Withdrawal logic

[prowler]

Hi Tom - Logic escapes me as I try to determine which source from which to make a withdrawal for [annual] supplementary living expenses. I plan to withdraw a maximum of 4%.

One source, namely my TSP "G" fund earned approx 3.75% during year 2008. Another bond fund, completely disassociated with TSP earned approx 7% during year 2008. The higher "earning" fund's value is equal to half the value of the TSP G Fund although its rate of growth is almost twice that of the TSP G Fund.

Which source would be the most advantageous for me to make my withdrawal in order to most protect my overall fixed income savings?

Thanks,
Roger

 

[tsptalk]

Hi Roger -

I'll have to leave that one for the professional financial advisors. Because of my affiliation with this site, I am not qualified to give individual advice, per the SEC.

Sorry. Maybe others can chime in with their opinion.

Welcome to the site!

 

[Scout333]

Hi Tom - Logic escapes me as I try to determine which source from which to make a withdrawal for [annual] supplementary living expenses. I plan to withdraw a maximum of 4%.

One source, namely my TSP "G" fund earned approx 3.75% during year 2008. Another bond fund, completely disassociated with TSP earned approx 7% during year 2008. The higher "earning" fund's value is equal to half the value of the TSP G Fund although its rate of growth is almost twice that of the TSP G Fund.

Which source would be the most advantageous for me to make my withdrawal in order to most protect my overall fixed income savings?

Roger, There are several things to consider. 1. rate of earning 2. taxable vs. tax-free or tax-deferred 3. withdrawals subject to 10 % penalty?
Generally, First thought is to take the money from the lowest earning fund. TSP would be tax-deferred and if eligible for withdrawals probably would not be subject to 10% withdrawal penalty. Second, Other bond fund(non-TSP) is making 7% now but what do you anticipate that it will make in the future?
A lot of these type decisions are made based on what we think the future will hold and none of us know that for sure. One tip, limit your withdrawals to your earnings and conserve your capital, that way you don't outlive your retirement savings. Good luck with your decision!

 

[prowler]

Scout333 - Thanks for your thoughtful reply. Yes, you point out many aspects of fund withdrawals which I'm considering at the present time. In my current situation, it really doesn't matter all that much which way I go, but I usually prefer to make the most efficient choice possible.

Have a great day - and thanks again.

Roger

 

[Scout333]

Prowler, You're very welcome!