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You love your children unconditionally. From sleepless nights with a newborn to watching them take their first steps, you've sacrificed for them their entire lives. Now they're struggling in an economy that feels stacked against them. Every parent's instinct is to help—but what happens when helping them hurts your retirement security? Recent studies reveal a sobering reality: 50% of parents now provide regular financial assistance to adult children, averaging nearly $1,500 monthly.¹ More alarming, 61% of parents sacrifice their own emergency savings to help their kids.² For Washington State public employees approaching retirement, this trend threatens decades of careful DRS planning. The truth is hard but necessary: You cannot pour from an empty cup. As a parent, I understand the deep desire to shield our children from struggle. When I watched my 18-month-old daughter take her wobbly first steps, I wanted to catch her every time she fell. But I know she needed to learn balance on her own. The same principle applies to adult children and financial independence. Compromising your retirement security often shifts an even heavier burden to your children later. Core Principles: Your Financial Oxygen Mask 1. Your Retirement Cannot Be Borrowed Unlike college expenses or homes, you cannot get a loan for retirement. Your DRS pension calculation is final once you retire—there are no do-overs.³ 2. Financial Independence Is the Greatest Gift Just as we teach toddlers to walk by letting them fall and get back up, adult children need to experience financial challenges to develop resilience. Enabling dependency robs your children of the confidence and skills they need to thrive. True support means helping them build their own wings. 3. Emergency Boundaries Are Sacred 69% of Generation X parents sacrifice their emergency savings to help adult children.⁴ This creates a house of cards that benefits no one when it falls. 4. Clear Expectations Prevent Resentment Open-ended financial support breeds anxiety for parents and entitlement in children. Boundaries protect relationships and finances. 5. Washington State Advantages Matter With no state income tax and strong DRS benefits, you have unique retirement advantages—protect them.⁵ Your 3-Step Financial Oxygen Mask Strategy Step 1: Secure Your Own Foundation First Before helping anyone, ensure your retirement is on track. Use DRS benefit estimators to confirm your pension will cover basic expenses. If it won't, every dollar you give away delays your financial security. Your Foundation Checklist:
Step 2: Create Bounded Support Systems Help strategically, not emotionally. Create a separate "family support fund" with clear limits that never touch retirement savings. Smart Support Boundaries:
The goal isn't perpetual support—it's launching independent adults. Focus on building their capacity, not solving their problems. Independence-Building Support:
The Partnership Model Instead of giving money, create win-win arrangements. Adult children living at home pay reasonable rent covering increased costs. They save money while you protect your budget. The Emergency-Only Safety Net Provide help only during genuine crises—job loss, medical emergencies, or unexpected major expenses. This teaches resilience while offering security. The Investment Approach Support purchases that build their future: education, professional development, or down payment assistance for appreciating assets. Avoid funding consumption. Hard Truths About Retirement and Family Support You are not responsible for your adult children's lifestyle choices. You raised them, loved them through skinned knees and teenage heartbreaks, educated them, and launched them. Their struggles, while painful to watch, are theirs to overcome. Just as you wouldn't carry your toddler everywhere to prevent them from falling, you shouldn't carry your adult children financially to prevent them from learning. Sacrificing your retirement security helps no one long-term. When you run out of money in retirement, your children will face caring for you financially—a burden that could crush their own financial futures. Financial boundaries strengthen relationships. Children who learn to solve their own problems develop confidence and respect for themselves and their parents. Your peace of mind matters. Nearly 80% of parents supporting adult children worry about their retirement security.1 This stress affects your health, relationships, and quality of life. Supporting your children and securing your retirement aren't mutually exclusive—but they require intentional balance. Your retirement security is not selfish; it's responsible parenting that extends into their adulthood. When you model financial discipline and independence, you teach your children the most valuable lesson of all: how to take care of themselves. As I plan for my young daughter's future, I'm reminded that the greatest gift I can give her isn't a trust fund or endless financial support—it's the knowledge that she's capable, resilient, and strong enough to build her own successful life. The same applies to your adult children. The greatest gift you can give your children is not financial dependence on you, but the confidence that comes from knowing they can thrive on their own. Put your oxygen mask on first—then help them put on theirs. Sources and Resources -Seth Deal
