Fairly New Young Fed

[nate2953]

Hey all.
I'm 28 years old, and will be coming up on my 2nd year with the federal government in July. I was a GS-4 for 6 months, transferred agencies to a GS-5 position (10 months) then transferred to my current GS-5 ladder (5/7/9/11) position at the SSA in September 2014. Right now my salary is 35k, in September 2015 it'll be 44k. September 2016 55k and then September 2017 it'll be approx 65-70k. Right now I'm single and contribute 15% into the Roth TSP. I've got my contributions going into the C S and I funds. The current balance is about $7500.

My current debt is about 22k in a car loan. I'm pretty good with controlling my credit card spending and I generally avoid any over the top spending.

My main retirement goals are to retire at my minimum retirement age (57).

So that's it in a nutshell, any questions/advice please comment. Thanks!


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[timo2]

Bogleheads.org has some good information about the TSP. Do a few searches on there for information. for example Thrift Savings Plan - Bogleheads

 

[porter]

Hi Nate,

Nice job finding better opportunities at other agencies. Once you are at the GS-11 grade, you might want to see if putting a percentage in the traditional TSP would have tax advantages. Good luck with your federal career!

 

[nate2953]

Thanks! I'll spend some time over at bogle heads!


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[nate2953]

I figured I'll probably stay Roth until I move up in a tax bracket.

I figure I'll probably top out at GS-11/12 at about 100k the last few years of my career. Then I assume I'll have approx 33k in taxable pension, and about 20k in taxable SS. And prob take about 40k yr in TSP withdrawals. The tsp forces you to take distributions of Roth and traditional so I'd probably have 30k tax free and 10k taxable for a total of maybe 80k in taxable income in retirement. (All roughly figured using current dollars).

Do my assumptions seem reasonable? Would it make sense to do Roth TSP until my income exceeds 80k? I've seen all sorts of examples where the Roth/traditional choice is irrelevant if you stay in the same tax brackets.

Right now I'm single, but I expect to marry a soon to be nurse (70k/yr easy) and likely will live and retire in SoCal.

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[timo2]

I figured I'll probably stay Roth until I move up in a tax bracket.

I figure I'll probably top out at GS-11/12 at about 100k the last few years of my career. Then I assume I'll have approx 33k in taxable pension, and about 20k in taxable SS. And prob take about 40k yr in TSP withdrawals. The tsp forces you to take distributions of Roth and traditional so I'd probably have 30k tax free and 10k taxable for a total of maybe 80k in taxable income in retirement. (All roughly figured using current dollars).

Do my assumptions seem reasonable? Would it make sense to do Roth TSP until my income exceeds 80k? I've seen all sorts of examples where the Roth/traditional choice is irrelevant if you stay in the same tax brackets.

Right now I'm single, but I expect to marry a soon to be nurse (70k/yr easy) and likely will live and retire in SoCal.

Of course you already know the TSP match goes into the traditional funds, not the Roth.

Also, something to ponder after you are married: instead of viewing your spouses and your own retirement plans as unique little portfolios with their own asset allocations, consider the family investments holistically. Where I'm going with this is to consider using the G fund as the primary bond fund in the family portfolio, rather than making your spouse also have a bond fund as part of a standard AA. The G fund is a unique thing that really is not completely replicated anywhere else. IMHO

 

[nate2953]

-knew about the matching going into the traditional, that's why I put 30k tax free and 10k taxable from the TSP (15% into Roth and 5% matching into traditional) for a total of 40k withdrawal.

-I will consider the whole approach once the marriage thing happens. As it stands right now I'm treating my SS and my pension as my safe investments and will slowly favor some G/F into my allocation as I get older and again depending on the future wife's 401k options and possible retirement perks


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[donheff]

Of course you already know the TSP match goes into the traditional funds, not the Roth.

Also, something to ponder after you are married: instead of viewing your spouses and your own retirement plans as unique little portfolios with their own asset allocations, consider the family investments holistically. Where I'm going with this is to consider using the G fund as the primary bond fund in the family portfolio, rather than making your spouse also have a bond fund as part of a standard AA. The G fund is a unique thing that really is not completely replicated anywhere else. IMHO

I was going to ask about the match. You are leaving free $ on the table without it. As to an integrated family portfolio be careful. I have all of my TSP in the G Fund as a super cash equivalent but I am retired and married 31 years. Had I entangled finances so heavily when I was young it would have been difficult to unravel when I got divorced. That safe G component will likely be creeping along while your spouses equity loaded 401K is growing. I suppose it is possible to sort that out but I would be inclined to wait until near retirement to move to such a structure.

 

[freebird5825]

Hello and congratulations on your upward career moves. I entered fed civil service at age 30 in 1988, under FERS.
This site was recommended to me to be able to keep track of developments with pay and benefits. I subscribed to the newsletter and read what pertained to me on a frequent basis. Knowledge is power !
Government Executive Pay and Benefits Watch site. The Subscribe button is at the top middle under the Tech tab.
Retirement Savings Reassurance, Financial Fears, Vets’ Health Care Changes and More - Pay & Benefits Watch - Pay & Benefits - GovExec.com

There is a staff writer named Tammy Flanagan who writes periodic articles about Retirement Planning. Here is a link to recent examples of her articles.
http://www.govexec.com/rss/pay-benefits/retirement-planning/

A more comprehensive list is here
http://www.govexec.com/pay-benefits/retirement-planning/2015/01/index-2015-edition/102489/

At first it may seem like a lot of the articles in the newsletters aren't relevant in the early stages of your fed service. The newsletters are well organized and written, so you can pick and choose easily.

Here is a list of all newsletters published by Government Executive.
E-Mail Newsletters - GovExec.com

 

[nate2953]

Donheff- good point about at taking an appropriate level of caution when co-mingling retirement plans.

Freebird- thanks I've been a frequent reader of govexec fedsmith and federalsoup since I started in 2013. At the ssa I frequently find myself getting in talks with my coworkers at lunch and we almost always come back to the tsp, retirement planning, and budgeting.


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[Retirein2024]

Be aggressive with your TSP. Look into seasonal allocations within the funds. A good site to read is at tsptalk. I'll be short 3 years for my MRA 57 so I'll just stay until 62. Good luck.