the will of the public and the free
markets drove the price of gold up until once again the value of gold
held at the Treasury exceeded the currency supply and there was
a year where we could have gone back on the gold standard and it also covered outstanding
revolving credit for an entire month. So all it was doing is the
same thing as it did in 1934 and in Weimar Germany and
hundreds and hundreds of times since the year 407 BC with the
first grade inflation in Athens. This is the same chart again but it shows Ben Bernanke panicking
over here and this is the increase of base money.
That's that first chart that I
showed you, not first chart, but one where there was a red area on the bottom, so that's the increase
in base money. Well, there's the outstanding
revolving credit piled on top of it, uh… here's gold and what this means is that gold has to
rise from here to way up there to do the same
accounting that it has already done twice in the United States and
hundreds and hundreds of times in history. This is a natural thing. It does this
automatically. The will of the public and the free market force
this to happen.
I'd believe that is there's absolutely no chance
in hell that this won't happen, right now it takes about 15000 to
20000 dollar a ounce of gold So, here is another way of looking at the
same thing, and it's a great way of looking whether gold is undervalued
or overvalued. If you take just the paper
dollars, that base money and you say there's a certain amount of
paper dollars, how much gold do we have as a percentage of those
paper dollars to cover them? And so gold is expensive when we've got too much gold,
more than uh… paper dollars, and it's cheap when we don't have enough,
and it's very cheap uh… when uh… when it's way down here. Well, this is where we are as far as just the paper
dollars. Here's when you add outstanding revolving credit. This is what a debt collapse or
currency collapse looks like. We borrow uh… two units of currency
into existence here uh… and uh… to do that we promise to pay back, we're borrowing
this currency into existence with the bond the bond is over here,
say you've got uh…
These two units
of debt plus interest, so you owe back more than you're borrowing into
existence but then each month you're going to pay off a small portion of that debt, and so the next month we go
on borrow more into existence and we pay off, we keep on hang
off that debt every month and we always have to borrow more into
existence than we're paying off, but notice something. You notice how the debt is now growing
faster? It was only fifty percent higher but now it's a double,
it's a hundred percent. It grows faster than the currency supply. There comes a day where
this is unsustainable. If the public gets scared and they
stopped borrowing currency into existence and they save
up and pay down debt, the whole thing goes
into a deflationary collapse. This is what I was predicting and this
is what is happening right now. Thank you. uh… This is how much debt we owe
compared to the size of our economy.
If you owe fifty cents and
your economy is a dollar you owe fifty percent of
the size of the economy. If you owe five hundred billion and your
economy is one trillion you owe fifty percent the size of your economy. It's the same either way so uh…
this what this chart shows, is how much debt
the United States has, the National Debt, compared to the size of its economy, and it goes back to 1792, which was
when the original coinage act of the United States was created, and there was debt leftover from the revolutionary war and,
so that's this debt here at the very beginning of the chart, right there and what you see is that it never
exceeded the fifty percent level, until World War Two, this includes the Civil War, World War One and the
establishment of the Federal Reserve, uh… the Great Depression. You see that during the twenties we were
growing the economy faster than the debt, and so the debt compared to the size of
the economy is a smaller and smaller uh…
Portion because we were having the roaring
twenties, the economy was growing and the debt wasn't
growing as fast, so on this chart the debt is shrinking
through the twenties but then suddenly in 1930 it goes up. Why? It wasn't because we were borrowing a
whole bunch of currency and going into debt, it's because
the economy shrank and our debt
stayed the same, so that was the last great deflation
that got us into uh… a deeper debt because we couldn't afford to
pay the debt that we owed, uh… the economy shrank faster then we do the deficit spending for
World War Two and we can exceed this level of fifty percent because now we
have this fiat currency system, where we could just borrow
currency into existence but when you do that a bond, bonds range from like a month to
thirty years out into the future that you're going to pay them back, that means we're borrowing prosperity
out of the future.
