Retire at MRA?

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claytonr1
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Re: Retire at MRA?

Post by claytonr1 »

As CSRS, I retired on my 55th birthday (first day eligible) and never looked back. Been retired for 2 years now and loving every minute. After 36 years it was time for a new chapter in life. The stress, office politics and reorgs take a toll. It took me months to get over the Sunday night jitters, thinking about what problems would come my way on Monday morning. People say I look too young to be retired and should be working someplace. I say I'm very lucky to be retired and not bored one bit. It's really nice to be able to focus on your health and well being and especially to do whatever you want, whenever you want! Retirement is FREEDOM.

mmmmmbeer
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Re: Retire at MRA?

Post by mmmmmbeer »

claytonr1 wrote:It's really nice to be able to focus on your health and well being and especially to do whatever you want, whenever you want! Retirement is FREEDOM.



Hey congrats on this! Your answer quoted is exactly what I want. I lift weights 3-5x a week, but work/life gets in the way alot and I find myself struggling a lot of weeks to get that in. Much less bike rides, hiking, etc. I want to retire younger and mobile... and really work to maintain that mobility and youthfulness.

I see my parents in their 60's really broken down. I don't want to be stoved up or not physically fit enough to travel and hike around all the sites.
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mjedlin66
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Re: Retire at MRA?

Post by mjedlin66 »

If I understand correctly, the three biggest differences between a full MRA retirement and a deferred retirement are:

1. No FEHB for deferred retirement.
2. Annuity starts earlier with MRA retirement, and with no age penalty. The no penalty age for deferred retirement is 62.
3. By working to MRA, you will have worked more years so the FERS annuity will be much bigger.

If that is the case, then I am even more likely to retire at 40. I thought I would have to give up my pension completely to retire early. A partial pension starting at age 62 makes it so that all I have to do is-

A) Fund my lifestyle fully from taxable accounts until age 62.
B) Figure out health insurance.
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mmmmmbeer
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Re: Retire at MRA?

Post by mmmmmbeer »

mjedlin66 wrote:If I understand correctly, the three biggest differences between a full MRA retirement and a deferred retirement are:

1. No FEHB for deferred retirement.
2. Annuity starts earlier with MRA retirement, and with no age penalty. The no penalty age for deferred retirement is 62.
3. By working to MRA, you will have worked more years so the FERS annuity will be much bigger.

If that is the case, then I am even more likely to retire at 40. I thought I would have to give up my pension completely to retire early. A partial pension starting at age 62 makes it so that all I have to do is-

A) Fund my lifestyle fully from taxable accounts until age 62.
B) Figure out health insurance.



Dude the health insurance part is hooooge. Be careful.
Those who 'abjure' violence can do so only because others are committing violence on their behalf.

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evilanne
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Re: Retire at MRA?

Post by evilanne »

Congrats claytonr1 & welcome to the forum.

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akpackfan
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Re: Retire at MRA?

Post by akpackfan »

I appreciate everyone's comments. I forgot to add that I am willing to alter my lifestyle to "make the budget" every month. I really don't think I'll have to alter it a whole lot. Well, 6.5 years to go till I'm eligible. I'll be thinking about it and crunching the numbers a lot as my wife rolls her eyes....

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evilanne
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Re: Retire at MRA?

Post by evilanne »

mjedlin66,

I agree with mmmmbeer on FEHB. One of the biggest issue on early retirement forum for young to pre-medicare retirees is health care. If you can make enough money by then to afford it, more power to you. With the government and potential future downsizing, reducing your hours or working part time may also be an option.

Some career fields like Air Traffic Controllers & Law Enforcement have earlier retirement but it is 10 years past what you want to do. Would you even consider changing careers?

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evilanne
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Re: Retire at MRA?

Post by evilanne »

akpackfan wrote:I appreciate everyone's comments. I forgot to add that I am willing to alter my lifestyle to "make the budget" every month. I really don't think I'll have to alter it a whole lot. Well, 6.5 years to go till I'm eligible. I'll be thinking about it and crunching the numbers a lot as my wife rolls her eyes....

Seems to me that you may have to convince your wife... is she is willing to let you retire early? :mrgreen: Spouse has to sign off on the retirement papers and your benefit choices.

Getting the house paid off is a big plus. It also puts you in position to take advantage of VERA if offered by your agency.

sergio
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Re: Retire at MRA?

Post by sergio »

Recent MRA Retiree here...

I only check here to read and don't actively participate in Fantasy TSP.

During Feb, 2017, I retired at 56, with 4 (AD) + 30 Civil Service for 34 years total. My pension based on 12 step 10, turned out to be 2600. My supplement is 1300 after taxes and healthcare is paid I net 3400 / mo. Divorced no kids.

Mortgage is 1400 and 300 car loan that I could pay off tomorrow if I wanted to. No credit cards! Yes, less driving, gas, wear, eating out savings realized. I'l not a penny pincher and I'm making it. Lots of part-time work if and when I want to take it. Currently upgrading my house with my time, my dime and will sell and move to a state that does not tax federal pensions. For me, just over the border to NC. Tax penalty if I make over 16K income (on top of pension & supplement) / yr is 50%/$1.00. SS Office will tax your Supplement 50% on a dollar if you go over $16K on top of your retirement. At 65 or 66 for me, it's game on and you're taxed at income scale whatever...

