Q. When I hope to retire in FERS, I will be 62 years old with 28 years creditable service. I will receive TSP payouts, Social Security benefits and a FERS pension. My wife will benefit from Survivors’ Benefits. I’m concerned about what the living costs will be as a retiree.

Will I have to pay federal income taxes on all of the above income that I receive.

I am told that the tax rate is cheaper after retirement. Is that just because there is less income, or is it also because we are in a lower tax bracket?

A. All of your TSP withdrawals will be taxed as ordinary income for the year in which the withdrawal occurs. That means that it will be subject to federal, state and local income taxes in effect. If you experience lower tax rates in retirement, it would likely be the result of either: less income (which could put you in a lower tax bracket) or special tax breaks for retirees, or both.

About Author

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 and view his blog at

Leave A Reply