My Plan

[brooksmd]

Well here's my plan and I'm open to suggestions, recommendations, ideas, whatever. No matter what, my retirement date is Dec 31, 2010.

Without touching my TSP, my USPS annuity/AF retirement/SS will give me $4500/mo. My wife with her job and Air National Guard pay about $100K/yr. I have over $340K in TSP and she has $100K in 401K. Plus $30k in savings. We have a 30 yr fixed with 24 yrs left and a balance of $175K plus a HELOC of $23K. Of our 3 cars, the oldest being a 2003, we owe $6K on the newest one a 2009. We are in the process of refinancing from a 30 yr/ 5.75% to a 15 yr/ 3.85%. I might also add that my wife plans on working at least 8 more yrs when she will be SS eligible. We have no credit card debt or other outstanding loans. The one main part of the plan involves paying off the HELOC by withdrawing $23K from my TSP. I know there won't be a penalty since I'm 61, but the tax consequences are the stickler. Withdraw before the end of the year or after the first of the year? What is our current administration going to do? Continue the Bush tax cuts or let them expire? Keep some or none? If I take it before, we could be looking at gross for the year at $200K or more. After the first of the year, much less than $200K, but possible change in taxes.

So there is the story. Sorry for being so long winded. Now fire away.

 

[Zebra]

If what you say is factual, I would pocket your income, live off your wife's and within 4 or 5 months you would have the 23 saved to make your payoff. If u don't like that, use your savings. If you can wait the 4 or 5 months, then you will be able to see how the tax situation will turn out. My perferred would save your income a few months and do nothing.

 

[Scout333]

Hello Brooks, I like ZEBRA's idea. You could also use your Annual Leave payout at retirement. With your combined bring home you should easily be able to pay the HELOC and car notes quick fast and leave the TSP alone. Should be able to knock out the mortgage altogether inside of five years and be Dave Ramsey debt free! Nice job on the lowww interest rate on your mortgage! How are the closing costs on the transaction?

 

[brooksmd]

Should be able to knock out the mortgage altogether inside of five years and be Dave Ramsey debt free! Nice job on the lowww interest rate on your mortgage! How are the closing costs on the transaction?

Another Dave Ramsey fan. I listen to him at nite on the way home from work and consider myself blessed to not be in the predicaments of some of the callers. Five years is pretty aggressive, but we would like to be clear of the mortgage in 8 yrs when my wife retires. She is a nurse and loves her work. I've tried to talk her into working part-time but says she's not ready yet. And she also enjoys the ANG and will retire when they force her to. Her greatest sense of accomplishment was when she volunteered for Iraq and worked in the hospital at Balad AB. She felt like she finally did something worthwhile. And that's from a person who has worked with cancer patients her entire career. She has actually been to the middle east 3 times as a volunteer and would like to go one more time before she retires.

Closing costs are $2500. Plus we have to pre-fund the escrow account but will get half of that back from the original mortgage.

 

[brooksmd]

If what you say is factual, I would pocket your income, live off your wife's and within 4 or 5 months you would have the 23 saved to make your payoff. If u don't like that, use your savings. If you can wait the 4 or 5 months, then you will be able to see how the tax situation will turn out. My perferred would save your income a few months and do nothing.

Zebra, believe it or not I had the practically the same thought when I proof read the post before submitting it. It hadn't occurred to me until I actually looked at it on paper. But was thinking a 12 month time-frame vs 4-5 months. More tax deductible interest. And the whole $340K would earn 3% in the G fund. BINGO!!! Thanks.

 

[Birchtree]

Here is what I'm thinking since you are still a young man.

1. Hold off on SS until you are 70 - you'll get more money.

2. Move the $30K in savings to a Bank of America account - that would qualify you for thirty free stock trades per month in an on-line account. Allow your base to build and then utilize margin to pay off the car loans - the interest is tax deductanle.

3. Begin a slow monthly withdrawal of TSP funds to a Roth IRA - no need to hurry. Try and use your capital to further make profits in TSP. Buy individual stocks in the Roth and participate in dividend reinvestments.

4. If you pay off your mortgage you will limit your interest deductions to balance out your annuity income. Those deductions will become more valuable over time.

5. You might have twenty years ahead of you to invest - you'll have to assume some risk parameters to make gains - but I think the future is bright.

Just a few things to consider. Try and limit your income while the wife continues to work. Taxes are a terrible price to pay for her labor. The Roth will provide some shelter over time and will eventually give you or heirs free income. There is no minimum distribution on a Roth versus TSP.