You remember how I said you save up some of the currency
supply and you can pay tax to pay the principle plus interest. So the prosperity that we're
enjoying right now, this moment is owed back in the future. We have to pay a principle plus interest
for the privilege now of having currency that we can use. Somebody is skimming off
the top basically, this is the way the banking system sort of skims
off the top, is through inflation there's people that get
rich off of this without having to do any work and putting their value into the
system, they get to skim purchasing power out of the
system through inflation. But every dollar that we borrow into
existence puts us in debt in the future, so we are every year borrowing
prosperity out of the future and we spend it today.
The average roll over for all the bonds
is about four-and-a-half years, so the prosperity that
we're enjoying right now we owe back uh… we've got to pay for
four-and-a-half years from now. And right now the taxes
that you're paying are paying for prosperity
during the Bush administration, We have already
spent it, it's gone. So then we started growing the economy
faster than we were doing deficits spending, so our debt compared to the size of the
economy goes down during the Korean War, in Vietnam, and then we have the end of the gold
standard and then Reagan says: "deficits don't matter" we can just go ahead and
spend as much as we want. uh… The debt increases. Just before
this era of the financial crisis, there's a little slope where it starts to go
down, that's the Clinton era.
They said that we had surpluses, it was uh… bullshit. If you look.. I don't look at the
government's accounting of whether or not they say we have a
surplus or deficit, what I look at is the National Debt. Did it go up? If it went up it meant we
spent more than we had. If it went down it means we had a surplus, we had excess
income above what we're spending and during the Clinton years
there was never a year where the actual national
debt went down. I don't know of the people in the United
States, from the United States here, remember when uh… Gore and Bush
were running against each other they're both telling us how they were
going to spend all this currency that was flowing in.
You know, they were each trying to compete on all the free crap they're
going to give us in the future, and uh… you know, that's how uh… actually that
isn't how Bush won… but that's another story. Anyway, These statistics are from the
congressional budget office. This is what our government is going to tell us,
is going to happen in the future, and it's not pretty. It's completely unsustainable,
it is impossible, it cannot happen,
you can't have debts that is ten times
the size of your economy. It's not possible. Everything comes
to a screeching halt first, and so something has to change. Right now, uh… I don't know if it got passed or
not, but the government I dont't keep up with the news,
I consider it all short term noise, it distracts you from what is
really going on, so I'm not sure did uh…
They settle on some sort of
budget and is the government gonna keep on running? Does anybody know this? Yes, they did? Did the republicans, who were trying to get
this thing passed whose gonna pay down the debt that they win? There's some sort of compromise. You see, it's deflationary. It would cost a financial collapse to try
and pay down this debt, you have to go into.. In order for us to maintain the levels we've
got and to maintain the prosperity Obama has to be a…
We have to be twice as far in debt when
he leaves office than when he came in. Or the whole thing is
starting to collapse. uh… so, more proof that we are
going into a deflation first. This is what a dead cat
bounce looks like. This is the stock market.
The stock rises uh… it peaks, takes a little dip, a bunch of investors come in, thinking
that they're scooping up deals and they start buying and it rises again and then
the crash continues because when they started buying it hadn't
reached fair value yet. It had just rollover taken a little bounce in
the market that's still uh… looking for a fair value so there's
the dead cat and it bounces.
There's the Nasdaq, so that's uh… uh… what a dead cat bounce
looks like. The initial crash on the Nasdaq was
38 percent. The total crash was 78 percent. This is the Dow in the 1929 crash
and the dead cat bounce, uh… the initial portion of
the crash was 48 percent, and the total crash was 90 percent, so in the first examples was
38 percent, 78 percent. 48 percent, 90 percent, so if
the initial crash is larger the rest of the crash
is going to be larger. We are going through a giant
version of the 1929 crash or the Nasdaq crash. We just had the biggest
crash in history: the Dow which is supposed to be the biggest,
safest, securest. The 30 largest companies in the United States uh… just crashed by 56 percent and we are in a
dead cat bounce, meaning that ultimately the total crash should be greater
than 90 percent from its high. This is the best way of measuring the value of a stock, and I'm sorry if I'm going
fast and this isn't sinking in, I've got lot of stuff here and
I've got to cover it, only got twenty minutes left, I gotta show you that the world's
stock markets and real estate bubbles have to continue crashing because all it is is that market trying
to seek fair value, it's trying to seek equilibrium, this is what the markets do, it is their job.
