Planning for Retirement

[Skorcher]

Regarding A: A transfer from TSP to an IRA incurs no tax. Not sure what you mean by 100%. You can transfer any % of your TSP to an IRA. When the new rules kick in you won't be limited to two transfers.
Correct on B. Unless you transfer that money to another IRA within 60 days.

 

[nasa1974]

Lots of info here and a great thread. Back to the social security and spouse’s social security question which is not real easy to figure out estimates for. Everything except for the spouses own estimated benefit is based on the “workers primary insurance amount”. The primary insurance amount (PIA) is defined as “The ‘primary insurance amount’ (PIA) is the benefit (before rounding down to next lower whole dollar) a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement”. You can figure yours out at https://www.thebalance.com/social-security-benefits-calculation-guide-2388927. I went to ssa.gov, established a chat session, asked to speak to an expert and got mine. I didn’t know at the time to ask if this would change before I started receiving benefits. Apparently so since I have ss income in 2019 which exceeds my income 35 years ago. I also didn’t ask when this amount gets set in stone. I think when you start receiving benefits.

According to the formula in https://www.thebalance.com/clearing-spousal-benefits-confusion-2388948, Take the older spouse's PIA divided by 2, minus the younger spouse's PIA. $2,100/2 = $1,050 - $800 = $250. In my case 2460/2=1230 – 1513 = less than 0.
Since the wife’s (age 63) latest ss estimate says $1225 if she applies now and $1555 if she waits until 66y 4m, I see no advantage for her to wait until I apply.

It’s all somewhat ambiguous especially the estimated amounts. Someone correct me if I am way wrong.

PO

Here is a curveball. Does WEP affect the SS payout for a spouse drawing early on your SS (only for CSRS folks)?

 

[rakendzior]

PO - re your curveball. You ask if the WEP affects the SS payout for a spouse taking spousal SS benefits. At least that's what I think you're saying. I think that's an entirely different income stream. Spousal SS benefits are a function of your earned income from a source other than as a Federal employee where you didn't have FICA applied.

 

[rakendzior]

This is Tony Kendzior. Thanks for your questions and your replies etc. I'm still working out the best way to respond to question so that the person who asked them gets my reply in the right context and doesn't have to ask them again. I know I understand money but as yet, I don't seem to understand how to use the TSP Talk forums. But I'm working on it...

 

[PessOptimist]

PO - re your curveball. You ask if the WEP affects the SS payout for a spouse taking spousal SS benefits. At least that's what I think you're saying. I think that's an entirely different income stream. Spousal SS benefits are a function of your earned income from a source other than as a Federal employee where you didn't have FICA applied.

The curve ball comes from nasa1974, below a quote from one of my posts.

PO

 

[PessOptimist]

Yes, ‘set in stone’ when you start receiving benefits. This is because all previous years’ income is indexed based on inflation. SS.gov has all the up to date index info if you want to get down into the details.
So what the chat advisor must have said is that your 2019 SS income is larger than the INDEXED SS income 35 years ago. Note also, I believe this 35 yr period is consecutive.
yes?

I understand when it is set in stone now. Thanks. The chat advisor didn’t actually say anything about the 2019 income. All I asked was for the PIA and didn’t know to ask for what month that was computed. I got the gross wage amount from my last LES so am not positive that is all actually ss income. Probably. I got the indexed amount from my ss earnings record and the indexing factor based on the national average wage index for the year I turned 60 and the 35[SUP]th[/SUP] year back. It is so close it probably makes little difference. I was an E-6 in the AF 35 years ago. The real factor will be what the COLA will be for 2019 if I don’t start receiving benefits.

I’m not sure I will go down in to the weeds and figure out my actual AIME for any given month.

According to the ss web site https://www.ssa.gov/oact/progdata/retirebenefit1.html “We use the highest 35 years of indexed earnings in a benefit computation.”.

PO

 

[PessOptimist]

uscfanhawaii, I forget to include this in the last post.:cheesy: There are 11 types of people in the world. Those who know binary, and those that don't, and those who don’t accept different number systems!!

PO

 

[PessOptimist]

This is Tony Kendzior. Thanks for your questions and your replies etc. I'm still working out the best way to respond to question so that the person who asked them gets my reply in the right context and doesn't have to ask them again. I know I understand money but as yet, I don't seem to understand how to use the TSP Talk forums. But I'm working on it...

TSPTalk uses vBulletin software which can be difficult at times. Sometimes replies to posts will go away. This is not necessarily due to the software or the web site server, there are so many factors involved with the interwebthingie.

Several questions may be asked in a post and replies to those post may ask more. The questions come fast and furiously.

This has been my solution to replies that has worked well for me. Under the post you want to reply to (not a reply to the post with or without a quote) select the Reply with Quote button. This should open a Quick Reply window and show the quote. Copy the quote and paste it in to a word processor. Go back to the Quick Reply window and select cancel. Now you can answer the question(s) in the word processor in your own time, leaving to research something if needed. When you are done with the reply copy it from the word processor and go back to the thread. Make sure you are still logged in, select Reply to Thread. A Quick Reply window will open. Paste what you copied from the word processor in to the window. Now select Go Advance in the bottom right. A Reply to Thread window will open and should show your post. Select Preview Post a little way down on the right. This will show you what the post will look like. If you need to make any corrections there will be a Your Message window just below you can edit. After editing select Preview post again. When you are ready to submit the post, scroll down to the Your Message window and select Submit reply.

