Retiring Young- one man's plan

[James48843]

Interesting article today about a guy who is planning on retiring early. Worth reading.

http://finance.yahoo.com/focus-retirement/article/103763/Cash-Out-Early?mod=retirement-preparation

You can quit the rat race, but prepare to ramp up your savings.

Faced with frozen pensions, disappearing retiree health benefits and lengthy retirements, many Americans are choosing to work longer to provide for a comfortable future. Nearly one in four people between the ages of 65 and 74 were working or looking for work last year, according to the Census Bureau, up from 20% in 2000.

Still, the dream of dropping out of the workforce a few years -- or even decades -- ahead of schedule lives on. One such dreamer is Brian Fouch. Fouch lives in Lexington, Ky., where he is a human resources specialist with Toyota. His goal is to call it quits in 15 years, when he'll be 51. To make that happen, he's socking away 21% of his gross salary, including both his personal contributions to his 401(k) plan and his employer's match, and he hopes to boost the total to 24% soon.

(More at the link above...)

 

[Sonic]

I plan to retire age 50 which is early for me, that will give me 23 years of service. But if I don't plan correctly then I'll be the normal statistic. Thanks for the article, plan on reading more.

 

[Frixxxx]

I plan to retire age 50 which is early for me, that will give me 23 years of service. But if I don't plan correctly then I'll be the normal statistic. Thanks for the article, plan on reading more.

Sonic,

What will you use as an income generator? I hear of people wanting to retire early but IRA's and TSP funds are pretty locked up. If I'm understanding most of the rules, those funds are available at 59 1/2.

Is there a "magic" way to keep money coming in that won't stop my current lifestyle? I am concerned with retiring earlier than most because my wife is 6 years older than me.

 

[ChemEng]

Google Rule 72t for your answer Frixxxx.

Using life expectancy method, you can tap your retirement accounts much earlier than 59.5.

 

[Bullitt]

I'm shooting for 52.

 

[Frixxxx]

Google Rule 72t for your answer Frixxxx.

Using life expectancy method, you can tap your retirement accounts much earlier than 59.5.

Hey chem, I'm familiar with the rule, just trying to figure out how to have income for the years that I could be penalized for withdrawing money from those accounts early. And what is this life expectancy method you are tauting?

 

[Sonic]

Special Retirement Provision allows me to retire age 50 with at least 20 years service or 25 years of service regardless of age. Normally you cannot withdraw your tsp account until you separate from Federal service. Three basic ways to withdraw from account. 1.Have the TSP purchase a life annuity for you. 2.Receive your account in a single payment. 3.Receive your account in a series of monthly payments. After age 50, I plan to live half the year in the Phillippines aka (retirement), preferrably during the winter and work during the summer in the states. Retirement is difficult because you still want to maintain a good life style without putting all savings to retirement. Never know when you go, so enjoy your time.

 

[ChemEng]

Also consider that the amount to achieve the same standard of living will be less because you wouldnt have to save for retirement anymore.

 

[Frixxxx]

I can see that by spending half the year in the Phillipines can keep costs down annually. But I see that you plan to work part time while the other 6 months are spent in the states.

My position is this:

I retire at 56 and my wife is 62. She will recieve full Social Security and have her investments. But, that is four years before I start receiving any of my benefits. I will not have access to funds unless I work. Then 4 years later, I'm 60, and BAM, I have access to my FERS annuity, TSP, and Reserve retirement. so for four years, I need to figure out the gap. I post this simply for the fact that people can see what I'm trying to do to spend time with my wife before we get too old.

Insights anyone?

P.S. Sonic, what is the Special Retirement Provision you speak of....link?

 

[Minnow]

Frixxxx... are you on a mandatory "early" retirement at age 56? If so, then you are entitled to a Social Security Supplement -- in some cases, its a decent amount of supplemental income and in other cases, it's not.

If not, then I gotta do some digging for more "insight."

 

[Pill]

http://www.dodfire.com/cpms_retire_guidance.pdf

ATC, FF, LE

 

[Frixxxx]

Frixxxx... are you on a mandatory "early" retirement at age 56? If so, then you are entitled to a Social Security Supplement -- in some cases, its a decent amount of supplemental income and in other cases, it's not.

