yakers
Thinks s/he gets paid by the post
I posted this question over on a Morningstar board but I want to explore it here as this site has both a range of knowledgeable people and specifically some Federal retirees who may have the same isseu.
The Federal TSP (401k type) system is justifiably considered a good system at least in having very low cost index funds as its main feature. But it is a limited and complicated withdrawal system and I am trying to figure out how to make this as flexible as possible. I expect to retire in the next year or so, I will be over 55 but below 59.5. Accordingly I can elect to receive payments from the TSP without the 10% early withdrawal penalty. But I have to elect an amount to be paid each month and this can only be changed once a year on a specific date. This is not a bad option but it does not allow me to immediately discontinue withdrawals if the market tanks.
I have the choice of several index funds but have chosen a Lifecycle (Target Retirement type) fund as my major holding. So my question is whether a Target Retirement type fund is a good source for structured withdrawals in retirement? I could choose a small & large cap index and a total bond fund and put say 50% in each but withdrawals are calculated on the relative amounts in each fund; I cannot direct the payments from one specific fund.
There are other possibilities like rolling some or all of the TSP into an IRA but I would have to take 72t structured payments and that would fix the amount for 5 years although it would allow for more fund choices. I can think of more complicating issues but I just wondered if there is any insight as the the advantages or disadvantages of making regular withdrawals from a Target Retirement fund as opposed to having more adjustable asset allocations or other fund choices.
The Federal TSP (401k type) system is justifiably considered a good system at least in having very low cost index funds as its main feature. But it is a limited and complicated withdrawal system and I am trying to figure out how to make this as flexible as possible. I expect to retire in the next year or so, I will be over 55 but below 59.5. Accordingly I can elect to receive payments from the TSP without the 10% early withdrawal penalty. But I have to elect an amount to be paid each month and this can only be changed once a year on a specific date. This is not a bad option but it does not allow me to immediately discontinue withdrawals if the market tanks.
I have the choice of several index funds but have chosen a Lifecycle (Target Retirement type) fund as my major holding. So my question is whether a Target Retirement type fund is a good source for structured withdrawals in retirement? I could choose a small & large cap index and a total bond fund and put say 50% in each but withdrawals are calculated on the relative amounts in each fund; I cannot direct the payments from one specific fund.
There are other possibilities like rolling some or all of the TSP into an IRA but I would have to take 72t structured payments and that would fix the amount for 5 years although it would allow for more fund choices. I can think of more complicating issues but I just wondered if there is any insight as the the advantages or disadvantages of making regular withdrawals from a Target Retirement fund as opposed to having more adjustable asset allocations or other fund choices.