ALRetiree’s Retirement Story

[ALRetiree]

I’ve enjoyed everyone’s retirement stories so I thought I would post mine. I’m retiring on 8/31 and I just got my retirement estimate from the Benefits Operation Center. My pension and special supplement numbers seem very close to what I estimated. I was pleasantly surprised to see the federal tax withholding was much smaller than I expected but we will see what happens at tax time to see if that’s a good thing.

My TSP is in great shape and all seems to be in place. I plan on moving next year and we want to buy a new place and then sell the old house. We have a reasonable balance on our mortgage and I’ll likely pay it off once I wait a few months of retirement and see how my final numbers all work out.

I have a question that I’m hoping someone who’s been through this can hopefully answer. Since we are buying the next house before we sell this one, my house money will be tied up in this one until we sell it. We plan on doing a VA mortgage for 100% or close to it until we sell the old house and then either pay it off or refinance to a very small mortgage. My question is it more difficult to apply for a mortgage in retirement? Since a portion of our income is investment income and my fixed income is much smaller than my old paychecks, I’m wondering what hoops does a lender make you jump through to prove your income? Besides that we are looking forward to retirement!

 

[evilanne]

Congrats on your upcoming retirement AL!

I'm not sure about VA loans. Basically they just want to know that you will be able to pay off the loan. It shouldn't be too much more difficult than when you are employed for a reasonably priced home. Typically they will want your recent tax returns, proof of income, assets, outstanding debts, credit check, etc. You might want to talk to a lender and get pre-approved for a loan and ask the lender how your estimated reduction in income would impact how much credit you would qualify for based on your specific situation.

 

[tsptalk]

Not sure about the mortgage, but just wanted to say congratulations on your retirement!

 

[flalaw97]

Congratulations on your retirement! I am still a few years away so I can't answer your question about the VA loan but I am curious why you aren't going to buy the new home contingent on the sale of your current home? With the housing market being a seller's market and since you are planning on using the proceeds from the sale towards the new home anyway, I think it would be easier (banking wise) to do them together. Until you have a demonstrated income stream again (pension, social security and TSP withdrawals) I think the bank will be hesitant to loan more (especially if you are still making mortgage payments on your current home). I agree with evilanne's recommendation to talk to a lender and find out what factors they will be looking at.

As to your estimated taxes being withheld, everything I have read is not to trust that amount will be enough come tax time as it does not take into account any other income you might have and is likely at the 11% income tax bracket which you might not be in if you (or your spouse) have other income (including TSP withdrawals which are taxable income). Good luck!

 

[ALRetiree]

Congratulations on your retirement! I am still a few years away so I can't answer your question about the VA loan but I am curious why you aren't going to buy the new home contingent on the sale of your current home? With the housing market being a seller's market and since you are planning on using the proceeds from the sale towards the new home anyway, I think it would be easier (banking wise) to do them together. Until you have a demonstrated income stream again (pension, social security and TSP withdrawals) I think the bank will be hesitant to loan more (especially if you are still making mortgage payments on your current home). I agree with evilanne's recommendation to talk to a lender and find out what factors they will be looking at.

We’d like to move to our new place before we sell because meeting a 30 day window for a buyer looking to move in while we are trying to move cross country would be daunting. Also we are moving from a hot real estate market to a scorching one and I’ve heard that building a house which we will probably do can take months now. It would also allow us to prep the house a bit before we sell with it empty.

Thanks for the tax advice, I do think it’s using the 11% bracket but I know tsp takes out 20% on withdrawals so we’ll be prepared for it needing to be raised. Our tax bracket should be lower but not 11%.

 

[flalaw97]

Those cross country moves can definitely be daunting. We rented an "off season" place while we found our new home (moved from Michigan to Mass). Near the coast places will rent fairly affordably from September to May before the owner comes back for the summer (or rents at premium rates) and that gave us time to do the serious search (and we figured out we didn't want to live on the South Shore and instead found a place on Cape Cod). Proceeds from the Michigan house sale sat until we were ready to use for the downpayment (only surprise was not having the mortgage deduction at tax time).

And not tax advice but the next bracket up is 22% I believe for married filing joint over $81K ... the 20% might not be enough.

