Pensions and taxes
- Thread starter grampi
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Originally Posted By: NormanBuntz
Grampi, you don't state your age. If you will be 59.5 years or older when you retire, there's no worries. Figure out your monthly withdrawal amount, and that annual total will count as regular income. At age 70.5 years, the IRS will require you to withdraw a minimum required distribution each year, as set by IRS based on life expectancy.
You must be a FERS employee. I am a CSRS/FERS retiree, having worked 21 years under CSRS and 8 years under FERS. What worked for me was doing a direct transfer from TSP to a brokerage account. That way you have more flexibility, more choices (many of them no cost) and you can use an advisor at that firm or continue to use your own.
One mistake retirees make is underestimating the cost of health care in retirement. Even with your Federal group health insurance, instead of an average COLA of 1-3%, you should figure an 8-10% annual inflation rate for health care expenses.
Good luck with your retirement.
My healthcare costs will be minimal as I am retired military...
Grampi, you don't state your age. If you will be 59.5 years or older when you retire, there's no worries. Figure out your monthly withdrawal amount, and that annual total will count as regular income. At age 70.5 years, the IRS will require you to withdraw a minimum required distribution each year, as set by IRS based on life expectancy.
You must be a FERS employee. I am a CSRS/FERS retiree, having worked 21 years under CSRS and 8 years under FERS. What worked for me was doing a direct transfer from TSP to a brokerage account. That way you have more flexibility, more choices (many of them no cost) and you can use an advisor at that firm or continue to use your own.
One mistake retirees make is underestimating the cost of health care in retirement. Even with your Federal group health insurance, instead of an average COLA of 1-3%, you should figure an 8-10% annual inflation rate for health care expenses.
Good luck with your retirement.
My healthcare costs will be minimal as I am retired military...
Originally Posted By: grampi
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
My FIL just retired and retired with a mortgage. It happens. If you didn't have a mortgage you would have rent what's the difference? As long as you can pay who cares?
Sure the goal might to be not to have one but it's not devastating or anything.
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
My FIL just retired and retired with a mortgage. It happens. If you didn't have a mortgage you would have rent what's the difference? As long as you can pay who cares?
Sure the goal might to be not to have one but it's not devastating or anything.
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Originally Posted By: grampi
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
That's your second mistake you can down size you didn't plan well enough is my thought.
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
That's your second mistake you can down size you didn't plan well enough is my thought.
Originally Posted By: JohnnyJohnson
Originally Posted By: grampi
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
That's your second mistake you can down size you didn't plan well enough is my thought.
Are you here to help, or just criticize?
Originally Posted By: grampi
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
That's your second mistake you can down size you didn't plan well enough is my thought.
Are you here to help, or just criticize?
Originally Posted By: NormanBuntz
Originally Posted By: grampi
Originally Posted By: NormanBuntz
Grampi, you don't state your age. If you will be 59.5 years or older when you retire, there's no worries. Figure out your monthly withdrawal amount, and that annual total will count as regular income. At age 70.5 years, the IRS will require you to withdraw a minimum required distribution each year, as set by IRS based on life expectancy.
You must be a FERS employee. I am a CSRS/FERS retiree, having worked 21 years under CSRS and 8 years under FERS. What worked for me was doing a direct transfer from TSP to a brokerage account. That way you have more flexibility, more choices (many of them no cost) and you can use an advisor at that firm or continue to use your own.
Good luck with your retirement.
I think the RMD requirement at age 70.5 only applies if you're not taking a monthly distribution, which I plan on doing. And yes, I am FERS, and I will be 62 when I retire...
The RMD applies to everyone. When you approach age 70.5, your plan will notify you what that RMD amount is for that tax year. If your regular withdrawals are too low, you'll have to increase them. Also, there are many opinions on paying off a mortgage early. I have 9 years left on a 15 year loan at 2.75%. I'm happy to make that payment every month at that low rate.
I just called TSP again and you are right, the RMD still applies even if I'm already taking a monthly distribution, however, my monthly distribution counts towards my RMD and will likely be enough to cover the RMD...
Originally Posted By: grampi
Originally Posted By: NormanBuntz
Grampi, you don't state your age. If you will be 59.5 years or older when you retire, there's no worries. Figure out your monthly withdrawal amount, and that annual total will count as regular income. At age 70.5 years, the IRS will require you to withdraw a minimum required distribution each year, as set by IRS based on life expectancy.
You must be a FERS employee. I am a CSRS/FERS retiree, having worked 21 years under CSRS and 8 years under FERS. What worked for me was doing a direct transfer from TSP to a brokerage account. That way you have more flexibility, more choices (many of them no cost) and you can use an advisor at that firm or continue to use your own.
Good luck with your retirement.
I think the RMD requirement at age 70.5 only applies if you're not taking a monthly distribution, which I plan on doing. And yes, I am FERS, and I will be 62 when I retire...
The RMD applies to everyone. When you approach age 70.5, your plan will notify you what that RMD amount is for that tax year. If your regular withdrawals are too low, you'll have to increase them. Also, there are many opinions on paying off a mortgage early. I have 9 years left on a 15 year loan at 2.75%. I'm happy to make that payment every month at that low rate.
I just called TSP again and you are right, the RMD still applies even if I'm already taking a monthly distribution, however, my monthly distribution counts towards my RMD and will likely be enough to cover the RMD...
Grampi, I would ask the TSP "experts" what happens with the RMD calculation if you start a monthly withdrawal at the time of retirement, then want to stop or change the amount later. I like the idea of having flexibility, rather than being locked into a fixed monthly amount. Beware of the TSP annuity option. Most annuities are a bad option for most knowledgeable and self-guided people.
