Join Early Retirement Today
Reply
 
Thread Tools Display Modes
What do you do about Minimum Retirement ages Required by Pensions??
Old 07-19-2007, 12:46 PM   #1
Recycles dryer sheets
 
Join Date: Jun 2007
Location: Oklahoma City
Posts: 338
What do you do about Minimum Retirement ages Required by Pensions??

I have been lurking a month or so and need a little insight

I am married M39, 2 kids 14/17 and recently retired from the Reserves after 20+ years (pension will be COLA adjusted about 7,500 a year at 60)

I already have 20 years as a fulltime federal employee and @ 57 will receive a federal pension of about 38,000 a year (plus good Health ins) (This amount ncludes a supplement that mirrors the Social Sec that I will get at 62 so the 38k is consistent from 57 on plus at 60 I start getting the 7.5K from the reserves)

We have about 225K in a 401K plan and own our house with no other debt

On the downside we have no $ saved for the kids college that is approaching next year.... (Wife is going to second interview for job at very nice private college tomorrow and they would cover 100% tuition for all family members for a 4yrdegree -- So pray for us!)

We save 16% of my salary and get a match of 5% for the 401K.

I see no hope to retire before 57 because the pension mentioned above requires me working to a Minimum retirement age of 57 before I draw the $$ without incurring a large penalty and forfitting health benefits.

Guess I just need to concentrate on staying healthy so I can enjoy Retirement at 57 on.....
militaryman is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-19-2007, 01:00 PM   #2
Full time employment: Posting here.
 
Join Date: Jun 2007
Posts: 567
I'm still learning a lot, myself, but I believe you could do a 72t on the retirement funds at any point you're comfortable with the accumulation. Basically, you'd agree with the IRS to take substantially equal payments from your account for five years or until you're 59 1/2, whichever is longer. So, you could stop at age 50 with, say, 500k in your account and then start drawing that down until you're 59 1/2 (you can do whatever you want at that point).

Read more about it here: Retire Early: Can I withdraw money from my IRA before age 59½ ?

and here: Welcome to 72t on the Net

Talk to a tax professional before considering this route.

My thoughts are with your wife with her job interview. If it comes to it, though, if you're intent on helping your kids with college, decide to what level you want to do that. I went to a state school with little monetary help from my parents (but I lived at home and they fed me).. you might want to start laying ground rules with them regarding if you're the bank of dad or only helping assistance to a point (pay for in-state school, only pay for a portion of private school, etc). Only you can decide what's going to be best for you and yours.
Webzter is offline   Reply With Quote
Old 07-19-2007, 02:47 PM   #3
Full time employment: Posting here.
Arif's Avatar
 
Join Date: Jun 2005
Posts: 761
I would have HR or the equivalent actually run the numbers on your pension at 57 vs. 52 (or whenever you would be eligable despite penalties). It might not be as bad as you think or the penalties not substantial given a high enough 401k balance.
My mom retired two years ago and several of her friends found that after running the numbers they weren't giving up that much if they left now vs. 3 years from now.
__________________
You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.
Arif is offline   Reply With Quote
Old 07-19-2007, 04:08 PM   #4
Thinks s/he gets paid by the post
martyb's Avatar
 
Join Date: Nov 2006
Location: Bossier City
Posts: 2,183
OK, so you're a civil service employee who falls under the FERs retirement system, and your MRA is 57. You are retired from the reserves and have another 20+ yrs to wait for that pension to kick in. I'm fairly familiar with your situation, since I'm a fed also, although I'm under CSRS, and I'm also a reservist, with over 30 yrs now & 5 to go till I can retire. I'll retire from both at age 55. I'm not as well versed with FERS as I am CSRS, but am I correct in thinking if you bail before your MRA, that you'll probably forfiet your FEHB (health ins. benefits)? Thinking I read that somewhere. There was a point, about 12 years ago when I seriously considered bailing on my government career and going into something else, but I talked myself out of it in the end, and decided to stick with it. I had then about the amount of time you have now. Now, at age 49.5, I'm glad I made that call, because it's all downhill from here. I say if you're happy being a fed, are satisfied with all that comes with being employed by uncle sam including future retirement bennies, and aren't dreading going to work everyday, then try to hang in there. On the other hand, if you're not enjoying what you're doing, hate going to work everyday and find yourself constantly thinking about being in some other situation (different job, self-employed or ER'd) then you have to make that call. As for me, I'm happy I chose to stay, and when Jan 18, 2013 rolls around, is what I'm gonna look like!
__________________
“Change is the law of life. And those who look only to the past or present are certain to miss the future.”
-John F. Kennedy

