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Thread: Planning for Retirement

  1. #13

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    Feb 2019
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    Gainesville, Florida
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    36

    Default Re: Planning for Retirement

    Thanks for biting. By now you’ve realized the transition to ritirement is complicated. Dozens of moving parts, many of which are unique to you which makes giving advice problematical.

    You’ve already started your transition and many of your variables are now etched in stone. You raise the issue of starting SS benefits or withdrawing from TSP. Here’s my initial thoughts: Under ‘normal’ circumstances, one should not take SS benefit before one’s full retirement age. And that applies to your wife too.

    Having said that, if you wait beyond your FRA, the benefit increases .667% every month, or 8% annually until you reach age 70. If you think that’s better than what you’ll generate with your TSP money, then draw down the TSP if you need it and hold off on your SS benefits.

    Statistically for a reasonably health man and woman, there’s roughly a 93% chance that one of them will be alive at age 93. If you think of Social Security as a defined benefit pension plan with a cost of living rider, you can expect that benefit to be there.

    If you’ve died first, then she will get the larger benefit (yours) for the rest of her life. Over that span, your TSP money will probably grow faster that the COLA benefit, if you’re not too conservative. If you want to know my thoughts about the future of Social Security, I’ve written blog posts about this. Here’s one of over 130 post I’ve written about Social Security; https://tinyurl.com/yy9ga2bx

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  3. #14

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    Default Re: Planning for Retirement

    Essentially what this means, assuming I understand it, is that for some people, a pension benefit attributable to earned income not subject to Social Security FICA withdrawals is considered a 'substitute' for what for most people is a traditional Social Security retirement benefit. To the extent you have such a pension income, you can expect it to effectively reduce or eliminate any Social Security income that's not as a result of a disability or other qualifying circumstance. Tony

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  5. #15

    Join Date
    Apr 2008
    Location
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    12,148

    Default Re: Planning for Retirement

    Quote Originally Posted by rakendzior View Post
    Essentially what this means, assuming I understand it, is that for some people, a pension benefit attributable to earned income not subject to Social Security FICA withdrawals is considered a 'substitute' for what for most people is a traditional Social Security retirement benefit. To the extent you have such a pension income, you can expect it to effectively reduce or eliminate any Social Security income that's not as a result of a disability or other qualifying circumstance. Tony
    I think you are referring to the CSRS vs. FERS post. Makes it easier to know which post you're talking about if you say post "so and so" or you can click on the lower right "Reply With Quote". Yes you are correct. If your retirement program was CSRS you didn't pay into SS.
    May the force be with us.

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  7. #16

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    Feb 2019
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    Default Re: Planning for Retirement

    nasa1974 re CSRS vs FERS : glad to know we're on the same page. Thanks.

  8.  
  9. #17

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    Stinking desert valley of bad air quality, AZ
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    2,993

    Default Re: Planning for Retirement

    Quote Originally Posted by rakendzior View Post
    Thanks for biting. By now you’ve realized the transition to ritirement is complicated. Dozens of moving parts, many of which are unique to you which makes giving advice problematical.

    You’ve already started your transition and many of your variables are now etched in stone. You raise the issue of starting SS benefits or withdrawing from TSP. Here’s my initial thoughts: Under ‘normal’ circumstances, one should not take SS benefit before one’s full retirement age. And that applies to your wife too.

    Having said that, if you wait beyond your FRA, the benefit increases .667% every month, or 8% annually until you reach age 70. If you think that’s better than what you’ll generate with your TSP money, then draw down the TSP if you need it and hold off on your SS benefits.

    Statistically for a reasonably health man and woman, there’s roughly a 93% chance that one of them will be alive at age 93. If you think of Social Security as a defined benefit pension plan with a cost of living rider, you can expect that benefit to be there.

    If you’ve died first, then she will get the larger benefit (yours) for the rest of her life. Over that span, your TSP money will probably grow faster that the COLA benefit, if you’re not too conservative. If you want to know my thoughts about the future of Social Security, I’ve written blog posts about this. Here’s one of over 130 post I’ve written about Social Security; https://tinyurl.com/yy9ga2bx
    Thanks for the reply. I understand that everyone’s retirement situation is different which is why we post minutiae in our threads that only apply to ourselves but in some cases apply to someone else’s situation. Makes it difficult to decipher it all but the fed that the detail apples to will understand it.

