Q: I am planning to retire next year. I have about $100,000 in my TSP account and about $60,000 in credit cards. Should I use my TSP to pay off my credit cards, or is there something else I can do? A: No one can tell you what you should do without a lot more information and some careful consideration. You can either live beneath your means and pay off your debt, or you can default on all or part of your debt. Those are your choices.
Author Mike Miles
Mike Miles
Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.
Hedging is an investment concept that is either too unfamiliar or seems too exotic to be seriously considered by most individual investors. But, as a Thrift Savings Plan investor who is relying on your savings — and your skill at managing those savings — to provide you with an acceptable lifestyle in retirement, you should recognize hedging as an essential element of a sound investment strategy. Hedging is nothing more than finding ways to reduce the investment risk you face to an acceptable level. Fortunately, the TSP provides you with everything you need to implement an effective strategy to hedge…
Q: I have been contributing 17 percent into the TSP, and have two loans against the fund. It appears that the loans repayments are pre-tax just as the the contributions are. Is there a disadvantage to reducing the contribution to 5 percent (to maintain the matching from my employer), and re-amortizing one loan with that 12 percent to pay it off faster? A: Your premise is incorrect. Your TSP loan payments are not tax-deductible, that is, they are made with post-tax dollars. Your loan gave you spendable, after-tax dollars, and it must be repaid with spendable, after-tax dollars.
Q: I’ve recently read that if I plan to retire at age 65, and my total annual household income is $100,000, that I would need $1.1 million in savings and assets. Because I plan on keeping as much as I can in the TSP after retirement, can I tack on the interest to be earned on my account savings onto my TSP retirement savings to come up with a “summation” of life-savings value to be able to say what amount I could/should realize? The article also suggested that a 3.6 after-retirement percent interest rate would be a cautious assumption. Your…
Q: I am 46 and plan on leaving federal service. Can I avoid the 10 percent tax penalty if I use my TSP savings to purchase an annuity? A: Yes.
Q: I have been trying to find out for more than a year why the deductions from my paycheck for the Thrift Savings Plan and the catch-up deductions do not equal the amount on the Personal Benefits Statement for 2008. I have been told it is an estimate. I know the benefits are estimated but the total deducted from my checks is not an estimate. I have had the TSP for nine years. The amount for the TSP and catch-up contributions on the Personal Benefits Statement for 2008 is $15,582.84, the amount deducted for the TSP and catch-up contributions from…
Q: A few years ago, I applied for an early withdrawal from my SP, specifically a hardship loan. Ten percent was taken right off the top, and I reported the early withdrawal on that year’s taxes. Two years later, the IRS says I owe them another 10 percent, plus a $1,000 penalty plus interest. If I had that kind of money, I wouldn’t have asked for a hardship. Does it even matter that I borrowed against my TSP for hardship reasons? Is there another way to borrow against your TSP (early) without going broke? A: You took a hardship withdrawal,…
Q: Can I draw my TSP at age 56 when I retire under FERS? A. Yes.
Q: In the late 1990s, I invested money in a Franklin Templeton T-Roth IRA and a Hartford Variable Annuity investment. I would like to bring these investments into my TSP account. I understand TSP will begin to offer Roth options in the second quarter of 2012. Would I simply be able to roll over my Franklin T-Roth accounts into Roth accounts offered by TSP? And how would this relate to the $17,000 ceiling on TSP investments for 2012? From my limited understanding regarding variable annuity investments, it sounds like I would need to liquidate these accounts in order to move…
Q: I am 62 with 22 years of federal service. Recently, my agency offered a buyout. I was thinking about taking the buyout and retiring. Here is my reason for not doing so. I have been reading horror stories regarding OPM’s incompetency regarding our annuity checks. Some people have been waiting as long as a year. They cannot get any response from OPM. Since the third leg of my retirement TSP has lost so much money, I would have to drain it in order to survive. Should I stay or go? I also will have surgery in early 2012 and…