50, FERS Military Tech possible retirement strategies

[Tankernav]

Hi, I am an officer in the air national guard serving as a a dual status civil service technician. When I am forced to retire militarily, then I will be forced into civil service retirement (similar to capitol police, fed LEOs). So, unless I land an active duty tour and take a leave of absence from the national guard civil service, I will retire militarily and civil service wise next April at the age of 51 with 33 years of military and 25 years of FERS.

Here's what I was thinking and want feedback from the forum on the plan.

April 2016 I start my civil service annuity with the annuity supplement, and break up my TSP (401K) into equal monthly payments to gap the time from civil service retirement until age 60 when my military pension begins. I realize I have to pay the 10% penalty and am comfortable with that, and in Kansas the dept of revenue decided last year not to tax TSP withdrawals as income since it was part of a defined federal pension.

So, retiring April 2016 my net income between working and retirement is only a few hundred dollars difference. At age 60, my TSP is depleted and military retirement kicks in which increases my monthly net by at least 1000.00 a month. At age 62, Social security starts and annuity supp stops but amount received from SS is quite a bit more than the supplement.

Health insurance wise, I will pay my civil service insurance until age 60 when tricare starts and at age 65 tricare for life and medicare kick in (basically no health bills to me for the rest of my life....provided the govt stays solvent and massive reforms to pensions, tricare, etc don't sink the ship.

Questions?

Do I need to have a big cash reserve on hand for anything?

This plan with pensions has me living on allowances but in a way which is very comfortable.

Would you use the TSP in a different fashion?

If I get selected for an active duty tour for around four years, TSP distribution is delayed until the tour ends which will increase the distribution when it starts, active duty pay for the time, buy back the military time for civil service credit, catch up the TSP matching, and add points to the military retirement.

Always remember that your greatest wealth is health.

Cheers

 

[unno2002]

[FONT=&quot]Consider rolling the TSP out to a private sector IRA. You should be able to find an IRA custodian that is MUCH more flexible on distribution timing than the TSP folks are.[/FONT]
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[FONT=&quot]Obviously you do not need to answer with any particular number, but how large is the TSP account? When I retired “early” (age 57 FERS civil service) I rolled the TSP out to something along the lines of a “checkbook IRA”, among other things that account then bought a small rental property for $77,500, which is bringing in $805/month. After expenses it is putting in the tax deferred account a consistent $583/month. ($6996 per year), from which account we can withdraw if we need it, otherwise it remains tax-deferred. We have the risk of no tenants, repairs, etc., but with the potential for the equity aspect of the investment increasing, available to leave to heirs. [/FONT]

[FONT=&quot] [/FONT]
[FONT=&quot]Have you ran your Social Security numbers? If you are retiring at age 51, you probably do not have 35 years of Social Security payment history. The money your SS benefit is ultimately based on is a 35 year average of your taxed earnings. A few years of “zero” put into the mix can really erode your eventual benefit. [/FONT]

[FONT=&quot]
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[FONT=&quot]Consider looking into:[/FONT]
[FONT=&quot]Checkbook IRA[/FONT]
[FONT=&quot]Or[/FONT]
[FONT=&quot]Solo 401k[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]NOTE: For age-based waiver of the 10% penalty, on a 401k it is age 55, on an IRA it is age 59 ½. Each type account also of course has other exceptions that apply, see the appropriate IRS publications to determine what of your living expenses might qualify.[/FONT]
[FONT=&quot]
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[FONT=&quot]For IRA limits & rules see:
http://www.irs.gov/pub/irs-pdf/p590.pdf [/FONT]

[FONT=&quot]For 401k limits & rules see:[/FONT]
[FONT=&quot]http://www.irs.gov/pub/irs-pdf/p560.pdf[/FONT]

 

[martyb]

Tankernav, unless you want to retire from civil service, I believe you can retire from the Guard part, and find a different civil service job that's not dual status, correct? I was an ART for 28 years, retired from the AF Reserve and did the last 6 years of my fed career with a different DoD agency. I just retired last July. Just saying that there are possibilities if you want to continue your fed career. I believe that as a Guard technician though, that you are Excepted service, whereas ARTs are Competitive service.

Also keep in mind that your FERS SS supplement will not get any annual COLAs, and will stop at age 62, whether you apply for Social Security then or not. I retired under CSRS at age 56 with 37 1/2 years, and 4 1/2 yrs active duty, the rest of my military time (33 yrs total) was Reserve, enlisted.

Sent from my SAMSUNG-SM-G900A using Early Retirement Forum mobile app

 

[Greg V]

Piggybacking on martyb's comment, you should be placed in the Priority Placement Program and get a valid Civil Service job offer if the end of your Military career forces the end of your Civil Service career. I was an ART as well and had the option to keep working Civil Service vice retiring in both careers. Have you been put in PPP and, if so, are you making these plans because the job offer is not acceptable for some reason(s)?

 

[Greg V]

One more item after rereading the original post...doesn't the ANG waiver military High Year of Tenure for ARTs to continue to their FERS Minimum Retirement Age? I know that has been standard practice for the AF Reserve...surprised they would force military retirement prior to you reaching Age 56 (or slightly more depending on your birth year) for your MRA. We had to initiate the waiver, but disapproval was very (very) rare and usually linked to issues unrelated to length in service.

 

[Tankernav]

Thanks for the replies

Unno2002, Martyb, and GregV; thanks for the awesome feedback.
following up on all your posts:
Unno2002: Good idea on the checkbook IRA and rental property idea, I will need to do some more research on it. My TSP account next April in the G fund should be at 360K. I am currently a GS14 step 9. In social security, I have over 35 years of payments into the system, started in the fast food business working for my dad at age 9 and then all through my high school years was working. At age 18, I enlisted in the guard. I haven't accounted for the "0" income years from age 51 to 62.
Martb: At our ANG base, not too many non-dual status positions. There are some around downtown Topeka at the VA which may be an option. DHS in Kansas City area or Logistics jobs in Omaha or Oklahoma City may be viable. It would be nice to lock in an immediate non-reduced annuity with the supplement at age 51 but working longer will enhance my retirement years. My MRA is age 56 and 2 months.
GregV: Yes, I will be eligible for Priority Placement after the selective retention board meets and approves my non-retention. On the enlisted side, I would say our guard unit is pretty good about getting folks to MRA but I haven't seen our unit work to see senior staff make it to MRA. Different units have different cultures, views on force management, and the technician program. One of these days, i do believe congress will eliminate the dual status element of the military technician program.
Force management wise, I have been an O-6 Colonel on our base since April 2007. We don't have too many O-6s at our base and my retirement really does help upward mobility of the workforce.
My military background has me qualifying and interviewing for many title 10 active duty tours with the guard which would allow me to serve for about 4 more years and provide the opportunity to make BG. I like to stay busy and the best career choices are in the military or civil service sectors.