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Picture this: You're 57, eligible to retire from your state job with 30 years of service, but you won't be eligible for Medicare for another eight years. You assume your PEBB retiree coverage will handle everything until then. Then you discover that without employer contributions, your health insurance premiums jump from $200 to $850 monthly, routine dental cleanings cost $150 out of pocket, and if you need long-term care, Medicare won't help at all until you turn 65—and even then, coverage is extremely limited.¹ For state and local government employees in Washington, understanding what your insurance won't cover is crucial whether you're retiring before or after 65. The gaps in coverage create different challenges at different ages, and can create unexpected expenses that derail even the best retirement plans. Core Principles Understanding healthcare coverage gaps requires grasping these key principles that change dramatically at age 65: 1. Before 65: You Pay Full Freight for PEBB Coverage As a retiree under 65, you'll pay the full premium for PEBB coverage without employer contributions. This can mean monthly premiums of $850-1,200 compared to the $200-400 you paid as an active employee.² 2. After 65: Medicare Has Major Coverage Holes Traditional Medicare Parts A and B exclude routine dental, vision, and hearing care entirely.³ Your PEBB coverage becomes secondary, but significant gaps remain. 3. Long-Term Care Coverage Is Almost Nonexistent at Any Age Before 65, PEBB offers minimal long-term care coverage. After 65, Medicare only covers skilled nursing for up to 100 days after a qualifying hospital stay.⁴ Most long-term care is custodial care, which neither covers. 4. Prescription Drug Coverage Changes at 65 Before 65, you rely on PEBB prescription coverage. After 65, Medicare Part D caps out-of-pocket costs at $2,000 annually starting in 2025, but this only applies to covered medications.⁵ Your 4-Step Strategy for Managing Healthcare Coverage Gaps Step 1: Understand How Coverage Changes Before and After Age 65 Before Age 65 (Early Retirement): As a public employee retiring before 65, you can continue PEBB coverage, but you'll pay the full premium without employer contributions. Monthly costs jump from roughly $200-400 to $850-1,200 for medical coverage alone.⁶ You're also not eligible for Medicare, so PEBB is your primary coverage with all its limitations. After Age 65: You must enroll in Medicare Parts A and B to keep your PEBB coverage. Your PEBB plan becomes secondary insurance, helping cover some of Medicare's gaps. However, new limitations appear that didn't exist with your working-age PEBB coverage. Key action items:
Before Age 65: PEBB retiree plans offer some dental and vision coverage, but with annual maximums typically around $1,000-1,500 for dental. Once you hit these limits, you pay full price. Hearing aids aren't covered at all. After Age 65: Medicare excludes routine dental, vision, and hearing care entirely. Your PEBB coverage may help, but gaps remain significant. Average annual costs for retirees: $766-$992 for dental care depending on coverage.⁷ Universal Costs Regardless of Age:
Long-term care means you need help with daily activities—bathing, dressing, eating, using the bathroom. Neither PEBB nor Medicare covers much of this, regardless of your age. The True Costs in Washington:
For Early Retirees (Before 65): Your biggest challenge is the dramatic increase in premium costs plus coverage gaps. Calculate:
Alternative Approaches for Different Retirement Ages For Early Retirees (Before 65): The Bridge Strategy: Purchase temporary health insurance to bridge the gap to Medicare eligibility, then switch to PEBB plus Medicare at 65. This can save money if you're healthy but carries risk. For Traditional Retirees (65+): The Medicare Advantage Route: Choose Medicare Advantage plans that include dental, vision, and hearing benefits instead of traditional Medicare plus PEBB. However, you'll lose PEBB coverage entirely. For Any Age: The Self-Insurance Approach: Build a dedicated healthcare fund rather than purchasing additional insurance. Plan to save 15-20% of your retirement income specifically for healthcare costs not covered by your primary insurance. Action Plan Take these steps in the next 30 days:
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-Seth DealYou've worked in the public sector for decades, building your career and your retirement benefits. Now you're looking at your four-bedroom house and wondering if it still makes sense. With your kids grown and your retirement approaching, downsizing might seem like the obvious choice. But the decision isn't always straightforward. The timing and financial impact of downsizing can significantly affect your retirement planning. Core Principles of Smart Downsizing Before diving into the details, here are the key principles every Washington public employee should understand:
Step 1: Calculate Your True Housing Costs Most people only think about their mortgage payment. Your real housing costs include much more. Start by adding up these monthly expenses:
Step 2: Assess Your Home's Current Market Value Washington's real estate market has seen significant changes in recent years. Get a current market analysis from a local realtor or use online tools as a starting point. Consider these factors:
Step 3: Project Your Future Housing Needs Think beyond just square footage. Consider your needs for the next 10-20 years. Ask yourself:
This is where downsizing can really pay off. Calculate the difference between your current costs and projected new costs. Case Study: Tom, a DRS Plan 2 member, downsized from a $450,000 home to a $275,000 condo. His monthly savings were:
Step 5: Factor in Your DRS Benefits Your retirement benefits can influence your downsizing decision in several ways. Consider how downsizing affects:
Not everyone needs to downsize completely. Here are three alternative strategies: The Rental Income Approach: Keep your current home and rent out rooms or convert part of it to a rental unit. This works well if you're in a high-demand rental area. The Gradual Transition: Move to a smaller home in the same area first, then consider relocating later if desired. This reduces the stress of major life changes happening at once. The Reverse Mortgage Option: If you want to stay in your home but need more cash flow, a reverse mortgage might work. However, this is complex and should be carefully evaluated with professional help. The Geographic Arbitrage Strategy: Move to a lower-cost area within Washington or to a state with favorable tax treatment for retirees. Your Action Plan Ready to move forward? Follow these steps:
