Financial Advisor

DoWhat

Deplorable
PREMO Member
I believe the minimum retirement age is 57. But you would have to take a reduced retirement if you retire before 62. Your pension is reduced by 5% for every year you are under the age of 62.

You also only get a multiplier of 1.0% rather than 1.1% if you retire before 62.

So example: Your 3 year high salary is $100,000. You retire at 56 with 36 years. First you will have to defer you retirement as you are not old enough at 56 to receive one. So until you are 57 you will not receive any retirement. Since you retired before reaching 62, your multiplier is 1.%. 36 years X 1% for each year of federal service is 36% so you are entitled to 36% of your high three salary (in this hypo $100,000) as your pension, which equals $36,000 per year. However since you are retiring before the age of 62 you have to take a 5% penalty for each year you are younger than 62. That is 5 years, so your pension has a 25% reduction. Your pension in this hypo would be $27,000 per year.

Now second scenario. You wait until you are 62. This gives you 6 additional. You now have 42 years of federal employment. Because you reached 62 before retiring your multiplier is 1.1% rather than 1.0% so 42 X 1.1% = 46.2%. Assuming you have the same $100,000 three high, your pension in this scenario would be $46,200.

So by working for 6 extra years you have increased you annual pension from $27,000 to $46,2000. My advice is not to use an early retirement.

In terms of turning your TSP into an annuity. It depends on how good you are with money. If you are not good at budgeting and are likely to blow through your TSP money then use an annuity. If you are really good at budgeting and can live just off your pension, then maybe keep the money in the TSP.
I am sure you know about the pay to work.
I will hit that at 56/6mths.
 

PeoplesElbow

Well-Known Member
I believe the minimum retirement age is 57. But you would have to take a reduced retirement if you retire before 62. Your pension is reduced by 5% for every year you are under the age of 62.

You also only get a multiplier of 1.0% rather than 1.1% if you retire before 62.

So example: Your 3 year high salary is $100,000. You retire at 56 with 36 years. First you will have to defer you retirement as you are not old enough at 56 to receive one. So until you are 57 you will not receive any retirement. Since you retired before reaching 62, your multiplier is 1.%. 36 years X 1% for each year of federal service is 36% so you are entitled to 36% of your high three salary (in this hypo $100,000) as your pension, which equals $36,000 per year. However since you are retiring before the age of 62 you have to take a 5% penalty for each year you are younger than 62. That is 5 years, so your pension has a 25% reduction. Your pension in this hypo would be $27,000 per year.

Now second scenario. You wait until you are 62. This gives you 6 additional. You now have 42 years of federal employment. Because you reached 62 before retiring your multiplier is 1.1% rather than 1.0% so 42 X 1.1% = 46.2%. Assuming you have the same $100,000 three high, your pension in this scenario would be $46,200.

So by working for 6 extra years you have increased you annual pension from $27,000 to $46,2000. My advice is not to use an early retirement.

In terms of turning your TSP into an annuity. It depends on how good you are with money. If you are not good at budgeting and are likely to blow through your TSP money then use an annuity. If you are really good at budgeting and can live just off your pension, then maybe keep the money in the TSP.

I think you failed to notice this part

Reductions in Non-Disability Annuity
Age
If you retire under the MRA+10 provision
If you have 10 or more years of service and retire at the Minimum Retirement Age (MRA), your benefit will be reduced by 5/12 of 1% for each full month (5% per year) that you were under age 62 on the date your annuity began. However, your annuity will not be reduced if you complete at least 30 years of service, or if you complete at least 20 years of service and your annuity begins when you reach age 60.

I will have 30 years at 56 :dye:
 

PeoplesElbow

Well-Known Member
Got my info here https://www.opm.gov/retirement-services/fers-information/computation/

The worst part of retiring before 62 is this part

Cost of Living Adjustments
Your annuity will be increased for cost-of-living adjustments, if:
You are over age 62; or
You retired under the special provision for air traffic controllers, law enforcement personnel, or firefighters; or
You retired on disability, except when you are receiving a disability annuity based on 60% of your high-3 average salary. This is generally during the first year of receiving disability benefits; or
Your retirement includes a portion computed under Civil Service Retirement System (CSRS) rules.
FERS retirees under age 62 who do not fall into one of the categories above, are not eligible for cost-of-living increases until they reach age 62.
If you’ve been receiving retirement benefits for less than 1 year and are eligible for a cost-of-living adjustment, you’ll get a percentage of the cost-of-living increase. The percentage depends on how long you were receiving your annuity before the effective date of the increase.

Between that and losing that extra 0.1% in the calculation may be worth it for some people to stick around.
 