Consider this... I'm getting 80% of my age 62, SS. That's seven years! I haven't figured out the break even point, but i'm sure it's late 60's early 70's? - Meaning if I wait, for full SS retirement at 67? That larger amount collected later, doesn't break even with the guy that took it at 62! Later, when I take my age 62 monthly check, that will increase 400/mo. Therefore, collecting that for a number years plus my supplement years, I'm pushing that break-even point well into my 70's!

As the instructor said in a retirement class... "How many of you in this room, will be alive and kicking well into your 70's?" No one raised their hand!

TSP: I admit to borrowing on it for risky business loans in the past, but I paid it all back before I retired and won't have to touch it until 70.5 to begin making withdraws. I did check on an annuity on my balance, and turned out to be about 1K / mo. if I wanted it. My TSP strategy now is the seasonal one. I was cautious at first, but now feel confident that I can be a little more aggressive. I should do a LC 2030 (set it and forget it) or something but it's fun to look at account activity and see a raise for that month. Sometimes it's flat, but hasn't been that way for too long in recent memory.

Summary, If you can retire at your MRA, than why not? Live life on your terms, you'll still be young enough to enjoy it!

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Aitrus
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Re: Retire at MRA?

Post by Aitrus »

mjedlin66 wrote:If I understand correctly, the three biggest differences between a full MRA retirement and a deferred retirement are:

1. No FEHB for deferred retirement.
2. Annuity starts earlier with MRA retirement, and with no age penalty. The no penalty age for deferred retirement is 62.
3. By working to MRA, you will have worked more years so the FERS annuity will be much bigger.

If that is the case, then I am even more likely to retire at 40. I thought I would have to give up my pension completely to retire early. A partial pension starting at age 62 makes it so that all I have to do is-

A) Fund my lifestyle fully from taxable accounts until age 62.
B) Figure out health insurance.


What about doing a phased or partial retirement? I haven't read up on them much so I don't know how FEHB and the pension work in such situations.
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akpackfan
Posts: 22
Joined: Fri Jul 25, 2008 11:34 pm

Re: Retire at MRA?

Post by akpackfan »

sergio wrote:Recent MRA Retiree here...

I only check here to read and don't actively participate in Fantasy TSP.

During Feb, 2017, I retired at 56, with 4 (AD) + 30 Civil Service for 34 years total. My pension based on 12 step 10, turned out to be 2600. My supplement is 1300 after taxes and healthcare is paid I net 3400 / mo. Divorced no kids.

Mortgage is 1400 and 300 car loan that I could pay off tomorrow if I wanted to. No credit cards! Yes, less driving, gas, wear, eating out savings realized. I'l not a penny pincher and I'm making it. Lots of part-time work if and when I want to take it. Currently upgrading my house with my time, my dime and will sell and move to a state that does not tax federal pensions. For me, just over the border to NC. Tax penalty if I make over 16K income (on top of pension & supplement) / yr is 50%/$1.00. SS Office will tax your Supplement 50% on a dollar if you go over $16K on top of your retirement. At 65 or 66 for me, it's game on and you're taxed at income scale whatever...

Consider this... I'm getting 80% of my age 62, SS. That's seven years! I haven't figured out the break even point, but i'm sure it's late 60's early 70's? - Meaning if I wait, for full SS retirement at 67? That larger amount collected later, doesn't break even with the guy that took it at 62! Later, when I take my age 62 monthly check, that will increase 400/mo. Therefore, collecting that for a number years plus my supplement years, I'm pushing that break-even point well into my 70's!

As the instructor said in a retirement class... "How many of you in this room, will be alive and kicking well into your 70's?" No one raised their hand!

TSP: I admit to borrowing on it for risky business loans in the past, but I paid it all back before I retired and won't have to touch it until 70.5 to begin making withdraws. I did check on an annuity on my balance, and turned out to be about 1K / mo. if I wanted it. My TSP strategy now is the seasonal one. I was cautious at first, but now feel confident that I can be a little more aggressive. I should do a LC 2030 (set it and forget it) or something but it's fun to look at account activity and see a raise for that month. Sometimes it's flat, but hasn't been that way for too long in recent memory.

Summary, If you can retire at your MRA, than why not? Live life on your terms, you'll still be young enough to enjoy it!


Thanks for this input! Exactly what I was looking for with real numbers and experiences when punching out at MRA.

Regarding taking SS at 62 and leaving TSP alone till 70.5 vs. using TSP to supplement income at 62 and letting SS ride till 70 to get the max benefit..... I've seen different arguments both ways. Anyone have wise thoughts about which method is more advantageous?

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evilanne
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Re: Retire at MRA?

