What would you do

[Texarkandy]

I am a relative newbie to TSPTalk Forums and would like to hear the expert (or non-expert ) opinions/advice of any of you veteran TSP traders who would like to mentally put themselves into my shoes for a moment.

I am getting ready to retire next year at 49.5 y/o with 25 years law-enforcement 6C FERS Service and trying to get things sorted out. I have a fair-sized TSP account (though not as large as I would like it to be - but oh, well - it's not gonna stop me from going next year.)

I'm scheming now on exercising the option of "substantially equal monthly payments based upon life expectancy"
(I'd like to just leave it all in TSP & let it continue to grow till, 59.5 - but it's looking like I'm going to need that extra little bit of my "3 legged stool" each month between 49.5 & 59.5 - I figure if any of it turns out to be more than I need I'll roll it back into IRA's)

I've always been mostly 75 to 100% C fund & rarely move money around - once or twice a year at most - I'm not a very active trader & tend to be a bit "risk averse"

Near the end of April 2007 I moved to 100% G when I got scared over the sub-prime thing & have been there since.

I know however that staying 100% G is not going to do my TSP balance very much good over the long-haul when I start taking those "substantially equal" payments next year.

I am thinking to move it all into one of the L funds (L2020 maybe) when I feel the market is done bottoming this year -

QUESTION IS: Is this where you would go this year with my account given my life situation as described above?

Thanks in advance for any responses.

 

[GGal]

Andy, I don't think anyone here would venture to answer your question about which fund to put your money in, especially in light of the current volatility.....

I can only tell you that at 49, I wouldn't dream of retiring if I needed to draw from my TSP to do it.

If I were being forced to retire because of mandatory rules, I would be looking for a second career.

You know, 70 is the new 50.

GGAL

 

[Texarkandy]

Andy, I don't think anyone here would venture to answer your question about which fund to put your money in, especially in light of the current volatility.....

GGAL

Thanks GGal - but I'll clarify - I'm not so much looking for advice related to the direction of markets given the "current volatility" - I'm studying that very closely myself (as is everyone)

I guess what I'm looking for is a recommendation on which L Fund, or combination of other funds might be advisable considering my time-frames & my 4% "life expectancy" withdrawals (which by the way finishes paying off my house for me in 4 years at about the same time my one child starts college).

As to timing of exactly "when" to make my move back out of the G - I, of course, realize that everyone is pretty much on their own figuring that one out.

For example - it has occurred to me to dropping it all into the L2020 & just leave it till I'm 60 (making my 4% "life expectancy" withdrawal of course)

(as to your suggestion re: deferring retirement - that decision is done made, I'm gone April 09 barring any major world economic catastrophe!)

 

[Show-me]

I'm reading it, but I'm not touching it. I am NOT a financial adviser. My only advise is to get the match and max the Roth. And, the 5 G's! God, Guns, Groceries, Gas, and Gold.

 

[Texarkandy]

Seems nobody's willing to stick their neck out on this particular thread - Must be quite a "risk averse" bunch on this site (like me). :laugh:

 

[tsptalk]

You should always keep something in the stock funds. If you made it to 50 y/o, chances are good you'll live to 70+. Your money must continue to grow.

 

[Texarkandy]

................ I can only tell you that at 49, I wouldn't dream of retiring if I needed to draw from my TSP to do it. .............

GGAL

You haven't spent 25 years in my job

 

[Tempest]

Unless you have to retire why would you? You'll take a life-style hit.
FWIW.

 

[GGal]

You haven't spent 25 years in my job

LOL, and how true!

I can relate. I spent 20 years picking up ex # 2's dirty socks ALL OVER THE HOUSE. thank goodness # 3 picks up his own, cause I'm just getting too old for that.

GGAL

 

[Texarkandy]

Unless you have to retire why would you? You'll take a life-style hit.
FWIW.

Why would I? Well, life isn't all about work & making money - been there done that. Besides 25 years of my life spent in this particular field of endeavor is enough!! (Not too mention the 4 years military I gave Uncle Sam in addition)

No, I don't have to retire - but considering my mother died at 60 & my father at 67, I can't see continuing on doing something I am thoroughly burned out on for 3 or 8 more years - when I can go at a guaranteed FERS+SRS of 60K w/Colas now (+ 400K in my TSP & 200K home equity).

I may take a little bit of a lifestyle hit financially, but I am anticipating a lifestyle boost in other areas of my life.

I am just weighing the thought of taking the "equal monthly payments" in my 50's for helping the kid (one) through college, extended family vacations, making up for some missed fishing holes, etc - when I can probably enjoy the income more than I will in my 70's & 80's (if I make it that long)

We can be fine without the "equal monthly payments" also - provided we work a little - & I intend to, just don't know at what yet - it's kind of exciting to me to think of the possibilities

(DW stayed home for 15 years & is just now back in the workforce & makes enough now to make up the difference - I just don't want her to be "trapped" into "having" to work)

I am considering a move to L2020 - still watching the markets/econom & trying to determine when.

I'm just not sure L2020 is the right place to park my TSP considering my plan.

Question - can I park the TSP money at retirement & take up the "substantially equal monthly payments" a year, or two, or three later if I find I need it? Or does the decision have to be made at retirement?

 

[clester]

You don't have to start tsp payment until you want to, but then your stuck with you decision until 59.5 or for 5 years. I'm in a similar position, but planning a second career. If you'll have enough, I'd take the TSP's version of life expectancy payments, which is basically minimum distribution. It starts low but will increase yearly and you'll never run out. Then at 59.5 change to monthly payments. I'd also play it safe with a bunch in G fund. At least until we have an all clear sign.

 

[Texarkandy]

You don't have to start tsp payment until you want to, but then your stuck with you decision until 59.5 or for 5 years. I'm in a similar position, but planning a second career. If you'll have enough, I'd take the TSP's version of life expectancy payments, which is basically minimum distribution. It starts low but will increase yearly and you'll never run out. Then at 59.5 change to monthly payments. I'd also play it safe with a bunch in G fund. At least until we have an all clear sign.

Thanks Clester - so I understand from your post that I can wait till I'm 50, 51, 52, whatever & if I decide then that I need it I can tell TSP I want the "substantially equal monthly payments"? Don't have to make that decision right away - (I know about the "have to do it till 59.5" part)

I figure if I start taking the payments at some point in my early 50's - then decide I don't need all or part of it any particular year, I can always stash it an IRA or Roth.

I've considered also hanging in the G Fund for a time yet - just hate to miss the earnings if things look like they're gonna come back up & stay up there for a while - that's a judgement call we've all got to make on our own though. I have a feeling the markets may stay quite unsettled till after the Pres election.

Hope you've got your 2nd career picked out - cause I haven't got a clue!!! - sell used cars maybe