Traditonal Pensions
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pb4uski
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What is COLO? If you mean COLA as in a cost of living adjusted pension, where you enter your pension there is a tick-box whether or not it is inflation adjusted or not.
Sorry yes cola. The other question for the group is wrt Thrift savings plan (tsp) Is it best to leave funds their or put in some other Avenue to withdraw at a 4% annual rate?
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jimnjana
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I intend to leave a portion of my TSP funds in the TSP and will convert about 1/2 to a Roth IRA over next 5 yrs or so. Thinking the benefits of the G fund will out weight the negative tax implications once RMDs would begin. We've already moved DW's TSP to IRA as well as a small civil service TSP account I had. I don't currently own the G fund, just planning on moving funds to it later in life.
nun
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The G-Fund is like the Stable Value fund that a lot of retirement funds once had. If you have access to these funds they are great as they allow you to get good interest and protect principal. I currently have half of my fixed income allocation in a stable value fund getting 2%. I don't see much reason to take money out of TSP as it offers very low fees and a choice of index funds to build a lazy portfolio.
nun
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Why not leave it all of it in TSP and convert half to a ROTH with TSP?
Greg V
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TSP is a great program. Expense ratios are unbeatable, adjusting allocation is painless and even the few funds currently available let you cover all the most important investment areas. The one significant disadvantage is the very limited options for withdrawal.
Our retirement assets are about 50/50 TSP and Brokerage IRAs, which gives a broad range of options for investments and withdrawal scenarios. We take a fixed monthly amount from TSP as a predictable stipend and the IRAs are available for lump sum withdrawals (or not) depending on market conditions and the need for major expenditures, emergencies, etc.
Take your time deciding if moving funds from TSP to IRAs is correct for you. It's a decision that needs thorough analysis.
Our retirement assets are about 50/50 TSP and Brokerage IRAs, which gives a broad range of options for investments and withdrawal scenarios. We take a fixed monthly amount from TSP as a predictable stipend and the IRAs are available for lump sum withdrawals (or not) depending on market conditions and the need for major expenditures, emergencies, etc.
Take your time deciding if moving funds from TSP to IRAs is correct for you. It's a decision that needs thorough analysis.
smurray5991
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Unfortunately TSP does NOT allow Roth conversions at this time. So that's why I rolled most of mine into a traditional IRA, so I can do Roth conversions over time. I'm doing this mainly to reduce my RMDs, since as a single person with pension and SS I will already be in higher tax bracket.....
Teacher Terry
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Some pension plans will allow you to leave your spouse the same amount that you are presently taking with a small reduction from the get go. That is how both of ours work so no reduction in pension income when one of us dies. In fact since it can't be left to anyone else the person still living see theirs go up by the amount it was originially decreased each month.
smurray5991
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Yes, there is a Roth TSP, but it is relatively recent and only pertains to new contributions. So if you have a lot in traditional (non-Roth) TSP accumulated in previous years, you are not allowed to convert it to Roth while staying within TSP.
seraphim
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We are in a similar position as yourself and retired in our mid fifties. We chose to pay off our mortgage, however, rather than refinance to a lower rate. We have a 2.25% line of credit and can refinance the house, again, if necessary. Or sell and move into our RV, which we are considering, anyway.
For comparison:
After taxes and health insurance are removed, we have $3900 a month COLAd pension. The COLA was just reduced by almost half. Consider the possibility of future change to your pension. Ours was changed to reflect true inflation. Both our pensions are set up so that the survivor continues receiving the same income after their spouses death. Since my wife will outlive me by 15 years statistically, I sleep better at night knowing she's protected.
We can live on pensions alone. DW will have no SS, but has paid into Medicare. I will have a minimum SS - maybe $500 before any reductions from having a pension - but I don't calculate that into my figures. It's gravy. I never paid into MediCare. It will be more expensive than my current insurance - assuming Im required to buy into it. I'm not sure of that.