The SP 500, these are PE ratios,
how many here knows know what a PE ratio is? OK, how many do not? It's OK, raise your hand
and say that you don't. OK, it's the price of a share of stock divided by the earnings
of the company. So it's basically how much is this
stock costing me, compared to how much is the company making. And one of the best ways, the entire industry stock market, the
industry, the financial industry agrees that this is
probably the best way of measuring the true value of the stock,
whether it's overpriced or underpriced when you're buying it.
The S&P only goes back to the
year 1950 but professor Robert Shiller of Yale University uh… reconstructed the S&P and took the
500 largest companies in America and took it all the way back to the year 1880. So you have a hundred and twenty years or two hundred
and twenty one years of data here. Fair value is when PE ratios are about
12, meaning you're paying twelve times the
earnings of the stock, so if you buy a stock its going to…
if nothing else changes and the company continues making the same amount
every year, it's gonna take you 12 years to make your uh…
Money back and be in profit. Undervalued is anything under 10,
overvalued is 15 to 18, anything over 18 is a bubble, and so here's the data
going back to the year 1880 and what you see here is that there is no time in history that
we go from fair value to overvalued, once it hits overvalued, it does not stop, it bounces
on the way down, and visits undervalued, overvalued,
undervalued, overvalued, undervalued, overvalued, undervalued. The greatest bubble in history, the year 2000 PE is at almost 45, absolutely insane
investing in a stock and having to wait 45
years to be in profit. This was nuts and people were chasing
stocks like crazy. This is the tech boom and so on. Well, it crashed down the fair value
during the market crash of 2008 and it bounced back
into a bubble, where PE is about 23 or 24 right now. The stock markets seek equilibrium. They
seek fair value over the years. This is their job, that is what they do. There's a famous trader
named Bernard Baruch who said in the short term the stock
market is a voting machine, is like a stock machine, I mean, it's
a slot machine or voting machine it does what the public
thinks it should do.
The public chases after
something, it goes into a bubble, but in the long term
it's a weighing machine, it balances, its scales balancing each other. That's what the stock market is
always trying to do: seek fair value. It's only there for brief
moments in history, but the point is that every
time we are in a bubble, it visits severely undervalued and the
greater the bubble, usually the greater you overshoot fair value. uh… This is the second best way of
measuring a stock's value: the dividend yield. If you
buy a stock for a buck and that company pays you six cents every
year into your brokerage account you're getting a six-percent yield. I have inverted this chart because uh… the higher the yield the more
undervalued the stock is, the lower the yield more overvalued it is. So I inverted it, so
the bubbles are up and undervalued is down, uh… so fair value is uh… four and a half
to almost six uh… so there you see the
same pattern as before, but here's what's alarming.
It's that there is no time in
the first 118 years of data that we have been
in a bubble this large. This is absolute insanity
and it can not last. There are two ways that the
market can seek equilibrium. One: the market goes sideways for a decade
while we have raging inflation that will balance this out and then bring
dividend yields and PEs back into line. Two: it crashes, the markets go down, the currency supply is collapsing, therefore this has to be a
deflationary collapse, this can't be an inflation in what they
call an invisible crash.
Uh… these are the
world stock markets, so there you have the US stock market,
the England stock market, Germany stock market, this is Singapore and Japan. Notice that before the year 2000 Singapore and Japan used to trade in
different direction than the United States. The United States could be going up
while their stock market was going down. But before the year 2000 all of the markets
of all the major economies trade in the same
direction at the same time. Here is Brazil and here is Russia and in about the year 2003 they started trading in the same
direction and since the market crash of 2008 all markets,
all world markets go the same direction
at the same time. The S&P, the Dow they're way,
way overvalued in a bubble, we're having a deflationary
collapse of the currency supply, the markets have to go down, when they do, the rest of the world's,
where the United States goes so goes the rest of the world. These markets all have to collapse.
