Million Dollar TSP!

[jimcasada]

I haven't withdrawn anything yet. I recently just put in to start taking out a couple thousand every month, but I don't really need it. I'm working on my tax return right now. Last year is going to cost me, because I received a large back payment on my Navy retirement, whereas they didn't hardly withhold anything for taxes. After that. I probably will have over $50k taxable income coming in every year (not counting VA & TSP). So, now I am wondering what would be the sweet spot regarding taxes to shoot for in making TSP withdraws?

[bloobs]

I probably will have over $50k taxable income coming in every year (not counting VA & TSP). So, now I am wondering what would be the sweet spot regarding taxes to shoot for in making TSP withdraws?

The name of the game, fundamentally, is to get your AGI in the lowest tax bracket possible. Keep a spreadsheet of your income sources and refer to this:

https://turbotax.intuit.com/tax-tools/c ... lsrc=3p.ds

[Navig8tor]

Wise Man told me about 10 years ago (surprised he hasn't commented on this string...he's still here), "Get off your wallet and live a little..at what point is enough money, enough money!?!? >>> I didn't listen,

Told me this while I was still on active duty. I think I was a W4 at the time, and at the 27-year mark of my military career. We were talking about living in retirement, and how much money I'm stashing in the TSP, a ROTH IRA, a brokerage account etc. Year in and year out, I was maxing out the TSP and the ROTH, and tossing 10's of thousands more into the brokerage and savings accounts. Of course, I didn't listen to him because I was "stressing" over getting to the magic "7-Digit" portfolio balance number.

Well, here we are 10 years later. I've been retired from the military for 7 years, and still working as a GS-13 for the military. Still maxing out the TSP (and the catch-up), year in and year out. After I retired from the military I was told by my "Wealth Management" people I made too much money to contribute to the ROTH, so I stopped. That was 100% INCORRECT and I've lost 7 years of ROTH contributions. However, now my bank account is stupidly high and earning about ZERO interest. But, I still don't listen to the Air Force Retiree who told me 10 years ago, "Get up off your wallet and live a little."

I'm within striking distance of the magic "7-digit" portfolio...maybe in about a year I'll hit it. Lately, I've been sitting here asking myself >>> "WHY - what's the point of continuing to worry about it...what is the point of continuing to dump money into a Pre-Tax account...what is the point of continuing to put it in a savings account earning nothing...what is the point of putting it into a HYSA because THAT TOO causes me to have underpaid taxes every flippin year."

3/4 of my savings is in the TSP (pre-tax). Between my military retirement and VA benefits, I'm clearing $98K right now. Three years from now, I'm confident those numbers will be well above $100K just from annual pay increases. When I retire from Federal Service in 3 years (MRA + 10), I'll be exactly 59 1/2. I'll have to defer my piddly "2nd retirement" to age 62. Post-tax, I'm guessing that 2nd retirement will add ~$9000/yr to my total retirement income and leave me around ~$110K/year. Then what do you know, SS kicks in the same year. My most recent estimate is showing $2400/month. If, by then, they can only meet 70% of the stated benefit, call it $1600/month. Now my total retirement is up near ~$129K/yr. May as well take it at 62...I may not live to see 67, let alone 70.

Now, I'm well into understanding my friend's instruction from 10 years ago>>> "Get off your wallet and enjoy life."

I'm 13-15 months from hitting 7-digits...and for what? If you can't "live" on $130K/yr retirement income...I'm going to be the first one to tell you, perhaps you need to address your "problem"

If I take 3% per year from my TSP, and run my retirement income to $160K/yr, all I'm doing is taking money out to pay more taxes (on both ends). At this point, I don't see a good reason to continue putting money in...but I also can't see a reason to stop and have no place to put it but in my bank account. I don't need 3 houses, 5 automobiles, gold bars, a speed boat and a 10-day cruise once per quarter. Don't need T-bills, savings bonds, REITS, a winter and summer home, and a new truck every 2 years. I couldn't live extravagantly even if I wanted to...that's just not who we are.

