I am glad you made this video. I retire next year and have done a lot of research. Using TSP before turning on SSAN is the same conclusion I came up with.
It's my money and I want it now. For me and my wife, we're taking TSP funds (6% of balances x 2 accounts), Social Security (2 accounts @ 62), and our gov pensions (2 accounts) as soon as we can, and not a day later. Tomorrow isn't promised, and I want a new Porsche..
@SpookyEng1 Sure I am, probably for 30 -35%. Otherwise, why would we have built it over 20-25 yrs of working and sacrificing? Lots of chat about needing 70%, 80%, etc. income replacement in retirement for the exact same lifestyle... No thanks, always shoot for 110% or better. A $1 million TSP balance will carry you a long way.
DH, you also didn’t touch on the tax efficiency of taking SS instead of TSP. If you take money out of the TSP, you’ll be taxed on the full amount (except for what comes out of your Roth). But if you take your SS, you’re only taxed on 50-85% of the amount. And the current Presidential electee has talked about reducing or eliminating taxes on SS altogether! That makes it a no-brainer for me!
I plan to retire at 57. Between my Pension and TSP, I'm lucky to not need my SS at all. I plan to invest 100% of my SS at 62, I am sure I can make more that way than waiting until 70.
@mred8969 long as you've got the 35 yrs of working credits you won't have $0.00 for any of the SS calculations earnings, but you'll certainly take a reduction of about 30% if you grab the money @ 62 vs. 67.
I think if you are single, are unhealthy or very healthy, I would take SS at 62. The reason being, if for whatever reason you happen to pass away earlier than expected, there's no spouse to take over those payments & that money is now back to the Government. While your TSP has beneficiaries.
I am turning 62 next year, but am collecting my wife's survivor benefit. I was going to continue with that and see where my finances are before I file for my own social security. Going to suck when I lose the supplement.
DH, you didn’t touch on the Estate Planning aspect of when to start taking SS. My kids can inherit my TSP, but they can’t inherit my SS! I retired at 56 and my FERS Supplement goes away at 62, and I’ve gotten pretty used to that money coming in! Given the option of replacing the Supplement with SS or my TSP, I’ll chose SS!
This all depends on ALL savings/investments etc. Also depends on having spouse she will start SS at 63 and I will delay until 67 this way if I pass and my pension(s) are reduced by 50% and her SS goes away then it will be less of a reduction and also allows not taxable Roths and other investments can grow. In the end for us by doing this we do not reduce our savings other than what is set aside for this period.
Be careful about delaying retirement to long and over estimating how much money you will need in your later years. Especially if you eliminate most of your debt in your younger years. It important to remember you're not trying to replace your annual salary but instead replace your monthly net pay. After looking at the numbers on both receiving social security benefits at 62 and 70 and finding the break even point being age 81. Then the reality of the average life expectancy being age 77 had me thinking. I wouldn't take away my net worth or inheritance for my family members to try get couple extra dollars for a short periods of time. The older we get pass age 75 the less we spend on entertainment and think about maintaining our health. I'm taking social security as soon as possible. I seen spouses passed quickly after each other.
As of recent data (2023), the average life expectancy in the United States is approximately: 77 years overall 74 years for men 80 years for women Life expectancy can vary based on factors such as race, ethnicity, socioeconomic status, and lifestyle choices. For instance, individuals with healthier habits and access to better healthcare may live longer than the national average. African American average life expectancy is much lower. Do that mean every African American male will pass away before 77. Course not. Should I defined the word average 🤔
I'm retiring from the government in 2 weeks. I have already registered and signed up for social security at age 62 and 3 months. I am not touching my TSP so in the event I die, my children will get the full TSP amount. That's just my opinion. Like everything else I'm probably wrong.
@@markwhite6782 I think you're headed in the right direction. I retired at 51 in 2021 from DOJ. I haven't touched my retirement savings. I'm living off my veteran compensation and DOJ pension. I was also smart enough to grow a emergency fund (untouched), and funeral expenses fund. Some how my savings for vacation and party keeps growing. I don't worry about keeping up with the Jones.
@@b.coxemba6799 Yeah, I must admit I'm not a rocket scientist at all this financial planning stuff. I just hope I don't regret anything. Friends think I'm crazy for leaving an easy high paying job but I don't care, I'm ready to retire. I was a government contractor for a long time and just now have 30 years service after being at my facility 43 years. It's time to go.