Of our million dollar portfolio, we like to take 2% for travel and other extras. We travel at least half of the time. We eat out a lot and and pretty much do as we wish. We placed a 3% limit on withdrawals and hit that once - paid off our son's car early as a college graduation gift, so he could start out debt free.
So if you can stick to your budget, I see no reason you shouldn't retire. The only question I would ask you to consider is if your budget covers living, just not surviving. If you're real budget is $4500 and your net income $6500, consider reducing how much you withdraw from investments. May come in handy later.
Good luck
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For comparison:
After taxes and health insurance are removed, we have $3900 a month COLAd pension. The COLA was just reduced by almost half. Consider the possibility of future change to your pension. Ours was changed to reflect true inflation. Both our pensions are set up so that the survivor continues receiving the same income after their spouses death. Since my wife will outlive me by 15 years statistically, I sleep better at night knowing she's protected.
We can live on pensions alone. DW will have no SS, but has paid into Medicare. I will have a minimum SS - maybe $500 before any reductions from having a pension - but I don't calculate that into my figures. It's gravy. I never paid into MediCare. It will be more expensive than my current insurance - assuming Im required to buy into it. I'm not sure of that.
Of our million dollar portfolio, we like to take 2% for travel and other extras. We travel at least half of the time. We eat out a lot and and pretty much do as we wish. We placed a 3% limit on withdrawals and hit that once - paid off our son's car early as a college graduation gift, so he could start out debt free.
So if you can stick to your budget, I see no reason you shouldn't retire. The only question I would ask you to consider is if your budget covers living, just not surviving. If you're real budget is $4500 and your net income $6500, consider reducing how much you withdraw from investments. May come in handy later.
Good luck
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I think I need to clarify a few things. First and foremost the firecalc has us at 100%
Secondly: the 4500 is our pension cola'd as of today if my wife would retire tomorrow. She is 61 in March. (I am 55)That being said, this does not count our investments as of today about 500K in 401k and annuities. Also, does not count ss if wife took her ss 62? (Most likely won't).
At age 59.5 we will take 35K from those investments annually, that plus the 54k from pensions should be good enough. Two years later at age 62, I will have the option of pulling ss.
What I have NOT considered is what the taxs will be? The above mentioned pensions are net take home.
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Secondly: the 4500 is our pension cola'd as of today if my wife would retire tomorrow. She is 61 in March. (I am 55)That being said, this does not count our investments as of today about 500K in 401k and annuities. Also, does not count ss if wife took her ss 62? (Most likely won't).
At age 59.5 we will take 35K from those investments annually, that plus the 54k from pensions should be good enough. Two years later at age 62, I will have the option of pulling ss.
What I have NOT considered is what the taxs will be? The above mentioned pensions are net take home.
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Accidental Retiree
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Seraphim alluded to SS reductions from having a pension.
As gov't. retirees, you may find your Social Security amounts could be affected by WEP and GPO reductions.
Have you checked into that?
As gov't. retirees, you may find your Social Security amounts could be affected by WEP and GPO reductions.
Have you checked into that?
seraphim
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It's sometimes difficult to know if a person is speaking gross or net on certain aspects of income; and Im sure you're familiar with the military definition of 'assume'. Lol Same with the $35k - net or gross?
And I understood the pension, but I thought you also said your expenses were 4500 a month. Actually, you said 4500k *grin*. If that's actually true, you're screwed lol.
But since the pension matches your budget, and you have SS and a .5M portfolio, you're good to go, IMO. I'm wondering why you're going to start pulling $35k out of investments - that doesn't seem necessary. Unless you plan on reinvesting the majority in a taxable account for some reason. Just curious. That's $35k more than your projected expenses. If that $35k is pretax money, assume a 10% withholding. That's what my tax preparer advised. Seems to work. Personally, I'd take as little out as necessary and let the balance grow against the possibility of LTC expenses down the road. That's just me.
I double checked, and you're correct - military pensions do not reduce SS distributions.
