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15k limit by year 2006. Are you ready?
- Thread starter pyriel
- Start date
Birchtree
Well-known member
imported post
Rolo,
Allow me to expand on the virtues of the TSP and how it helps my particular situation. Aside from the deferred compensation component having the ability to put away $20K/year on a dollar cost averaging basis adds up real quick. Also the $15K is actually indexed to inflation starting in 2007. I already have built a power account that provides me opportunities that others have to earn to achieve - there really is no easy way to get to where I am. You have to work and save and learn how to invest. There are many TSP participants who have accounts that match mine - but instead of using that power they fear loosing - I'm here to tell them that a loss is only temporary. The selections that TSP provides are ample and diversified enough to enable anyonewho is diligent to make exceptional gains. One has to remember that the TSP is a supplemental program - not a defined benefits retirement program.
I particularly like the C fund from this point going forward - and there are numerous reasons for that. Because it is cheaper than the other funds I managed to buy more shares, so even if it doesn't outperform the other funds immediately I still make good money because I own more shares and am constantly dollar cost averaging at the current price when the contributions hit the account. I plan to make a great deal of money in this account over the next 20 years- I have the power to purchase multi-thousands of shares - tens of thousands I should say. And I know I'm not alone - there are many others that just need to learn the game to be successful. This web site can help me and many others. My question is: if a participant has $400,000 why be satisfied with 40,000 shares of the G fund and collecting a copper when silver is readilly available? Use the power for better gains while the opportunity is here. Unfortunately bull markets don't last forever - but I think this one has years to run.
Dennis
Rolo,
Allow me to expand on the virtues of the TSP and how it helps my particular situation. Aside from the deferred compensation component having the ability to put away $20K/year on a dollar cost averaging basis adds up real quick. Also the $15K is actually indexed to inflation starting in 2007. I already have built a power account that provides me opportunities that others have to earn to achieve - there really is no easy way to get to where I am. You have to work and save and learn how to invest. There are many TSP participants who have accounts that match mine - but instead of using that power they fear loosing - I'm here to tell them that a loss is only temporary. The selections that TSP provides are ample and diversified enough to enable anyonewho is diligent to make exceptional gains. One has to remember that the TSP is a supplemental program - not a defined benefits retirement program.
I particularly like the C fund from this point going forward - and there are numerous reasons for that. Because it is cheaper than the other funds I managed to buy more shares, so even if it doesn't outperform the other funds immediately I still make good money because I own more shares and am constantly dollar cost averaging at the current price when the contributions hit the account. I plan to make a great deal of money in this account over the next 20 years- I have the power to purchase multi-thousands of shares - tens of thousands I should say. And I know I'm not alone - there are many others that just need to learn the game to be successful. This web site can help me and many others. My question is: if a participant has $400,000 why be satisfied with 40,000 shares of the G fund and collecting a copper when silver is readilly available? Use the power for better gains while the opportunity is here. Unfortunately bull markets don't last forever - but I think this one has years to run.
Dennis
Mike
Active member
imported post
The tax advantage I'm gaining through TSP investment at this stage isn't all that significant - simply due to the fact I'm not in a very high tax bracket. The nice thing about the Roth - aside from the ability to pull out the contribution money whenever I wish - is the fact I don't have to worry about what the future tax rates will be with that account... and I'd say it's highly unlikely I will be in this low of a tax bracket at age 60.
Since it involves the future, yes, it's all guesswork. But given what information I have at this point in time, I believe I'm making the right decision. If anyone wishes to try to prove me wrong on this, feel free. My mind is open (and 2006 is still 3 months away).
In any event, I cannot afford to max out the contribution at my payrate. I only take home 60% of my gross as it is. I can't imagine what that would drop to with 30% TSP witholding. :shock:
The tax advantage I'm gaining through TSP investment at this stage isn't all that significant - simply due to the fact I'm not in a very high tax bracket. The nice thing about the Roth - aside from the ability to pull out the contribution money whenever I wish - is the fact I don't have to worry about what the future tax rates will be with that account... and I'd say it's highly unlikely I will be in this low of a tax bracket at age 60.
Since it involves the future, yes, it's all guesswork. But given what information I have at this point in time, I believe I'm making the right decision. If anyone wishes to try to prove me wrong on this, feel free. My mind is open (and 2006 is still 3 months away).
In any event, I cannot afford to max out the contribution at my payrate. I only take home 60% of my gross as it is. I can't imagine what that would drop to with 30% TSP witholding. :shock:
Birchtree
Well-known member
imported post
Pete 1,
I currently have some small-cap funds and international fund in other places - I'm covered. I'm using my TSP to leverage 100% in the C fund because it is presently undervalued and I have a substantial position. Going 100% in a particular fund allows me to catch as much risk as possible - I want the leverage, not diversification. With the assumption of risk comes opportunity - and possibly a greater gain.