Now, we have some real estate bubbles going
on. The real estate bubble in the United States uh… took it basically burst in
the year 2007-2008 and it's been falling but I measure something
called the mortgage rent ratio, uh… fair value on a home is
if you're paying about a uh… uh… a dollar to a dollar five for the mortgage, the monthly
mortgage on a thirty-year mortgage plus your carry cost
like insurance and stuff, for each dollar that you can rent the
house for, if you were going to rent it.
We went into a bubble of a buck
twenty five in 1989-1990, fair value is about a buck five, and then we had the recession and it
went to ninety cents, on national average in the year 1995 uh… real estate cash flow by ten
percent, a single-family medium price home in the United States except you couldn't get a loan
back then, credit was tight, the economy was lousy, then we went into this real estate
bubble that was the greatest bubble in world history, where people are paying a buck
eighty-five, a buck ninety, almost two bucks for each dollar they
could rent the house for. uh… And then that bubble popped, and it came back down not to fair value but
to a buck twenty five and bounced, so it came back
down to the height of the previous bubble, it bounced, and we are right now at a buck twenty
five, so valuations on real estate are still as high as they were
in the bubble in 1989.
They have to come down or rents have to go up. This is all deflationary, which means
that rents are not going to go up, real estate is gonna come down. All of this travels
together, like I said. Now, when the world
stock markets crash, does anybody know about the bubbles that
are going on, the real estate bubbles that are going on in
the rest of the world? How many here are watching the videos
that we produce each week on Youtube and so on? OK, do you enjoy those videos? Yes, good. Are they informative? Yes. Do we try to sell you anything? No. All we do is we educate. So here is a video that we made in
Las Vegas uh… this is our driver very well-informed
man, very educated. uh… he was very informed on world
finance, the stock markets, real estate, he really knew what
was going on in Las Vegas and behind him there is a
uh…
Big casino project I can't remember the name of this one uh… there's the… Venetian in the background and
there's a building going up in front of that. this is the the casino project
that they were developing uh… and that's another shot of it. See that tall building behind it? That's a hotel called the Fountainbleu. If you go to the other
side of the Fountainbleu what you notice is that there's a bunch
of windows that are boarded over, this thing is skinned on the outside,
it's not finished on the inside, they've got a billion and a half into
it, now looking for another three billion dollars to finish this thing, and this stuff is all over Las Vegas, it's not
just in Las Vegas, it's all over the world.
This is in Moscow, this is a development called
Moscow's City Center, there's the project, you can't read it
unless you read Russian, uh… but all of these beautiful
buildings here, there's nine buildings one of them was completely in the
framing stage, another one was uh… half way completed of the others there are two that are
occupied and one that is one-third occupied, the rest are just skinned over, and they're not
completed on the inside. The project is at a standstill, uh… and then in front of this project there's
this giant hole in the ground and this is where the centerpiece
was supposed to be. This was Russia's bragging rights, this was going to be the
tallest building in Europe, Federation Tower, and it's
a hole in the ground, and it'll remain a hole
in the ground, that will never be finished.
Does anybody know what the Singapore
flyer is? I've only got ten minutes and I'm not gonna be able
to finish this thing, It's a big ferris wheel in Singapore, it's
one of the tallest in the world if not the tallest, I think it is the tallest, and here I am looking at
their real estate bubble and if you noticed there's cranes on top
of all these buildings here, uh… there's cranes everywhere. Look at
all those buildings being built uh… All bubbles burst, we are in
a worldwide credit bubble, when these markets rollover the giant real estate bubbles that were going up and then took a
little breath when our markets crashed their bubbles kept on going after
pausing, when our real estate bubble uh… popped and started
reverting back to fair value. The markets are just trying to seek fair
value, that's all they're doing. But people and the world
central banks go: "Oh, my God!" every time there's a little crash "we gotta do something about it!" It doesn't feel good to be in a recession
so they try and pump everything up but they don't realize that they're
just making everything worse later.
