Hello Stoplight, I appreciate you sharing your experience, but I dont understand this part
"I'm withdrawing as the "full withdrawal" with a specified monthly amount."
Welcome, Dave95 !
I see you've entered the murky world of the "how much can I withdraw ?" question...believe me ; it's an art, not a science ! Everybody's situation is different
The short answer to your question is...figure out your yearly rate of return, and use the specified monthly withdrawal amount, adjusted annually. In fact, I have my TSP-73 in front of me right now ! That's the form used for changing your monthly distribution. As you noted, when you hit that RMD age, you'll need a new strategy to preserve your principal, regardless of the tax-deferred investment vehicle.
I assume you've already done all the basics, like estimate your expenses first, and the source(s) of income to meet those expenses (your pension, Wife's pension, Wife's 403(b) (?), Social Security, etc), and you're still a little short....thus, the need to tap your TSP now. In my case, the Wife was also a school Teacher.
My 2 pieces of advice ? First...if your Wife just retired, wait a while and see how your expenses shake out. For instance, I was surprised at how our gasoline use dropped, after neither of us were driving to work ! Also, it's nice not paying a Social Security tax anymore ! OTOH, the amount we're spending on her hobbies skyrocketed :nuts:
Second : Seriously consider rolling your TSP into an IRA, as Birch recommended. You can then have a LOT more flexibility on where your money is invested ; you can be as active or passive as you want ; and the best part...you can withdraw whatever amount you want, whenever you need it (like for 1 of those home maintenance bills !). Of course, you'll pay tax, and you'll still have to deal with an RMD down the road. Many on the Board will argue the pros and cons about that approach, and there are good reasons to go either way, so you have to look at it from your own perspective. Be careful, though, because with some TSP withdrawal decisions, there's no going back !
For me, we don't have Kids, or anyone else we want to make rich when we die, so "estate planning" wasn't a factor.
We rolled the Wife's 403(b) into an IRA ; took the one-time "partial withdrawal" and rolled most of my TSP balance into an IRA ; and kept a small balance in my TSP, based on an estimate of what we'll need over the next 3 years, which I'm withdrawing as the "full withdrawal" with a specified monthly amount. That makes sense for us, because I avoid the tax penalty on the distribution because I'm not yet 59 1/2 (like I'd have on the IRA). For you both, that's not an issue, since you're 65...
Anyway...best of luck ! Read through some of the other threads, and ask questions ! LOTS of good discussions about homes, paying off mortgages, life insurance, etc etc, and plenty of people willing to share their knowledge and experience !
Stoplight...
"I'm withdrawing as the "full withdrawal" with a specified monthly amount."
Welcome, Dave95 !
I see you've entered the murky world of the "how much can I withdraw ?" question...believe me ; it's an art, not a science ! Everybody's situation is different
The short answer to your question is...figure out your yearly rate of return, and use the specified monthly withdrawal amount, adjusted annually. In fact, I have my TSP-73 in front of me right now ! That's the form used for changing your monthly distribution. As you noted, when you hit that RMD age, you'll need a new strategy to preserve your principal, regardless of the tax-deferred investment vehicle.
I assume you've already done all the basics, like estimate your expenses first, and the source(s) of income to meet those expenses (your pension, Wife's pension, Wife's 403(b) (?), Social Security, etc), and you're still a little short....thus, the need to tap your TSP now. In my case, the Wife was also a school Teacher.
My 2 pieces of advice ? First...if your Wife just retired, wait a while and see how your expenses shake out. For instance, I was surprised at how our gasoline use dropped, after neither of us were driving to work ! Also, it's nice not paying a Social Security tax anymore ! OTOH, the amount we're spending on her hobbies skyrocketed :nuts:
Second : Seriously consider rolling your TSP into an IRA, as Birch recommended. You can then have a LOT more flexibility on where your money is invested ; you can be as active or passive as you want ; and the best part...you can withdraw whatever amount you want, whenever you need it (like for 1 of those home maintenance bills !). Of course, you'll pay tax, and you'll still have to deal with an RMD down the road. Many on the Board will argue the pros and cons about that approach, and there are good reasons to go either way, so you have to look at it from your own perspective. Be careful, though, because with some TSP withdrawal decisions, there's no going back !
For me, we don't have Kids, or anyone else we want to make rich when we die, so "estate planning" wasn't a factor.
We rolled the Wife's 403(b) into an IRA ; took the one-time "partial withdrawal" and rolled most of my TSP balance into an IRA ; and kept a small balance in my TSP, based on an estimate of what we'll need over the next 3 years, which I'm withdrawing as the "full withdrawal" with a specified monthly amount. That makes sense for us, because I avoid the tax penalty on the distribution because I'm not yet 59 1/2 (like I'd have on the IRA). For you both, that's not an issue, since you're 65...Anyway...best of luck ! Read through some of the other threads, and ask questions ! LOTS of good discussions about homes, paying off mortgages, life insurance, etc etc, and plenty of people willing to share their knowledge and experience !
Stoplight...
