Retire at age 55?

[Spaf]

Here's a question. I am in a wheelchair. Will I need to file for and receive SS disability payments to be considerd totally and permanently disabled? What's the criteria? Can I go from working one day to totally and permanently disabled the next? I got the permanently part covered but I don't know about the totally. Any ideas?

Wheels,
For Social Security Disability you have to file for it and they check it out with your doctors and they make a decision. You can go from working to non working and get social security. Once non working you have a 6 month period to file for disability.
Spaf

 

[Wheels]

Wheels,
For Social Security Disability you have to file for it and they check it out with your doctors and they make a decision. You can go from working to non working and get social security. Once non working you have a 6 month period to file for disability.
Spaf

I understand this, but the question is, to be considered totally and permanently disabled by the IRS for the purpose of avoiding the 10% penalty, do I have to be considered disabled by the SSA or is there some other benchmark or criteria.

 

[vol46]

Have already reached MRA. Searching for a place to retire where I can live off my annuity check of $350 a month. Asia, S. America, Africa, maybe the north pole. Until I can find a place, will stay put, earning my $3.30 a day.
Vol46

 

[Shaggy]

I have a question. I think I understand TSP withdrawals but am not sure about the defined benefit plan. I want to retire at 57. I will have only 25 years on at that point but will have the minimum of 30 years under SS to get full benefits. When I say retire I don't really mean filing for benefits I mean I want to quit at age 57. I then want to draw on my TSP and work part-time. At age 62 I want to file for SS and formally retire. First is this possible and second is there a penalty for not doing the full 30 yrs. or do I get the 1% *25* high 3 starting at age 62?

 

[Spaf]

I can only address FERS. You can quit at 57 and use your TSP. Remember SS retirement has an age scale. Generally anything under the SS age, and under 30 (FERS) is going to have a reduced rate unless you are disabled. Your personnel management office can send you "Information for FERS Annuitants" and a "FERS Benefit Estimate Report" SSA should be sending "Your Social Security Statement". With this information you can analyze your specific circumstances.

I have a question. I think I understand TSP withdrawals but am not sure about the defined benefit plan. I want to retire at 57. I will have only 25 years on at that point but will have the minimum of 30 years under SS to get full benefits. When I say retire I don't really mean filing for benefits I mean I want to quit at age 57. I then want to draw on my TSP and work part-time. At age 62 I want to file for SS and formally retire. First is this possible and second is there a penalty for not doing the full 30 yrs. or do I get the 1% *25* high 3 starting at age 62?

 

[ebbnflow]

So you think your 401(k) money is safe

The popular accounts have little protection from theft. Smaller companies have raided the funds in hard times.

By Kathy M. Kristof, Times Staff Writer

December 10, 2006

MUSKEGON, MICH. — Jim Elliott, 55, spends his days clambering onto the tops of houses, taking measurements for the wooden trusses his company sells to support roofs through long, snowy winters.

Not long ago, Elliott thought his ladder-climbing days would soon be over. With a few more years of work, his 401(k) account would be large enough to let him retire at 60 and spend his days with his three grandchildren.

Then Elliott learned that his former employer had looted the company's 401(k) plan. The $230,000 he had saved over three decades was gone.

Read the rest here. :notrust:

 

[TRAFFIC_DOG]

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

 

[Wheels]

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.

I've read publication 575 and I didn't see this anywhere. Where are you getting it from?

(Not that it matters much to me, there is no way I'll stay in until I'm 55).

 

[TRAFFIC_DOG]

I've read publication 575 and I didn't see this anywhere. Where are you getting it from?

Wheels, I don't remember specifically, but I'll try to find it. I've seen it addressed specifically several times.

It makes intuitive sense though if you think about it.

1. Any money taken as a distribution from the TSP account will be taxed as ordinary income.
2. The only way to avoid income tax on that money is to roll over into another qualified plan. In this case, since I'm retiring it'll be a self directed IRA.
3. The only way to access access money from an IRA (as a distribution, not a loan) prior to age 59 1/2 is with a 72t.