Retire and go have fun. Who knows what tomorrow brings...
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Seraphim,
DW will have no SS, but has paid into Medicare. I will have a minimum SS - maybe $500 before any reductions from having a pension - but I don't calculate that into my figures. It's gravy. I never paid into MediCare.
If this is true you can qualify for Medicare based on your spouses QC's and get part A for free and part B for the monthly premium.
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DW will have no SS, but has paid into Medicare. I will have a minimum SS - maybe $500 before any reductions from having a pension - but I don't calculate that into my figures. It's gravy. I never paid into MediCare.
If this is true you can qualify for Medicare based on your spouses QC's and get part A for free and part B for the monthly premium.
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seraphim
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Great! Thanks for the info. I hadn't looked into it, yet, since it was a few years away, but I fee much better knowing this. I think the part A premium was about $450 last I checked.
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Seraphim
Your point ts are valid. My expenses today are 4500, retirement will be more if I consider travel twice year, emergency account, taxes, and of course grandkids -
.
One of my annuities is a Roth Ira so my of my income will not be taxed. The annual 35K would be starting at 59.5, so like you said, enjoy life! I have been shot at, missed the kids growing up and so we just want to travel back and forth to Asia and save a little for our family when we move on. The firecalc tells us that with the pensions, 400K and the mrs ss I can pull 35K annually for 35 years. That still leaves us with my SS and small 500.00 gov pension and leaves us still investing. I was just wondering about taxes, I think you explained it at a 10% reduction in pretaxed account
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Your point ts are valid. My expenses today are 4500, retirement will be more if I consider travel twice year, emergency account, taxes, and of course grandkids -
.One of my annuities is a Roth Ira so my of my income will not be taxed. The annual 35K would be starting at 59.5, so like you said, enjoy life! I have been shot at, missed the kids growing up and so we just want to travel back and forth to Asia and save a little for our family when we move on. The firecalc tells us that with the pensions, 400K and the mrs ss I can pull 35K annually for 35 years. That still leaves us with my SS and small 500.00 gov pension and leaves us still investing. I was just wondering about taxes, I think you explained it at a 10% reduction in pretaxed account
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Forgot to answer to important question, is this pre-tax ed money? The monthly pensions (4500) are net take home and most of the investments are not
So tax tax tax will eat a lot. That is why I trying to build our 401k to 650K prior to 59 and of course if the mrs keeps working until I retire, if she retires next year then I am hoping to have close to 600K total in both.
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So tax tax tax will eat a lot. That is why I trying to build our 401k to 650K prior to 59 and of course if the mrs keeps working until I retire, if she retires next year then I am hoping to have close to 600K total in both.
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Teacher Terry
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Our pensions have negatively impacted our SS due to WEP. Glad that is not true for the military.
seraphim
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Seraphim
Your point ts are valid. My expenses today are 4500, retirement will be more if I consider travel twice year, emergency account, taxes, and of course grandkids -
One of my annuities is a Roth Ira so my of my income will not be taxed. The annual 35K would be starting at 59.5, so like you said, enjoy life! I have been shot at, missed the kids growing up and so we just want to travel back and forth to Asia and save a little for our family when we move on. The firecalc tells us that with the pensions, 400K and the mrs ss I can pull 35K annually for 35 years. That still leaves us with my SS and small 500.00 gov pension and leaves us still investing. I was just wondering about taxes, I think you explained it at a 10% reduction in pretaxed account
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Gotcha lol. You're going to use the investment account as we do - extraneous travel and gratuitous gift giving!
At 2% withdrawal, FireCalc suggests, on the average, our portfolio could double ( or triple or stay the same) over a 25 year period. It seems you will also have the flexibility to stop withdrawals, if necessary, and be a little more frugal. It's a good option to have. No grandkids yet. Told my son if I was a grandfather before 60, he was disinherited... One question a lot of us face is whether we want to leave money for our kids, or die broke.
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