- The Washington Times - Tuesday, August 13, 2002

The 4.1 percent national pay raise that white-collar federal workers are likely to get in January will more than offset federal health premium hikes which could be 10 percent or more due next year.
But for retirees and low-income feds, the offset factor won't help much.
Many lower-income feds who have moved into health maintenance organizations (HMOs) to cut premium and out-of-pocket costs will find fewer HMOs to choose from in 2003. Also, any kind of across-the-board pay raise helps a $90,000 paycheck more than it does a $40,000-per-year income.
Meanwhile, premiums for both executives and clerical employees will be the same.
Retirees, who typically have less income than workers, also won't get much in the way of a January cost-of-living adjustment (COLA). With just a couple of months to go in the COLA countdown, retirees whose increases are pegged to inflation are looking at a modest 1 percent raise in January.
You may think costs are higher than last year, but according to the government's Consumer Price Index, inflation has been almost flat for the last 12 months.
Bottom line: The upcoming (mid-November to early December) federal health insurance open season will be more important than ever for many feds and all retirees.

I download at the office
Federal bosses concerned with the small band of workers who waste time (and break the law) downloading copyrighted songs and videos at the office now have other potential worries.
Next month, federal and military investors will be able to monitor their 401(k) (Thrift Savings Plan) accounts online and get daily peeks at their balances in dollars and shares. That's good and it shouldn't take long.
What worries some officials, however, are workers who will be tempted to try to get rich by making quick trades, moving from one fund to another. That can be an addicting sport until, as nearly always happens, the fearless trader realizes he's broke.
As benefits expert Tammy Flanagan puts it, time in the market not timing the market is the way to make money.
Like other 401(k) plans, the TSP was set up for long-range investing, utilizing dollar cost averaging by investing the same amount each payday. Jumping in and out of mutual funds (the TSP has five) isn't the way to make money, although it could be a great time waster.
As one financial expert advised a federal client: "Don't get into timing the market by moving your funds daily. And especially don't do it from the office."

TSP stock funds: On sale?
For the 12-month period ending in July, the TSP's F Fund (bond index) led the field with a 7.7 percent return. The G Fund (super-safe Treasury securities) return was 5.3 percent not bad in a period of almost zero inflation.
The S Fund (small caps) and the I Fund (international stock index) continue to run neck and neck albeit downhill losing 17.3 percent and 17.1 percent, respectively.
Meanwhile, the one-time golden boy of the TSP, the stock-indexed C Fund, continues its second year as a bottom feeder. It was down 7.7 percent for the month of July, and for the 12-month period it has lost 23.6 percent. The C Fund tracks the S&P; 500 index.
Many bold, farsighted feds believe the C, S and I funds have "On Sale" signs on them. They are certainly less expensive than during the 1990s, when they regularly returned 20 percent to nearly 40 percent a year. But for investors who have never experienced an extended bear market among them most federal and military personnel smiling while your favorite funds plunge requires a very stiff upper lip.

Long-term care insurance
If you are planning to retire soon this month or next you probably should sign up for the Federal Long Term Care Insurance Plan now. Reason: It will be much easier to qualify as an active worker than after you are retired. That means you must apply, and be accepted for coverage, before you become a retiree.
In addition, it's much easier to get information quickly when you are working through your human resources office than when you are retired and dependent on the intern. If you plan to retire soon or think you might need coverage sooner, then run, don't walk, to the office to sign up. Remember, the open season ends Dec. 31.

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