TSP Retirement Decision

[hamergast]

Been out of the market for several years and kicking myself daily. 33 years in and planning to call it quits in the near future, somewhat depending on what our "friends" in congress do to our benefits. I have been following the daily seasonal data and I am very impressed which leads me to my question. Do you think it would be a bad idea at this point to get back into the market knowing that once I do retire I will need to draw from my TSP to maintain a decent life style? A GS 12 FERS pension 34 1/2 years including sick time and 600K in TSP.

[mmmmmbeer]

Boy that really is up to you and your risk tolerance.

I can tell you I have 7 years left, and when I retire I will do a monthly draw from TSP as well. I will also keep all my tsp funds doing a seasonal. I mean.. what you gonna do? Put it all in the G fund and get <2% return? Your tsp will be in a constant drawdown.

Keep it in a seasonal and have it keep growing even with a draw.

For instance... the C fund month to date is somewhere around a +2.25% return. 600k in it would have given you somewhere around $13,500 growth for the month. Doubt your draw would even be close to that, so even with your draw, your TSP goes up.

That's my plan anyway. Even when it loses.. it comes back. Look at the seasonal mix return charts brother.

[evilanne]

Even when drawing against TSP, you still want it to continue earning. Ideally, you want to earn more than your withdrawal rate. Typical asset allocation plans would have you at least 40-50% in stock, even in retirement, in order to keep ahead of inflation.
http://money.cnn.com/retirement/guide/i ... index7.htm
Much depends on your risk tolerance but since you have a pension, you should be able to tolerate more risk and the seasonal strategies generally reduce risk by keeping you out of the market a certain percentage of the time.
Another view:
http://www.tspallocation.com/faq/#number4

[hamergast]

Thanks for the reply's. Guess I will need to decide if I should go all in or keep some money in the G fund just to be safe.. 30% G, 70% following daily seasonal... ??

[mmmmmbeer]

Thanks for the reply's. Guess I will need to decide if I should go all in or keep some money in the G fund just to be safe.. 30% G, 70% following daily seasonal... ??

Yup... good questions. Gutcheck time when you get there for sure.

[Aitrus]

You could also follow a monthly seasonal. F all Year, S in December or G all Year, S in December are meant for those in retirement or coming close to it. They are designed to keep funds safe all year, but take advantage of the S Fund's performance at the end of the year to stay well ahead of inflation.

[gary markh]

Your risk tolerance as stated above will determine what you should do. How much loss can you afford and still be able to retire or meat your financial goals.

[crondanet5]

hamergast how close to qualifying for Social Security Benefit are you? The reason I ask is unless the fanatical Republicans succeed at screwing up the Medicare program you have to decide at age 65 whether you take the Medicare benefit. If you don't your health insurance coverage is revoked. If you do take Medicare they will take your monthly premium out of your SS Benefit so you are not bothered by paying the 3 month premium in advance. Also, most important, take your federal health care insurance program into retirement with you. It's cheaper than a private policy and gives you double coverage for co-pays in retirement. This is extremely important.

[ArrieS]

Been out of the market for several years and kicking myself daily. 33 years in and planning to call it quits in the near future, somewhat depending on what are "friends" in congress do to our benefits. I have been following the daily seasonal data and I am very impressed which leads me to my question. Do you think it would be a bad idea at this point to get back into the market knowing that once I do retire I will need to draw from my TSP to maintain a decent life style? A GS 12 FERS pension 34 1/2 years including sick time and 600K in TSP.

How much will you need when you retire?

Do you plan on keeping it in the TSP?

For example, your current amount of 600K will provide you with an annual income of 18K if invested in a dividend ETF that pays 3%. There are preferred stock funds that will pay an average of 5% which would be 30K.

If the current TSP amount will meet your income needs there is little reason to risk your money in the market and instead take the risk free return of the G fund.

Pigs get fat, hogs get slaughtered.

[hamergast]

I'm 58, covered by fed health insurance my entire career. Currently planning to take social security at 62 (could change). I thought Medicare part b was optional at 65 with the understanding there is a penalty if I decide at a later date that the coverage is necessary. No easy decision is there...........

[crondanet5]

Call your federal health program. Ask them if Medicare is optional. Bwahaahaahaa.

[hytid]

I'm 58, covered by fed health insurance my entire career. Currently planning to take social security at 62 (could change). I thought Medicare part b was optional at 65 with the understanding there is a penalty if I decide at a later date that the coverage is necessary. No easy decision is there...........

On deciding when to start receiving Social Security:
1. Do you need the money to survive? If yes, ASAP. If no, possibly still ASAP if you feel you can, through investment, outperform the early retirement penalty over the course of.....
2. How long do you think you'll be alive? Betting on a longer lifespan favors delaying retirement. Unless you feel like you can outperform the guaranteed gains of waiting.
3. How do you like working? You probably won't even be eligible to receive Social Security until your full retirement age if you continue at your GS-12 position. Many people delay retirement because their earnings in later years are sufficient to replace the lowest years used in their benefit calculation, resulting in a higher benefit.

What you've stated is the case with Medicare, and a late sign up will be accompanied by a penalty unless you can establish that you were currently insured through an employer-provided plan, BUT! (full stop)

Many private/non-Medicare plans REQUIRE that you take Medicare once you become eligible. Your policy terms will state that your insurer will only cover what remains after Medicare pays a portion. There are very few reasons why I would recommend against taking Medicare ASAP. You'll be billed quarterly.

I remember speaking to a gentleman who had refused Medicare due to having private insurance, but was not aware of the aforementioned provision. His Leukemia treatments were financially crippling. Be very sure of your decision if you do refuse Medicare.

[crondanet5]

Good point hytid. As for Social Security Benefit, I believe the key is to begin as soon as you can. Say a federal employee retires right at the age they can collect SS Benefit and they apply for it. And say that is age 62. If they live to age 72 they would receive 10 years Benefit. But if they elected to wait until age 70 to receive the SS Benefit they would only receive 2 years of Benefit after paying into the program over 40 years.

I had the opportunity to talk with a person knowledgeable of union retirements and he said the average number of checks a union retiree receives before dying is 13. Union retirement programs are always happy when a fellow member retires.

The point I am trying to make is the sooner you go on Social Security the greater the money received in retirement for at least 10 years and that might be all there is.

[sunny]

I will have 14 years at sage 62 in 2019, will I still have my small pension with this new bill?

[crondanet5]

If you don't the Republicans will be swept from office.