Sources and Resources -Seth DealProtecting Your Nest Egg: A Washington State Public Employee's Guide to Weathering Market Storms6/12/2025 As a Washington State public employee, you've worked hard to build your retirement savings through your DRS pension, Deferred Compensation Program (DCP), and Social Security. But retirement brings a fundamental shift from accumulating wealth to preserving and spending it wisely. This transition from your working years to retirement years requires a completely different approach to managing market volatility and protecting your nest egg. Core Principles of Market Protection in Retirement Understanding these fundamental principles will help you make smarter decisions about protecting your retirement savings:
Step 1: Understand the Transition from Working Years to Retirement During your working years, market volatility was actually your friend. When markets dropped, your regular DCP contributions bought more shares at lower prices. Dollar-cost averaging worked in your favor over decades of saving. Retirement flips this equation completely. Now you're taking money out of your investments regularly to cover living expenses. If you're forced to sell investments during a market downturn, you lock in losses that can never be recovered. This is called sequence of returns risk, and it's one of the biggest threats to retirement security. Consider two retirees who experience identical average returns over 20 years, but in different orders. The one who faces poor returns early in retirement may run out of money, while the one who experiences good returns early may preserve wealth for decades. This is why your investment strategy must change as you transition from accumulation to withdrawal mode. Step 2: Build Your "War Chest" of Safe Money Create a buffer of cash and conservative investments equal to approximately 5 years of your maximum anticipated withdrawal needs. This war chest serves as your protection against being forced to sell growth investments during market downturns. Here's how to structure your war chest:
Maria, a retired state employee, maintains her war chest in a combination of savings accounts and the DCP Stable Value Fund. When markets dropped in early 2022, she drew from her war chest instead of selling her stock investments, allowing them to recover. Step 3: Implement a Guardrails Spending Strategy Guardrails provide a systematic framework for adjusting your withdrawal rate based on your portfolio's performance. Instead of withdrawing the same amount every year regardless of market conditions, guardrails help you spend more when your portfolio is doing well and less when it's struggling. Here's how guardrails work for spending:
Step 4: Coordinate All Your Income Sources Your retirement income likely comes from multiple sources, and each has different characteristics that affect your overall strategy: DRS Pension: This guaranteed monthly income provides your foundation and reduces the pressure on your investment portfolio. The larger your pension relative to your expenses, the more risk you can potentially take with your DCP investments. Social Security: Another guaranteed income source that adjusts for inflation, providing additional security. DCP Account: Your variable income source that requires careful management to last throughout retirement. Tom, a highway engineer, receives $3,200 monthly from his DRS pension and $1,800 from Social Security, covering about 70% of his living expenses. This strong foundation allows him to take a more growth-oriented approach with his DCP investments while maintaining his 5-year war chest. Step 5: Monitor and Adjust Based on Performance Review your guardrails and war chest annually, making adjustments based on:
Three Approaches to Retirement Portfolio Protection Conservative Approach: Maintain a larger war chest (6-7 years of expenses) with tighter spending guardrails. Best for retirees with smaller pensions who rely heavily on their DCP accounts or those who prefer maximum security. Balanced Approach: Use the standard 5-year war chest with moderate guardrails that allow for spending adjustments of 10-20% based on portfolio performance. Suitable for most Washington State retirees with solid pension foundations. Growth-Focused Approach: Maintain the 5-year war chest but use wider guardrails that allow for more aggressive growth investing. Best for retirees with substantial pension income who can handle more volatility in their discretionary spending. Case Study - Linda's Complete Strategy: Linda, a 65-year-old retired teacher, receives $2,800 monthly from TRS and $1,700 from Social Security. Her basic expenses are $4,200 monthly, leaving her needing only $300 monthly from her $450,000 DCP account. She built a $150,000 war chest (covering 5 years of maximum anticipated withdrawals) using savings accounts and the Stable Value Fund. Her guardrails allow her to withdraw between $15,000-$25,000 annually from her DCP based on portfolio performance, with the remainder invested for growth. When markets performed well in 2021, she increased her withdrawal to $22,000. During the 2022 downturn, she reduced to $17,000 and used her war chest to maintain her lifestyle. Your Action Plan
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-Seth DealAs a Washington State public employee approaching retirement, you've likely spent years carefully saving through your DRS pension plan, a DCP account, and Social Security. But have you thought about your complete legacy? More than just financial assets, your legacy includes your values, wishes, and the meaningful impact you'll leave behind. Many pre-retirees focus exclusively on money when planning for their future. However, a truly comprehensive legacy plan addresses both financial security and personal values. This approach ensures your life's work and wisdom continue to benefit your loved ones long after you're gone. Core Principles of Comprehensive Legacy Planning Creating a meaningful legacy requires attention to several key principles:
