PessOptimist's Retirement Story

[PessOptimist]

PO,

This whole SS thing is confusing. I've decided to wait until I'm 70 because of WEP. It will give me a little more in my pocket and the break even point if I started to collect now isn't that big of a deal. My SO just turned 66 this month and we haven't totally decided what to do but I'm leaning towards starting her SS sooner than later. I think it all depends if I did the math right.

I knew we shared the same birth date I just realized we share the same birth year.

Yup, same year. Differences are you are a rocket scientist and I'm not and you are CSRS and I'm FERS.

PO

 

[PessOptimist]

I thought I had this all figured out for my particular situation. Spouse files for SS benefits as she wishes and gets what she gets. Then I file for benefits and restrict my benefit to spousal benefit. My own delayed retirement credits continue to accrue. At 70 I apply for my own benefits.

Why? Spouse survivor benefits. When I die, she gets a percentage of my benefit based on her age. If I make it to when she turns 66, she gets 100% of what my benefit was on the day I died or started collecting. If I don’t make it that long she gets a percentage of what my benefit would have been on the day I died. Still more than she gets on her own record. If I start receiving benefits earlier, she receives a percentage of that benefit so I should wait until 70 to receive my benefits.

To make this work I need to start a full TSP withdrawal of monthly payments soon. When I turn 70 and start receiving my SS benefits I can reduce the monthly payment amount to around my MRD.

I went to the tsp.gov site and tried to download the TSP-70. No luck, you have to use the online wizard. Scary since I am not ready to pull the trigger. I didn’t need to worry since you have to print and snail mail or fax the form.

What I did find out is that unless I can get my wife to sign the form (notarized of course) that I am locked in to buying the Metlife joint annuity with 50% survivor benefit, level payments, and no cash refund. From the TSP.gov site:
“If you are married (even if separated from your spouse) and your total TSP account balance is more than $3,500, your spouse is entitled, by law, to a joint life annuity with a 50% survivor benefit, level payments, and no cash refund. If you choose any other method of withdrawing your account, the law requires your spouse's written consent.

Joint Life Annuities.
If you choose any of the joint life annuities, your monthly annuity payments will be less than if you had chosen a single life annuity. Also, keep in mind that if you choose a joint life annuity with a 50% survivor benefit, the monthly annuity payment will be cut in half when either you or your joint annuitant dies.”

Even if I choose the 100% survivor benefit I need her signature.

I always swore I would never buy the TSP annuity. I think that under my plan of monthly payments soon and reducing them in 3 years is a better deal. On the other hand do we really care if there is any TSP left over for my kids? My plan, based on G fund paying at least 2%, leaves about $150k in TSP the year she turns 91. I have no expectation of being alive at 95. The big deal to me is once you buy the annuity there is no going back.


I better start working on a business case.

PO

 

[Tsunami]

PO,

Regarding the TSP withdrawal initiation process, thought I’d describe how it’s working for me.

Since I wanted to show the extra income as part of qualifying for our giant VA mortgage for our retirement home purchase, I went ahead last week and submitted the form to start the monthly withdrawals. I found a blog topic on federal soup where people have been posting the timeline on how long the process takes, and saw that in recent years the TSP has been getting faster and faster at it, with the most recent person posting that it took just 4 business days from faxing in the TSP-70 form until the deposit showed up in their bank account. Being a former engineer, I’m rather anal about money matters and I’d like to get all the income early in the month (unfortunately, based on my birthdate of the 22[SUP]nd[/SUP], my SS payments will come on the 3[SUP]rd[/SUP] Wednesday of each month…I wonder why SS continues that archaic practice when all SS payments are electronic now, not physical checks?, sigh)…so I waited until last Thursday to send in the form by fax…I did that from a UPS Store, just $4 and tax for the 2 page form, since we’re staying in a rental condo currently and don’t have the ability to fax from home….anyway, as of Saturday (and it’s the same right now on Monday morning 4/29), when I log into TSP.gov, then click on the “Withdrawals” link, there’s a red message that says “Message Alert – Pending Full Withdrawal Request”, so I know it’s being processed. I’m hoping that the deposit shows up on 5/1, but any date before the 10[SUP]th[/SUP] of the month works I suppose since our mortgage payments will be on the 10[SUP]th[/SUP]. My understanding is that whatever day it happens, it will be set in stone and you’ll get your deposits on that day forever and can’t change it (why?, sheez).