 

[Maricar19]

Hi- Congrats on your retirement.

Mortgage: When we retired 6 years ago, we did remortgage our house and we didn't have a hard time securing financing at 2.99% APR with zero closing costs.
We just showed our OPM statements and DFAS Statements plus a statement from TSP.
However, we only remortgaged 20% of the appraised value of our house and we didn't do VA. So yours might be a little different.

Taxes: (After $25100 Standard Deduction)
The first $19900 is taxed at 10%, the next $61149 ($19,901 to $81,050) is taxed at 12% and after that is 22% for $81,051 to $172,750.

 

[ALRetiree]

Thanks Maricar!

 

[ALRetiree]

I was out of town last week but when I got home I was pleased to see my letter from payroll transferring my file to OPM. I also got my PIN number for my OPM claim. I’m assuming my OPM letter will come soon. This was all at three weeks after my last day. Hope to get my leave payout next week since they closed me out at payroll. I knew something happened while I was out of town as I got an email from the credit monitoring service that the government was paying for saying I was cancelled.

Was down south house hunting last week and the market is insane now.

 

[evilanne]

Where are you looking to move to?

 

[ALRetiree]

Huntsville Al, I grew up there.

 

[evilanne]

It sounds like your retirement is on track, flowing smoothly. Good Luck on finding a new home...try not to rush it, I'm sure you will find the right place. My 1st experience with Zoom was looking at houses with a realtor last year, so you can still keep looking. Got videos of the inspections and ended up closing remotely.

 

[ALRetiree]

It sounds like your retirement is on track, flowing smoothly. Good Luck on finding a new home...try not to rush it, I'm sure you will find the right place. My 1st experience with Zoom was looking at houses with a realtor last year, so you can still keep looking. Got videos of the inspections and ended up closing remotely.

We did a FaceTime walkthrough of a model home the other day. I don’t want to rush things either but ready to get out of New England. OPM has my application now so I hope it all settles soon.

 

[Maricar19]

Interesting read...might get a few pointers here for your pending mortgage: https://www.caniretireyet.com/getting-a-mortgage-when-you-have-assets-but-no-income/
.

 

[ALRetiree]

Interesting read...might get a few pointers here for your pending mortgage: https://www.caniretireyet.com/getting-a-mortgage-when-you-have-assets-but-no-income/
.

Interesting article. It was funny when we talked to our realtors in AL they referred us to a mortgage guy they’d known a long time and he turned out to be my cousin. We had a good laugh about it. We listed our pension money etc and how much we had in our accounts and we got preapproved that day. Guess I was worried about nothing. At least it’s family and I can trust him.

 

[ALRetiree]

Interesting read...might get a few pointers here for your pending mortgage: https://www.caniretireyet.com/getting-a-mortgage-when-you-have-assets-but-no-income/
.

Interesting article. It was funny when we talked to our realtors in AL they referred us to a mortgage guy they’d known a long time and he turned out to be my cousin. We had a good laugh about it. We listed our pension money etc and how much we had in our accounts and we got preapproved that day. Guess I was worried about nothing. At least it’s family and I can trust him.

 

[ALRetiree]

My case was assigned to an OPM specialist yesterday and last week I got my annual leave payout so I’m hoping it will be adjudicated by December 1st.

We signed a contract last week to build a house in Alabama but it may be 10 to 11 months before we close. We hope it’s sooner but that’s just the way things are right now. The prices are going up almost monthly as well.

 

[Kdjs]

Wish you the best. Exciting time for you and family making two of the many big decisions, retirement and buying a new home.
Thank you for sharing article for us retired getting a new mortgage. Good reading for now.

 

[flalaw97]

My case was assigned to an OPM specialist yesterday and last week I got my annual leave payout so I’m hoping it will be adjudicated by December 1st.

So about 6 weeks from your retirement on 8/31 you got your annual leave payout? Just checking current timelines.

 

[ALRetiree]

So about 6 weeks from your retirement on 8/31 you got your annual leave payout? Just checking current timelines.

I got it 7 weeks on the nose. My last day was a Tuesday only 2 days in the pay period so I got a full check the following week and my check for two days on week 3. I was thinking my leave would come either in the second check on 9/21 or the pay period two weeks later but it came 10/19.