Everything they do is gonna come
back to haunt them as more uh… inflation eventually uh… or this deflation I'm talking about
is the expansion of credit contracting. Here's another thing that is going on that is going to mean that this decade
is different than anything else that you have known. uh… People don't realize
that every 30 to 40 years the world has an entirely
new monetary system. It changes every 30 to 40 years. In 1873 Germany started
the Classical Gold Standard uh… and by 1900 pretty much every developed country
on the planet was on the standard where every note in circulation that was
put out by their treasury was backed by an equivalent amount of gold, so it was 100 percent backing, uh…
Then World War One happened, all the combatants in Europe went
off of the Classical Gold Standard and started printing, and between the wars we had something called the gold
exchange standard where it was a mixture of debt and uh… gold backing the currency uh… then that was a very poorly
constructed man-made system, and anything man-made
cannot last, so basically they were uh… the Federal Reserve, under the Federal
Reserve Act there was a 40 percent reserve ratio and they were allowed to put uh…
A fifty dollar bill into circulation
for each twenty dollars worth of gold that they had
backing the fifty dollars, so they're putting claimchecks on gold
in excess of the amount of gold that they actually had. Ever since the Federal Reserve was born
we have been living under a lie. And if people say that we've got free
markets in the United States, they're wrong. You cannot have free markets
without free market money. Your currency is fifty percent
of every transaction, all of the transactions
are the free market. If there's a small group of men
deciding what currency is and how much the cost of currency is
going to be, the interest rates, that isn't a free market.
We do not have free markets,
we haven't had since the year 1913, then we have uh… something called the
Bretton Woods system, the Classical Gold Standard broke down, the Bretton Woods
system was from 1944 where uh… all of the world's uh… currencies would be backed
by the US dollar at 35 dollars an ounce and foreign
central banks only could exchange those dollars
for gold at the New York Fed, for 35 dollars per ounce, so all the world's currencies were
pegged to gold but through the US dollar. uh… All of these countries started
asking for dollars and gold flowed out of the vaults and Nixon had to take
us off the gold standard in 1971, so you've got 30 to 40 years,
30 years, 28 years, 39 years plus what's next? In this decade there's going to be an
emergency meeting of the G7, of the G20 countries, and there going to be trying to hash out a
new world monetary system and they're already working on it, they're trying to figure out what they're going to do
when the dollar collapses.
Uh… Here's the differences between the seventies bull market and today and
this is the reason I say that you really can't compare them,
their isn't any comparison, and remember in eight years gold went up 24 times its price
silver went up 36, these are enormous winnings in such a
short period of time. uh… In the seventies it was basically
North America and Western Europe, that drove the price
of the precious metals, the exchanges were the
London Metals Exchange, and the Commodities Exchanges
in the United States, that's where the price of
gold and silver was set. All of the USSR they could not participate, there were no
exchanges there, there's no market for gold and silver and even if you could buy some, it was on
the black market, so your investment did not affect the worldwide price. Those
people were excluded in participating in this bull market and driving
the price of gold forward.
China under Mao, same thing, first of all everybody was making a
subsistence living, very few people even had electricity let alone being able to
go and invest in gold. India, Mexico, South America, these
countries were all very poor at that time, the world's richest man is Carlos Slim, and uh… he lives in Mexico City, uh… you have massive investors in all
of these countries now and in Shanghai investing is a sport, people will sit around in a room like this
and watch tickers go by and make their bets, uh… the rest of the world,
Africa, I mean, pretty much the whole rest of the world was excluded in
that bull market and gold went up 24 times and silver 36. So what…and back then too, news traveled very slowly, you turned on that old vaccum tube
TV set waiting 60 seconds for it warm up and then Walter Cronkite would
come on give you the price of gold and or you open the newspaper
the next day and uh…
Get your news 24
hours after it happened, and then you pick up the telephone and call
your broker and if you were lucky he can get an order onto the floor of the
exchange for you the same day, but possibly the next day. So, news and reaction
time was very slow. uh… Also the development
of the investor mindset. before the Arisa Act and before
Nixon took us off of gold, before 1971 when Nixon
took us off of gold if you went to work between your
late teens or mid twenties, depending on whether you went
to college or not, you could expect that if you saved ten percent of your
income every month then when we got into your sixties you can
retire and live off the interest in your savings account.
