Q: I am a Federal Employees Retirement System employee with the Postal Service who plans to retire at the age of 60 with 27.5 years of service. I plan to take monthly withdrawals from my Thrift Savings Plan account to apply to my mortgage for ten years until I am 70 1/2 years old, rather than paying off my mortgage when I retire. My mortgage is a 30-year fixed at 4.75 percent. By leaving my money in the TSP and earning an estimated 8 percent while taking monthly withdrawals to make my mortgage payments, won’t I be ahead money at 70 1/2 ? Also, will I still be able to take a one-time withdrawal in the middle of this plan at a date after retirement, let’s say, at age 65?
A: I’m not going to do the math to determine whether the scenario you’ve laid out will work out to your advantage since the answer will ultimately depend upon your future tax returns and the rate of return earned each year on your TSP account — neither of which can be predicted reliably in advance. I can tell you that once you start monthly payments from your TSP account, you can’t interrupt them with a partial withdrawal. You would have to end the payments with a complete and final withdrawal.
