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Thread: Using the TSP as a supplement to military pension

  1. #13

    Join Date
    Apr 2010
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    S.W. Florida
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    1,268

    Default Re: Using the TSP as a supplement to military pension

    Thank you for your service. I concur with Edelman. You state you don't expect S.S. to be there in 16 years. I agree, S.S. won't be there in it's current form. I expect reduced benefits, higher taxes, means testing, as ways to keep it solvent. Personally, I'm grabbing my S.S. at 62, to heck with all the advice about waiting until 66 or 70. That said, are you aware the FEDS have borrowed from the G Fund numerous times over the last few years when spending approached the debt ceiling ?? I have no confidence in the FEDS leaving the TSP alone in the future if they are very strapped for funds. Other countries have appropriated their pensions and issued annuities to the holders. I would encourage you to consider rolling your TSP into a self directed IRA, taking it out of the hands of the FEDS and putting it into yours. You'll have much more flexibility in ETFS/Funds and no 2 a month limit in making changes if you wish to do so. There are numerous low fee, good life cycle type funds of there if you just wish to let it ride also...Good luck!

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  3. #14

    Default Re: Using the TSP as a supplement to military pension

    Here is another thought... make contingent plans that allow for a variety of possibilities. Taxes and death are sure things, the rest is up for grabs! Collecting TSP on top of early SS until full retirement age will do a couple of things; it will increase your adjusted gross income (agi, therefore tax liability) and reduce your SS benefits (due to early participation). Also, if means testing and other restrictions come into play, your total income may be reduced significantly. While there will likely be some changes to SS, one may wish to position themselves to take the best advantage of the changes by using TSP money (or rollover into another instrument) to cover the stretch between age 62 and full retirement or even delay to age 70. Early participation in SS limits future flexibility in this regard. If one looks at SS as a pension, it may be more easily understood why one might consider waiting for a maximum benefit, expecially considering spousal benefits.

    This is even more significat if one is going to work after gov't retirement as SS will deduct $1 for $2 after 15k in income. Then you are paying SS (FICA, increasing your AGI (tax liability) and receiving a permantly reduced SS benefit.

    A good start to research these options below : )

    http://www.forbes.com/forbes/2007/1112/092.html
    Official Retirement Date: 06-31-2014!

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  5. #15

    Default Re: Using the TSP as a supplement to military pension

    Quote Originally Posted by RealMoneyIssues View Post
    Easy numbers:
    100k pay at retirement (including all benes)
    50k in pay (assuming 65% retirement, only base pay, no BAH, etc)
    80k goal in retirement (80% you stated)
    30k Difference

    You will need about 600k in TSP/IRA to withdrawal 5% each year to make up the 30k (after you reach 59 1/2 years of age of course)
    If you don't earn any interest in the TSP/IRA, your 600K will only last 20 years. You should earn at least 5% to make up for your distribution.

    I can't get into other things like life insurance, health insurance, etc as that would be very specific to you and your needs. This should give you an idea (although you mentioned all of this in your post) of how the numbers work out.

    It is simple, number-wise; but you can make it as complicated as you want when you factor in your specific needs and requirements.
    I'd say 80% of your take home. Basically, what do you live on now after all the taxes and deductions etc. are taken out. What goes into your bank each pay day to pay the bills. That's the number you need to try and match in retirement funds available to keep paying he bills. 100% percent or more would make you comfortable, 80% would be doable with slight mods to your budget.

    RMI, 100K with all the benefits? I should have stayed in the military

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