Dennis
Pete 1,
I currently have some small-cap funds and international fund in other places - I'm covered. I'm using my TSP to leverage 100% in the C fund because it is presently undervalued and I have a substantial position. Going 100% in a particular fund allows me to catch as much risk as possible - I want the leverage, not diversification. With the assumption of risk comes opportunity - and possibly a greater gain.
Dennis
michelleunit
New member
imported post
i've been budgeting for this for two years...so i'll be ready. i just have a nagging thought that when i go to retire i'll be in a higher tax bracket. since my crystal ball isn't working, i'd rather lower my tax bracket now and then worry about that tax rate later. the good thing is with there being no more tsp open season, you're not locked in. i guess being in a high tax bracket in retirement is preferable to having to work during retirement.
i've asked coworkers if they're ready to up their contributions and all i get is 'are you kidding? i can't even afford to max out at 15%'....some don't contribute AT ALL....i dunno how they think they can lose when they don't even put in 5% to get the company match! those people will be working clear into their 70s...unless they hit the lottery (yeah, right!).
michelleunit
i've been budgeting for this for two years...so i'll be ready. i just have a nagging thought that when i go to retire i'll be in a higher tax bracket. since my crystal ball isn't working, i'd rather lower my tax bracket now and then worry about that tax rate later. the good thing is with there being no more tsp open season, you're not locked in. i guess being in a high tax bracket in retirement is preferable to having to work during retirement.
i've asked coworkers if they're ready to up their contributions and all i get is 'are you kidding? i can't even afford to max out at 15%'....some don't contribute AT ALL....i dunno how they think they can lose when they don't even put in 5% to get the company match! those people will be working clear into their 70s...unless they hit the lottery (yeah, right!).
michelleunit
imported post
mitchellunit,
You should only max the Roth before TSP if you are very certain that you will be in a higher tax bracket later. If it looks like your bracket will be the same or lower based on current tax law and your personal earnings projections, don't do it. I would avoid the temptation to speculate that tax rates will be higher overall later. Not a sound reason to max a Roth before TSP in my opinion.
mitchellunit,
You should only max the Roth before TSP if you are very certain that you will be in a higher tax bracket later. If it looks like your bracket will be the same or lower based on current tax law and your personal earnings projections, don't do it. I would avoid the temptation to speculate that tax rates will be higher overall later. Not a sound reason to max a Roth before TSP in my opinion.
michelleunit
New member
imported post
yeah--that's the other thing. :?
we've got an ira (traditional) not making hardly anything :Xacquired it through state farm and need to do something with that, any suggestions? i actually thought about rolling that over into the tsp (form 61?) but it's joint iraand i don't know if that can be done..from joint ira to my tsp...
i've been wanting to do a roth. but don't know which one...anysuggestions? then, of course, i'd like to max that out and do the tsp (i'm thinking the tax savings on the tsp will free up the money to do that..i read that on another post)
thanks for the advice-
michelleunit
yeah--that's the other thing. :?
we've got an ira (traditional) not making hardly anything :Xacquired it through state farm and need to do something with that, any suggestions? i actually thought about rolling that over into the tsp (form 61?) but it's joint iraand i don't know if that can be done..from joint ira to my tsp...
i've been wanting to do a roth. but don't know which one...anysuggestions? then, of course, i'd like to max that out and do the tsp (i'm thinking the tax savings on the tsp will free up the money to do that..i read that on another post)
thanks for the advice-
michelleunit
Birchtree
Well-known member
imported post
Pete 1,
Chicken Little would have to fall from the sky and land directly on my head inorder to get my attention - then I would ask where he came from and he was up to. I plan to hold the C fund for a price of $17.00. That may conceivably take a few years - it's hard to know what the future will bring - but I seldom get emotional to the point of cutting and running - that's how mistakes are made. The S&P had a peak of 1527.46 back in 3/2000, if we approach that level I probably will begin to gently pull back to the G fund but only in 5% increments and continue to let my allocations dollar cost average. And when the cycle starts again it may not be the C fund but rather one of the others - one has to stay current - this site will help in that endevor. Take care.
Michelleunit,
Try not to waste your time putting any money in the G fund - you are in accumulation mode and should be collecting shares of the stock funds. 70C 30I would be good.