As with OPM Services Online, I really wish TSP would get with the times and update their website, and do a better job at communicating with participants. Why not send me an email confirmation when the form was logged in for example? I wouldn’t be surprised if I get a letter, probably weeks after I get the first deposit LOL. Also, they don’t let you choose how much you want taken out in federal income tax like the OPM does for your annuity. Really annoying. I just went with their standard “married and 3 allowances” option (I’m too brain dead with all the house selling, moving, house buying stuff to try to figure out how much that will be so will just let it be a surprise), and plan to adjust my annuity taxes as needed in order to come out close to break-even each year. Regarding getting the form notarized, yep, a pain, but my wife trusted me in signing off that she won’t collect the joint life annuity option (she also has a TSP account and the plan is for whoever goes first, that account will be rolled over into the other spouse’s account)…and we really lucked out in that we had a notary public come by in order to sign the closing documents on our house in New Mexico, and for just $10 she did the TSP-70 form at the same time as a side deal. One disconcerting thing to me is that the poorly crafted TSP-70 form, and the message on TSP.gov, makes it sound like I’m about to get a check for my full account balance, so I have to trust that it will indeed be monthly payments as I indicated on the form (why not have a separate form for the monthly payments option?).

I’ll post again when I get my first monthly deposit in our account, hopefully by Friday this week. In the mean time I’ll start checking that the status in my account each day to look for any indication I’m about to get that deposit.

I’m only withdrawing the equivalent of about 4% per year to start, and I figure that at the current G fund rate all I need to do is find one single 1.5% trade outside of the G fund each year in order to keep my account balance stable…and then to keep up with a 2% inflation rate that would bump up the additional amount I need to make to about 3.5%, or about 6%/year, which seems doable if I’m patient and wait for a really oversold panic day each year, they always come a least a couple times each year…then even if we have a long grinding bear market that lasts for a large part of the 2020’s I can still grow my TSP withdrawals on par with inflation…and at age 62 in a few years (I turn 59 in June) hopefully I can bump up the withdrawals a bit more to somewhat make up for not collecting SS…if that’s what I do…I might just start collecting SS at age 62 based on that excellent long article by Danial Amerman that I posted recently.

 

[Valkyrie]

"No Cash refund"? I surmise that means that even if your initial balance lets say 300k wasn't paid out by the time you pass along, they get to keep the money left over?

 

[PessOptimist]

"No Cash refund"? I surmise that means that even if your initial balance lets say 300k wasn't paid out by the time you pass along, they get to keep the money left over?

You are correct. They pay a monthly amount, if one of you dies the amount reduces 50%, when the other dies Metlife keeps the money.<br>
<br>
Based on our ages I don't think it's a good deal.

 

[Tsunami]

An update on my full withdrawal (in monthly payments) status. Today the status has changed to:

Pending Full Withdrawal Request submitted 04/29/2019.
Your full withdrawal request (View withdrawal Request) is being processed for 04/29/2019. This request can no longer be changed or cancelled.

So now I'm crossing my fingers and toes hoping that the deposit doesn't hit our account tomorrow since I want the deposits to be on the 1st of each month, or soon after.

 

[Scout333]

An update on my full withdrawal (in monthly payments) status. Today the status has changed to:

Pending Full Withdrawal Request submitted 04/29/2019.
Your full withdrawal request (View withdrawal Request) is being processed for 04/29/2019. This request can no longer be changed or cancelled.

So now I'm crossing my fingers and toes hoping that the deposit doesn't hit our account tomorrow since I want the deposits to be on the 1st of each month, or soon after.

T your withdrawal amounts will usually be deposited 3 or 4 days after it is posted on the TSP site. My experience has been that it can be different days every month. Close but can be as much as 7 days difference some months. If you wish you can adjust your tax withholdings in OPM by taking the amount needed to cover your TSP withdrawals from your retirement. When I did mine I took -0- from the TSP withdrawals. Adjusted retirement to cover the withdrawals.

 

[Tsunami]

T your withdrawal amounts will usually be deposited 3 or 4 days after it is posted on the TSP site. My experience has been that it can be different days every month. Close but can be as much as 7 days difference some months. If you wish you can adjust your tax withholdings in OPM by taking the amount needed to cover your TSP withdrawals from your retirement. When I did mine I took -0- from the TSP withdrawals. Adjusted retirement to cover the withdrawals.

Thanks Scout. That's my plan, to adjust the taxes taken from my OPM annuity as needed.
This mornings update: Now the TSP has posted that the first monthly withdrawal was disbursed on 4/29. The amount is correct, and there's the beginnings of a statement, but it doesn't yet show the amount of taxes to be taken. It says it will be processed today. So I assume later today it will show the tax withheld and the net amount to me. And as you said, it says to expect it to take 3 to 5 business days for the funds to get to my account. Wish it was a consistent date, but it looks like my careful timing will work out well and I'll always get the deposit during the first few days of each month.