Your 5-Step Strategy for Comprehensive Legacy Planning Step 1: Create Essential Legal Documents The foundation of any legacy plan is proper documentation. As a Washington State employee, you'll need:
Step 2: Organize Your Financial Records Make it easy for your loved ones to manage your affairs by creating a complete inventory of:
Often, the items that cause the most conflict in families aren't the valuable ones, but those with emotional significance. Address these specifically by:
Beyond physical assets, your legacy includes your values, stories, and life lessons. Consider:
Your digital life is part of your legacy too. Make provisions for:
Case Study: A Washington State Employee's Comprehensive Legacy Plan Tom, a 63-year-old engineer with the Washington State Department of Transportation, created a legacy plan that went far beyond money. Here's how he approached it: First, Tom worked with an attorney to create essential legal documents, including a will, powers of attorney, and healthcare directive. He also updated beneficiary designations on his DRS pension, naming his wife as primary beneficiary with a 100% survivor benefit. Next, he inventoried his assets: a home in Vancouver worth $450,000, his DRS pension ($5,300/month), DCP account ($500,000), and personal property. He created a spreadsheet with account numbers and contacts for his financial advisor and attorney. For personal items, Tom created a memorandum listing who should receive specific items, including his collection of engineering books to a younger colleague and his grandfather's pocket watch to his son. To share his values, Tom wrote letters to his children and grandchildren explaining his life philosophy and hopes for their futures. He also established a $50,000 donor-advised fund focused on engineering education, reflecting his professional values. Finally, Tom created a document with login information for his digital accounts and instructions for handling his extensive digital photo collection and online subscriptions. Your Action Plan for Creating Your Legacy
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-Seth DealAfter decades of serving the public in Washington State, retirement offers well-deserved freedom. Yet for many DRS members, the transition from a workplace filled with daily interactions to more unstructured days can lead to unexpected isolation. About 43% of adults over 60 report feeling lonely regularly¹, and the impact on both mental and physical health can be significant. As you prepare for retirement from the public sector, understanding how to maintain and build meaningful connections deserves as much attention as your financial planning. Core Principles for Preventing Loneliness in Retirement
1. Plan Your Social Transition Before Your Last Day The months before retirement are crucial for establishing your social network beyond work. Too many public employees wait until after retirement to think about their social connections. Steps to take before retirement:
For many public servants, work identity becomes deeply entwined with personal identity. Retirement requires finding new ways to define yourself. Ways to develop post-career identity:
Unstructured time can lead to isolation. Creating routines that naturally include interaction with others provides both purpose and connection. Ideas for social structure:
Digital tools can help maintain and build connections, especially important in Washington State where weather and geography can sometimes limit in-person gatherings. Effective ways to use technology:
Physical health limitations can become barriers to social engagement. Maintaining your health supports your ability to stay connected. Key health habits that support social connection:
The Mentor Approach Some retirees find fulfillment by sharing their professional expertise. Washington's Retired and Senior Volunteer Program can connect you with opportunities to mentor younger professionals or students. This approach works well for those who derived significant satisfaction from their professional identity. The Explorer Approach Other retirees prefer to develop entirely new interests and social circles. Organizations like Washington State University's Extension programs offer classes and workshops in everything from master gardening to financial literacy, providing structured ways to develop new skills alongside others. The Community Builder Approach Some find meaning in addressing community needs. Serving on local boards, participating in community planning, or volunteering for civic organizations allows you to continue contributing to public good while building relationships with diverse community members. Your Action Plan
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-Seth DealAre you making the most of your retirement planning? As a Washington State public employee approaching retirement, understanding how to test-drive your future budget could save you from financial surprises. Many don't realize the full range of strategies available to ensure their retirement income will truly support their desired lifestyle. Core Principles for Test-Driving Your Retirement BudgetTest-driving your retirement budget represents a valuable planning strategy that deserves careful consideration. For Washington State employees, several key principles should guide your approach: 1. Reality often differs from expectations: Studies show 46% of retirees spend more than expected in early retirement¹ 2. Your fixed pension creates unique opportunities: Your DRS pension provides predictable income that needs careful coordination with other resources² 3. State-specific factors matter: Washington's tax structure and benefit systems create distinct planning considerations³ 4. Emotional and lifestyle changes affect spending: Your daily habits will change, often leading to unexpected spending patterns Your 5-Step Strategy for Test-Driving Your Retirement BudgetStep 