Money Talk With Tiff
Episode•October 14, 2021•18 min

Let’s Talk Government Benefits with Sam Zelinka | Ep. 73

About Our Guest Sam Zelinka is a researcher with the US Forest Service and blogs at Government Worker FI, where he helps fellow federal employees navigate the federal system and understand their benefits. Sam has worked for the federal government since age 18 and also shares his financial journey and lessons he has learned through personal experiences on his blog and YouTube channel.   Connect with Sam Zelinka   Blog: https://www.governmentworkerfi.com Twitter: https://twitter.com/govworkerfi YouTube: https://www.youtube.com/channel/UC2P7egL_2FCnPi7SzFhAe4w Connect with Tiffany on Social Media Facebook: Money Talk With Tiff Twitter: @moneytalkwitht Instagram: @moneytalkwitht LinkedIn: Tiffany Grant YouTube: Money Talk With Tiff Channel Pinterest: Money Talk With Tiff This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

Key Takeaways

  • 1

    Federal total compensation is ~34% higher than salary due to untaxed benefits

    Benefits like pensions, TSP matching, and health insurance add significant non-taxable value

    Private sector applicants should request a full benefits statement before comparing offers

  • 2

    FERS pension provides 1% of high-3 average salary per year of service

    30 years of service yields ~30% of final average salary as lifetime annuity

    Unlike many private pensions, FERS is backed by the federal government

  • 3

    TSP offers automatic 5% employer match (100% match on first 5% contributed)

    New hires are auto-enrolled at 5%; opting out forfeits free money

    Only five low-cost index fund options available, limiting poor choices

  • 4

    Federal Employees Health Benefits (FEHB) can continue into retirement at employee rates (~25% of premium)

    Estimated lifetime value around $500k depending on plan and longevity

    Multiple nationwide and regional plan choices available

  • 5

    Government jobs remain one of the last reliable sources of traditional pensions

    Private-sector pensions have largely disappeared or become underfunded

    Federal employment combines pension + TSP + retiree health coverage

Intro

  • Recorded live at FinCon 2021, Tiffany Grant interviews Sam Zelinka about maximizing federal employee benefits and planning for financial independence.
  • Sam Zelinka is a 20-year federal employee with the US Forest Service and founder of Government Worker FI, where he educates federal workers on benefits, retirement planning, and the FIRE movement.

– Overview of Federal Benefits Value

  • Sam explains that total compensation including benefits is approximately 34% higher than base salary, and these benefits are largely untaxed.

If you're in the private sector and thinking about applying for a government job, you're like, oh, it doesn't pay anything. You need to kind of like figure out like all these other ways you're being paid that aren't in money.

– Sam Zelinka

– FERS Pension (Annuity)

  • The FERS annuity is calculated as 1% × years of service × high-3 average salary. Most current federal employees are under FERS rather than the older CSRS system.

If you work for 30 years, you get about 30% of what you were making when you retire.

– Sam Zelinka

– Thrift Savings Plan (TSP)

  • The TSP functions like a 401(k) with only five low-cost index funds and an automatic 5% employer match. New hires are auto-enrolled at 5%.

They match up to 5% of your salary. So if you put in five, they'll match five.

– Sam Zelinka

– Retiree Health Insurance (FEHB)

  • Federal employees who reach minimum retirement age can keep their health insurance in retirement, paying only the employee portion (roughly 25% of premium). Estimated lifetime value ~$500k.

When you retire, you can take it with you if you make it to retirement.

– Sam Zelinka

– Action Steps & Resources

Resources

Topics

Federal BenefitsFERS PensionTSPGovernment JobsRetirement PlanningFinancial IndependenceFEHB Health InsuranceTotal CompensationFIRE Movement
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