ATC retirement and IRA 72(t) options

[clester]

I'm looking for any comments on my retirement palns.

Here's the details and assumptions. FERS Salary now $100,000 . I will be 49 1/2 (25 years FERS) when I retire from ATC (Air Traffic Control). ATC has early retirement. Basic retirement FERS will be 39% or $39,000. Social Security supplement will be about $11,500.

Using the 72(t) rule (www.72t.net has good info) I would use the amoritization calculation on at least $500,000. Using the calculator at the site above it comes to about $35,000. It is based on life expectancy SEPP, but uses a "resonable interest rate" in the calculation now at 6%.

All 3 together comes to $85,000. Figuring $15,000 that I now put in TSP that means I now get $85,000. So, 100% retirement. There are other factors involved but this is the gist of it.

Any holes in this senario?

Thanks

[Wheels]

I'm looking for any comments on my retirement palns.

Here's the details and assumptions. FERS Salary now $100,000 . I will be 49 1/2 (25 years FERS) when I retire from ATC (Air Traffic Control). ATC has early retirement. Basic retirement FERS will be 39% or $39,000. Social Security supplement will be about $11,500.

Using the 72(t) rule (www.72t.net has good info) I would use the amoritization calculation on at least $500,000. Using the calculator at the site above it comes to about $35,000. It is based on life expectancy SEPP, but uses a "resonable interest rate" in the calculation now at 6%.

All 3 together comes to $85,000. Figuring $15,000 that I now put in TSP that means I now get $85,000. So, 100% retirement. There are other factors involved but this is the gist of it.

Any holes in this senario?

Thanks

Maybe not holes but a couple of things to consider. Are you married? If so, you'll want to take survivor benefits so that you're wife will have access to your health care. That will cost you up to 4K a year.

Your SS Supplement estimate looks a little high to me. How are you estimating it?

On the positive side, you haven't included reductions in expenses that will help. You mentioned that you won't be paying into your TSP anymore but also count on lower taxes, no more FICA, no more medicare, no more retirement, no more union dues etc etc. And these are just the ones from your pay. I am not even including things like lower commuting expenses.

Just a few thoughts.

[clester]

Thanks Wheels,

I didn't include all that for simplicity. I have considered all of that. If your ATC you also know there will be less in differentials (night and Sunday pay).

I saw, I think, in one of your posts that you are looking at the 72t. Are you ATC?

[clester]

Oh, The supplement is 5/8ths of my SS amount at age 62. I also used a caculator at www.fedbens.com. It says about $900/mo which is about $11,500.

What would be your guess? Thanks

[EW_ret]

It appears that FERS credit under ATC is more generous than other government agencies. I do not see how 25 years under FERS gives 39% of average high three years. You only get 1% for each year of FERS service. That would give you 25% rather than 39% of average high three. Is FERS pension credit more with a ATC career?

[colonialmike]

Clester, Congrats on retirement and doing so well. I am a LEO, and we have similar age and peension coverage. Although I am a little younger, 41, I am starting to prepare and estimate my benefits. I am also considering the use of the IRS 72T rule on my TSP "to supplement my SS Supplement". Good luck.

[clester]

EW,
ATC has early retirement and special rules. We get 1.7% for the first 20 years then 1% thereafter. We also have mandatory retirement at age 56.
25 years at any age or 20 years at 50 or older are the minimums.

[EW_ret]

I knew about the early retirement age for LEO, but the FERS yearly credit for first 20 years (1.7%/year) I was not aware. Thanks for responding and enlightening me.

I retired under CSRS last year with 36 years service. I can attest that the lower Federal and State taxes, no Medicare and CSRS deductions add to my net CSRS retirement income. On the negative side, my health insurance premium is now taxed, and I have no medical flexible spending account, so I pay more for medical care. When I consider all these pluses and minuses and factor in not saving to TSP and Roth, my net CSRS annuity is 96% of my net federal salary. This does not even consider withdrawing any funds from my TSP and IRA accounts. It is possible to have 100% or more of pre-retirement net income in retirement.


EW,
ATC has early retirement and special rules. We get 1.7% for the first 20 years then 1% thereafter. We also have mandatory retirement at age 56.
25 years at any age or 20 years at 50 or older are the minimums.

[Wheels]

I saw, I think, in one of your posts that you are looking at the 72t. Are you ATC?


The supplement is 5/8ths of my SS amount at age 62.

I am ATC. I am planning on using 72T but I am leaning towards keeping my money in TSP so I can't use the same method that you are speaking of. TSP uses only the simplest method which will net me about 3% annually.

Your calculation on the supplement is correct. However the big mistake that many make is that they assume their age 62 benefit is the one that is printed on their yearly SS statement. If you read carefully you'll see that you have to work until 62 to receive that amount. If you retire at 49, your age 62 benefit will be less and therefore your supplement will be less. The SS website has a good calculator to estimate your age 62 benefit.

benefit.http://www.ssa.gov/retire2/AnypiaApplet.html

You'll need your last SS statement.

[clester]

Wheels,

There are a couple of negatives with my plan that I have come across.