Pete 1,
Chicken Little would have to fall from the sky and land directly on my head inorder to get my attention - then I would ask where he came from and he was up to. I plan to hold the C fund for a price of $17.00. That may conceivably take a few years - it's hard to know what the future will bring - but I seldom get emotional to the point of cutting and running - that's how mistakes are made. The S&P had a peak of 1527.46 back in 3/2000, if we approach that level I probably will begin to gently pull back to the G fund but only in 5% increments and continue to let my allocations dollar cost average. And when the cycle starts again it may not be the C fund but rather one of the others - one has to stay current - this site will help in that endevor. Take care.
Michelleunit,
Try not to waste your time putting any money in the G fund - you are in accumulation mode and should be collecting shares of the stock funds. 70C 30I would be good.
michelleunit
New member
imported post
i totally agree...i'm a c-30%/ s-30%/ i-40% girl. i'm only 37, so i have plenty of time. been maxin' out the tsp since i was eligible ('96) and have 66k right now
hubby (he's 42)has 38k in his 401k at work, and rolls his eyes-he thinks i'm putting away too much and i think he's putting away too little!!
so i hope between the two of us to have a nice amount in there when i'm eligible to retire at 56.5... i don't know that i'll retire then (my family gets very old 90s-100s)
does anyone know if the tsp calculator - projecting account balance- include the 5% company match? i put 15% in the calculator, but this guy at work posed the question, and now he has me wondering. i just assumed their calculator would account for it.
thanks
michelleunit
i totally agree...i'm a c-30%/ s-30%/ i-40% girl. i'm only 37, so i have plenty of time. been maxin' out the tsp since i was eligible ('96) and have 66k right now
hubby (he's 42)has 38k in his 401k at work, and rolls his eyes-he thinks i'm putting away too much and i think he's putting away too little!!
so i hope between the two of us to have a nice amount in there when i'm eligible to retire at 56.5... i don't know that i'll retire then (my family gets very old 90s-100s)
does anyone know if the tsp calculator - projecting account balance- include the 5% company match? i put 15% in the calculator, but this guy at work posed the question, and now he has me wondering. i just assumed their calculator would account for it.
thanks
michelleunit
smine
Member
imported post
This was an interesting question Pyriel posed.....I had to think about the answer and get out the calculator! As a "catch-up" old person, in the old system I can and do put in $3000 (just for being over 50). My contributions were never matched but we old folks are up to what 11% this year? Something like that....which already has me puttingin at least $13,500 yearly. If 15K is the max then that's not a much further stretch so I voted yes. Bottom line for all, old and young is to diversify, with Roth's, money markets and/or some type of tax deferred savings. Savings is the operative word here.
This was an interesting question Pyriel posed.....I had to think about the answer and get out the calculator! As a "catch-up" old person, in the old system I can and do put in $3000 (just for being over 50). My contributions were never matched but we old folks are up to what 11% this year? Something like that....which already has me puttingin at least $13,500 yearly. If 15K is the max then that's not a much further stretch so I voted yes. Bottom line for all, old and young is to diversify, with Roth's, money markets and/or some type of tax deferred savings. Savings is the operative word here.
imported post
Dennis -great attitude. Sounds like you havebeen through many cycles. As you close in on retirement and the distribution phase, do you plan to move a significantchunk to fixed income or stay with stocks?
michellenut - tell your husband to get with the program! Regarding your IRA, honestly, not surethat you can rollover a jointIRA. Would be surprised if you can. Suggest that you call TSP directly. Regarding starting a Roth, recommend no load, low expense ratiocompanies like Vanguardor Fidelity. Probably would go withone of their aggressive target retirement funds (Vanguard 2045) until you hit about $30K, then split the account betweenmorespecialized asset classes (for example - international smalland emerging markets)to further diversify your TSP holdings. You would want to reduce your EAFE exposure in your TSP account to keep international at 40% if youfollowed the above plan. Also, you need to think of your husband and your asset allocations as one big account rather than separate accounts. What is the overallasset allocation ofboth of your accounts?
Dennis -great attitude. Sounds like you havebeen through many cycles. As you close in on retirement and the distribution phase, do you plan to move a significantchunk to fixed income or stay with stocks?
michellenut - tell your husband to get with the program! Regarding your IRA, honestly, not surethat you can rollover a jointIRA. Would be surprised if you can. Suggest that you call TSP directly. Regarding starting a Roth, recommend no load, low expense ratiocompanies like Vanguardor Fidelity. Probably would go withone of their aggressive target retirement funds (Vanguard 2045) until you hit about $30K, then split the account betweenmorespecialized asset classes (for example - international smalland emerging markets)to further diversify your TSP holdings. You would want to reduce your EAFE exposure in your TSP account to keep international at 40% if youfollowed the above plan. Also, you need to think of your husband and your asset allocations as one big account rather than separate accounts. What is the overallasset allocation ofboth of your accounts?