If I keep squirreling money, eventually someone else is going to end up with a huge wad that I spent my entire working life squirreling. If I don't keep squirreling, my income taxes will be worse than they are now. Pay off the house...why...I plan to sell it in about 2.5 years. Right now, the house is worth twice as much as we paid for it. Every bit of money cleared on the sale will go straight into the final "retirement home."

I fully understand these are GOOD problems to have, but I think my friend's point is this: DO SOMETHING besides work, squirrel money and stress over retirement income. Start early, save often, stretch it out over decades and you'll be fine. Don't forget to ENJOY your life while you're doing it. I haven't NOT enjoyed my life but I don't know that I've enjoyed it as much as I could have (to this point) because I've spent nearly 40 years worrying about making sure we're ready for the second part of our lives...and whatever comes next.

We are a career military family. My parents were career military. As most military people know, you generally don't act rich, live rich, and probably have no desire to actually BE rich. Nor do I consider having a MILL in the bank as being rich. It's a good problem to have, but I couldn't FORCE myself to spend money like I was rich. So yeah, when is enough money, enough money?

So, Friend of Mine >>> It took me 10 years but I now see your point!

[NUC SHARK]

wise advice and wise words to share. there was also a recent post on i forget which forum, which said you cant buy time….. yes 7 digits cant buy time.

[Aitrus]

My father-in-law was Civil Service under CSRS, and worked at the same location for pretty much his entire career. After doing a short 4 years during the latter part of 'Nam in the Air Force, he landed an entry-level position at a power plant on an Air Force base. He then spent the remainder of his career at that plant, slowly working his way up the ladder of responsibility for the place.

Towards the end of his career, the plant manager retired and they handed the job to him, but he didn't want it. He was happy being a shift supervisor, didn't want to be the plant foreman responsible for the entire thing. He didn't want the stress. So he resigned his position and took a job at another location - which lasted all of six months because the Air Force begged him to go back to his old job as shift supervisor. Nobody knew the plant like he did - he'd spent 35 years working in the same building, and knew that place inside and out. When he left, so did all his knowledge and experience. He went back for the last few years of his career.

In the end, he put in a couple more years working there than he really wanted to. He did so to train his replacement, and to mentor the series of new foremen that cycled through the top spot. When he retired a couple of years after his MRA, he regretted it bitterly. His advice to me has always been: "Retire as soon as you can afford to, because you'll regret working every day you didn't have to and didn't want to."

I'm facing a somewhat similar dilemma right now myself. I'm not near my MRA, however, there will be a tidal wave of supervisory positions retiring this year, ranging from one to three levels above me. I'm not a supervisor, but if I want to promote upward then I'll have to be. I've been a supervisor before in the military, and I didn't like it. The job I have now is the least stressful I've ever had, the money is enough for all our needs (although I wish I could put more in TSP), and my retirement plans show me to be on track to retire at my MRA with about 90% replacement - assuming inflation / market crashes don't make that proposition untenable.

So the question I'm asking myself: do I apply for a job I probably won't enjoy in order to get an extra $10k a year? Do I take on the stress in order to give myself some buffer space and a better chance of retiring at my MRA? I'm leaning towards no. When MRA time comes, I can always put in an extra year or two if I want to hedge my bets and spend the next decade happily doing the job I'm good at instead of doing a job I don't like for more money.

[Navig8tor]

Aitrus,

I kinda walked away from this thread...got busy and been playing catch-up. I see that no one else responded, so, I'll add my two cents.

I have been in a command element or some kind of supervisory position, both military and civilian, since I was a 20-year old Sergeant in the Marine Corps back in 1988. I'm now a 56-year, GS-13 with twenty-four GS 7-12 in my charge. It's not always easy, is sure ain't always fun and they WILL test your patience. However, if you lay the line, enforce the line promptly and equitably WHILE AT THE SAME TIME rewarding good behavior, applauding excellent work and just saying THANK YOU ever so often, your people will follow you to the ends of the earth.