1: Calculate Your Expected Retirement Income· Your DRS Pension: Use the DRS benefit estimator tool for your specific plan² · Social Security: With the recent repeal of the Windfall Elimination Provision, Washington State employees now receive full benefits⁴ · Personal Savings: Calculate safe investment withdrawal rates · Other Income: Include rental properties, part-time work, or other income sources Step 2: Track Your Current Spending· Track every expense for 2-3 months using a spreadsheet or budgeting app · Categorize spending and calculate monthly averages · Pay attention to work-related expenses that will disappear in retirement Step 3: Adjust Your Budget for Retirement Reality· Eliminate work-related expenses: Commuting, professional clothing, workplace lunches · Adjust for new expenses: Higher healthcare costs, new hobbies, travel · Consider Washington-specific factors: Healthcare costs through PEBB, property tax exemptions for seniors³ Remember that while you'll no longer contribute to your pension, you may have higher healthcare premiums if you retire before Medicare eligibility. Step 4: Live on Your Retirement Budget for 3-6 Months· Set up a separate account with your estimated retirement income · Live exclusively on this account for the test period · Track any challenges or shortfalls you experience For DRS members, this step is crucial because your pension provides fixed income that won't easily adjust to unexpected spending needs. Step 5: Refine and Repeat· Analyze where you struggled or had surpluses · Adjust your retirement income plans if needed · Consider working longer or adjusting your lifestyle Alternative Approaches to Test-Driving Your Retirement BudgetFor those who can't commit to a full test, consider these alternatives: The Partial Practice ApproachFocus on specific categories where retirement will bring the biggest changes, like redirecting commuting costs to your retirement activities fund. The Step-Down ApproachGradually reduce your spending over 1-2 years before retirement, reducing spending by 10% every three months until you reach your retirement budget level. The Category Replacement MethodEach month, replace one budget category with its retirement equivalent—particularly useful for testing property tax impacts with Washington's senior exemption programs.³ The 80% Rule with AdjustmentsStart by testing a budget at 80% of your current income, then refine based on your specific situation. Case Study: A Washington DRS Employee Tests the WatersMeet James, a 58-year-old IT specialist with the State Department of Revenue with 22 years in PERS Plan 2. His expected retirement income: · PERS Plan 2 pension (total): $3,000/month · Social Security: $2,100/month · Personal savings: $700/month · Total: $5,800/month For three months, James lived on $5,800 monthly while banking the difference. This real-world test revealed important insights: · His commuting costs disappeared · Healthcare costs would increase until Medicare eligibility · He spent more monthly on hobbies than anticipated · Utility bills were higher because he was home more often These discoveries allowed James to make strategic adjustments before retirement: · Increasing his DCP contributions · Planning to work an extra year to increase benefits · Researching senior property tax exemptions in Washington³ · Finding free recreational activities through state senior programs Your Action Plan for Test-Driving Your Retirement Budget1. Calculate your expected retirement income: Use the DRS benefit estimator and Social Security calculator² 2. Track current expenses: Document all spending for 2-3 months 3. Develop your retirement budget: Create your projected retirement spending plan 4. Choose your test-drive approach: Select the method that best fits your timeline 5. Execute your test and analyze results: Follow through and make necessary adjustments Remember that these decisions are highly personal. Your health, financial situation, retirement goals, and family circumstances all play important roles in determining the best approach for you. Sources and Resources1. Employee Benefit Research Institute, "Retirement Confidence Survey" 2. Washington State Department of Retirement Systems 3. Washington State Department of Revenue, "Property Tax Exemptions" 4. Social Security Administration, "Social Security Fairness Act" 5. Health Care Authority, "PEBB Retiree Benefits" -Seth DealMaximizing Your Social Security Benefits: Smart Strategies for Washington State Public Employees5/15/2025 Are you making the most of your Social Security benefits? As a Washington State public employee approaching retirement, understanding how to optimize this important income source could add thousands of dollars to your retirement security. Many don't realize the full range of strategies available to maximize their benefits. Whether you've spent your entire career in public service or split your time between public and private sectors, how and when you claim Social Security can significantly impact your retirement income. Core Principles for Maximizing Your Social Security BenefitsSocial Security benefits represent a valuable inflation-protected, lifetime income stream that deserves careful planning. For Washington State employees, several key principles should guide your strategy: 1. Timing matters: When you claim benefits can increase or decrease your monthly payment by as much as 76%⁸ 2. Your earnings record is crucial: Your benefit is based on your 35 highest-earning years of covered employment⁸ 3. Coordination is key: Aligning your Social Security strategy with your DRS pension can optimize your total retirement income⁹ 4. Recent law changes benefit you: The repeal of WEP and GPO provisions in January 2025 means Washington State employees can now receive their full earned Social Security benefits without reduction¹,² Timing is Everything: Strategic Claiming Ages for Maximum BenefitsThe single most powerful lever for maximizing your Social Security benefits is your claiming age. This decision