Sounds complicated but it’s not really and will help preventing lost replies. Plus it gives you a chance to see your reply before it is submitted.

Depending on your equipment and software, right clicking the mouse may not give you copy/paste options. Using the keyboard commands control c and control v seem to work better.

PO

 

[rakendzior]

They are not consecutive unless you have exactly 35 years. If you have 36 and #10 was zero, it will not be counted. If you have 34 years, then there will be a zero computed in the highest 35 average.

 

[rakendzior]

Go to Successful Retirement Secrets, look for Tony's Blog, and when that comes up, find the About tab and there you'll find out more about me that you ever want to know...

 

[tsptalk]

To respond to a question / post, simple use the "Reply with Quote" button below that post.

If you're using a phone app I don;t know for sure. It seems every phone's software is different.

This is Tony Kendzior. Thanks for your questions and your replies etc. I'm still working out the best way to respond to question so that the person who asked them gets my reply in the right context and doesn't have to ask them again. I know I understand money but as yet, I don't seem to understand how to use the TSP Talk forums. But I'm working on it...

 

[alfaman]

Well, i'm moving forward with my retirement...although i ran the numbers, i was concerned that my wife would not have enough when i die.......i went with a service: tspmasters, https://www.tspmasters.com/ who ran my numbers for various situations (including a doomsday market crash)

I was very pleased with the service, far beyond what my HR was doing...i thought i had all the angles when i ran the numbers,myself but i was not as accurate as i needed or wanted to be....i worked out for me becauses now my wife can really see (we are a one income family) that the kids and her have nothing to worry about...was thinking of holding out one more year, but will be retired, sipping pina coladas poolside within a few months

 

[evilanne]

Congrats alfaman on your upcoming retirement

 

[nasa1974]

alfaman, congratulations on your upcoming retirement.

 

[FAB1]

TSPmasters looks like it could be a good resource BUT webpage aesthetics are totally amateurish. He needs to lose the stupid pop-up chat window...Blocks 1/5 of the page that I am trying to view & no options to "X" out. So I didn't hang around long.


Anybody that begs to differ with me and has a solution to view Pete's full page, let's hear it.

 

[FAB1]

That's is view the full page without paying anything... :cheesy:

 

[tom4jean]

TSP Roth vs traditional question. When the Roth was first available I went 100% in, but with further consideration I switched back to traditional deductions because the more I thought it about it I will be in a lower tax bracket when I retire and therefore pay less taxes on withdrawals. However, that does not take into consideration that I also end up being taxed on gains I made in the market. Wondering what would be the best approach? Thanks.

Sent from my Pixel 2 XL using TSP Talk Forums mobile app

 

[rakendzior]

TSP Roth vs traditional question. When the Roth was first available I went 100% in, but with further consideration I switched back to traditional deductions because the more I thought it about it I will be in a lower tax bracket when I retire and therefore pay less taxes on withdrawals. However, that does not take into consideration that I also end up being taxed on gains I made in the market. Wondering what would be the best approach? Thanks.

Sent from my Pixel 2 XL using TSP Talk Forums mobile app

Hello - ROTHs of any stripe can be good for you. But... As they evolved, it became apparent to me that once you reached age 50 or so, the tax paid up front wasn't offset by presumed taxable effect when you reached age 65 and beyond and were in a possibly lower tax bracket. Of course it depends on how long you actually live and your unique circumstances. I had a physician client, now deceased, who moved $2M of qualifed money, taxable money, into a ROTH after he retired. He had been an art collector during his lifetime, and gifted enough art to a local museum such that his tax bill on the $2M distribution was offset by the charitable gift. For most of us, that opportunity doesn't exist. Tony

 

[tom4jean]

Hello - ROTHs of any stripe can be good for you. But... As they evolved, it became apparent to me that once you reached age 50 or so, the tax paid up front wasn't offset by presumed taxable effect when you reached age 65 and beyond and were in a possibly lower tax bracket. Of course it depends on how long you actually live and your unique circumstances. I had a physician client, now deceased, who moved $2M of qualifed money, taxable money, into a ROTH after he retired. He had been an art collector during his lifetime, and gifted enough art to a local museum such that his tax bill on the $2M distribution was offset by the charitable gift. For most of us, that opportunity doesn't exist. Tony

Yea, I'm a nurse, not a doctor and I won't ever be in that situation.
At 52 I think I'm making the right choice staying traditional, thanks for the reply and confirming it.

 

[alfaman]

Yea, I'm a nurse, not a doctor and I won't ever be in that situation.
At 52 I think I'm making the right choice staying traditional, thanks for the reply and confirming it.

do not be so sure.....i will be in a higher tax bracket at 70 since that's what the RMDs start and so does my social security....so at this point i am putting more in my roth tsp than my traditional....found that out using the service i mentioned earlier...i am in my early sixties