“Hard work never killed anybody, but why take a chance?” - Edgar Bergen
martyb is offline   Reply With Quote
Old 07-20-2007, 04:27 AM   #5
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,855
Quote:
Originally Posted by militaryman View Post
I am married M39, 2 kids 14/17 and recently retired from the Reserves after 20+ years (pension will be COLA adjusted about 7,500 a year at 60)
Welcome to the board, MM. You may need to watch your back—you could be worth more dead than alive.

When you retired from the Reserves, if you selected a Survivor Benefit Plan then it’ll start paying out if you don’t make it to 60. In fact some Reservists have even filed for retirement in their 40s/50s with SBP and cancelled the SBP when they reached age 60 just to have some “life insurance” during the gray-area years.

It’s extremely common for Reservists to miscalculate their pension amount. The pay scale used in the calculation is actually the maximum longevity pay for your rank, whether you had those years of service or not. (It’s an incentive for you to file for retirement instead of separating.) The pay scales are those in effect for the High-Three years before you turn age 60, so that’s a bit difficult to nail down. (Hypothetically military pay will rise at the rate of the ECI.) And finally you’ll want to check the 40-year pay tables that took effect in April to see if there’s a new (higher) max longevity pay for the rank you retired at.

If anything in that last paragraph changes the results of your military pension calculations then you may be able to spend down your savings a bit more in anticipation of a boost at age 60.

Quote:
Originally Posted by militaryman View Post
On the downside we have no $ saved for the kids college that is approaching next year.... (Wife is going to second interview for job at very nice private college tomorrow and they would cover 100% tuition for all family members for a 4yrdegree -- So pray for us!)
I wouldn’t delay retirement for a college fund—there’s a lot more educational assistance in the world than “retirement assistance”. There’s a strong sentiment that kids are more motivated to perform in college when they’re paying for it, up to the point where work hours interfere with studying. Of course every kid is a different situation.

Quote:
Originally Posted by militaryman View Post
I see no hope to retire before 57 because the pension mentioned above requires me working to a Minimum retirement age of 57 before I draw the $$ without incurring a large penalty and forfitting health benefits.
Guess I just need to concentrate on staying healthy so I can enjoy Retirement at 57 on.....
I think the only other alternatives would be for one of you to remain eligible for health insurance (keep working) or for you to pay for your own health insurance. But the cost of that may break an ER budget, especially if there are pre-existing medical conditions.
__________________
*

Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."

I don't spend much time here— please send a PM.
Nords is offline   Reply With Quote
Thanks for the replies
Old 07-20-2007, 05:57 AM   #6
Recycles dryer sheets
 
Join Date: Jun 2007
Location: Oklahoma City
Posts: 338
Thanks for the replies

Yeah I also understood that FERS folks who bail early lose their health benefits and that is a big consideration for me --

I calculated the military pension amount for today's dollars but understand it will actually be inflation adjusted at 60


I do find myself content to continue where I am at for awhile especially since my kids are still in school and will be going to a local college (if my wife gets this job at the university offering free tuition) --- I would not want to relocate or start "traveling the world" until they are somewhat "finished" But I see in 10 years that things maybe different --

My best chance "out" I think is after I have 25 years in (4 years away) hoping for a early out offer (has not been happening in my agency)

If that happened I would get an immediate pension (reduced because of shorter time worked of course) and I could keep the health benefits.

Hope I get that offer around 50 years old!

militaryman is offline   Reply With Quote
Old 05-03-2016, 11:56 AM   #7
Recycles dryer sheets
 
Join Date: Jun 2007
Location: Oklahoma City
Posts: 338
Updating this ... Almost nine years later

I am still married 47, (29 years!)

