Q. I am in the process of moving my traditional IRAs into the TSP, but would like to keep some money in asset classes not available under TSP. Specifically, I have in mind current investments in emerging markets and real estate investment trust index mutual funds. Assuming that I would not need to liquidate these two classes of assets for at least five years, do you have any advice on the percentage of the total amount of post-retirement assets I should hold in each class? A. I recommend that you forgo this unnecessary concentration (it’s not diversification) and move the money into…
Browsing: retirement
Q. I am retiring under FERS with 23 years of service at age 66. Can I set up with TSP to draw an amount from my account on a yearly basis? Do I have to pay taxes on the amount that I withdraw? Is there an age limit where I do not have to pay taxes on the withdrawal amount? A. You may only set up automatic distributions from your TSP on a monthly basis. Every dollar you withdraw during the year will be counted as taxable income for the year, regardless of your age.
Q. I plan to retire from the federal government in the near future (I will have 32 years). I wish to pay my house off ($74,000) with my Thrift Savings Plan earnings. Is this a good idea? The interest rate on my house is 5.75 percent, and I realize that 20 percent will be taxed when I decide to withdraw from TSP. Should I transfer to an outside facility? I do not wish to have a house payment when I retire. A. It’s impossible to say whether this is a good idea for you without understanding and analysis beyond the…
Q. Can you recommend some funds where a retiree could put his money if he is not a federal worker? A. Except for the G Fund, which is a cash equivalent that can’t be matched outside the Thrift Savings Plan (use a money market fund or equivalent interest bearing security with no risk of loss), the other four TSP funds are based on widely available indices. The C Fund is based on the S&P 500 Index, the S Fund on the Dow Jones U.S. Completion Total Stock Market Index, The I Fund on the Morgan Stanley Capital Europe, Australasia, Far…
Q. I am four years away from retirement at the Postal Service. However I have Parkinson’s disease, and I don’t know if I can hang in there. Any advice on whom I can contact regarding my options and what is best? Disability or trying to hang in there until 2016? A. Continuing to work will produce a better financial result. The real question is whether the financial improvement is worth the suffering, and only you can make that decision. I can show you what the additional work will mean to you in terms of your lifetime standard of living. Visit…
Q. Three years ago, I let myself be persuaded to withdraw 50 percent of my Thrift Savings Plan and place it in a private qualified retirement account. I did this at age 61, and this was my one-time withdrawal, so there were no penalties. I regret doing this. Before I retire, can I transfer this money back into my TSP without any issues? The other option is to use this private account to purchase a fixed annuity and draw off of it during the first years of my retirement thus leaving the other half of my savings (in Thrift) alone…
Q. You made the following statement in a recent column on common mistakes regarding retirement: “Think paying off your mortgage in retirement is important in achieving the highest standard of living possible? It’s probably not.” Why? I’ve always thought the opposite — that you should have your mortgage paid before you retire. Can you share your thoughts on this subject? A. You’ll find a transcript of a column I wrote on the subject here: http://www.variplan.com/uploadedDocuments/1277733522Carrying_mortgage_into_retirement_can_pay_off.pdf. Basically, the reason is that paying off your mortgage can tie up funds that you may need later to pay your bills — the bills for your…
Q. I’m preparing to retire and trying to learn about TSP options and the outside world with investing my life savings. I have most of the outside world telling me to pull it out now — I’m 61 — because the G Fund is not even keeping up with inflation. I also have looked into investing some of it in a program called Diversified Stock Income Plan with Wells Fargo. Under $200,000 will cost me 1.5 percent every year if I invest in this program. What do the experts say about the advice I am getting? A. This expert says:…
Q. I am considering a Thrift Savings Plan loan of $40,000 to fully fund a Roth TSP for the next few years. I am in the Air Force and plan on staying in the service for at least six more years until retirement. I’m just not sure that the benefits of a fully funded Roth TSP will outweigh the tax I will pay on the loan payments, not to mention the tax I will pay on the interest from the $40,000 as it sits in the bank waiting to be deposited into my Roth TSP, and the gains that $40,000…
Q. I am planning to retire in December 2013 with 41 years of government service. I am covered by CSRS and have been participating in the Thrift Savings Plan. I have several small IRAs for which I am charged $40 a year. I was going to switch this money over to a building and loan association that advertises it does not charge an annual fee. Would I be better to put these funds in my TSP? Would that result in a taxable event? A. Generally, the TSP should be your first choice for retirement investment. Transferring your IRA accounts to your…