Post by evilanne »

It really depends on individual situations. Some factors that may impact your decision:
--you annual spending needs
--your marital status, their age & any dependents
--life expectancy based on family history
--amount of your pension and any survivor benefit
--how much you have in your TSP, and your rate of return.
With longer life expectancy delaying SS can be advantageous. Some people use to hedge against future inflation or down markets. If spouse is relying on your SS when something happens I'm not sure whether it impacts what they get or not--best to research & understand prior to taking it early.
With shorter life expectancy, if you are single--payments end when you do. TSP goes to your designated heirs. If married, leaving TSP alone provides some insurance to provide for spouse who can use it as their own.
Social Security will be 85% taxable in most cases with a pension or other income. If you are married, you have a larger tax bracket. If something happens to either spouse, the amount of taxes they pay will likely increase (assuming they get %age of your pension).
If you wait until 70.5 when RMDs are required, you have little control over the amount you have to take.

mmmmmbeer
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Joined: Wed May 11, 2016 11:00 am

Re: Retire at MRA?

Post by mmmmmbeer »

evilanne wrote:It really depends on individual situations. Some factors that may impact your decision:
--you annual spending needs
--your marital status, their age & any dependents
--life expectancy based on family history
--amount of your pension and any survivor benefit
--how much you have in your TSP, and your rate of return.
With longer life expectancy delaying SS can be advantageous. Some people use to hedge against future inflation or down markets. If spouse is relying on your SS when something happens I'm not sure whether it impacts what they get or not--best to research & understand prior to taking it early.
With shorter life expectancy, if you are single--payments end when you do. TSP goes to your designated heirs. If married, leaving TSP alone provides some insurance to provide for spouse who can use it as their own.
Social Security will be 85% taxable in most cases with a pension or other income. If you are married, you have a larger tax bracket. If something happens to either spouse, the amount of taxes they pay will likely increase (assuming they get %age of your pension).
If you wait until 70.5 when RMDs are required, you have little control over the amount you have to take.



Was just reading about this today. Just remember if it's not your spouse, and you don't have an IRA set up for them to have an "inherited IRA" the beneficaries are subject to the full 20% tax on the entire amount.

Good article on it here:

http://fedretire.net/tsp-ways-to-safegu ... heritance/

Hugebpart to wrap your head around for those of us with spuses andnkids:
According to the TSP, “If a beneficiary participant (Annuitant’s spouse) dies, the new beneficiary(ies) cannot continue to maintain the account in the TSP. Also, the death benefit cannot be transferred or rolled over into any type of IRA or plan.” If you are the surviving spouse and inherit your husband or wife’s TSP account your beneficiaries must claim the full amount as income the year that you die.


So if thers time before you die set up the IRA and transfer everything out for your spouse and kids. If not, make sure she/he understands to set up an IRA for the money to go to prior to their death or the kids will get hosed
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evilanne
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Joined: Thu May 14, 2015 6:52 pm

Re: Retire at MRA?

Post by evilanne »

mmmmmbeer wrote:Was just reading about this today. Just remember if it's not your spouse, and you don't have an IRA set up for them to have an "inherited IRA" the beneficaries are subject to the full 20% tax on the entire amount.

Good article on it here:

http://fedretire.net/tsp-ways-to-safegu ... heritance/

Hugebpart to wrap your head around for those of us with spouses and kids:
According to the TSP, “If a beneficiary participant (Annuitant’s spouse) dies, the new beneficiary(ies) cannot continue to maintain the account in the TSP. Also, the death benefit cannot be transferred or rolled over into any type of IRA or plan.” If you are the surviving spouse and inherit your husband or wife’s TSP account your beneficiaries must claim the full amount as income the year that you die.


So if there's time before you die set up the IRA and transfer everything out for your spouse and kids. If not, make sure she/he understands to set up an IRA for the money to go to prior to their death or the kids will get hosed


The restrictions on spouse beneficiary account should really be same as the primary account holder if they are allow to treat it as their own and designate beneficiaries IMO. That is one area they may want to improve in the future if they want people to keep their money in TSP.
It seems like best alternative would be for spouse to transfer into their own TSP, 401k or IRA if they are 59.5 or older. Transferring part or all to inherited IRA may make more sense if they are younger and need the supplemental income/cash flow.
It is also possible to provide for a certain percentage to go directly to your children if you wish. But you still need to provide instructions that non-spouse heirs should not take lump sum distribution, but transfer it all into an inherited IRA.
TSP Publications
https://www.tsp.gov/PDF/formspubs/tspbk31.pdf Death Benefits
https://www.tsp.gov/PDF/formspubs/tspbk33.pdf Beneficiary Participant Guide
https://www.tsp.gov/PDF/formspubs/tsp-536.pdf TSP Tax Info
https://www.tsp.gov/PDF/formspubs/tsp-583.pdf TSP Tax info for Beneficiaries

CrocSix
Posts: 14
Joined: Fri Jan 06, 2017 2:45 pm

Re: Retire at MRA?

Post by CrocSix »

I say if you can do it then go for it.

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FundPriceDayYTD
G $18.14 0.01% 1.00%
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C $82.11 0.87% 10.42%
S $82.19 1.48% 6.61%
I $42.68 0.56% 6.21%
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L2055 $16.39 0.84% 8.36%
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L2040 $54.37 0.63% 6.20%
L2035 $14.34 0.58% 5.77%
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