2 Adult kids now 23/25 The older one is working on a Master's degree after becoming bored with working. She has no debt and is engaged to be married to a smart fella who seems like a "good guy". The younger daughter graduated with her BS in December and is working full-time but still at home.... ( she also is debt free )

My wife DID end up getting a job at a university that gave full tuition scholarship that allowed both girls to attend for only the cost of "FEES" and books ( not insignificant ) which we covered. The older daughter is getting her Masters also on a full ride

I now have just shy of 30 years as a full-time federal employee and @ 57 will receive a federal pension of about $48,000 a year (plus good Health ins) (This amount includes a supplement that mirrors the Social Sec that I will get at 62 so the 48k is consistent from 57 on plus at 60 I start getting the $10K from the Reserve Retirement) I have updated these figures with the calculations as they come out in todays dollars after raises from the last nine years.

We now have about 525K in a 401K plan and still own our house with no other debt.

We save 19% of my salary and get a match of 5% for the 401K.
Hoping to have around $900K or so at 57 retirement

I am now 8.5 years until I am eligible to retire with an immediate annuity. ( officially at 56 and 8mos.) I am not really even dreaming about an earlier retirement than that. My wife continues to work although she does not need to and we now use her income to fund savings for weddings, vacations and things we do not HAVE to do deal with once retired. Since the girls are done their degrees at that college she can feel free to go elsewhere to work if she finds a better opportunity or interest.

I have concentrated on health starting a few years ago (lost 40 lbs) and maintain a trim 175 ( I'm 6'2") I hit the gym 6 days a week for about 40min/visit.
__________________
USAF Veteran -- Retired Air National Guard -- OSW -- ONW -- OIF
militaryman is offline   Reply With Quote
Old 05-03-2016, 12:18 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Apr 2005
Location: Duesseldorf, Germany
Posts: 1,202
Thanks for the update. You + family are in great shape to retire once pension kicks in or even sooner. Give a hug to DW.
chris2008 is offline   Reply With Quote
Old 05-03-2016, 01:03 PM   #9
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 17,773
I love the update info and that you thought to provide it. Your DW saved a bucket of $$ with the family tuition benefit! Nice progress.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 05-03-2016, 06:51 PM   #10
Recycles dryer sheets
 
Join Date: Apr 2012
Location: Birmingham, AL
Posts: 195
All sounds good...I'm a combination FERS/AF Reserve retirement guy myself. Here's some info from my experience, in case any of it could be useful to you.

Depending on the workload when you retire from Civil Service, it may be a while before you start receiving your full retirement. In my case it was 6 months and the interim pay was about 65% of my final pay. For me, putting aside cash to bridge that gap helped keep lifestyle the same until the total amount kicked in. I also had to validate some AD time bought back with AD orders, so your archives could be worth a buck or two.

TSP withdrawals worked fine, though options are limited and all payment actions are done on paper, not via website...may be changed by the time you need it.

Military retirement kicked in on time with no delays or interim amounts. You just need to get with the Personnelists 6 months or so ahead of time to start the process.

Transitioning from FEHB to TRICARE wasn't a problem. My current providers accepted both carriers. I kept my Dental and Vision through BENEFEDS to go with TRICARE and the combination worked well.

Best of luck
Greg V is offline   Reply With Quote
Old 05-03-2016, 07:33 PM   #11
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Posts: 1,962
Congrats! Great progress there after so many years. That's a great pension amount.
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is online now   Reply With Quote
Old 12-30-2018, 07:05 PM   #12
Recycles dryer sheets
 
Join Date: Jun 2007
Location: Oklahoma City
Posts: 338
Updating this again after 2+ more years have past....

I am still married (31 years!) Couple of months from 51 years old --- DW turns 50 shortly

I am now <6 years until I am eligible to retire with an immediate annuity. ( officially at 56 and 8mos.) I am not really even dreaming about an earlier retirement than that.