 

[Tsunami]

Thanks Scout. That's my plan, to adjust the taxes taken from my OPM annuity as needed.
This mornings update: Now the TSP has posted that the first monthly withdrawal was disbursed on 4/29. The amount is correct, and there's the beginnings of a statement, but it doesn't yet show the amount of taxes to be taken. It says it will be processed today. So I assume later today it will show the tax withheld and the net amount to me. And as you said, it says to expect it to take 3 to 5 business days for the funds to get to my account. Wish it was a consistent date, but it looks like my careful timing will work out well and I'll always get the deposit during the first few days of each month.

Just to finish up my TSP monthly withdrawals timeline, I received the direct deposit yesterday. So it took exactly one week, 5 business days, from the day I faxed the form to TSP to the day I received the deposit. And as I was hoping, I should now get the deposits either on the 1st or 2nd weekday of each month forever and ever.

Meanwhile, nothing but silence from OPM on fixing the $19 error in my annuity. One last note regarding the federal taxes taken from the TSP monthly withdrawals...Since my TSP withdrawals are set at $2000/month, even though the amount of federal tax to be taken out is based on married and 3 allowances, that turns out to be meaningless...since, I assume due to the $24,400 exemption for married couples (and the fact that my annual withdrawals will be less than that)...they took out a grand total of ZERO taxes...so today I greatly increased the taxes taken from my annuity to make up for that. I wonder if adjusting taxes will be one of the things TSP fixes this coming fall when they roll out the new withdrawal rules.

 

[nasa1974]

Tsunami,

Thanks for the updates.

 

[olefoggie]

Just to finish up my TSP monthly withdrawals timeline, I received the direct deposit yesterday. So it took exactly one week, 5 business days, from the day I faxed the form to TSP to the day I received the deposit. And as I was hoping, I should now get the deposits either on the 1st or 2nd weekday of each month forever and ever.

Meanwhile, nothing but silence from OPM on fixing the $19 error in my annuity. One last note regarding the federal taxes taken from the TSP monthly withdrawals...Since my TSP withdrawals are set at $2000/month, even though the amount of federal tax to be taken out is based on married and 3 allowances, that turns out to be meaningless...since, I assume due to the $24,400 exemption for married couples (and the fact that my annual withdrawals will be less than that)...they took out a grand total of ZERO taxes...so today I greatly increased the taxes taken from my annuity to make up for that. I wonder if adjusting taxes will be one of the things TSP fixes this coming fall when they roll out the new withdrawal rules.

ok what do you mean by 24,400 exemption?

 

[PessOptimist]

OPM amount has been finalized apparently.

SO has applied for SS benefits and I have applied for spouse benefits based on her benefits. My own will continue to increase under delayed retirement benefits rules until age 70. That’s coming up quickly. I fall in to some age group that can do that. Reason is benefits for her will be more $ if I predecease her.

Applied for a “full withdrawal” of the TSP. Was going to wait until later in the month but the CU notary offered to fax it so I said do it. At this point I don’t really care what day of the month it shows up, My TSP shows this status. Pending Full Withdrawal Request.
$2500 per month. Under the new rules starting in September we can change that every month supposedly.

SO was scheduled for back surgery at Stanford Hospital Redwood City CA in August but one of Dr Cheng’s minions called today and said it must be rescheduled. Though it was a firm date but apparently the good doctor has a conflicting appointment. I will not write my thoughts about this other than to say this is sounding much like the previous failed attempt here in Phoenix with Dr Rappaport.

No fears in my mind about stating doctor’s names as they promise the perfect cure but so far produce no results other than still having to use a walker etc. I personally expect the same results from Stanford as came from the Arizona surgery only hoping she doesn’t come so near dying this time. Just costs more as it is Stanford after all.

Just trying to keep cash flowing in during this time of uncertainty.

Retirement income is about what I expected with a few $10k thrown in for medical care. Whatever, I probably won’t outlive the TSP money.

PO

 

[nasa1974]

PO,

Good luck as your retirement continues. Sorry to here about SO. My wife has some hip issues. Good days and bad.
Because of the SS penalty I'm trying to wait until I turn 70. It looks like I get hit not as hard if I wait. Was going to start SS for the wife but she started working part time (16 hours a week) so we will wait. Don't want to take a chance and jump into the next tax bracket.

 

[turbo23dog]

OPM amount has been finalized apparently.

