Retirement (FAQ)

I started in 1987 at age 24, so that was in my favor. I invested the max to TSP from day one and that's a big factor too. After 30 years of service, I could take 44% with the COLA and SS supplement or 51% and neither for 8 years. Staying 2 more years to MRA +30 would've been 54.5% of my high three or 46% standard. It all comes down to how long do you want to work for the possibility of breaking even? A lot depends on your TSP and other obligations obviously. I was so tired of the FAA that I was willing to take the risk of maybe losing 40 bucks a month. It's actually worked out well, the FERS COLA has added 4.3% to my pension so far and I still have 5 years to reach age 62. Moved my TSP to an IRA and still haven't touched it. My life and health are so much better, it should be a no brainer! One good piece of advice is to get in touch with a financial advisor when you are about 7-10 years from your target date, especially one that is trained for federal retirement. Don't let this job and agency drive you to an early grave, you've earned the early go...take advantage of it!
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The differences from standard retirement are as follows:


  • 1.7% for every year
  • No social security supplemental pay
  • No cost of living adjustments until age 62
I left after 30 years at age 54 and would've had to stay another 2 years to get the MRA +30.. The social security supplement is worth about an extra $1200 a month to me. Losing the COLA for 8 years can be a crapshoot, so I had my financial advisor take a look at it. His advice was to take the standard retirement. Been retired for three years now, best decision of my life!
Yes you do get the social security supplement also read your other post check before you move your tsp to an ira on your state laws. In ny you do not pay state income tax on tsp withdrawals if you move it to an ira you will pay state income tax when you withdraw
 
I started in 1987 at age 24, so that was in my favor. I invested the max to TSP from day one and that's a big factor too. After 30 years of service, I could take 44% with the COLA and SS supplement or 51% and neither for 8 years. Staying 2 more years to MRA +30 would've been 54.5% of my high three or 46% standard. It all comes down to how long do you want to work for the possibility of breaking even? A lot depends on your TSP and other obligations obviously. I was so tired of the FAA that I was willing to take the risk of maybe losing 40 bucks a month. It's actually worked out well, the FERS COLA has added 4.3% to my pension so far and I still have 5 years to reach age 62. Moved my TSP to an IRA and still haven't touched it. My life and health are so much better, it should be a no brainer! One good piece of advice is to get in touch with a financial advisor when you are about 7-10 years from your target date, especially one that is trained for federal retirement. Don't let this job and agency drive you to an early grave, you've earned the early go...take advantage of it!
Is there any benefit to adding more to TSP above the employer-match? Seems like it would be better put in the stock market long term if you are able to better manage your portfolio.
 
Is there any benefit to adding more to TSP above the employer-match? Seems like it would be better put in the stock market long term if you are able to better manage your portfolio.

The TSP is tax-advantaged to $19.5k, an IRA (Traditional or Roth) is tax-advantaged only to $6k, a standard brokerage account isn't tax-advantaged at all. The hell kind of question is this? You don't want to be playing the stock market with your retirement account anyway, you want index funds. The TSP has large-cap, small-cap, and international index funds at rock bottom expense ratios.
 
The TSP is tax-advantaged to $19.5k, an IRA (Traditional or Roth) is tax-advantaged only to $6k, a standard brokerage account isn't tax-advantaged at all. The hell kind of question is this? You don't want to be playing the stock market with your retirement account anyway, you want index funds. The TSP has large-cap, small-cap, and international index funds at rock bottom expense ratios.
I think you misunderstand my question- I get that the TSP is tax advantaged but is there a point to adding more than $19.5K afterwards?
There are opportunities that have more value now than 25 years in the future.

"You don't want to be playing the stock market with your retirement account anyway, you want index funds."
You realize that the index funds track the stock market right...? I'm not saying that I'm going to get into options/penny stocks/Chinese stocks but weighting your portfolio towards risk is better when you're younger, you diversify when you're older for safety and you establish a nest egg.
 
