Q. I am soon to be 65 and plan to retire within the year and have debt in the amount of $67,000. This is not including my home, car, etc. I have been considering withdrawing a large amount from my Thrift Savings Plan to pay this debt. With my pension and Social Security benefits, if I figured correctly, I would be bringing home about what I do now after taxes. I know it’s personal preference, but is it a wise decision? A. I can’t say if it’s the best course of action, but the debt needs to be paid. The…
Browsing: Social Security
Q. I received a 1099R from the Internal Revenue Service. They do not differentiate the annuity income from the supplement income. I’ve read the IRS Publication 721 tax guide to U.S. Civil Service Retirement benefits. There is no mention of the special retirement supplement. I called the IRS; they said they never heard of the supplement being treated like Social Security. They also advised me to report the income on the 1099R as is (do not separate the supplement from the regular annuity). If it is indeed to be reported like Social Security, how do I go about it without…
Q. I retired in July 2013 and have $500,000 in my Thrift Savings Plan. I need more money to support retirement and would like to take a lump sum of $30,000 out of TSP. I was thinking about taking the rest of the money as an allotment. Does this make sense? I have delayed my Social Security until I am 66 (I’m 64 now). My wife is taking her Social Security. A. Waiting to claim Social Security is probably a good idea unless you have a shorter than average life expectancy and are single. If your only other source of…
Q. I am a federal air technician with the Air National Guard. I have 34 years in the Guard and 27 years as a federal full-time technician. I am in FERS and have a minimum retirement age of 56. I will be 53 this year. It has been communicated to me that I will probably not be retained this year, meaning that Dec. 31, 2014, I will be involuntarily retired, thus losing my full (technician) and part-time (traditional Guard) employment. When can I begin collecting my retirement pay, Social Security, Thrift Savings Plan? Are there any penalties if I was…
Q. I am 56 and had to retire under a disability retirement because of cancer. I am receiving Social Security, and I have 90 percent disability from the Veterans Affairs Department. Can I withdraw from the Thrift Savings Plan without the 10 percent penalty, or do I need to wait until I’m 59? What documentation do I need for taxes? Can you also refer me to the correct tax pubs and pages? A. The answer will depend upon when you retired and the nature of your disability. See Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf to see if you meet…
Q. After I retire, I am planning to withdraw $4,000 per month from the Thrift Savings Plan and I am not claiming Social Security. How will Social Security taxes be paid for the TSP I withdraw? A. Social Security taxes can’t be paid from your TSP withdrawals since they are not considered earned income.
Are you planning to retire soon? If so, you’ll need to figure out whether you’re financially able to make it work in the near and the distant future. Because there are few, if any, truly reliable financial guarantees, this can be a difficult thing to determine. The essential question is this: “Will I have the resources — usually cash — available when I need it to support my desired standard of living for the rest of my life?” If someone else is depending upon you for all or part of their financial support, your retirement decision will affect them, as…
It’s easy to make mistakes when you are planning to retire. Some of the biggest mistakes apply to all employees; a few apply only to CSRS or FERS retirees. All can be costly. Here they are and what you can do to avoid them: Retiring on the spur of the moment. It can be disastrous, for two reasons. First, if you hand in your retirement application at the last minute, it may contain errors that delay processing or even cause it to be rejected. Second, decisions made in haste often come back to bite you. Once committed to a course…
Q. I am considering retirement at 62 (FERS) but not collecting Social Security until my full retirement age of 66. I know that once you start withdrawing from your Thrift Savings Plan account, you must continue to make withdrawals each year. To bridge the time from 62 to 66, I’m thinking of taking funds from my IRA instead. If I start taking withdrawals at 62, can I stop taking withdrawals from my IRA at 66 when I start Social Security and then resume withdrawals at 70½? A. You’ve got the right idea, and it will work. You may start and…
Q. Has there been any analysis over the cost/benefit of drawing Social Security at age 62, banking the money in a conservative investment instrument such as T-bills and drawing down on it at age 70 along with the reduced SSA amount using a 20-year amortization rate? A. There has been much analysis done on the timing of claiming Social Security benefit. I analyze the options for every one of my clients who haven’t already made the choice. You didn’t ask, but I’ll assure you that there is no universal result to this analysis. What will work best for you depends…