You might think about tranferring your traditional(non roth)TSP account after you retire to an IRA and doing partial roth conversions every year. Right now I've heard we are in historical low tax rates compared to other historical levels. I personally max out my tax rate with roth conversions to the 12% tax(before standard deduction) rate but ensure you have enough money to pay the increased taxes
@@markwhite6782 You still have to pay taxes when you transfer and private sector Roth fees can be higher than TSP. Although the results will be no additional tax on invested funds but taxes on money that's growing.
Not true. It's fully funded until 2037, and then it would only drop to pay out 75% of benefits unless they do something about it. All they have to do is up the payroll tax 2% to fund it fully for another 75 years.
@ndjollymon If they would quit raiding the fund for other stuff there wouldn't be an issue at all. Besides, they're already lowering our benefit to give it to others...
You didn't explain the difference in total payouts over the course of life expectancy taking into account the loss of interest spending your IRA earlier. Of course if you have enough in an IRA to afford it you can that's obvious.
Interesting, I was going to wait until 67, but being single and (relatively) healthy I may decide to collect SS at 62 now. I'm currently 59 and debt free but started my Federal career late in life (39) and wasn't able to invest heavily into the TSP until about 9 years ago. How much penalty to SS if I continue working?
For example: In 2025 If you are below full retirement age of 67 your benefits will be reduced by $1 for every $2 you earn working above the annual limit of $23,400. Probably better to wait till you reach 67 where there is no penalty.
I set up retirement seminars for our govt personnel. I have an employee who is a gs-13 who stopped tsp some years ago due to having financial difficulties. They have very little saved up (abt 100k). They are 60 and plan to retire in 3 years. Shld they start contributions for the last 3 years or no?
Yes. I would max out the next 3 years and put it all in the TSP Roth C Fund. When they retire use the Pension, 100k, SS, and than in 15-20 years use the Roth Tsp c fund tax free income.
@b.williams3095 The taxes is what kills it for me, so it's better to just have a larger balance, do regular withdrawals, and pay taxes as you go. I figure I've done the heavy lifting by building the balance over time, with the intent of leaving that to the kids. So, I'm not also gonna eat the taxes, too, on the conversion. They can pay them.
@@b.williams3095Yes. Once you retire/quit you can transfer your TSP account to a financial firm like Vanguard, Fidelity, etc. If it's a traditional TSP than transfer to a traditional IRA and than convert to Roth IRA at any age., but if you use your IRA to pay the taxes and you are less than 59 1/2 you pay a 10 percent penalty on the portion of your IRA you used to pay the tax. Have a separate account to pay the taxes. I use my pension account. In addition they require you to keep it 5 years in a Roth to make it 100 tax free.
One pro for using TSP and delaying SS is being able to work another job without reducing the SS benefit. One con for this strategy is possibly having more RMD's to take out later which may cause a change in tax planing.
For most people the break even is early 80's. The other dealy'O is from 62 to 70 you can get a guaranteed 8%+ per year return for delaying. TSP can't do that.
@sevenson99 I was only referring to delaying SS or taking it at 62 w/o using the TSP to make it up. Studies have shown what you get vs what you make is about even around age 70ish and if your health is bad, waiting isn't the best, plus you can invest that $ for 8+ yrs. TSP returns aren't guaranteed but lately mine has been 13%...you have to have some $ at risk to make $. Every decision has a risk & reward✨️😊I'm not waiting personally.
The president cannot act alone on SSI...in fact if you did some simple research you would see they have attacked it 100% bipartisan.....they dont want you to collect
I am glad you made this video. I retire next year and have done a lot of research. Using TSP before turning on SSAN is the same conclusion I came up with.
It's my money and I want it now. For me and my wife, we're taking TSP funds (6% of balances x 2 accounts), Social Security (2 accounts @ 62), and our gov pensions (2 accounts) as soon as we can, and not a day later. Tomorrow isn't promised, and I want a new Porsche..
I hope you aren’t relying on 6% TSP withdrawals to pay must pay expenses.
What wrong with the current Porsche?
@SpookyEng1 Sure I am, probably for 30 -35%. Otherwise, why would we have built it over 20-25 yrs of working and sacrificing? Lots of chat about needing 70%, 80%, etc. income replacement in retirement for the exact same lifestyle... No thanks, always shoot for 110% or better. A $1 million TSP balance will carry you a long way.
@@phillipgrandison2384is your tsp all traditional ?
I am taking SS and TSP. I'm enjoying my life now.. Life is short.
@@Retired-jr3qs I'm with ya.
DH, you also didn’t touch on the tax efficiency of taking SS instead of TSP.
