Q: I am five years away from retiring. My husband retired at age 48 in 2000 with $300,000 in his 401(k). He went to a financial planner and set up an annuity. The way it was written, he couldn’t change the dollar amount he was allotted. Needless to say, his money ran out this year. I have 30 percent of my income invested in the Thrift Savings Plan, all in the G Fund, hopefully not making the same mistake with the stock market. Should I go to a financial planner to have a monthly annuity made up? I don’t want…
Successful retirement investing depends more on avoiding serious mistakes than it does on realizing exceptional gains. Cash flows from your portfolio when investment values are depressed can cause damage that won’t be repaired later by better returns. If you withdraw $10,000 from a portfolio when it is worth $200,000, you’re withdrawal represents 5 percent of your portfolio. If, alternately, you withdraw that same $10,000 from your portfolio after its value has fallen to $100,000, you’ve now withdrawn 10 percent of your portfolio’s total value. A withdrawal rate of 5 percent might be sustainable over 20 or 30 years, but a…
Q: I have checked your Q&A and have asked several people about the special retirement supplement (SRS) and can`t seem to get an answer. I’m a 56-year-old Postal Service employee with 22 years of service. Rumor has it there will be another VERA (early out). My two questions are, if I go out on VERA will I be able to take money out of my Thrift Savings Plan account without early withdrawal penalties even though I`m not 59 1/2 years old? I know I will be eligible for SRS. Will the fact that I will be getting SRS, an annuity…
Q: Many financial advisers recommend a retiree include Treasury Inflation Protected Securities (TIPS) as part of the fixed-income portion of their portfolio to protect against rising inflation. Although TIPS are clearly different securities than those in the Thrift Savings Plan’s G Fund, it appears there are some similarities in both their composition and their returns over time. As TIPS aren’t available in the TSP (nor should they be, in my opinion), what are the pros and cons of using the G Fund as a substitute for a TIPS (IRA) fund in the fixed-income portion of a federal retiree’s portfolio? A:…
Q: I am 69 and plan to continue working well into my 70s. Do I have to start my Thrift Savings Plan withdrawals at age 70 1/2 or can I wait until I retire? What are my options? A: You can wait until you retire to begin your withdrawals.
Q: I enlisted in the Marine Corps and signed up for the Thrift Savings Plan in 2004. I was severely injured in Iraq in 2005 and was retired from active service in 2006. I am now receiving Combat Related Special Compensation, Social Security and my compensation from the Veterans Administration. Can I continue to add to my TSP account as a military retiree? I’m only 23 years old and would love to add to it. A: You may only contribute to the TSP through federal payroll deduction or via transfer from an eligible outside retirement plan.
Q: I have a question regarding borrowing against my Thrift Savings Plan and would like your opinion on the scenario as to whether it would be worth it. I am 52 years old and have eight years as a Federal Employees Retirement System employee, and I intend to do 12 more years for a total of 20 years before I retire. Currently, I contribute approximately $600 each pay period into my TSP account, which currently totals about $100,000. I have about $20,000 in loans. Would it be sensible to borrow $20,000 against my TSP to pay off the loans? Or…
Q: A co-worker is trying to convince me that taking an annuity without survivor benefit is more cost-effective than with the survivor benefit. He says it is better to take the full benefit and buy an insurance policy to protect my wife when I die. Besides the health insurance aspect of that decision, I argue that the survivor benefit is the better choice. I believe you wrote an article on why it is better to take the survivor annuity. Would you please repeat that advice and would you also point to where I may find more information on this question?…
The Thrift Savings Plan’s G Fund is in a class by itself. It is a government securities investment fund that guarantees against loss of principal while offering the returns of more risky, longer-term Treasury bonds. While the G Fund’s returns are similar to the yield provided by 10-year Treasury bonds, the G Fund is not comparable to a bond investment. Bonds and bond funds, like TSP’s F Fund, can and sometimes do lose money. Treasury bonds, for example, guarantee their interest payments and the value of the bond, if redeemed, at maturity. Along the way to maturity, however, the bonds…
Q: I am currently in a Civil Service Retirement System 6C designated law enforcement officer position. Aside from my CSRS retirement benefits, of which I will reach the maximum annuity of 80 percent at the end of this year, I have also contributed to the Thrift Savings Plan. I am not planning on relying on my TSP funds to supplement my retirement. I know there are ways to avoid the 10 percent tax penalty for early withdrawals before turning 55 years old (taking the money in a monthly annuity, etc.). I would like to take all of my TSP out…