Can you do that today? Nobody
can live off the interest of its savings account, unless he got
twenty million bucks sitting there, fifty million bucks, that's the
only way you're going to get by. and you wouldn't leave in the savings
account because you're losing to inflation, your principle is
getting whittled away because of inflation. uh… So, my parents' generation were savers not speculators and investors. uh… What's different today? Today, the entire world
can participate. It's roughly ten times the
populations that can participate in this bull market. News travels at the speed of light over
a tremendous variety of media outlets. You can get the news on your cell phone, on your laptop, uh… And an investor crossing the Sahara, we're out filming in front of the
pyramids and there's this Bedouin guy sitting on the ground and he's
got some sticks and he's starting a fire to make some tea, and he's on his cell phone.
This guy crossing the desert can take his
Apple Iphone, check the price of gold and place a trade right there. Is this a different world or not? Yes? OK? uh… Then you have the development of the
investor mindset. Along comes the tech bubble, and Nasdaq and everybody got themselves a
trading platform and became a day trader, uh… and then they got
punished, the market crashed. Then you've got a real estate bubble that
happens and everybody starts chasing real estate, and then they get
foreclosed on, on real estate, the bubble popped at least
here in the US and England, the bubbles are still going on all down
the coast of China and Australia and New Zealand, those bubbles are massive and
they're about to burst.
Uh… And so they got punished, nobody has been punished on
precious metals for 30 years. Our memories just aren't
that long so the next great bubble is absolutely
destined to be precious metals. Nobody has been burned out on it, you
know, nobody that's chasing after an investment to either secure their retirement or to
buy them that new Lamborghini. uh… And so the development of the investor mindset,
this is really critical to try and figure out.
How many units of currency around the
planet are gonna come chasing the same tiny little pile of gold and a
pile of silver that's about one fifth the size that was in 1980? uh… It's at least ten times the
eligible populations, each one of them has at
least ten times the currency, and, you know, as I think about this it's
probably greater than these figures I was saying that there
was somewhere between ten and one hundred times
more investors but think about this: In all of the USSR and China, more that
half the world's population, there was not one investor, not one and today it's the sport in Shanghai.
So i think this is probably over a
hundred, it might be a thousand I don't know. So you can take these figures and
possibly add a zero to them and that's the potential amount of units of
currency that can come chasing the same… I mean we had 2 billion
ounces of gold back then, uh… on the markets, and today there's
2.2, so it's 10 percent more gold, but silver there's only about
600 million ounces of silver on the exhanges, 500 million
ounces, 600 million ounces. uh… Here's the 747, and here's a little man with very strong
legs that just dropped out of the sky, this is for scale, and if you took all of the
silver ever mined in history it would fit into a cube about that size
on the scale and all the gold ever mined in history would be a cube about that size,
however, gold has two basic functions: money and jewelry, and that's a pretty much it.
Only 5
percent of gold production gets used in industry. Silver is the second most useful
commodity known to man, oil is the first with about 30.000 uses, silver is second with about 10.000
uses but we use it in microscopic amounts. When you type on the keyboard you're
typing on silver, when you look at a DVD or a CD you're looking at silver, when you look
in the mirror, you're looking at silver. When you look through a thermal pane
window, you're looking through silver. It's everywhere, it's a biocide,
it's going into superconductors, it's going into RFID chips, but you know what?
None of that matters.
What's going to drive the price of
silver is investment demand, it's the public rushing into this and
when gold gets too expensive for the public, they switch their preference to
silver, this is what happened back in in late 1979 and early 1980, silver lagged gold and then uh… silver
just exploded because gold got too expensive. But silver has already been
outperforming gold, and there will come a day when there's
commentators on MSNBC, Fox News, CNN they're going to be showing with… Whenever you're in a bubble,
whatever is in a bubble and the public is chasing, they want to hear about,
and the news accommodates, they give you whatever you want to hear
about, they don't tell you what they should be telling you, they tell you what
you want to hear.