If you take money out of the TSP, you’ll be taxed on the full amount (except for what comes out of your Roth).
But if you take your SS, you’re only taxed on 50-85% of the amount.
And the current Presidential electee has talked about reducing or eliminating taxes on SS altogether! That makes it a no-brainer for me!
I plan to retire at 57. Between my Pension and TSP, I'm lucky to not need my SS at all. I plan to invest 100% of my SS at 62, I am sure I can make more that way than waiting until 70.
Do you know how much less your SS at 62 will be if you retire at 57? Just curious. SS supplement is a good deal.
@mred8969 long as you've got the 35 yrs of working credits you won't have $0.00 for any of the SS calculations earnings, but you'll certainly take a reduction of about 30% if you grab the money @ 62 vs. 67.
Nope. You can't.
I think if you are single, are unhealthy or very healthy, I would take SS at 62. The reason being, if for whatever reason you happen to pass away earlier than expected, there's no spouse to take over those payments & that money is now back to the Government. While your TSP has beneficiaries.
I am turning 62 next year, but am collecting my wife's survivor benefit. I was going to continue with that and see where my finances are before I file for my own social security. Going to suck when I lose the supplement.
fortunately I don't need to touch TSP and will wait until FRA for SS, I retired as a topped out GS-15
DH, you didn’t touch on the Estate Planning aspect of when to start taking SS.
My kids can inherit my TSP, but they can’t inherit my SS!
I retired at 56 and my FERS Supplement goes away at 62, and I’ve gotten pretty used to that money coming in! Given the option of replacing the Supplement with SS or my TSP, I’ll chose SS!
If you’re doing Roth Conversions, delaying SS gives you more room at a lower tax rate to convert before you hit the next bracket
This all depends on ALL savings/investments etc. Also depends on having spouse she will start SS at 63 and I will delay until 67 this way if I pass and my pension(s) are reduced by 50% and her SS goes away then it will be less of a reduction and also allows not taxable Roths and other investments can grow. In the end for us by doing this we do not reduce our savings other than what is set aside for this period.
Be careful about delaying retirement to long and over estimating how much money you will need in your later years. Especially if you eliminate most of your debt in your younger years. It important to remember you're not trying to replace your annual salary but instead replace your monthly net pay. After looking at the numbers on both receiving social security benefits at 62 and 70 and finding the break even point being age 81. Then the reality of the average life expectancy being age 77 had me thinking. I wouldn't take away my net worth or inheritance for my family members to try get couple extra dollars for a short periods of time. The older we get pass age 75 the less we spend on entertainment and think about maintaining our health. I'm taking social security as soon as possible. I seen spouses passed quickly after each other.
Ver good information! I just left a post that I'm hitting SS at 62.
Average life expectancy for a 62 year old is not 77.
expectancy for a 65 yr old male is 84
As of recent data (2023), the average life expectancy in the United States is approximately:
77 years overall
74 years for men
80 years for women
Life expectancy can vary based on factors such as race, ethnicity, socioeconomic status, and lifestyle choices. For instance, individuals with healthier habits and access to better healthcare may live longer than the national average.
African American average life expectancy is much lower. Do that mean every African American male will pass away before 77. Course not. Should I defined the word average 🤔
@@larriveeman with a break even point of age 81 - what the purpose of holding off 8 years for receiving 3 years worth of increased profits?
I'm retiring from the government in 2 weeks. I have already registered and signed up for social security at age 62 and 3 months. I am not touching my TSP so in the event I die, my children will get the full TSP amount. That's just my opinion. Like everything else I'm probably wrong.
@@markwhite6782 I think you're headed in the right direction. I retired at 51 in 2021 from DOJ. I haven't touched my retirement savings. I'm living off my veteran compensation and DOJ pension. I was also smart enough to grow a emergency fund (untouched), and funeral expenses fund. Some how my savings for vacation and party keeps growing. I don't worry about keeping up with the Jones.
@@b.coxemba6799 Yeah, I must admit I'm not a rocket scientist at all this financial planning stuff. I just hope I don't regret anything. Friends think I'm crazy for leaving an easy high paying job but I don't care, I'm ready to retire. I was a government contractor for a long time and just now have 30 years service after being at my facility 43 years. It's time to go.
@@b.coxemba6799 Dude! You nailed it.