    I understand the .667% monthly increase in social security if I wait until May 2022 v applying in Aug 2019. 231/3% is not to be taken lightly. The desired amount would be about $3500 per month taken from the TSP in that 2year 9month period.

    The question is not about my wife’s ss benefits after I have died. She believes that if she starts collecting ss before I do that she will get close to what her estimated benefits statement shows as the amount. True. She believes that if I start collecting ss benefits before she does that her estimated amount will be 50% of my benefit. I have not been able to find out if this is true. Chatting with ss people on their site tells me to apply and see what happens. If my wife starts receiving ss benefits, which amount will she receive assuming I am not dead and haven’t started receiving benefits. After I start receiving benefits will her amount go up to 50% of my benefit?

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  11. #18

    Default Re: Planning for Retirement

    what a great thread..thanks for starting it...very timely for me....here's something i came across, might be helpful if your spouse is 10 years or younger....TSP has a higher RMD than a regular IRA...it drains your account faster.....uses a different table to calucate RMD...this may explain it better...at least the IRA part...

    https://www.kiplinger.com/article/re...h-younger.html


  12.  
  13. #19

    Default Re: Planning for Retirement

    in regard to social security...my wife plans to take her lower spousal benefit at 62...i will take mine at 70
    She can draw her spouse benefit at age 62 (and I will be age 72) which will be 32.5% of my increased full benefit. Upon your death, her benefits will increase to my benefit amount if she is at least age 67.

    I am 10 years older than her

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  15. #20

    Default Re: Planning for Retirement

    the calculator on https://fersguide.com/ was the best i came across...no affiliation....15 per year membership well worth it in my opinion

  16.  
  17. #21

    Join Date
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    Default Re: Planning for Retirement

    Quote Originally Posted by alfaman View Post
    in regard to social security...my wife plans to take her lower spousal benefit at 62...i will take mine at 70
    She can draw her spouse benefit at age 62 (and I will be age 72) which will be 32.5% of my increased full benefit. Upon your death, her benefits will increase to my benefit amount if she is at least age 67.

    I am 10 years older than her
    You may have already found these calculators but I find them helpful when advising people. On a personal note, I filed at my FRA and for whatever reason, my wife filed when she was 65. That permanently reduced her benefits below the 50% threshold even though we didn't need the money at the time. Now, several years later, that extra $XXX would be help us pay our extra medical expenses.


    Benefits for Spouses—This page also has a calculator that computes the effect of early retirement.


    Benefits Estimator—This page takes you to Social Security's calculators that allow you to get as detailed as you would like to estimate your benefits.


    Retirement Planner: Benefits for You As a Spouse—A simplified version of the rules regarding spousal benefits.

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  19. #22

    Join Date
    Feb 2019
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    Gainesville, Florida
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    Default Re: Planning for Retirement

    Quote Originally Posted by alfaman View Post
    what a great thread..thanks for starting it...very timely for me....here's something i came across, might be helpful if your spouse is 10 years or younger....TSP has a higher RMD than a regular IRA...it drains your account faster.....uses a different table to calucate RMD...this may explain it better...at least the IRA part...

    https://www.kiplinger.com/article/re...h-younger.html
    Is that why there are restrictions re extracting large chunks of TSP money by transferring to an outside IRA?

  20.  
  21. #23

    Default Re: Planning for Retirement

    Quote Originally Posted by rakendzior View Post
    Is that why there are restrictions re extracting large chunks of TSP money by transferring to an outside IRA?
    did not know there were restrictions...assumed there were none since i thought you can transfer the roth part of the tsp to an outside ira..i will have to educate myself on extracting large portions...hope i do not have to transfer the whole tsp to an outside ira to get the lower RMD

    i know the roth does not have a RMD...i was talking about the nonroth portion

  22.  
  23. #24

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    Default Re: Planning for Retirement

    I have a retired federal employee client who wanted to keep some of his money at TSP but remove the rest. He wanted an environment that gave him upside potential but guaranteed him against a loss if it turned out he was too exposed to sequence of returns risk. He moved some of it but TSP said "no more transfers". He thinks the rules may be changing but because he is afraid of a market crash this year, and he lost a lot of his account last fall, he has everything in the most conservative option available. That's not good if he expects to live another 25 years.

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