And there's going to be
people on air like me showing charts and saying: "Of course,
silver has been outperforming gold, there's less of it". "There's five times more gold for
investors to buy than there is silver" that's the reason is been outperforming
gold so, is it possible that silver could actually exceed the price of gold? Sure, it is. All you have to do is look at
these insane bubbles that have happened in the past like
the tulip mania of 1637. I don't know if it will, I don't
actually expect it to, but it definitely could because it's
more rare and the markets do something called the price discovery
mechanism where they try to find out, uh…
they set the price based upon
the equilibrium that's determined by the rarity of the two items. uh… That's been going
on for centuries, the price discovery mechanism
is not broken, it still works, uh… and I expect it to work, so we use up
the silver, so the result is, this is what they look like today. Now, cubes are deceiving that so
the gold cube's actually about four, five times larger than the silver cube. If you take a cubic foot,
that's a foot by a foot by a foot. And if you make it 2 feet by 2 feet
by 2 feet, it hasn't doubled, it's now 8 cubic feet. So, uh… as you double the measurements on
a cube, it goes up in volume eight times, so there's actually about four, five
times more gold than there is silver on the exchanges that
investors can buy, so when people come flooding into this,
I do expect this…
Right now silver's value is 1/35 of gold. I expect it to outperform gold
by at least a factor of 3.5, I'm expecting a 10/1 ratio
at an absolute minimum. uh… Silver being 1/5 of
gold's price is perfectly logical, if it's going up slow and it hits gold's
price then all the industry will just switched to gold because that's the
only other metal they can use in most of these instances. They can use platinum, rhodium,
paladium and gold but they only mine 5 million ounces each per year of
platinum, rhodium and paladium. They use 900 million
ounces of silver so there's not enough of those other
metals, the only alternative to silver in most of these applications, like
keyboards in electronics, is gold. uh… So if it was going up slowly and
it did hit the price of gold, gold can stop it in its tracks, if there's a
rush gold can go past, however silver is much cheaper to mine than
gold and it wouldn't stay there. uh… We are always trying to figure
this stuff out at our company, trying to measure it and see
when to buy, when to sell.
Now… Can you roll that… This is a clip from one of our Youtube videos,
and this is the insiders video that uh… our customers at Goldsilver.com,
they got to see this two months ago and then we just released it, and so this is the type of
information that you get, and when we're nearing a top, our
customers are going to be informed on what we are doing, so, can you roll that video, please? And what you see is that when you're
coming off the bubble, when it's overvalued it has never in 130 years, just gone back to fair value and gone
back up into a bubble, it always continues on its uh…
Way down in a
bear market until it goes to severely undervalued and then a new bull market
starts again and it start rising. Well, we are in a bubble, it has to seek equilibrium,
it's probably gonna blow right past it and go to severely
undervalued, just like it has every time for the
past 130 years. So real estate and stocks are
doing this at the same time, while we're in a bull market for
precious metals and there is a problem with currencies.
So we are going to be measuring all
these things very carefully, and then using some confirming
indicators that should flash to us when to get ready to sell and
we're going to be letting you know, so thanks a lot, I hope you have some
great holidays, I'll see you later. I was standing in front of a green screen just sort
of drawing this charts out of memory and our animator Adam had to sort of flow the charts
in front of me and move them around to match them up with my finger, but uh… uh… that is what you
get as a customer, it's on the Youtube channel "Why Gold
And Silver?" so if you do a search for "sell silver Mike Maloney", because it's when to sell your gold and silver
so "sell silver Mike Maloney" you'll get that video in its entirety,
and there are dozens of videos on "WhyGoldAndSilver" "GoldMikeMaloney" and "WealthCycles".