You might think about tranferring your traditional(non roth)TSP account after you retire to an IRA and doing partial roth conversions every year. Right now I've heard we are in historical low tax rates compared to other historical levels. I personally max out my tax rate with roth conversions to the 12% tax(before standard deduction) rate but ensure you have enough money to pay the increased taxes
@@markwhite6782 You still have to pay taxes when you transfer and private sector Roth fees can be higher than TSP. Although the results will be no additional tax on invested funds but taxes on money that's growing.
Can you do a segment whether there will be social security under Trump? Should FER employees rush to sign up for it?
My plan
not worried about social security it will be gone by the time I am eligible
Not true. It's fully funded until 2037, and then it would only drop to pay out 75% of benefits unless they do something about it. All they have to do is up the payroll tax 2% to fund it fully for another 75 years.
@ndjollymon If they would quit raiding the fund for other stuff there wouldn't be an issue at all. Besides, they're already lowering our benefit to give it to others...
Nope, it will be there my friend.
@ you can guarantee it
@ we will see but I won't plan on it
You didn't explain the difference in total payouts over the course of life expectancy taking into account the loss of interest spending your IRA earlier. Of course if you have enough in an IRA to afford it you can that's obvious.
Interesting, I was going to wait until 67, but being single and (relatively) healthy I may decide to collect SS at 62 now. I'm currently 59 and debt free but started my Federal career late in life (39) and wasn't able to invest heavily into the TSP until about 9 years ago. How much penalty to SS if I continue working?
For example: In 2025 If you are below full retirement age of 67 your benefits will be reduced by $1 for every $2 you earn working above the annual limit of $23,400. Probably better to wait till you reach 67 where there is no penalty.
I set up retirement seminars for our govt personnel. I have an employee who is a gs-13 who stopped tsp some years ago due to having financial difficulties. They have very little saved up (abt 100k). They are 60 and plan to retire in 3 years. Shld they start contributions for the last 3 years or no?
Yes. I would max out the next 3 years and put it all in the TSP Roth C Fund. When they retire use the Pension, 100k, SS, and than in 15-20 years use the Roth Tsp c fund tax free income.
@donricky, are you saying tsp can be converted to separate Roth IRA with no penalties after 59.5 ?
Would it be the same if you retired before 59.5 but waited til 59.5?
Thanks for your response
@b.williams3095 The taxes is what kills it for me, so it's better to just have a larger balance, do regular withdrawals, and pay taxes as you go. I figure I've done the heavy lifting by building the balance over time, with the intent of leaving that to the kids. So, I'm not also gonna eat the taxes, too, on the conversion. They can pay them.
@@b.williams3095Yes. Once you retire/quit you can transfer your TSP account to a financial firm like Vanguard, Fidelity, etc. If it's a traditional TSP than transfer to a traditional IRA and than convert to Roth IRA at any age., but if you use your IRA to pay the taxes and you are less than 59 1/2 you pay a 10 percent penalty on the portion of your IRA you used to pay the tax. Have a separate account to pay the taxes. I use my pension account. In addition they require you to keep it 5 years in a Roth to make it 100 tax free.
What amount of $$$'s do you consider a healthy amount?
One pro for using TSP and delaying SS is being able to work another job without reducing the SS benefit. One con for this strategy is possibly having more RMD's to take out later which may cause a change in tax planing.
@robertdowell4104 Working another job after retiring from your last job is not a PRO. That's a CON....no thanks.
I agree, no more job after retiring! It does not compute?
What tsp amount would you consider having before delaying ss
@@b.williams3095 he only said it needed to be a large amount, no # given since everyone's situation / expenses are different.
Great info again thanks😊It usually evens out around age 72 I think?
For most people the break even is early 80's. The other dealy'O is from 62 to 70 you can get a guaranteed 8%+ per year return for delaying. TSP can't do that.
@sevenson99 I was only referring to delaying SS or taking it at 62 w/o using the TSP to make it up. Studies have shown what you get vs what you make is about even around age 70ish and if your health is bad, waiting isn't the best, plus you can invest that $ for 8+ yrs. TSP returns aren't guaranteed but lately mine has been 13%...you have to have some $ at risk to make $. Every decision has a risk & reward✨️😊I'm not waiting personally.
Rainbows and sunshine🌈🌞!
Cheers.
@@sevenson99 😊
Use it all now - who cares
Our elected officials gave us TSP. Meanwhile the same elected officials have themselves taxpayers pension for life. We got screwed again 😅😮
Federal employees also receive pensions too but it isn't as generous as our elected officials receive
Another factor to take into account is what the President-Elect plans to do to Social Security.
The president cannot act alone on SSI...in fact if you did some simple research you would see they have attacked it 100% bipartisan.....they dont want you to collect