One is that the amount you choose for the 72t is set in stone until your 59 1/2 or for 5 years whichever is longer . Same goes for SS suppliment, it is set until you are 62 and then recalculated. FERS has a cola. So, infation will erode you buying power.

Leaving it in TSP and using their payments is like having a cola built in because of the way they calculate it. You start off a lot lower, but it increases each year.

So the decision is , more money while your young or more for later years.

I struggle with this one.

[Ed]

Why not just take out the monthly amount that you need each year without implementing 72(t)? Just a thought.

I'm in a similar retirement situation. Is the $11.5K SS supplement a firm figure? How was it calculated? Your input is appreciated.

Ed

[Wheels]

Why not just take out the monthly amount that you need each year without implementing 72(t)? Just a thought.

I'm in a similar retirement situation. Is the $11.5K SS supplement a firm figure? How was it calculated? Your input is appreciated.

Ed

Because he would be assessed a 10% IRS penalty on any money taken out without using 72t.

No, I don't believe the 11.5 is firm. If you read my post above you should be able to figure out your SS supplement.

[teknobucks]

I'm looking for any comments on my retirement palns.

Here's the details and assumptions. FERS Salary now $100,000 . I will be 49 1/2 (25 years FERS) when I retire from ATC (Air Traffic Control). ATC has early retirement. Basic retirement FERS will be 39% or $39,000. Social Security supplement will be about $11,500.

Using the 72(t) rule (www.72t.net has good info) I would use the amoritization calculation on at least $500,000. Using the calculator at the site above it comes to about $35,000. It is based on life expectancy SEPP, but uses a "resonable interest rate" in the calculation now at 6%.

All 3 together comes to $85,000. Figuring $15,000 that I now put in TSP that means I now get $85,000. So, 100% retirement. There are other factors involved but this is the gist of it.

Any holes in this senario?

Thanks

HI GUYS!
Tom site still has it's flair;)

here's an untimely answer from tekno...lol

in my 3rd year of retirement now...retire early and often IT"S GREAT;)
FAA is way to F'ed up to continue working if eligible 2 go...pay freeze vs 5% plus raise from OPM this year

gs2152...25years FAA...4 years US Army paid back .
switched to fers in 98 with full contributions every pay period, since my military time was paid it resulted in 21 years vested in csrs (it's a better retirement UNLESS u can work tsp interfund moves well)

retired from a low level 9...but had many years at zla which topped my band out

ended up with just under 100k per year with a blend from all sources including a 72t....the 72t to social security transition will be a wash or pay raise @ 62 eye hope :O

17777.00 is my yearly 72t draw....tsp was only about 270k at retirement date.

been trading at schwabb & bofa (bofa is 30 trades a month free...poor web site tho)

fool with only SSO, UYM, TNA, CEF, GLD, UNG, TAN, FAN, SRS,TWM, FAZ, & UYG
run straddles..sell the green ones...buy the red ones works well when it works
liquidity of the thinly traded stuff makes for some chitty spreads esp in pre and ah sessions
ya can not short or buy options in ira...short etf's only avenue
SRS has been my baby...esp. after i learned to use trailing stops religiously ......after 2 draws we still have our original transfer $$$ plus a wee bit

GOOD LUCK TO ALL OF YA HERE....MANY FOND MEMORIES ON THIS BOARD

ps: this market will see MOST CERTAINLY SEE THE 600's on spx soon be cash ready to buy that with both fists....jmho

[tsptalk]

ps: this market will see MOST CERTAINLY SEE THE 600's on spx soon be cash ready to buy that with both fists....jmho
It's nice to know we are on the same page. Going against teknobuks can be detrimental to your financial future. :)

[Zebra]

It appears that FERS credit under ATC is more generous than other government agencies. I do not see how 25 years under FERS gives 39% of average high three years. You only get 1% for each year of FERS service. That would give you 25% rather than 39% of average high three. Is FERS pension credit more with a ATC career?


If you are regular FERS and over 60, it is 1.1% of the average high three. It isn't much, but better than nothing.

[Hallatauer]

Things to consider.
First, the SS supplement is high. The number they give you on your SS Benefit Statement is calculated as if you were to continuing working at your present salary until you are 65.
Second, what about health benefits? If you stay with FEHB, they are deducted from your pension. Find out ahead of time how much.
Third, what about survivor benefits? Are you going to provide your spouse a 50% or a 25% or 0% benefit in case you predecease her? A 50% benefit lowers your pension by I believe 10% and 25% lowers it by 5%.

[clester]

Things to consider.
First, the SS supplement is high. The number they give you on your SS Benefit Statement is calculated as if you were to continuing working at your present salary until you are 65.
Second, what about health benefits? If you stay with FEHB, they are deducted from your pension. Find out ahead of time how much.
Third, what about survivor benefits? Are you going to provide your spouse a 50% or a 25% or 0% benefit in case you predecease her? A 50% benefit lowers your pension by I believe 10% and 25% lowers it by 5%.
Your supplement is a fraction of your age 62 ss amount. Its the number of fers years divided by 40. So 25 years fers would be 25/40 (5/8) times the amount on ss statement at age 62.