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Thread: Retirement Withdrawal Options... Guidance Please

  1. Default Retirement Withdrawal Options... Guidance Please

    Hello, I have been retired for 8 years and have not touched my TSP. I was looking on these forums to view threads on withdrawal options, advantages and disadvantages, but could not find what I was looking for. I have read the TSP brochure regarding available options such as annuities, roll-over to IRA, full or partial withdrawal, monthly payout, etc, so I have at least some knowledge. Is there an area here on TSP talk with such a discussion going on ?

    In my particular situation, I think I want to withdraw a monthly amount, while preserving my TSP balance as much as possible, so I can pass the modest nest egg on to my surviving heirs (wife and children). I understand I can withdraw from my TSP monthly, and still have the ability to manage my investments among the TSP funds. I am presently still 100% invested in the S fund. I also understand that I can adjust the monthly withdrawal amount once a year.

    I tried using the calculator on the TSP website, but it seems to consider my "life expectancy".... the way I understand that is - if I say I think I will live 30 years, then in 30 years all my nest egg would be exhausted (?). I would like to live 30 years and leave as much of my present nest egg possible intact. What I want/need to know is what % of my present balance can I reasonably take out on a monthly basis, while preserving the nest egg ? I know the market will have swings, and there are no guaranties.

    Any guidance offered would be appreciated. I learn so much from this website, the collective wealth of knowledge is very impressive.

    Thanks in advance.
    Dave


  2.  
  3. Default Re: Retirement Withdrawal Options... Guidance Please

    OP here. Question to Administrator - Can this thread question be moved to the "Retirement and IRA Talk" thread ?

    Thank you.

  4.  
  5. #3

    Default Re: Retirement Withdrawal Options... Guidance Please

    welcome. and i don't how old you are so no offense, but if you've been retired 8 years without touching your tsp and are now wondering what advantageous minimum to withdraw, have you considered the possibility you might already be in heaven?
    100g

  6.  
  7. #4

    Join Date
    Jun 2004
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    Default Re: Retirement Withdrawal Options... Guidance Please

    Are you aware of this?
    Withdrawals After Leaving Federal Service: Your Options


    Account Withdrawal Deadline

    If you decide to leave your money in the TSP, be aware that you will be required to start withdrawing your money by April 1 of the year following either:

    • The year you turn age 70½, if you are separated from Federal employment or the uniformed services, or
    • The year you separate from Federal service, if you have already reached age 70½.

    As a helpful reminder, the TSP will notify you before your required withdrawal date and mail you important tax information about your TSP withdrawal, as well as information about the IRS required minimum distributions.
    If you do not begin withdrawing your account by the required deadline, your account balance will be forfeited to the TSP. You can reclaim it; however, you will not receive earnings on it from the time it was forfeited.


    To understand your withdrawal options, visit Withdrawing Your TSP Account.

    https://www.tsp.gov/planparticipatio...tOptions.shtml



  8.  
  9. #5

    Join Date
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    Location
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    Default Re: Retirement Withdrawal Options... Guidance Please

    Quote Originally Posted by dave95sps View Post
    OP here. Question to Administrator - Can this thread question be moved to the "Retirement and IRA Talk" thread ?

    Thank you.
    I'll see what I can do Dave, welcome to the Forum.
    Done, Now open it in the Retirement and IRA thread!



  10.  
  11. Default Re: Retirement Withdrawal Options... Guidance Please

    nnuut - Thank you for moving this thread.

    burrocrat - Almost heaven. Thank you for the compliment.

    Yes, I served 35 years including military service and have been retired for 8 years, but my wife just recently retired from teaching school. Now that our combined income has dropped a bit, I am thinking of tapping in to my TSP.

    In preparation for our more senior years, we would like to move from this old 2-story house with considerable maintenance requirements both inside and out. We are both 65. But in order to buy a house with the master bedroom and bathroom on the 1st floor, it is going to cost us more than the value of the house we are in. We would consider either a single detached home, or a 2 story condo as long as the master bed/bath is on the same living space.

    So - what I want to do is figure out how much money I can pull from my TSP nest egg without tremendous risk of losing principle. It may be only $500 a month, I don't know. Once I figure that, I can then consider potential equity I stand to net when I sell our present house and will know what price range house/condo to look for. I don't even know if what I want to do is possible.

    Thanks for your help.