2 Adult kids now 26/28. The older one has finished a Master's degree and is living a few blocks away with her husband and both are gainfully employed. The younger daughter is also gainfully employed and also lives a few blocks away.

My DW stopped working a very stressful university job a year ago. She LOVES not working!!! Blood pressure is much better. The job had served its purpose of providing both kids with a debt free education from a reputable institution. We always tried to maintain our lifestyle to only require one salary so this change has not effected our plan for me to retire as soon as eligible in 6 years.

Breaking this out a little differently in this update ---

I now have 32+ years as a full-time federal employee and @ 57 will receive a federal pension of about $33,500 a year after the SBP reduction. (FERS)

My SS amount at 62 is indicated to be $21,600/yr in today's dollars and I will have the FERS SS Supplement that mirrors the SS that I will get at 62 . Rumors indicate the Supplement maybe taken away (although I'm thinking if true it will be grandfathered.... ) Regardless ( worst case) I'm planning to use some TSP ROTH $$ to make a bucket of funds to replace Supplement if taken away so it doesn't effect retirement plans...

My wife's SS should be half of mine at $10,800 @62 and I plan to also have a "bucket to equate that from age 57 - 63 (wife is a year younger than me so I'll be 63 when she is 62 for SS eligibility)

NOW all that said I only anticipate and "count on" HALF of SS actually being a reality (based on the SS systems current solvency outlook) Soooo 50% of $21,600 and $10,800 is a total of $16,200 which means my 57-63 bucket needs to be about $90K .

At 60 I will get over $10K pension from my military reserve retirement which adds a $30k need to the above $90k bucket for a total of $120K

So totaling up above I am counting on a

33.5K pension from FERS starting @ 57
16K SS (or bucket) starting @ 57
10K Military Pension ( or bucket ) starting @ 57
__________
$59.5K

Anticipated retirement income need calculation.....

Current salary of $95,600 - 25% contributed to 401k (with catch-up contributions) is $71,600 (won't be contributing 401k after 57 ) AND about $6,300 in SS and medicare tax that will not be paid in retirement brings down retirement salary need to $65,300 --- Several other more minor line items will decrease in retirement budget but also there may be several minor increases that would offset

So that leaves $6,000/yr needed to come from TSP 401k funds

We now have about $690K in a 401K plan and still own our house with no other debt.

I save 25% of my salary and get a match of 5% for the 401K.
Hoping to have over $900K or so at 57 retirement

$900K - $120K for buckets outlined above is $780K - $100K bad luck market turn = $680K * 2.5% withdrawal rate = $17,000

I am still concentrating on health and maintain 175 ( I'm 6'2") I hit the gym 6 days a week for about 40min/visit.
__________________
USAF Veteran -- Retired Air National Guard -- OSW -- ONW -- OIF
militaryman is offline   Reply With Quote
Old 12-31-2018, 04:17 AM   #13
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 4,939
On your original question, I waited until 3 months before my pension age penalty ran out at age 58. Even though I had enough, I just hated leaving $ on the table, and DW needed the extra time to get used to no paycheck.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 12-31-2018, 09:58 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Nov 2016
Location: Washington State
Posts: 2,341
My wife won't be eligible to take her pension until she is 55. That just happens to be the same year I'll be able to withdraw from my IRA without penalties at 59-1/2. So, 2023 is the year this all comes together and is when we are planning to retire. There's no financial option I can see that would allow us to retire any sooner than that.
mountainsoft is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Should a married couple have individual retirement investing plans? Anaya_1de Young Dreamers 28 12-05-2006 07:57 PM
Earliest Retirement with 100% Equity Portfolio? bbuzzard FIRE and Money 42 12-03-2006 10:13 AM
43% of Americans at risk of not having enough retirement $ mickeyd FIRE and Money 21 10-29-2006 08:51 AM
Many ARE saving enough for retirement REWahoo FIRE and Money 49 09-09-2006 11:03 AM
30 days - minimum wage cute fuzzy bunny Other topics 32 06-28-2005 12:40 PM

» Quick Links

 
All times are GMT -6. The time now is 10:15 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.