Medically Retired

**hunters** · 12-14-2004, 07:08 PM

I am 48 and was planning on working for the gov. much longer but now must retire due to a medical condition. I got into the TSP about halfway into my career and was very uneducated about investing. My funds weremostly in the G fund and didn't grow much, but at least they are there.

I understand that, as I am covered by FERS, I will get 40% of myhigh 3 avg pay as a retirement income until I reach age 62 when it will convert to a regular retirement. At that time it will actually be less than 40% but then I will be eligible for reduced social security payments if that is still around. I won't get any supplement in the meantime. Needless to say 40% is not enough to live on in my current situation. I still have a mortgage, and all the regular living expenses that come with life. So some changes must come.

I have done some reading and I think that I will no longer be able to contribute to the TSP with the money I will be receiving. Is that correct that my tax deferred saving days are over?

I have heard from some coworkers that I could tap into my TSP without a penalty but would still be taxed at regular income rates on the money I take, providing I take it out according to some formula. I would rather not tap it but may have to until I sell my home to access the equity, relocate somewhere, and work out a new budget. Doesanyone know the formula?

As to medical retirement, has anyone gone down this path before? I've been told OPM really drags their feet, taking nearly 6 months to approve the claim and begin to pay. I've already used all my sick leave and all my annual. My savings account is going to be wiped out if this is true. This is all fresh and I'm in a bit of a shock phase at the moment. I need to get moving and be proactive in my future. At this moment I don't know where to begin. HR was really no help and just gave me a raft of paperwork to fill out, no guidance.

Any and all comments, ideas, etc.are welcome.

HunterS

**pyriel** · 12-14-2004, 07:42 PM

hunters wrote:

I have heard from some coworkers that I could tap into my TSP without a penalty but would still be taxed at regular income rates on the money I take, providing I take it out according to some formula. I would rather not tap it but may have to until I sell my home to access the equity, relocate somewhere, and work out a new budget. Doesanyone know the formula?

Any and all comments, ideas, etc.are welcome.

I am sorry about your situation and hope for the best for you. I am not one of the guru here but I hope that you will not tap into your TSP unless you really have to. It seemed like this is one of your last line of defense. As for your plan to sell your home to access the equity, I think that is a swell idea. Move into a smaller home and relocate to a cheaper city. This would be the first thing I would do. If you can still live by yourself, buy a cheap home rather than renting. However, you must factor in your monthly payment to the anticipated income you'll be getting. I would also start looking for a home now (if this is your decision) and buy it while you are still in service. Once you are out of service, it becomes harder to get a loan (or at least one that has good interest rate). Just ensure that you can sell your house. God Bless...

**eukrate** · 12-14-2004, 07:47 PM

You sound like you need some serious, reliable advise.
I suggest you go to
http://community.federalsoup.com/4/OpenTopic
and post your question directly to Ed Zurndorfer, the moderator, in the "Q&A" section.
He'll answer you, but it will take weeks to see his posted response.

A 2nd idea:
Post it instead at the federalsoup "Financial & Retirement Planning" Forum. You'll get some
quick responses, less valid than Zurndorfer's. But the poster "Kivi" there is knowledgeable.

A 3rd idea (the best)
Ask Tammy Flanigan , at The National Institute of Transition Planning
http://www.nitpinc.com/main/faq_submit.html
She's the best, and she'll email you a private response.

Good Luck

12-14-2004, 08:42 PM

hunters wrote:

Any and all comments, ideas, etc.are welcome.

HunterS

I too have little advice to offer, but eukrate has given you great direction. However, you do have my prayers. May you find wisdom and direction during this time.

**Old_BOPer** · 12-14-2004, 08:55 PM

Hunters check out www.fedworkerscomp.net it has great infofor any injured worker, or anybody that is thinking of taking a medical retirement either under OPM or OWCP. I hope this helps..

**grandma** · 12-15-2004, 07:30 AM

Does anyone know if it is possible to donate AL outside your own institution or category?? (wrong word, but you inow what I mean.) We do it alot where I work, but have never heard of sending a day or two elsewhere.

**namor** · 12-17-2004, 03:04 PM

Hunters:

You should also check with theSocial Security Administrationabout a disability. You should be vested, and if you are total and permanently disabled from any type of work, you can file for aSocial Security disability benefit without waiting until age 62 and without taking an age reduction. I am not sure how this may affect your OPM disability, so you should look into that with OPM also.

Its not your fault that you can't wait until age 62 for your SSA benefit, thats why disabilities are not subject to age reductions.

Good luck to you.

**Wheels** · 12-17-2004, 03:28 PM

You DO have access to your TSP without penalty. You DO NOT get a social security supplement from OPM. You DO get 60% the first year which would help make up for the loss of the supplement. You can file for disability benefits from SSA but your OPM benefit WILL be reduced by 60% of the SSA benefit.

Hope this helps.

Dave

**Wheels** · 12-17-2004, 03:30 PM

You DO have access to your TSP without penalty. You DO NOT get a social security supplement from OPM. You DO get 60% the first year which would help make up for the loss of the supplement. You can file for disability benefits from SSA but your OPM benefit WILL be reduced by 60% of the SSA benefit.

Hope this helps.

Dave