Mr Gadget
Dryer sheet aficionado
- Joined
- Jul 17, 2009
- Messages
- 26
Hi, wanted to see if I could get any sage advice. I’ve read several of the FAQ’s and lurked for about a year and a half. Most of the advice is great but NORDS is the MAN.
I have a couple of questions on TSP to ROTH and mortgage payoff after my background info;
42 YO single military finally going to put in the retirement letter for next September. The new GIBILL is the last part that helped, I’ll be transferring 2 years of my benefits to my daughter for college (her part is to contribute scholarships or loans for the rest) so it is a huge paycheck that really enabled me to do this early.
I will be at an E-8’s 25 year pension level (basically a $1.4M nestegg over 40 years) with an annual COLA (4.4% average over the last 35 years) and I currently only spend about ½ my take home (after taxes) pay, so I think I will be ok with my projected retirement income and budget (this includes my current mortgage/child support/utilities and planned medical and dental insurance cost increase) once I’m retired. I’ve got 40K in TSP and 15K in a Roth IRA. And I will have 46K and 20K by next year with my normal additions. (Only able to start after paying off the divorce costs ) Once I retire, additions will probably stop or be minimal unless I find a hobby that pays.
First option; Should I shift the TSP to the ROTH and pay the taxes when I retire? Can I since it’s over the 5K limit per year? Additionally, not sure if it’s worth doing the SEPP afterwards, I looked at Retire Early: Can I withdraw money from my IRA before age 59½ ? I don't need the money, but might be nice, still not sure.
Second option; I’ve got about 30K equity that I put in to my current (new in 07) house when I bought it two years ago, but I cannot sell due to the current market. I like where I live, and military pension will be non taxable in IL so that helps, but I will be looking to relocate back to AZ where my family is in a few years once the local market recovers. I just refinanced in January from a 20 year mortgage to a 15 year and dropped two points on the interest rate. I could pay off the remaining mortgage (65K) with just about all of my liquid savings (currently a money market at NFCU, normally laddered CD’s), that would leave me with just the TSP and/or Roth as back up funds and no other cash except about 5K in INTEL stock, but it would eliminate a $600 a month mortgage payment (and save about 28K on interest). Not sure if I should pay off the mortgage and then use that difference for building back up a safety account and then investing. (Since I don’t have to really worry about losing my job/income, I’ll be living on my pension)
I have no other debt, (car, CC, etc) and my car is a 06 Toyota, so don’t anticipate any major costs there for a few more years.
Thanks for reading.
I have a couple of questions on TSP to ROTH and mortgage payoff after my background info;
42 YO single military finally going to put in the retirement letter for next September. The new GIBILL is the last part that helped, I’ll be transferring 2 years of my benefits to my daughter for college (her part is to contribute scholarships or loans for the rest) so it is a huge paycheck that really enabled me to do this early.
I will be at an E-8’s 25 year pension level (basically a $1.4M nestegg over 40 years) with an annual COLA (4.4% average over the last 35 years) and I currently only spend about ½ my take home (after taxes) pay, so I think I will be ok with my projected retirement income and budget (this includes my current mortgage/child support/utilities and planned medical and dental insurance cost increase) once I’m retired. I’ve got 40K in TSP and 15K in a Roth IRA. And I will have 46K and 20K by next year with my normal additions. (Only able to start after paying off the divorce costs ) Once I retire, additions will probably stop or be minimal unless I find a hobby that pays.
First option; Should I shift the TSP to the ROTH and pay the taxes when I retire? Can I since it’s over the 5K limit per year? Additionally, not sure if it’s worth doing the SEPP afterwards, I looked at Retire Early: Can I withdraw money from my IRA before age 59½ ? I don't need the money, but might be nice, still not sure.
Second option; I’ve got about 30K equity that I put in to my current (new in 07) house when I bought it two years ago, but I cannot sell due to the current market. I like where I live, and military pension will be non taxable in IL so that helps, but I will be looking to relocate back to AZ where my family is in a few years once the local market recovers. I just refinanced in January from a 20 year mortgage to a 15 year and dropped two points on the interest rate. I could pay off the remaining mortgage (65K) with just about all of my liquid savings (currently a money market at NFCU, normally laddered CD’s), that would leave me with just the TSP and/or Roth as back up funds and no other cash except about 5K in INTEL stock, but it would eliminate a $600 a month mortgage payment (and save about 28K on interest). Not sure if I should pay off the mortgage and then use that difference for building back up a safety account and then investing. (Since I don’t have to really worry about losing my job/income, I’ll be living on my pension)
I have no other debt, (car, CC, etc) and my car is a 06 Toyota, so don’t anticipate any major costs there for a few more years.
Thanks for reading.