Early Retirement

[ajareds92]

I was thinking the other day about what I would do to survive until i could access my TSP and pension if I decided to retire at 50. I max out my TSP and have since I hired in at 23. I am only 25 now but I am wondering if i should be putting part of it somewhere else.

So my questions are as follows:

What is your plan that will allow you to retire at 50?
Do you wish you didnt put so much money in your TSP so you could access it between 50 and 60?
Where would you put your money to live off of from 50 to 60?

Just interested in peoples plans and experiences.

Thanks!

[mjedlin66]

If you fully fund a Roth IRA each year, then you will be able to withdraw the contributions at any time without penalty. You will not be able to withdraw the earnings until 59.5. So that is one option. At 5,500 per year, at age 50 you will have 137,500 worth of withdrawalable contributions at age 50. Plus, those earnings will still be there for you at age 59.5.

The second option is to invest in a taxable account which you can withdraw at any time.

The third important factor is to buy a house with a 15 year mortgage so you will own it outright before age 50. No mortgage payment means a substantially lower cost of living.

Congratulations on starting young. I started fully funding my TSP at age 24 and I have 76k now. Get your IRA going. My IRA has 18k.

I actually plan on retiring at 40. My house will be paid in full when I turn 40. My wife and I both work professional careers and we stash about 60k per year between TSP, 401(k), IRAs, and taxable accounts.

Do you really work in Seattle, or do you secretly work in the little town of Bremerton?

[evilanne]

What is your plan that will allow you to retire at 50?
My original plan was to retire at 56 MRA but agency offered VERA & I retired at 51.

Do you wish you didnt put so much money in your TSP so you could access it between 50 and 60?
No. If you retire on immediate pension*, you can access TSP based on life expectancy payments (also known as IRS 72t or SEPP) at any age but rules are somewhat restrictive. If you retire after age 55 for most or 50 for LEOs you have more flexible withdrawal options. *Not sure if this is an option for postponed or deferred retirement.

Where would you put your money to live off of from 50 to 60?
Agree with MJ on Roth, Taxable Brokerage & House plus some cash in an emergency fund prior to retiring. At your age, for civil service your MRA is 57 so you would need to look at either deferred or postponed retirement options depending on years of service; see https://www.fedsmith.com/2012/06/27/wha ... -deferred/ & https://www.opm.gov/retirement-services ... etirement/.

Medical Coverage is generally the biggest issue for anyone retiring before getting a pension. You may also want to look at HDHP FEHB options and fully fund HSA each year for maximum allowed.

[mjedlin66]

Good tip on the medical coverage. I admit, that is one factor that I have not found an answer to. However, I do fully fund my HSA as evilanne suggested. Your HSA will stay with you for life, even if you get rid of the HDHP or have no insurance at all.

[evilanne]

Matt,

It is never wise to go without medical insurance, particularly if you have any dependents. Children may change your perspective on retirement

[ajareds92]

If you fully fund a Roth IRA each year, then you will be able to withdraw the contributions at any time without penalty. You will not be able to withdraw the earnings until 59.5. So that is one option. At 5,500 per year, at age 50 you will have 137,500 worth of withdrawalable contributions at age 50. Plus, those earnings will still be there for you at age 59.5.

The second option is to invest in a taxable account which you can withdraw at any time.

The third important factor is to buy a house with a 15 year mortgage so you will own it outright before age 50. No mortgage payment means a substantially lower cost of living.

Congratulations on starting young. I started fully funding my TSP at age 24 and I have 76k now. Get your IRA going. My IRA has 18k.

I actually plan on retiring at 40. My house will be paid in full when I turn 40. My wife and I both work professional careers and we stash about 60k per year between TSP, 401(k), IRAs, and taxable accounts.

Do you really work in Seattle, or do you secretly work in the little town of Bremerton?

I might work in a town close to seattle called bremerton. Yokosuka? I have a 15 year mortgage and my wife and I are doubling down on it. Should be paid off in 6 or 7 years. My goal is to have it paid off before we have kids and my wife stops working.

I almost wonder if my wife should not be maxing out her TSP and we should just invest the money after 5% match into a private account.

[mjedlin66]

I work in Okinawa. I have been to Yokosuka and may head there in the future. I used to be 710 at PSNS, and will be again when this tour ends.

Mortgage rates are cheap. From a strictly financial point of view, you would be much better off to not pay extra on the mortgage and invest all that money in TSPs and IRAs. My mortgage is 3.5%, but I have been making over 10% annual in stocks. For the same reason, I have not paid all of our student loans, only the high interest (>5%) loans.

[crondanet5]

I agree with your thinking beyond TSP. Stock investing has its ups and downs. I like to trade a thousand shares a day. Sometimes it works, sometimes I don't sleep in cash. It would be wise to max out your TSP Program and use the investing knowledge available on this web site to really make your TSP a mainstay of your "later years" retirement life. The only person I know who really hit it big with a ROTH was Mitt Romney. And the contribution limit on ROTHs make them challenging to be meaningful. You can open a ROTH, but I would suggest you also open a brokerage account. Invest in growth stocks like Tesla and Amazon. If Apple comes out with something brilliant then that could be an option too. Or you could invest in (yawn) ETFs. Look for growth. Also take a look at Mr Moneymoustache.com to get his take on early retirement and fiscsal management. Work hard on your health status. Beware white sugar and grains for starters. It is not how long you live but how well you are in the time you live and not running out of money that matters.

[fly_caster]

I think I'll retire at 30.

[TSPBuilder]

If you fully fund a Roth IRA each year, then you will be able to withdraw the contributions at any time without penalty. You will not be able to withdraw the earnings until 59.5. So that is one option. At 5,500 per year, at age 50 you will have 137,500 worth of withdrawalable contributions at age 50. Plus, those earnings will still be there for you at age 59.5.

The second option is to invest in a taxable account which you can withdraw at any time.

The third important factor is to buy a house with a 15 year mortgage so you will own it outright before age 50. No mortgage payment means a substantially lower cost of living.

Congratulations on starting young. I started fully funding my TSP at age 24 and I have 76k now. Get your IRA going. My IRA has 18k.

I actually plan on retiring at 40. My house will be paid in full when I turn 40. My wife and I both work professional careers and we stash about 60k per year between TSP, 401(k), IRAs, and taxable accounts.

Do you really work in Seattle, or do you secretly work in the little town of Bremerton?

I might work in a town close to seattle called bremerton. Yokosuka? I have a 15 year mortgage and my wife and I are doubling down on it. Should be paid off in 6 or 7 years. My goal is to have it paid off before we have kids and my wife stops working.

I almost wonder if my wife should not be maxing out her TSP and we should just invest the money after 5% match into a private account.

If I had to do it all over again, I would be doing exactly what you are thinking your wife should do and just invest the money after 5% match into a private account (combination of the ones mjedlin66 mentioned he is putting into, i.e., IRA's and taxable acct's). I can work my money a lot harder outside the TSP and therefore I could have retired a lot earlier. 44 would have been a very doable goal for me given what I've learned the past 17 years if I'd had the investment tools in my early 20's. Good Luck!

[ajareds92]

I think I'll retire at 30.

Would you be willing to elaborate on that a little bit more on how you are going to accomplish that?

[heckrules]

I think I'll retire at 30.

Powerball gives you a 1 in 292 million chance at retiring tonight....

[mjedlin66]

Anyone who bought into Bitcoin in any susbstantial way a year ago may well be on their way to retiring early.

[RollsRoyce]

Matt,

It is never wise to go without medical insurance, particularly if you have any dependents. Children may change your perspective on retirement

Very good advice.

[CODE4]

Nice dream.