VERA retirement, TSP monthly withdrawals

[skysoldier]

Good morning to everyone - I'm obviously new to this forum and new to a sudden VERA retirement. I was approved 2 weeks ago with a retirement date of Sept. 30 2013 so I really didn't have alot of notification; but I've been planning in the event it happened so should be fine.

I'm 55 so it appears I can receive monthly TSP withdrawals without any penalty; however, my intent was only 7 years of withdrawals (annuity supplement for 6 years, then SS at 62) and it appears that TSP will withhold 20% per month for tax purposes since it'll be less than 120 months, or 10 years, of withdrawals. Anyone know of a workaround, or if not, any suggestions? Also, does TSP factor in interest when determining the length of distribution? With 6% interest, I can make a lesser amount last for the 120 month requirement.

Thank you for any information and I'm really glad I found this site!

[TSPKip]

SKY: If you develop a monthly budget including income streams [Open Office has one which I use in a spread sheet format], you will find that married/ Joint returns at 80,000 per year income in the past will require only ~ 10% fed taxes with standard deduction. Some states have no income taxes, and others: none for for federal retirees. Thus your bottom line could be better by ~ 4%. You can reduce your OPM fed pension to ~0% fed tax withholding and increase state tax as necessary to compensate for the TSP/SS lack of state tax withholding. The budget is necessary to calculate taxes and cash flow during low balance months.

Welcome to retirement.

[skysoldier]

Hey T, thanks for the suggestions, especially re: State taxes. I haven't looked into that yet except to the point of knowing that I was able to set up a W-4P for New Mexico. I have created a spreadsheet w/ budgets for different amounts and types of income and taxable income vs. expenses so feel pretty good there. It's really the issue of TSP keeping 20% of the monthly payout if payouts are for less than 120 months. Also whether any interest is taken into consideration re: the total that equates to 120 months of payout. I'll find out soon since I'm 5 days from retirement - very cool and spooky at the same time!!
Thanks again

[TSPKip]

Once you get a comprehensive budget with a 5% contingency fund, then you can do your budget for the next 7 years as I did with a 3% inflation rate each year just by copying the next year totals and then divide by 12 for each row.

I chose to eventually to rent in a nice apartment with 9 foot ceilings after selling my home and closing 1 week before the crash of 9/08. I can move anywhere it is cheaper to live since my grandchildren are all in school. Policemen get discounted apartments and it is very safe with many police cars around. May stay here for some time to come.

[skysoldier]

Good luck my friend. Yeah, I've got a very conservative budget with expenses that should reflect inflation but I would like to account for predicted inflation better. My contingency fund is really too high but better safe than sorry. I've got no kids but did make too many jumps as a paratrooper so my real work potential is a little more limited. But I'm good with all that, just want to be able to use the money I earned in the way that I choose.
Thanks again

[privateer]

Very good discussions, I’m 56 with 31 yrs civil service and look to retire in a couple of yrs, maybe sooner if we keep getting furloughed. I was looking to hold off my TSP withdrawals as long as I could, to continue growing the fund. You both raise some things I had not given much thought to, not being a wiz with spreadsheets, would either of you consider sharing (less private info) your spreadsheet.

Thank you for your knowledge and willingness to support others

[skysoldier]

Sure P, I'll see about trying to send you something. It'll have to be this weekend but I should be able to clean one up. TSPKip gave me an idea on how to account for inflation so I'll include that equation if I can. Good luck my friend

[TSPKip]

I use this Budget speadsheet: http://www.vertex42.com/ExcelTemplates/ ... plate.html

Remember:
include a line for yearly costs that may interupt cash flow that month paid;
include individual lines for income streams such as supplemental annuity, tax return, etc;
calculate tax burden;
and then be sure your budget re-balances.

[skysoldier]

Wow, it's amazing what can be found on the Net! Many thanks, T