can increase or decrease your lifetime benefit by tens or even hundreds of thousands of dollars. You can claim Social Security as early as age 62, but your benefit will be permanently reduced - up to 30% less than your full retirement age benefit⁸. For many people born after 1960, full retirement age is 67. Waiting until age 70 allows your benefit to grow by 8% per year beyond your full retirement age, potentially increasing your monthly payment by up to 24%⁸. For Washington State employees, coordinating your DRS pension start date with your Social Security claiming strategy is crucial. Your pension can provide income during the years you're delaying Social Security to maximize your eventual benefit. This is called a "bridge strategy" and can be highly effective for maximizing lifetime income⁹. The Social Security Administration provides detailed calculators on their website to help you estimate your benefit amounts at different claiming ages⁸. Powerful Strategies for Married Couples to Maximize Household BenefitsFor married couples, coordinating Social Security claiming strategies can dramatically increase your household's lifetime benefits. This coordination is especially important for Washington State public employees who may have different work histories than their spouses. The Higher-Earner Delay Strategy The higher-earning spouse should generally delay claiming until age 70 if possible. This provides two major benefits¹⁰: 1. It maximizes the higher earner's own monthly benefit 2. It maximizes the survivor benefit for the lower-earning spouse This survivor benefit protection is one of the most valuable and often overlooked aspects of Social Security planning¹⁰. Split Strategy for Cash Flow Management You can also implement a "split strategy" where the lower-earning spouse claims earlier (perhaps at 62-66) while the higher earner delays until 70⁹. This approach: · Provides early retirement income · Preserves cash savings · Maximizes the higher earner's benefit · Optimizes the potential survivor benefit Leverage Your DRS Pension for Greater Flexibility Your Washington State pension creates unique opportunities in Social Security planning. If your pension provides substantial income and you can comfortably delay Social Security to maximize your eventual benefit. This pension-and-delay strategy is often the optimal approach for maximizing lifetime household income⁹. Boosting Your Benefits Through Strategic Earnings PlanningYour Social Security benefit is calculated based on your 35 highest-earning years in Social Security-covered employment⁸. This calculation method creates powerful opportunities for Washington State employees to maximize their benefits through strategic earnings planning. Fill the Gaps in Your Earnings Record Some public employees have years with zero Social Security earnings because they worked in non-covered government positions. Each "zero" year significantly reduces your eventual benefit. The solution? Add more years of covered earnings to your record. Even working part-time in retirement can substantially increase your benefit⁸,¹¹. Strategic Post-Retirement Work Consider these high-impact earning strategies after retiring from your state position: · Part-time consulting in your field of expertise · Seasonal work during peak periods · Teaching or training positions that leverage your professional knowledge · Remote work options that provide flexibility Even earning $15,000-$20,000 annually for a few years can dramatically improve your Social Security benefit if you have gaps in your earnings record¹¹. Your Action Plan for Maximizing Social Security BenefitsThe strategies we've covered can potentially add tens or even hundreds of thousands of dollars to your lifetime retirement income. Social Security represents one of your most valuable retirement assets—it's inflation-protected, guaranteed for life, and partially tax-advantaged. Making informed decisions about how to maximize this benefit is one of the most important aspects of retirement planning. Here's your action plan for maximizing your Social Security benefits: 1. Review your earnings record: Create an account at ssa.gov and verify that your earnings history is accurate⁸ 2. Run the numbers: Use the Social Security calculators to see how different claiming ages affect your benefit amount⁸ 3. Coordinate with your spouse: If married, develop a household strategy that maximizes both individual and survivor benefits¹⁰ 4. Align with your pension: Structure your retirement timing to use your pension strategically with Social Security⁹ 5. Consider strategic work: Evaluate whether additional work could meaningfully increase your benefit¹¹ Remember that these decisions are highly personal. Your health, financial situation, retirement goals, and family circumstances all play important roles in determining the best approach for you. What works perfectly for your colleague might not be the optimal strategy for your situation. Consider working with a financial advisor who understands both the Washington State Retirement Systems and Social Security rules. They can help you analyze your specific circumstances and develop a personalized claiming strategy that aligns with your broader retirement plans. Sources and Resources1. Social Security Administration - Social Security Fairness Act 2. MissionSquare - Social Security Fairness Act Repealing WEP/GPO Becomes Law 3. Government Executive - Retroactive benefits from the windfall elimination repeal to begin 4. LACERA - Update: Social Security Expedites WEP/GPO Repeal and Payments 5. NARFE - NARFE Applauds Historic Repeal of WEP/GPO With the Signing of the Social Security Fairness Act 6. IAFF - The WEP & GPO have been repealed. Now what? 7. Government Executive - SSA: It could take more than a year to implement the WEP and GPO repeal 8. Social Security Administration - When to Start Receiving Retirement Benefits 9. Social Security Administration - Retirement Benefits 10. Social Security Administration - Benefits For Your Spouse 11. Social Security Administration - How Work Affects Your Benefits 12. Center for Retirement Research at Boston College - Should You Take Social Security at 62? 