Birchtree
Well-known member
imported post
Pete 1,
My plan is to stay with stock funds and participate in the growth dynamics of this great economy - no reason to lay back because of retirement. I will develope a monthly withdrawal system to add funds to a traditional IRA - and then when my AGI is under control begin the process of rolling from the traditional IRA to a Roth. Inside the Roth will be stocks that pay dividendes that will be reinvested. I like the idea of automatic pilot dividend reinvestment - leave it up to lady chance to pick the best prices. My outside account is being designed to produce income from dividends - any capital gains is added frosting. All I have to do now is patiently wait for the offer to convert my defined benefits pension to a defined contribution plan. Then I will have good control of my AGI - that will really provide flexibility.
Dennis
Pete 1,
My plan is to stay with stock funds and participate in the growth dynamics of this great economy - no reason to lay back because of retirement. I will develope a monthly withdrawal system to add funds to a traditional IRA - and then when my AGI is under control begin the process of rolling from the traditional IRA to a Roth. Inside the Roth will be stocks that pay dividendes that will be reinvested. I like the idea of automatic pilot dividend reinvestment - leave it up to lady chance to pick the best prices. My outside account is being designed to produce income from dividends - any capital gains is added frosting. All I have to do now is patiently wait for the offer to convert my defined benefits pension to a defined contribution plan. Then I will have good control of my AGI - that will really provide flexibility.
Dennis
michelleunit
New member
imported post
Pete1-
mine: c-30%/ s-30%/ i-40% (i don't mess w/ f or g or l funds)
his: 32.69% aggress grwth mgmt, 32.61% activ us sm cap mgmt, 19.67 verizon stock port & 15.03% vz co stk fund mgmt
he's w/ verizon and they have his 401k through fidelity.com. i never move his stuff around and i probably should, but i'm not clear about what he's got. i know he probably shouldn't have too much in company stock, but i don't know what those numbers should be...
thanks for your help and .02!!
michelleunit
Pete1-
mine: c-30%/ s-30%/ i-40% (i don't mess w/ f or g or l funds)
his: 32.69% aggress grwth mgmt, 32.61% activ us sm cap mgmt, 19.67 verizon stock port & 15.03% vz co stk fund mgmt
he's w/ verizon and they have his 401k through fidelity.com. i never move his stuff around and i probably should, but i'm not clear about what he's got. i know he probably shouldn't have too much in company stock, but i don't know what those numbers should be...
thanks for your help and .02!!
michelleunit
Birchtree
Well-known member
imported post
Pyriel.
The Roth IRA money will eventually go to the gradchildren - using their RMD - should last a considerable period of time. My plan is to buy a summer lake place so I can escape the Florida summer heat. And eventually I will be self-employed and will likely set up a sole owner 401 (K). I plan to stay busy and in touch with TSPtalk.
Dennis
Pyriel.
The Roth IRA money will eventually go to the gradchildren - using their RMD - should last a considerable period of time. My plan is to buy a summer lake place so I can escape the Florida summer heat. And eventually I will be self-employed and will likely set up a sole owner 401 (K). I plan to stay busy and in touch with TSPtalk.
Dennis
imported post
pyriel wrote:
pyriel wrote:
BTW, This month's smart money has a piece on retirement savings. One nugget I was not aware says that for those who plan on working until 67 , or whatever is the full social secuirtyretirement age is, there is a provision in the 401k rules that allows one to roll over the money to IRA after age 59.5 and yet continue contributing in to the 401k plan and working at the same company.Don't know whether it applies to TSP (which is similar but not same as 401k plan). Those struggling under limited asset class option in 401k plan, this is godsend and not advertised that much for selfserving reasons.
Mike
Active member
imported post
If you desire better diversification (access to REITs, precious metals, commodities), you have to kick money into a Roth... otherwise, your only options are stocks, bonds, and gov't securities - which is certainly good, but it isn't necessarily ideal.
Once my Roth vs. overall portfolio balance ratio drops a bit, I'll set my TSP allocation and move the Roth money into commodities and leave it there.
If you desire better diversification (access to REITs, precious metals, commodities), you have to kick money into a Roth... otherwise, your only options are stocks, bonds, and gov't securities - which is certainly good, but it isn't necessarily ideal.
Once my Roth vs. overall portfolio balance ratio drops a bit, I'll set my TSP allocation and move the Roth money into commodities and leave it there.
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