You cannot take some out of your TSP and put it into an IRA (so as to keep tax deferred status) and then withdraw it as you wish. -cheers

 

[clester]

Dog,
Sounds like a good plan. I also fit into the 1.7% for all years if I stay until 56 (my MRA). My plan is to retire at 49 (25 years) though. The 1.7% is a big carrot, but consider your giving up 6 years of retirement or going into another career(which I am) to do it. The current work environment in the FAA is not good. I won't be miserable. I'm checking out ASAP! I'll still be close to 100% take home pay. 2 years 4 months to go woohoo!! Go TSP!

 

[Gaetaone]

I think this is it...

http://www.opm.gov/forms/pdfimage/RI90-1.pdf

Applies to Firefighters, Law Enforcement and Air Traffic Controllers. Unless there's an update it's:

1.7% High 3 avg. x 20 years of service
and
1.0% High 3 avg. x years of service exceeding 20 years

also applies to members of Congress and Cogresssional employees

John

 

[TRAFFIC_DOG]

Dog,
Sounds like a good plan. I also fit into the 1.7% for all years if I stay until 56 (my MRA). My plan is to retire at 49 (25 years) though. The 1.7% is a big carrot, but consider your giving up 6 years of retirement or going into another career(which I am) to do it. The current work environment in the FAA is not good. I won't be miserable. I'm checking out ASAP! I'll still be close to 100% take home pay. 2 years 4 months to go woohoo!! Go TSP!

Clester, wish I could go at 49, but started a family late. My son is 7.5 and daughter is 6. As it is my son will be 16 when I retire. I'm open to things changing though. I have some options on a career change as well but I won't change for changes sake alone. Besides I want to go at 100% of gross without a drawdown on my TSP. Without help from Lotto I'll stay to the end. I'm hoping things will get better in ATC land.- cheers

PS- I'll have 25 years in at age 49 in 2 yrs 4 mos. too. EOD 05/84

 

[clester]

Dog,
We may have been in OKC at the same time. My EOD 5/4/84. Where do you work?

 

[TRAFFIC_DOG]

Dog,
We may have been in OKC at the same time. My EOD 5/4/84. Where do you work?

I'll PM you. Remember the "black widow" and "santa claus"?

 

[Aviator_Guy]

I’m 49 and have 28 yrs of fed service counting my 6 yrs military service. The CSRS vs. FERS retirement plans are both outstanding. The only thing I don’t like about the FERS plan is not having an incentive for not using sick leave. I currently have 1K hrs of sick leave, but when I retire at age 56, it really doesn’t count for any benefit. I have heard rumors that DC is looking at changing this.

I look at retirement as a time that will allow you the option enjoying your time off doing whatever you enjoy. A good retirement plan will also allow you the flexibility to move away from federal service into the private sector. The job market in the private sector is wide open. The cool thing about retirement will be going into another line of work because you want to and not because of a financial need.

My plan is to have 1M saved by 2013. At that time, I will buy enough land to build a log cabin and a small runway for my airplane. I will get some chickens and a tractor and do the Green Acres thing. Anyway, good luck with your investing and have a great day in TSP land!

 

[clester]

Air Traffic controllers (not management) get 40% payout of sick leave, so I hope everyone else will get it soon. It only makes good financial sense. Pay 40% or 100% (people will use all they can).

 

[rondalw]

Retired at age 50 today!!!! 32.8 years combined military and FED LEO. Leaveing TSP sit for immediate future. However, should I need some extra cash I could always set up the 72(t) withdrawls.

Ron

 

[tsptalk]

Congratulations!

 

[Wheels]

Retired at age 50 today!!!! 32.8 years combined military and FED LEO. Leaveing TSP sit for immediate future. However, should I need some extra cash I could always set up the 72(t) withdrawls.

Ron

IRS Publication 575 says that LEO's serving a state or municipality who retire after they turn 50, are exempt from the 10% penalty. I'm not sure if this covers you or not since you were a FED. Worth looking into.

 

[rondalw]

Thanks Dave: I did check into that and it does not count for us FEDS. Typical I guess since they leave us so little options for ous LEO'S that retire "early".

Ron