MADPEBS1

Man, I'm still here !!!
Please please please don't do annunity!!!!
https://federalnewsradio.com/federal-report/2015/02/tsp-or-an-annuity-look-before-you-leap/

Other options:
https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/withdrawals/withdrawingAccount.html#full - monthly withdrawl, you can then adjust that withdrawl when SS comes in. That is something i am thinking about, withdrawl monthly from TSP until i get FMA. Call it 120000 out of TSP to go from 1700 to 2500/month SS.
https://www.bogleheads.org/wiki/Thrift_Savings_Plan

i also have a fidelity rollover, my plan is to roll over to that when out at 62. Using a good asset allocation and low expense funds, you should be fine.... if i dont do the SS stratagy.

Have you taken the retirement class lately?
 
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vince77

Active Member
Why not leave your money in TSP after retirement? Lowest fees your going to find and many mirror index funds sold in the private sector.
 

PeoplesElbow

Well-Known Member
You can not just withdrawal money when you need/want it.

For something like that I have been contributing to a Roth IRA for the last 12 years, I have been calling it my RV fund since I can pull out as much as I want and not have it taxed.
 

DoWhat

Deplorable
PREMO Member
For something like that I have been contributing to a Roth IRA for the last 12 years, I have been calling it my RV fund since I can pull out as much as I want and not have it taxed.

I wish I had done that.
I want a RV.
36ft Diesel Pusher.
 
I am late to this thread however I recommend you interview an Edward Jones Advisor. I have been with EJ for 30 years and am very satisfied with their advice, support and investment products. I have found they provide support on your entire portfolio regardless of whether it is held at Edward Jones or not (i.e. TSP in your case for one).

https://www.daveramsey.com/smartvestor?ictid=HKDWD2241 click on in and interview one of their endorsed investment pro's for your area.

Interview is the key which is what you are doing as you will be paying them for their service which means they work for you.
 

PeoplesElbow

Well-Known Member
You know what I am curious about and haven't found anything about it, can you go part time and a year of service still count as a year? Say someone goes part time at 56, would finally retiring fully at 62 still them them the 1.1% vice the 1% calculation.
 

Clem72

Well-Known Member
Try to tell all of my buddies this but they seem more interested in buying new cars and bigger houses...
I'm 30 and have been putting 12% (not including 5% match) in my TSP ever since I've started. I plan on retiring as soon as I can.

If you max out your contributions from the very beginning you won't miss the money. Becomes harder down the road if you have based your lifestyle off of having that money.
 

PeoplesElbow

Well-Known Member
If you max out your contributions from the very beginning you won't miss the money. Becomes harder down the road if you have based your lifestyle off of having that money.

Not exactly needed to be done that way, as and engineer or scientist right out of school you get a promotion every year for the first 3 years, each promotion you increase your contribution and won't miss anything.

You never leave free money on the table so you want to start out at a minimum of 5%. You have no greater asset than time, the sooner you contribute the better. I know someone that just turned 40 that never contributed to his TSP until now because "everything will work out", what an idiot.
 

DoWhat

Deplorable
PREMO Member
Not exactly needed to be done that way, as and engineer or scientist right out of school you get a promotion every year for the first 3 years, each promotion you increase your contribution and won't miss anything.

You never leave free money on the table so you want to start out at a minimum of 5%. You have no greater asset than time, the sooner you contribute the better. I know someone that just turned 40 that never contributed to his TSP until now because "everything will work out", what an idiot.

I just wish ebis had a button for max contribution and max catch up contribution.
If you screw up the max contribution you can lose out on some of the matching.
 

PeoplesElbow

Well-Known Member
I just wish ebis had a button for max contribution and max catch up contribution.
If you screw up the max contribution you can lose out on some of the matching.

Would be nice, I think it was last year that there was 27 pay periods in the year so I had to reduce my contribution, now I leave it just a bit short just in case.

I've always wondered if it was just me but I have found every government website unnecessarily complicated and hard to navigate.
 

PeoplesElbow

Well-Known Member
If you leave your contribution short, you can't do the catch up.

Not sure I follow you, for me I can't do catch up yet so my max is 18k year this year, I divided the 18 by 27 pay periods and that is my contribution every paycheck so I am a bit short.

Wouldn't you do the same thing with the 18k + whatever the catch up differential is?
 

DoWhat

Deplorable
PREMO Member
Not sure I follow you, for me I can't do catch up yet so my max is 18k year this year, I divided the 18 by 27 pay periods and that is my contribution every paycheck so I am a bit short.

Wouldn't you do the same thing with the 18k + whatever the catch up differential is?
Maybe I am looking to much into it.
But I was told that if you do not meet the 18K on the exact amount your catch up of 6K will be kicked back.
If you overpay your initial contribution of 18k your contribution will stop at the limit and you can miss a portion of the matching.

I will try and call somebody tomorrow, but who are you suppose to call?
HRO is ridiculous nowadays.
 
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