Originally Posted By: grampi
Originally Posted By: JohnnyJohnson
Originally Posted By: grampi
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
That's your second mistake you can down size you didn't plan well enough is my thought.
Are you here to help, or just criticize?
Retired at 62 finally forced to take a distribution from my 401K at 70.5 I banked it now tell us how you're doing!
The secret is being debt free I've been that way since 1992.
Originally Posted By: JohnnyJohnson
Originally Posted By: grampi
Originally Posted By: JohnnyJohnson
Big mistake your mortgage should be paid off when you retire as well as all those fancy toys!
Oh well...everything will be paid off except for the mortgage...not much I can do about the mortgage...
That's your second mistake you can down size you didn't plan well enough is my thought.
Are you here to help, or just criticize?
Retired at 62 finally forced to take a distribution from my 401K at 70.5 I banked it now tell us how you're doing!
The secret is being debt free I've been that way since 1992.
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Originally Posted By: NormanBuntz
Grampi, I would ask the TSP "experts" what happens with the RMD calculation if you start a monthly withdrawal at the time of retirement, then want to stop or change the amount later. I like the idea of having flexibility, rather than being locked into a fixed monthly amount. Beware of the TSP annuity option. Most annuities are a bad option for most knowledgeable and self-guided people.
I did, and the answer is it can be changed or stopped once a year...and I wouldn't do an annuity with my TSP, the only way to make out on that deal is to live to 100...
Grampi, I would ask the TSP "experts" what happens with the RMD calculation if you start a monthly withdrawal at the time of retirement, then want to stop or change the amount later. I like the idea of having flexibility, rather than being locked into a fixed monthly amount. Beware of the TSP annuity option. Most annuities are a bad option for most knowledgeable and self-guided people.
I did, and the answer is it can be changed or stopped once a year...and I wouldn't do an annuity with my TSP, the only way to make out on that deal is to live to 100...
Originally Posted By: JohnnyJohnson
Retired at 62 finally forced to take a distribution from my 401K at 70.5 I banked it now tell us how you're doing!
The secret is being debt free I've been that way since 1992.
I will be debt free at retirement except for my mortgage, and my TSP will be used to pay that off...I don't need my TSP for income...
Retired at 62 finally forced to take a distribution from my 401K at 70.5 I banked it now tell us how you're doing!
The secret is being debt free I've been that way since 1992.
I will be debt free at retirement except for my mortgage, and my TSP will be used to pay that off...I don't need my TSP for income...
We take distributions on our IRAs and a variable annuity so that our entire SS is tax free. Wind up owing IRS about $450.00.Not taking cruises or tours but not deprived of anything. Worked for us for twenty years.
Originally Posted By: HosteenJorje
We take distributions on our IRAs and a variable annuity so that our entire SS is tax free. Wind up owing IRS about $450.00.Not taking cruises or tours but not deprived of anything. Worked for us for twenty years.
What determines if your SS is taxable or not?
We take distributions on our IRAs and a variable annuity so that our entire SS is tax free. Wind up owing IRS about $450.00.Not taking cruises or tours but not deprived of anything. Worked for us for twenty years.
What determines if your SS is taxable or not?
Personally I would consider a mortgage and retirement to be mutually exclusive.
Originally Posted By: grampi
Originally Posted By: HosteenJorje
We take distributions on our IRAs and a variable annuity so that our entire SS is tax free. Wind up owing IRS about $450.00.Not taking cruises or tours but not deprived of anything. Worked for us for twenty years.
What determines if your SS is taxable or not?
Income amount and the filing status.
Originally Posted By: HosteenJorje
We take distributions on our IRAs and a variable annuity so that our entire SS is tax free. Wind up owing IRS about $450.00.Not taking cruises or tours but not deprived of anything. Worked for us for twenty years.
What determines if your SS is taxable or not?
Income amount and the filing status.
Originally Posted By: grampi
Originally Posted By: HosteenJorje
We take distributions on our IRAs and a variable annuity so that our entire SS is tax free. Wind up owing IRS about $450.00.Not taking cruises or tours but not deprived of anything. Worked for us for twenty years.
What determines if your SS is taxable or not?
Total annual income. I use Tax Act the software does the computation. Before using online software, the instruction for form 1040 provided a formula. Actually, we did pay tax on a portion of our SS income in 2016. I suppose I could get closer to paying no tax but the effort isn't worth it for me.
Originally Posted By: HosteenJorje
We take distributions on our IRAs and a variable annuity so that our entire SS is tax free. Wind up owing IRS about $450.00.Not taking cruises or tours but not deprived of anything. Worked for us for twenty years.
What determines if your SS is taxable or not?
Total annual income. I use Tax Act the software does the computation. Before using online software, the instruction for form 1040 provided a formula. Actually, we did pay tax on a portion of our SS income in 2016. I suppose I could get closer to paying no tax but the effort isn't worth it for me.
I don't think he means first retirement. Or second. I think he means real final retirement.
Originally Posted By: ArrestMeRedZ
I don't think he means first retirement. Or second. I think he means real final retirement.
That's what I see as well.
MANY MANY MANY kids of baby boomers are getting in their 50's and will be nearly broke by retirement age.
If the RMD is greater than monthly expenses... can the remainder go into a ROTH?
I don't think he means first retirement. Or second. I think he means real final retirement.
That's what I see as well.
MANY MANY MANY kids of baby boomers are getting in their 50's and will be nearly broke by retirement age.
If the RMD is greater than monthly expenses... can the remainder go into a ROTH?
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