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I think you misunderstand my question- I get that the TSP is tax advantaged but is there a point to adding more than $19.5K afterwards?
There are opportunities that have more value now than 25 years in the future.

"You don't want to be playing the stock market with your retirement account anyway, you want index funds."
You realize that the index funds track the stock market right...? I'm not saying that I'm going to get into options/penny stocks/Chinese stocks but weighting your portfolio towards risk is better when you're younger, you diversify when you're older for safety and you establish a nest egg.

Really not sure what your question is here. There's no point in contributing more than $19.5k because that's the yearly maximum (for 2020; it goes up)—you aren't allowed to contribute more. You can choose to contribute Roth or Traditional.

Obviously index funds track the stock market but you're not playing individual stocks, that's what I meant. Do you know about the "lazy three-fund portfolio"? (For TSP you need four because you need the C and S to get the whole US market.) I'm young so I don't have anything in bonds at all, right now my contribution is split 67% C, 13% S, 20% I. That's weighing my portfolio more towards risk without doing something silly like buying individual stocks. You don't need to stay in the default lifecycle fund.

If you want to make the argument that there are more immediate concerns (paying off credit card debt or saving for a mortgage down payment) then sure. Or if you are concerned about retiring early so you're setting something to draw on before you can take TSP withdrawals. But I don't know why you would generally prefer to put retirement money in a brokerage account before maxing the TSP.
 
I think you misunderstand my question- I get that the TSP is tax advantaged but is there a point to adding more than $19.5K afterwards?
There are opportunities that have more value now than 25 years in the future.

"You don't want to be playing the stock market with your retirement account anyway, you want index funds."
You realize that the index funds track the stock market right...? I'm not saying that I'm going to get into options/penny stocks/Chinese stocks but weighting your portfolio towards risk is better when you're younger, you diversify when you're older for safety and you establish a nest egg.

If that's what you meant, your question wasn't misunderstood it was asked wrong. You asked about matching, which is only up to 5%. The maximum you can contribute in a year is 19.5k, you literally can't do more unless you're near retirement and in the catch up years.
 
Really not sure what your question is here. There's no point in contributing more than $19.5k because that's the yearly maximum (for 2020; it goes up)—you aren't allowed to contribute more. You can choose to contribute Roth or Traditional.

Obviously index funds track the stock market but you're not playing individual stocks, that's what I meant. Do you know about the "lazy three-fund portfolio"? (For TSP you need four because you need the C and S to get the whole US market.) I'm young so I don't have anything in bonds at all, right now my contribution is split 67% C, 13% S, 20% I. That's weighing my portfolio more towards risk without doing something silly like buying individual stocks. You don't need to stay in the default lifecycle fund.

If you want to make the argument that there are more immediate concerns (paying off credit card debt or saving for a mortgage down payment) then sure. Or if you are concerned about retiring early so you're setting something to draw on before you can take TSP withdrawals. But I don't know why you would generally prefer to put retirement money in a brokerage account before maxing the TSP.

Mortgage down payment can still be a good idea to put into TSP to accrue money and FAA match. Getting a TSP residential loan is at a rock bottom interest rate and you are just paying yourself back.
 
Mortgage down payment can still be a good idea to put into TSP to accrue money and FAA match. Getting a TSP residential loan is at a rock bottom interest rate and you are just paying yourself back.
Yeah but you're missing out on the stock market gains while you're paying yourself back over 15 years. I wouldnt take out a TSP loan unless thats your only option.
 
Yeah but you're missing out on the stock market gains while you're paying yourself back over 15 years. I wouldnt take out a TSP loan unless thats your only option.

Sure, you also have to consider house values going up, you building equity vs paying a slumlord, and how quickly you plan on paying the loan back.
 
Really not sure what your question is here. There's no point in contributing more than $19.5k because that's the yearly maximum (for 2020; it goes up)—you aren't allowed to contribute more. You can choose to contribute Roth or Traditional.