  12.  
  13. #7

    Default Re: Retirement Withdrawal Options... Guidance Please

    no one knows how withholdings will impact your principal without knowing how much principal you have or your return statistics/goals. For all we know, that $500 withdrawal will completely empty your account!

    G-fund has made 1.73% this year, so that is really all I could suggest. Basically 0.15% per month (1.8%/yr).

  14.  
  15. #8

    Default Re: Retirement Withdrawal Options... Guidance Please

    Quote Originally Posted by dave95sps View Post
    nnuut - Thank you for moving this thread.

    So - what I want to do is figure out how much money I can pull from my TSP nest egg without tremendous risk of losing principle. It may be only $500 a month, I don't know. Once I figure that, I can then consider potential equity I stand to net when I sell our present house and will know what price range house/condo to look for. I don't even know if what I want to do is possible.

    Thanks for your help.
    What is your average rate of return each year? If you are earning at least 4-5% per year you can withdraw 4% per year without losing much if any principal. The next issue is adjusting when you reach 70 1/2 ( read publications re required withdrawal amounts). If you have additional resources which will become available later you can withdraw more on the front end and adjust downward as other resources become available.

  16.  
  17. #9

    Default Re: Retirement Withdrawal Options... Guidance Please

    You should take monthly payments. There is a form for that. Not sure the tsp form number. Each December you can change the amount per month. No penalty just tax. So adjust it yearly as needed. Easy.
    100 G
    RSI - Relative Strength Indicator DMA - day moving average


  18.  
  19. #10

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    Default Re: Retirement Withdrawal Options... Guidance Please

    Quote Originally Posted by dave95sps View Post
    Hello, I have been retired for 8 years and have not touched my TSP. I was looking on these forums to view threads on withdrawal options, advantages and disadvantages, but could not find what I was looking for. I have read the TSP brochure regarding available options such as annuities, roll-over to IRA, full or partial withdrawal, monthly payout, etc, so I have at least some knowledge. Is there an area here on TSP talk with such a discussion going on ?

    In my particular situation, I think I want to withdraw a monthly amount, while preserving my TSP balance as much as possible, so I can pass the modest nest egg on to my surviving heirs (wife and children). I understand I can withdraw from my TSP monthly, and still have the ability to manage my investments among the TSP funds. I am presently still 100% invested in the S fund. I also understand that I can adjust the monthly withdrawal amount once a year.

    I tried using the calculator on the TSP website, but it seems to consider my "life expectancy".... the way I understand that is - if I say I think I will live 30 years, then in 30 years all my nest egg would be exhausted (?). I would like to live 30 years and leave as much of my present nest egg possible intact. What I want/need to know is what % of my present balance can I reasonably take out on a monthly basis, while preserving the nest egg ? I know the market will have swings, and there are no guaranties.

    Any guidance offered would be appreciated. I learn so much from this website, the collective wealth of knowledge is very impressive.

    Thanks in advance.
    Dave
    Here is the link to a site that I found a few years back.
    CSRS FERS Federal Benefits Calculator, Federal Retirement Income Expense Analyzer

    I don't know if the software is still free, although they still call it Free Personal Edition. I will provide a complete, extremely accurate estimate, of your retirement benefits and your TSP information. You enter your balance, what you estimate your return will be, how much you want withdraw monthly or annually, and it will provide a bar chart of how long your TSP will last. It even estimates taxes, state and federal, on your entire income, with or without, TSP added.
    They don't have a MAC version at present,so I have to set it up to run in a Windows environment on my MAC. Give it a try.

  20.  
  21. #11

    Join Date
    Apr 2005
    Location
    Gainesville, Florida, USA
    Posts
    24,244

    Default Re: Retirement Withdrawal Options... Guidance Please

    For the long, long term I would consider a roll over from TSP into an IRA primarily to build a permanent income stream. This way even if your principal fluctuates the income stream is constant and likely will grow over time. You will also have the opportunity for capital appreciation - all you have to do is pick a nice dividend growing equity plan. Stocks for the long haul and purrfect for heirs.

  22.  
  23. Default Re: Retirement Withdrawal Options... Guidance Please

    Quote Originally Posted by Scout333 View Post
    The next issue is adjusting when you reach 70 1/2 ( read publications re required withdrawal amounts). If you have additional resources which will become available later you can withdraw more on the front end and adjust downward as other resources become available.
    So, If I begin monthly payments at age 65, doesn't that satisfy the 70 1/2 minimum distributions rule ? I thought if I started to take money out of the TSP that rule would be satisfied ?

  24.  
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