Applied for a “full withdrawal” of the TSP. Was going to wait until later in the month but the CU notary offered to fax it so I said do it. At this point I don’t really care what day of the month it shows up, My TSP shows this status. Pending Full Withdrawal Request. $2500 per month. Under the new rules starting in September we can change that every month supposedly.

PO,

Can you clarify the quote above? I'm not sure what "full withdrawal" means in the context of $2,500 per month. So I get that you will receive a check in that amount each month from TSP but I thought you'd have to leave funds in the TSP for them to withdraw from. Also, if the context is that the funds will stay within the TSP, do you have to have the funds in a specific Fund (ie: L-income) or can you still move among the funds as before requesting withdrawal?

PS: Here's to hoping things work out for your SO.

 

[PessOptimist]

OPM amount has been finalized apparently.

Applied for a “full withdrawal” of the TSP. Was going to wait until later in the month but the CU notary offered to fax it so I said do it. At this point I don’t really care what day of the month it shows up, My TSP shows this status. Pending Full Withdrawal Request. $2500 per month. Under the new rules starting in September we can change that every month supposedly.

PO,

Can you clarify the quote above? I'm not sure what "full withdrawal" means in the context of $2,500 per month. So I get that you will receive a check in that amount each month from TSP but I thought you'd have to leave funds in the TSP for them to withdraw from. Also, if the context is that the funds will stay within the TSP, do you have to have the funds in a specific Fund (ie: L-income) or can you still move among the funds as before requesting withdrawal?

PS: Here's to hoping things work out for your SO.

t23d, “full withdrawal” is TSP speak for monthly payments, among other options. Under the current rules retired participants can do one partial withdrawal or a “full withdrawal”. Full withdrawal options are lump sum (take it all) as cash or rolled in to another tax deferred account, buy a life annuity from MetLife insurance company or take monthly payments based on life expectancy or in a monthly amount you choose. I requested $2500 per month which TSP calls a full withdrawal. Right now I can change this amount once per year. The page below explains it all or has links that do.
https://www.tsp.gov/PlanParticipation/LoansAndWithdrawals/withdrawals/withdrawingAccount.html

I can still do interfund transfers under the current rules as long as I have money in the TSP account. There are no restrictions on what fund they are in. I cannot contribute to my TSP other than roll an existing retirement account in to it.

On September 15[SUP]th[/SUP] withdrawal rules change as explained at https://www.tsp.gov/PDF/formspubs/tspfs10.pdf

I hope this helps. No idea why they call the monthly payment option a “full withdrawal”’

Saw this message this morning on the TSP site.

Rejected Full Withdrawal Request.
Your full withdrawal request was rejected during processing. An explanation has been sent to you at your address of record.

I called the thrift line and found out that SO put the wrong date next to her notarized signature. We get to renotarize and resubmit.

PO

 

[PessOptimist]

Re-notarized and re-faxed the TSP form 70 Tuesday. Today my withdrawal status shows:

Pending Full Withdrawal Request submitted 06/27/2019.
You have a pending full withdrawal request (View Withdrawal Request) that should be effective as of close of business 06/28/2019. You may cancel this request until 12:00 noon, Eastern time, that day.
I do hate that term "full withdrawal" but do understand as warned several times that it is an irreversible action, only the amount can be changed.

PO

 

[nasa1974]

PO,

Looks like things are moving along. Just a minor hiccup.

Once I make my second retirement permanent I will probably roll my TSP account into our joint account. I need to look at the last couple of years and see how the profit/loss has been for each account. Our financial advisor is pretty good and the fees aren't outrageous.


Don't get to toasty. Finally warming up here on the North Coast.

 

[Scout333]

Hello PO, Just saw this, hope SO is doing well! Will pray for you both back surgeries can be a long drawn out and painful healing process. tough for patient and caregiver! Best of luck to you both!

 

[nnuut]

Best of luck with the Back problems PO, heal and heal quickly!

 

[PessOptimist]

Update for those curious about time frames for TSP withdrawals. The TSP-70 was faxed on Tuesday 6/25 in the afternoon. Today the status shown is that it was disbursed 6/28/19. EFT will be processed on 7/5/19. Withholding unknown at this time. Speaking with the thrift line I am told no withholding will be withheld since it is less than ½ year and less than some figure based on a married old person.

The first line of the notice says 100% of account. The second line says $2500 monthly payment. I really hate that 100% thing and wonder if it is called that to steer participants away from withdrawing.
I will post when the EFT shows up.

Nnuut, the back problems discussed are about my SO, aka SWMBO. Thanks for the wishes.

Thanks for the wishes everyone. Not too toasty here right now, 108F on the patio. Just walked down to get the mail and didn’t die. Just have to drink a lot.

PO