 

[Steadygain]

Here is what you have:
1. A wife who is hugely the center of your existence. She plans on working at least 8 more years and makes an 'Excellent Income' of $100K - with good benefits and has at least $100K in her 'job related savings'.

2. Your income is $4.5K a month - not counting any other investments - savings - TSP ($340K)

INCOME: $154 Anually ~ $12.8K Monthy
Workplace Savings: $440K
Liquidable Savings: $30K

DEBT:
House - $175K (6 yrs paid on 30 fix 5.75)
Now Converting to 15 fix 3.85

HELOC - $23K
Cars - $6K
NO Credit Card debt and no other loans.

PLAN:
Pay off HELOC by taking $23K from TSP. (no penality)
Do it now - Gross Income $200K

My friend, you are 'Blessed' with enormous abundance and you have done extremely well planning for the 'Golden Years'. The ONLY debt you have to remotely consider is the $175 (15yr/3.85).

$4.5K monthly FAR EXCEEDS your needs.

I would totally ignore Bush or Obama or anything to do with now or the unknown future. None of those things in the slightest aspect has anything to do with your life and the years to follow.

You are more than prepared for all the years to come and will always have 'excess'.

Paying the HELOC - now - means you RETIRE with that behind you. That should be your focus and that more than anything else will 'FREE YOU' and make you feel ultra victorious. That is how you would most enjoy starting 'retirement' and screw the rest (cause it's nothing you even have to maul over).

I'd probably pay off the $6K as well and take the 'Bank Savings' to $24 because you'll be adding way more over the years.

So 'seriously' you have a lot to be grateful for and the only problem you have ~~ is how you 'MOST' want to start your retirement.

PAY IT OFF - CELEBRATE THE 'FREEDOM' AND 'VICTORY'.

EXCELLENT JOB !!!!

 

[Boghie]

BrooksMD,

I don't think you should pull anything from a retirement account to pay off 23K (or 29K) in current debt that will be resolved so soon.

Also, I'm not certain you can take a loan on your TSP 401(k) account during retirement. Check on that. You may have to pay it off prior to retirement - and, that is only four months away.

I don't think Dave Ramsey would like exchanging debt for debt. He hates HEL loans, but I've never heard him propose borrowing from a retirement account to pay them off...

Good luck and happy hunting.

 

[brooksmd]

oops

 

[brooksmd]

BrooksMD,

I don't think you should pull anything from a retirement account to pay off 23K (or 29K) in current debt that will be resolved so soon.

Also, I'm not certain you can take a loan on your TSP 401(k) account during retirement. Check on that. You may have to pay it off prior to retirement - and, that is only four months away.

I don't think Dave Ramsey would like exchanging debt for debt. He hates HEL loans, but I've never heard him propose borrowing from a retirement account to pay them off...

Good luck and happy hunting.

Boghie, I wouldn't be borrowing on the TSP. It would be a withdrawal without penalty because I meet the 59 1/2 age requirement.

 

[brooksmd]

My friend, you are 'Blessed' with enormous abundance and you have done extremely well planning for the 'Golden Years'.

Oh believe me Steady, we do feel blessed when we look around and see what is happening in this country.

 

[Steadygain]

My friend, you are 'Blessed' with enormous abundance and you have done extremely well planning for the 'Golden Years'.

Oh believe me Steady, we do feel blessed when we look around and see what is happening in this country.

I think it's especially difficult for people 'our age'. We could not have had a deeper grounding in the belief we had a perfect country and that 'Politics' and politicians and companies and corporations throughout were all there for 'us' the USA.

How could any of us possibly thought anything different when all we knew was endless 'Freedom' and 'Abundance'. When the atmosphere was overwhelming patriotic and we were immensely honored and proud to be 'Americans'.

I don't know that 'anyone' is honestly to blame. When I was growing up 'we' took and enjoyed 90% of the world's resources - because we could and we did. I only knew the benefits of that endless abundance and never really gave much thought to the 10% left over for all other nations. Yet overtime the others were bound to view us poorly.

I was thoroughly convinced our disputes and conflicts were 100% because we were more an extention of God and I could never have thought that corporate interests and political garbage was deeply seeped in almost everything that happened.

Also because of the family I was born and raised in - I would NEVER have thought the general population would not only live 'for debt' but to thrive on it. That our Government itself would grow bigger and bigger and find it wholly acceptable to let Debt grow without limits. That they would allow people to 'spend' hundreds of thousands on houses they could never afford and with no income or money. That they would ever allow people to be 'rewarded' for parasite traits and lifestyles.

Only in retrospect can I see and appreciate the 'changes' that have occured globally and the changes our NEW Country has been through. Economic growth and strength would have to be a very huge priority - but somehow they have all the power and the population is largely insignificant.