13. Social Security Administration - Income Taxes And Your Social Security Benefit Washington State Department of Retirement Systems Washington State Retirement Planning Checklist -Seth DealWhen planning for retirement, most people think about their investments, pension, Social Security or where they'll live. But there's another important question many Washington public employees approaching retirement should consider: "Do I really need long-term care insurance?" This question becomes even more relevant with the WA Cares Fund now in effect, Washington's state-mandated long-term care program. But is this coverage enough, or should you consider additional protection? What Exactly Is Long-Term Care Insurance? Long-term care insurance helps cover costs for assistance with daily activities like bathing, dressing, or eating when you can no longer do these things independently. These services aren't typically covered by regular health insurance or Medicare. For example, the average annual cost of a semi-private room in a nursing home in Washington State is about $152,570, while home health aide services average around $96,096 per year.[1] Without proper planning, these costs could quickly drain your retirement savings. The WA Cares Fund: Understanding Your State Benefit If you're employed in Washington State, you're likely paying into the WA Cares Fund through a payroll tax. This program provides a lifetime benefit of $36,500 (adjusted for inflation) for qualified long-term care needs.[2] While this benefit is helpful, it may not cover extended care needs. The $36,500 benefit would cover a fraction of the care needed. Start With Understanding Your Financial Picture During a Care Event The first step in determining if you need long-term care insurance isn't looking at policies—it's understanding how a long-term care event would impact your specific financial situation. For Married Couples When one spouse needs care, the financial impact is complex: · Expenses often increase dramatically with care costs · The healthy spouse still needs sufficient income and assets for their own living expenses · While pension income remains stable, the overall household budget changes significantly · The healthy spouse may need to reduce their own activities to provide care For Single Individuals The financial equation is different if you're single: · Your entire pension and other income is available to pay for care · Without a spouse to provide informal care, you might need paid care sooner and for more hours per day · Asset protection becomes a different consideration without a spouse's needs to consider Key Factors to Consider Before Purchasing Long-Term Care Insurance 1. Your Overall Financial Picture Take Sarah's story as a cautionary tale. At 68, she purchased an expensive long-term care policy, fearing future health costs. The premiums increased dramatically over time, straining her budget. She later realized her assets might have been sufficient to self-insure. 2. Policy Details Matter When evaluating policies, look closely at: · Benefit period (how long benefits last) · Elimination period (waiting time before benefits begin) · Inflation protection · Premium increase history of the insurer 3. Hybrid Policies as an Alternative Many insurers now offer hybrid policies that combine life insurance with long-term care benefits. These products address one of the biggest objections to traditional long-term care insurance: "What if I pay all these premiums and never need care?" With hybrid policies, your beneficiaries receive a death benefit if you don't use the long-term care portion. However, these policies typically require a larger upfront payment. 4. The Washington State Alternative: Partnership Policies Washington participates in the Long-Term Care Partnership Program, which allows qualified insurance policies to protect a corresponding amount of your assets if you need to apply for Medicaid after exhausting your policy benefits.[3] For example, if your partnership policy pays $300,000 in benefits, you could protect an additional $300,000 in assets and still qualify for Medicaid. Alternative Strategies to Long-Term Care Insurance Traditional long-term care insurance isn't the only way to prepare for potential care needs. Here are some alternative approaches: 1. Self-Insuring If you have substantial assets, you might choose to set aside specific funds earmarked for potential long-term care needs. This approach gives you flexibility but requires disciplined saving and investment. 2. Home Equity Strategies For many, their home is their largest asset. Options include: · Reverse mortgages · Home equity lines of credit · Downsizing to free up equity 3. Family Care Agreements Some families create formal agreements where family members provide care in exchange for payment or future inheritance. These arrangements require careful planning and clear communication. Making an Informed Decision Before making any decision about long-term care planning: · Map out how your income and expenses would change during a care event · Review your retirement income sources and assets · Consider your family health history · Explore all options, including self-insurance and alternative strategies · Get quotes from multiple insurers if considering traditional policies · Consult with a financial professional familiar with Washington State's specific programs Remember that traditional long-term care insurance isn't right for everyone. For some public employees, the combination of pensions, personal savings, alternative strategies, the WA Cares benefit may be sufficient. For others, dedicated insurance provides valuable peace of mind. The right answer depends on your unique financial situation, health outlook, and comfort with risk. The most important thing is making an informed decision that aligns with your overall retirement