So those are the 3 Youtube channels that you can go to, and each one of them
has a few dozen videos on it. uh… This is the gold panic
in 1948 in Shanghai, if you wait until the last minute, I'm not very good at swearing,
Robert Kiyosaki is great at it so I usually don't swear much on stage, but if you wait until the last minute,
you are shit out of luck, up shit creek, without a paddle in a
barbed wire canoe, fucked! Thank you! Unlike the second
to the last frame here, here's one thing
people do not realize. It does not take Ben Bernanke to print the dollar
into oblivion for gold to go to 10.000 dollars an ounce,
50.000 dollars an ounce, 100.000 dollars an ounce. All it takes are a few very wealthy investors
to try to get theirs before the masses wake up
and the herd comes charging in, but this is the masses,
this is the people waking up out of their beer-and-football
induced comas, coming in at the last second, well,
this is sort of a different situation, because their currencies were going to
to go to zero because of war, but basically, you've to get in
ahead of the trend, and then get out when everybody
else is panicking like that.
Like I said, this is the greatest
wealth transfer in history, but you have no idea
of the scale until you think. If we do have a change
in our monetary system and if we have to go back to
some sort of asset backed currency that means that the people that are
holding non asset backed currencies, which is all the currencies
on the planet today, their wealth is transferred to
the holders of precious metals. This is the greatest wealth transfer in
history, therefore it is the greatest opportunity in history. By the way, is Stephanie Wing here? Stephanie stand up for just a second.
Stephanie's grandfather's sister was the Secretary during the
roaring twenties and through the stock market crash and then
in the depths of the Great Depression, she started buying stocks
when everybody else was selling and when stocks were like the bad,
and the poisoned investment that you did not want
to get involved in. Stephanie's grandfather's sister
started buying the stocks, she is an example of wealth cycles, she rode this stocks up and I
don't know exactly when she did it, but she must have sort of innate sense
that the stocks were overvalued, and she sold the stocks and bought real estate.
If you go to the French Embassy in Washington DC that was her hotel, thank you, Stephanie.
So, thank you very much, we'll see
out in the lobby where you can get Free 100 trillion bucks from us, thanks! So, I just came off
stage of the event, and you know, it's great, the event went great, all the information
was very well received, it was a great audience, but, you know? Even though it's so rewarding to talk to the people live
and hear their reaction still reaching a few hundred or a few thousand people at a time. It's not good enough any more,
we're really in an emergency and we need to start reaching
millions of people at a time, and that's why I'm trying to go more video oriented, than travelling around the planet
like I have been, country by country, telling 400 to 4.000 people at a time. So, you know, hopefully I'm hoping that I don't
have to make any more personal appearances, that I can just produce videos, write books
and get the information out there as fast as possible and reach millions instead of thousands.
Well, we've been working on a
documentary and we have been around the world, Taiwan, Singapore,
Australia, New Zealand Colombia, Peru, Ecuador, London, Saint Petersburg (Russia), Moscow Germany, Rome, Paris, Athens (Greece), and we shot in front of the pyramids in Egypt,
it's been a spectacular trip, trying to put together this documentary and I think that's going to be really enjoyable
for people and highly educational. No chance in hell that
it's gonna happen, as far as a one world currency
that everybody is going to use. But what you see here
is that in the XAU since the early eighties, on the average, gold and silver outperformed the
stocks, on the average. …you've gotta get started, that'why…
the free markets always overwhelm manipulations, it's a doomed plan, eventually it will fail, but, they've got to position so accordingly,
they've got to be ready, you can't wait… because you can see 200, 300 point gap days for gold.
Basically,you know, one
thing you find out is that all fiat currencies eventually
fall to their intrinsic value, because they ruin it by puttink ink on it.
It's the amount of energy you can extract from it, the amount of the BTUs, from combustion, when you burn it, and you saw
that during the Weimar hyperinflation, people used the currency as fuel to heat the house.
Currencies have been backed by oil, by gold and silver by land, but as soon as you remove
some things that you can't, some things that put financial constraint, where
you just can't print as much currency as you want, the currency is pretty much doomed. It's beyond astonishing… If it
wasn't for the horrific effects, it would be more ludicrous, it would be actually comical,
that we can stop and have some fun with, and it's actually horrific, if you look back
in history in the last 3000 years, every episode of this kind of silly crap ended very very badly…
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