If not, then I gotta do some digging for more "insight."

Thanks minnow, I'm looking for the best alternatives for planning. I am not on an "early" retirement. My scenario is approximately 15 years away. But setting these types of goals seems to be difficult when even talking to my financial advisor. With all the tax-shelters, tax-free, tax-deferred, etc. options, there is always a gap. I am looking for a good route to go for those four years to spend quality time with my wife (she's disabled) before I become too stagnant. Thanks for the response.

 

[saturneptune]

You can take regular monthly payments out of TSP in the year you turn 55 and seperate. The 59.5 rule does not apply to money left in TSP.

I believe you can only earn 13000 a year in another job before they start taking away the sss two for one.

 

[gavinman]

Then 4 years later, I'm 60, and BAM, I have access to my FERS annuity, TSP, and Reserve retirement. so for four years, I need to figure out the gap.

You get your FERS annuity however small it is as soon as you retire. You have to go out on the immediate annuity to keep your health insurance also. If going out at 56 you have full access to your TSP also.

So just hope that in the next 15 years the stock market keeps shooting up. Also put some money in a Roth for the the tax free withdrawl advantages.

 

[Frixxxx]

You can take regular monthly payments out of TSP in the year you turn 55 and seperate. The 59.5 rule does not apply to money left in TSP.

I believe you can only earn 13000 a year in another job before they start taking away the sss two for one.

Thanks Saturn!

You get your FERS annuity however small it is as soon as you retire. You have to go out on the immediate annuity to keep your health insurance also. If going out at 56 you have full access to your TSP also.

So just hope that in the next 15 years the stock market keeps shooting up. Also put some money in a Roth for the the tax free withdrawl advantages.

I just got a video from fedguy07 that showed the options...I also put into a Roth IRA and I buy Muni bonds for quick cash. I'm all over the place with my investments (diversified) and I try and keep costs low. 55 would be a great age to retire.

Thanks everyone! My eyes are open:nuts:

 

[pogo]

You get your FERS annuity however small it is as soon as you retire. You have to go out on the immediate annuity to keep your health insurance also. If going out at 56 you have full access to your TSP also.
could you explain it little futher on the comment you made about taking out the annuity 1) how much 2) are you talking about met life annuity which i really don't want 3) i'm in fers 2/4/84 planning to retire in 2014 will be 57yrs old

 

[Frixxxx]

You get your FERS annuity however small it is as soon as you retire. You have to go out on the immediate annuity to keep your health insurance also. If going out at 56 you have full access to your TSP also.
could you explain it little futher on the comment you made about taking out the annuity 1) how much 2) are you talking about met life annuity which i really don't want 3) i'm in fers 2/4/84 planning to retire in 2014 will be 57yrs old

fedguy07 gave me this site for finding out how to take out money from TSP.

http://csrs-fers.com/TSPmwoVideo.html

 

[SCHAGAN]

fedguy07 gave me this site for finding out how to take out money from TSP.

http://csrs-fers.com/TSPmwoVideo.html

I reviewed it earlier today. Excellent source of information.

 

[gavinman]

could you explain it little futher on the comment you made about taking out the annuity 1) how much 2) are you talking about met life annuity which i really don't want 3) i'm in fers 2/4/84 planning to retire in 2014 will be 57yrs old

I just mean your FERS retirement. You have to go out on an immediate not delayed retirement to keep your health insurance. Here's a quote from a website about delayed FERS annuity. I don't think it applies to too many people.

The Delayed Annuity
FERS employees are eligible to retire at their minimum retirement age (MRA) with as few as 10 years of service. However, unless you have 30 years of service when you reach your MRA, you’ll be hit by that age reduction penalty. The way around the problem is to retire, but delay the receipt of your annuity to a later date. For example, if your MRA was 55 when you retired and you delayed receipt of that annuity until you reached age 62, you would avoid a reduction of 35 percent. While the annuity you’d receive at that time would be exactly the one you would have received 7 years earlier (less the penalty), if you took another job in the interval, delaying receipt of that annuity might make very good financial sense. Also, if you were covered by the FEHB program or FEGLI for at least five years before retiring, you would be able to reenroll in both programs when you activate your annuity.

 

[pogo]

thanks,i got scare there for a second