plan. Sources 1. https://www.carescout.com/cost-of-care 2. https://wacaresfund.wa.gov/about 3. https://www.insurance.wa.gov/insurance-resources/long-term-care -Seth Deal"How much do you need to have saved to feel confident in retirement in addition to your pension?" This question often leads to a specific dollar amount—$500,000, $750,000, or even $1 million. When asked how they arrived at that figure, many Washington public employees cite online calculators or general rules of thumb. After working with government employees across Washington State, one thing becomes clear: The "magic number" approach to retirement planning is often misleading, especially for those with pensions. Here's what actually works in 2025. The Real Way to Calculate Your Retirement Needs The most effective retirement planning process for Washington public employees looks quite different from the standard approach: Step 1: Start With Your Life, Not a Formula Most financial literature suggest you'll need 55-80% of your pre-retirement income [1]. However, this generic guidance misses a crucial point: Your retirement spending depends on YOUR specific plans, not statistical averages. A more effective approach: · Create a detailed breakdown of your current spending patterns · Identify which expenses will change in retirement (commuting costs down, travel expenses up?) · Pay special attention to healthcare costs, which typically increase · Separate essential expenses (housing, food, utilities) from discretionary ones (travel, hobbies) [2] The reality is that retirement spending varies significantly based on individual goals and circumstances. Some public employees find they need more than their working income to fund active retirement plans, while others require substantially less after downsizing or relocating. Step 2: Understand Your Unique Income Mix As a Washington public employee, your retirement income structure has distinct advantages: 1. Your defined benefit pension (PERS, TRS, LEOFF, or other systems) 2. Social Security benefits 3. Personal savings (DCP/457b plans, IRAs, etc.) Your target for savings depends heavily on your pension benefits. Here's how to find your true savings requirement: 1. Calculate your expected annual expenses in retirement 2. Subtract your projected pension and Social Security income 3. The remaining gap is what your savings need to cover For example, if you need $80,000 annually but will receive $35,000 from your pension and $25,000 from Social Security, your savings only need to generate $20,000 per year—a substantially different target than for someone without a pension. Step 3: The 4% Rule Reimagined for Public Employees The traditional 4% rule suggests multiplying your annual withdrawal need by 25. While this provides a useful starting point, Washington public employees should consider: · The security of your pension fundamentally changes the equation (you need less in liquid savings) · Utilizing a dynamic withdrawal plan that adjusts based on your portfolio balance · Your personal risk tolerance affects your "safe" withdrawal rate For the example above, if your savings need to generate $20,000 annually: · Traditional 4% rule: $20,000 ÷ 0.04 = $500,000 Step 4: Reality-Check Your Progress Standard retirement savings milestones rarely account for defined benefit pensions. Here's a more appropriate approach for Washington public employees: 1. Calculate your expected annual pension using DRS tools or estimates 2. Determine what percentage of your retirement needs will be covered by guaranteed sources 3. Track progress toward funding the remaining gap If your pension and Social Security will cover 75% of your needs, you're in a significantly different position than someone who must fund their entire retirement from savings. Step 5: Stress-Test Your Plan for 2025's Realities Your retirement plan must withstand real-world challenges: · Inflation fluctuations · Market volatility · Unexpected healthcare expenses · Longevity considerations (planning to age 95+ is increasingly prudent) [3] Creating multiple scenarios helps test your plan's resilience: · Best case (strong market returns, moderate inflation) · Expected case (average returns, typical inflation) · Stress case (poor returns, higher inflation, unexpected expenses) The Washington Public Employee Advantage Here's what many financial advisors miss: Washington public employees possess unique advantages in retirement planning. Your pension provides a foundation of guaranteed lifetime income that most Americans simply don't have. This pension foundation dramatically changes both your required savings amount and optimal withdrawal strategy. With a significant portion of essential expenses covered by guaranteed income, you may have more flexibility with your investment approach. Your Action Plan 1. Next 24 Hours: List all your expected retirement expenses in two columns: "Must-Haves" and "Nice-to-Haves" 2. This Week: Request your pension estimate from the Department of Retirement Systems to see exactly what your monthly benefit will be 3. This Month: Create your "gap funding plan" to determine how much your savings need to generate annually 4. This Quarter: Test your plan against different inflation and market scenarios There is no universal "magic number" for retirement—especially for Washington public employees with defined benefit pensions. What matters is understanding your specific income sources, expenses, and how they work together. With the right approach that accounts for your unique benefits, you might discover you're closer to retirement readiness than generic calculators suggest. Sources [1] https://www.fidelity.com/viewpoints/retirement/retirement-income-sources [2] https://www.tiaa.org/public/pdf/r/retirement_expense-income_worksheets.pdf [3] https://www.nerdwallet.com/calculator/retirement-calculator -Seth Deal |
AuthorsBob Deal is a CPA with over 30 years of experience and been a financial planner for 25 years. Archives
July 2025
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