Just ran across this thread, although it seems to have run i'ts course. I have one tidbit for those ATC-ers:
If you retire at your MRA (for me it's 56) and have 30 years service- you get 1.7 % for ALL years (good time only) worked. That's enough of a carrot to make a difference to many.
Some comments about what I know of the TSP/IRA/72t universe.
The IRS allows penalty free withdrawls from a 401k (our TSP qualifies) if you separate in the year you turn 55 or later....only if you leave it where it is and make your withdrawls under whatever terms the plan allows. Whatever portion you would decide to roll into an IRA would no longer be exempt from the pre 59 1/2 penalties. To access this money prior to 59 1/2 you would need to set up a 72t.
My plan is this. Retire in summer of 2015 at age 56. I'll capture the 1.7% for all 31 years.
Leave 1/2 in the TSP for all the well known advantages. I'll choose the equal monthy payment amount option and just wag an amount. Remember, since I'm past 55 I don't need any of the structured calculators. In Dec of that year I'll have a better feel for my needs for the next year and I'll tweak my payment. I'll re-adjust every Dec.
The other 1/2 I'll roll into an IRA to take advantage of the vastly greater investment vehicles available. This money is now sterile until 59 1/2 unless I access it via a 72t, which I probably will. If I do set up a 72t, then I must leave that structure as is until age 61 (59 1/2 or 5 years, which ever is longer).
I don't like (actually hate) annuities. Leaving something for my heirs is very important to me. The little insurance you get in the way of perpetual income is far outweighed by the risk of the Allmighty calling in my bond earlier than I'd like. As per the TSP life annuity calculator: 1 mil for a joint life w/ 50% to survivor buys ( remember you are purchasing something. They take your $1mil. In exchange they agree to pay you a fixed amount for life.) $71.000/yr. Not bad..... til you die 3-5 years later. Your wife now gets $35,500 for her life. That's 3.5% on $1mil.... no COLAs....never mind what inflation will do to that $35K. And when she dies.....POOOF! My kids will be scratching their heads saying "I know dad retired with a million bucks, mom never bought anything and there's nothing?"
This is why insurance companies have the tallest and shiniest buildings.
No thank you.
The G fund will pay you $51,000 per year leaving $500K each for my kids.
I plan to stay invested however, so I should be able to grow the balance.
Please forgive the indulgence of verbosity. -cheers