Integrity, quality of life, wholesome character, stability and prosperity have largely disolved to 'corporate profits' and we simply have to deal with all that defines and creates the reality of everyday life.

I don't mean this to be 'cold' and I very much appreciate your committment to our country and that will forever speak highly for the character you have; BUT I would look at your wife and yourself and all you can claim as 'yours' and all you have accomplished and let that be a huge and ever present source of 'enjoyment' and forget the rest.

The 'machine' that spins has the exact same wheels now as it did throughout the years and its more a mean grinder that at times has more of this and less of that. The corporations and industries that have gained in dominance and in wealth and power will undoubtedly do everything possible to gain more wealth and more power. We simply have to see and know what 'is happening' and understand why we are 'powerless' to change it in any manner OTHER THAN by the life we live. How we live and regard one another is all that really matters. So I don't let what is happening get me down - because I still have my 'freedom' and I have 'abundance' and I'm not enslaved to debt. I can live simply and generously and enjoy the health and life I have. As can you.

 

[Steadygain]

We simply have to see and know what 'is happening' and understand why we are 'powerless' to change it in any manner OTHER THAN by the life we live. How we live and regard one another is all that really matters.

We moved my daughter into her apartment for her last year of college. It's a beautiful place and seems like such a huge transition from being our 'girl' to an independent woman.

After we got settled in I grabbed one of her books 'Why we can't be silent' or title very close to that. The book was about the 'Porn Industry' and how one person can make such a huge difference. George Bush (Sr) had a lot of people going to prison for that stuff.

I'm sharing this mainly because too often I do feel 'What's the difference'? - when everything seems to be going down the drain - what can I (or anyone do)??

Much to my surprise I've found 'one person' can make a huge difference. I think almost any person can have a much bigger impact than they realize and we often don't recognize the capacity we can make.

 

[brooksmd]

Zebra, what are your plans for healthcare after retirement? I'm thinking of suspending my BCBS and going Tricare Prime. Our dr's and their medical center are listed in with Tricare and in fact we use Tricare Standard with BCBS. I have looked but haven't been able to find any Tricare forums for thoughts and ideas.

 

[Zebra]

Ditto brooksmd, I too plan to suspend bluecross blueshield. But I am not so sure how Tricare will look after obamacare shreads it up, time will tell. My wife wants me to maintain Gov BCBS, but as you know it is very expensive, $189. each pay period for me.

Before you know it, your Gov CS pension will be just for covering health insurance unless we get these left wing politicians destroyers out of office.

 

[brooksmd]

Ditto brooksmd, I too plan to suspend bluecross blueshield. But I am not so sure how Tricare will look after obamacare shreads it up, time will tell. My wife wants me to maintain Gov BCBS, but as you know it is very expensive, $189. each pay period for me.

Before you know it, your Gov CS pension will be just for covering health insurance unless we get these left wing politicians destroyers out of office.

Yeah and that's pre-tax dollars. When you retire it's after-tax dollars. At $480/yr Tricare Prime looks good. A co-worker who retired last year went with Standard and got a long term care policy to go with it. He also suspended his BCBS. I only hope Obama looses control of Congress in Nov and then Congress refuses to fund Obamacare.

 

[brooksmd]

I don't understand some of the talk about delaying applying for SS. According to my latest SS statement, when I retire in December at age 62 I'll get $1500/mo. At full retirement age 66, $2001/mo and age 70, $2673/mo. Suppose I choose age 62, I'll will have already collected $144,000 in SS benefits by the time I am 70. Unless I'm figuring wrong, it looks to me I'd be about 80 or so when total benefits collected at 62 would be equal to the total collected starting at 70. Hopefully I'll last longer than 80, but nothing is definite, especially factoring in Obamacare care for the elderly. (sorry about that little political comment) To me, a bird in the hand is worth 2 in the bush. So unless somebody can give me a better reason to delay SS, I think I'll grab the gold ring starting at 62 while it is still there and I'm still alive. Oh, one other factor. Can you draw SS while in prison? lol

 

[nnuut]

You are right on Brooksmd, 2+2=4!!

 

[Birchtree]

I'm waiting until 70 because I don't want the extra income boosting my AGI for tax purposes. A higher benefit at 70 would go a long way towards elder care if necessary.

 

[Silverbird]

Why delay to 67?

• Sole Breadwinner (therefore sole source of retirement income)
• Long life expectancy (family members live past 85 barring accident or illness + female, and a lot of my family avoids going to Drs)

Can I retire at 62 and delay payments of social security until 67 and get full retirement?