Early (aka Delayed) retirement strategy - not getting rich and getting by is okay

[offroad]

Choice 1: Not sure if this has been discussed because it is controversial. Most people want to retire at 60, as that is their magic retirement age when they will get a pension (new federal retirement system - using that magic number of combined service and age equals 80, and some can make that 80 magic number way before age 60.). That is when I can retire, and get lets say 20% of my salary per year in pension, at age 60. So if I wait I get $20,000 a year. Of course my TSP would be getting me at least $30k a year in gains. So my grand total is $50,000 per year taxible as income at age 60, via this standard retirement.

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Choice 2: My actual retirement eligability is when I turn 57 (in five years). But at that time (age 57) I would need to take a delayed retirement, and not get anything in pension until age 60. It means I can not get any funds from my pension (which might be only 15% pension, and I know thats not much). Lets say for arguement that a salary is $100k per year at retirement. So the delayed retirement at age 60 would result in $15,000 a year.

But at age 57 I want to start drawing money from thrift savings to live on (yes there will be a penalty). Lets says I have $300k in thrift savings. So if i draw out 10% a year thats $30,000 a year at age 57, minus some penalty. What is that penalty percentage against what I pull out?

Will I actually get lets say $20,000 a year for ages 57 until age 60 because of the penalty? and then at age 60 I will get a combined $35,000 a year?

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All comments and suggestions will be treating as water cooler discussions, and not as retirement advice.

 

[WorkFE]

offroad. What is the other important information. Future Plan, Health at 57, spouses situation, any other investments/income etc.

There is more than money that goes into that decision.

 

[busybrwneyes]

Wouldn't you also get something at MRA +10. There's like a 3% penalty but you would still get something.

 

[WorkFE]

Choice 2: But at that time (age 57) I would need to take a delayed retirement, and not get anything in pension until age 60. It means I can not get any funds from my pension (which might be only 15% pension, and I know thats not much.

Also, unless something has changed, if you meet MRA+10 at 57 then yes there is a pension to be had. It would incur a 25% penalty. 5% for every year before 62.

 

[alevin]

postponed retirement, ie postponed annuity-you don't get to keep your health insurance. Only get to keep health insurance is if go out on an immediate MRA+10 annuity. as I understand it.

 

[offroad]

Okay I follow some. Would buy Obamacare medical at age 57. Whatever is the cost. I will have MRA with 25 years.


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[WorkFE]

Understood. look into some of the retirement threads on the MB. Some of these folks have done these things already and are a wealth of knowledge.

 

[offroad]

MB?


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[WorkFE]

TSP Talk Message Board.

 

[offroad]

Got it


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[offroad]

There is DELAYED RETIREMENT and then there is POSTPONED RETIREMENT for federal employees. The Postponed one is better. You get postponed if you qualify for MRA+10 rules, but you get no money until age 62, but at that time you get FEHB back again. Is FEHB worth it, vs Obamacare? Not sure.

But I just found out that at age 56 (four years for me) that I can get MRA+10 retirement, with the 30% penalty. So the pension would be only a measly $12,500 on a formerly $100k salary. (thats $20,000 for 20 years service on a $100k salary high three, with subtracting 30% down to $12,500 a year).

Actual realistic considering plan? -- Retire with POSTPONED MRA+10 retirement at age 56, and dont take any pension until age 62. Work from 56 to 62 at another job that I consider ideal that I absolutely love ($20,000 a year - as no one pays well). Take money out of my agressively performing TSP and 401k accounts to suppliment my income (whatever is possible without having large tax bite taken out). Get obamacare for insurance. At 67 start getting social security and medicaid.

 

[Frixxxx]

There is DELAYED RETIREMENT and then there is POSTPONED RETIREMENT for federal employees. The Postponed one is better. You get postponed if you qualify for MRA+10 rules, but you get no money until age 62, but at that time you get FEHB back again. Is FEHB worth it, vs Obamacare? Not sure.

But I just found out that at age 56 (four years for me) that I can get MRA+10 retirement, with the 30% penalty. So the pension would be only a measly $12,500 on a formerly $100k salary. (thats $20,000 for 20 years service on a $100k salary high three, with subtracting 30% down to $12,500 a year).

Actual realistic considering plan? -- Retire with POSTPONED MRA+10 retirement at age 56, and dont take any pension until age 62. Work from 56 to 62 at another job that I consider ideal that I absolutely love ($20,000 a year - as no one pays well). Take money out of my agressively performing TSP and 401k accounts to suppliment my income (whatever is possible without having large tax bite taken out). Get obamacare for insurance. At 67 start getting social security and medicaid.

You sound like you are in the same boat as me, since I have been researching this option: 46 YO/21 YOS and 3 possible job offers at around +40K of what I currently make. If I defer my retirement, and use the overage, 26,500 after taxes to pay off house 22 years early, then I can coast out into the wild blue younder at 57, bills paid, and choice of retirement location.

 

[jkenjohnson]

You sound like you are in the same boat as me, since I have been researching this option: 46 YO/21 YOS and 3 possible job offers at around +40K of what I currently make. If I defer my retirement, and use the overage, 26,500 after taxes to pay off house 22 years early, then I can coast out into the wild blue younder at 57, bills paid, and choice of retirement location.

None of my business but be careful about jumping ship. I have known several engineers that left my agency for higher paying jobs only to get layed off within a year. Some came back, others were not so lucky.

 

[offroad]

Early (aka Delayed) retirement strategy - not getting rich and getting by is ...

Am 52 YO/19 YOS but my plan is to enjoy life as a gypsy vagabond using my technical skills living more on the road. My TSP is high enough to draw a salary off of at 56 MRA+10 ( maybe $30k). That plus the instant $14k a year pension.

Am truly blind to why people need $100k a year to live on. People are fearful of nursing home life, when if you are that level, you are not really existing. But that's philosophy.


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[offroad]

Make sure you always use the word POSTPONED retirement when you leave government service. You can get that at age 62 and then you get to buy back into FEHB program.

If you do the DELAYED or DEFERRED retirement you dint get that.


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[alevin]

Okay I follow some. Would buy Obamacare medical at age 57. Whatever is the cost. I will have MRA with 25 years.


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Obamacare-much more than premium to consider. Need to take into account the deductible as well. Many if not most Ocare insurance providers limit you pretty much to single state, sometimes single county, and limited choice of local providers. Not all that compatible with your proposed footloose fancyfree see the world intentions. And Ocare costs are likely to climb substantially within the next year or 2. good thing you have a few years before you pull the plug to see which way that wind is going to blow between now and then. Health may be good now, wide range of health conditions possible between hale and hearty now vs nursing home age in later years.

 

[Frixxxx]

None of my business but be careful about jumping ship. I have known several engineers that left my agency for higher paying jobs only to get layed off within a year. Some came back, others were not so lucky.

Agreed, and heeded. One of the job offers = bank. Other Fortune 100 company. Last is a government contract.

 

[offroad]

Alevin - thanks on Obamacare note. If I needed chronic treatment I would need to be ready to drive back to whatever state I wanted to be in. And live in an RV or with relatives while I deal with cardiac or cancer or other chronic illness.


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[Frixxxx]

Make sure you always use the word POSTPONED retirement when you leave government service. You can get that at age 62 and then you get to buy back into FEHB program.

If you do the DELAYED or DEFERRED retirement you dint get that.


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Not entirely true:

http://www.opm.gov/retirement-services/publications-forms/pamphlets/ri92-19a.pdf

It all has to do with MRA.

 

[offroad]

MRA+10. And you can do the postponed. I think


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