Obviously index funds track the stock market but you're not playing individual stocks, that's what I meant. Do you know about the "lazy three-fund portfolio"? (For TSP you need four because you need the C and S to get the whole US market.) I'm young so I don't have anything in bonds at all, right now my contribution is split 67% C, 13% S, 20% I. That's weighing my portfolio more towards risk without doing something silly like buying individual stocks. You don't need to stay in the default lifecycle fund.

If you want to make the argument that there are more immediate concerns (paying off credit card debt or saving for a mortgage down payment) then sure. Or if you are concerned about retiring early so you're setting something to draw on before you can take TSP withdrawals. But I don't know why you would generally prefer to put retirement money in a brokerage account before maxing the TSP.


Got it, didn't know that you couldn't contribute more than 19.5K. Makes more sense thanks.
 
You guys seem to have a very good idea of how to get the best retirement for yourselves! When I started, I had very little knowledge and there was not much to be found with no internet. The first week at my new facility, the ATM's advice was to put as much as I could in the TSP, set it and forget it. His other piece of gold was to save your sick leave when you're young because you're going to need it later. Truth!!! I was able to use a lot my last few years to take care of my parents who were starting to have some health problems. That time is something that 40 cents on the dollar can't bring back.

Concerning moving your TSP to an IRA, because of your status as an ATC you can move you funds without tax or penalty as long as your are 50 years of age or older. I was kind of worried about having access to funds if an emergency situation arose. My financial advisor had a really great idea, so we moved all of my TSP with the exception of 100K. He set it up so that money would be disbursed to me in equal payments until I reached age 59 1/2 ( when you lose the 10% penalty for early withdrawal ) and that goes into a separate account for emergency use. You are taxed on that, but it's a cash reserve that's earning interest, readily available and you remain in a lower tax bracket.

All in all, find a good financial advisor and skip the FAA retirement seminars, they're not very helpful IMO. Set a good date that works for you and your family and execute a good plan! It's an amazing life after work, even with the COVID!
 
Does anyone know how taking a full year off for maternity/paternity leave affects retirement calculation? Or even partial leave, 6 months, 3 months, etc?
 
Does anyone know how taking a full year off for maternity/paternity leave affects retirement calculation? Or even partial leave, 6 months, 3 months, etc?
Or seniority? Or leave bracket timing (4-6-8 hour per pay period)?
 
Does anyone know how taking a full year off for maternity/paternity leave affects retirement calculation? Or even partial leave, 6 months, 3 months, etc?
I don’t believe taking any extended leave impacts the calculation whatsoever. The only grey area I’m aware of is whether you’re in a pay or a non-pay status. So taking a year of LWOP under FMLA (I know a few who have done this) will stop your health insurance, leave accrual, etc. I am not certain if it impacts the retirement calculation, but when you are on paid leave you are still working as a 2152.
 
Have to be more specific. Are you taking LWOP?

I don’t believe taking any extended leave impacts the calculation whatsoever. The only grey area I’m aware of is whether you’re in a pay or a non-pay status. So taking a year of LWOP under FMLA (I know a few who have done this) will stop your health insurance, leave accrual, etc. I am not certain if it impacts the retirement calculation, but when you are on paid leave you are still working as a 2152.
I was told to take 8 hours of paid leave a PP to remain in a paid status the whole year. So I took 8 hours of leave a PP, and the other 72 hours/PP were LWOP.
So I retained my paid status and continued to accrue leave, but yes, I also took a lot of LWOP.
 
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I was told to take 8 hours of paid leave a PP to remain in a paid status the whole year. So I took 8 hours of leave a PP, and the other 72 hours/PP were LWOP.
So I retained my paid status and continued to accrue leave, but yes, I also took a lot of LWOP.
Whoever told you that is correct, here’s the OPM fact sheet that lays it all out but it only differentiates between pay status (which you are in) and non-pay status (which impacts your retirement, leave, etc.)

 
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