Second - BUST YOUR A$$ as a Supervisor. When your people see YOU working, they know YOU have skin in the game and they will break their A$$'s for you. They see you hanging out a the water fountain, sitting around doing nothing all day...they will do as you do...nothing. End the end, YOU answer for that >>> Not where you want to be when Jesus comes.

Third - When your people need top cover, MAKE SURE THEY GET IT. If you ain't willing to stick you neck out, you don't need to be a Supervisor. If you're not willing to walk into the fire with them, remain at your current non-supervisory pay grade. Conversely, when they've acted the fool and screwed up, you have be willing and able to hold them accountable. If you've trained your people correctly, and you act accordingly, they know when it's time to work and when it's time to play.

Last - Civilian HR is a full time job in and of itself. As a government supervisor, you damn near HAVE TO become an HR Specialist of your own accord. Guess who's going to learn you >>> YOU. You need to know more than a few aspects of employment law, hiring practices, grievance procedures, time and attendance, performance evaluations, pay and entitlements, leadership development...in addition to your regular full time job. I can promise you this: if you don't know this stuff, your subordinates will be the first to tell you what the "rules" are. Whether right or wrong, they'll tell you because they know better (they THINK they know better) than you do. Not where you want to be when Jesus comes either.

Being a Supervisor is literally taking "the good with the bad." You have to WANT to do it. You can't go into it and
half-a$$ it. Whether you have 5 people under you or 35...every eye they own is ON YOU. You can be friends and/or you can be strictly Supervisor/Subordinate. Sometimes, you can't be BOTH at the same time. Remember - respect is EARNED, it ain't given just because you are of a higher pay grade - you don't GIVE IT and you most certainly won't GET IT.

PS: You'll ALWAYS have one or two problem chil'rens. They will most likely be the same problem chil'rens everyone else takes issue with but aren't willing to engage or correct. Confront and correct that problem head-on and decisively, and you're IN LIKE FLYNN. The rest of the herd will likely THANK you.

PSS: If you work someplace that has a Union - good luck!

PSSS: DON'T BE AFRAID OF A GRIEVANCE. Providing YOU do YOUR job, acting within the rules and not committing a crime >>> "Please, file all the grievances you want...In fact, I'll bring the Grievance Manual to you so you can get that underway."

That's the extent of my 38-years of Supervisory "working for the military" knowledge. If taking a Supervisor job is worth an extra $10-grand a year - go for it. However, if you hate it, you're kinda stuck. When your herd accomplishes the mission day in and day out, IT'S GREAT. When they don't - not so much...but you gotta take the good with the bad. That's what you're there for. Hopefully the good days far outweigh the bad.

[Aitrus]

Thanks a ton for taking the time to think this through and type it out, Navig8tor. Much appreciated. Gives me a lot of food for thought.

[bloobs]

I'm 13-15 months from hitting 7-digits...and for what? If you can't "live" on $130K/yr retirement income...I'm going to be the first one to tell you, perhaps you need to address your "problem"

First off, CONGRATS! Be grateful because you have an income (for life apparently) that puts you approximately in the 98th percentile of households GLOBALLY. Not bad for a civil servant, eh? Only in 'Murica.

But in fairness to those who can't seem to live well off > $130k+ a year, some of them got there not from inconspicuous consumption habits, BTW also very 'Murican--but from truly unfortunate circumstances, such as spiraling medical bills https://www.retireguide.com/retirement- ... tatistics/. You just never know when all that processed food diet, super high-stress work environment and inadequate medical insurance coverage trifecta will snowball one right into bankruptcy. Also, a very 'Murican phenomenon.

I don't need 3 houses, 5 automobiles, gold bars, a speed boat and a 10-day cruise once per quarter. Don't need T-bills, savings bonds, REITS, a winter and summer home, and a new truck every 2 years. I couldn't live extravagantly even if I wanted to...that's just not who we are.

I agree, but most of our peers do not apparently. I spent my 20s seeking external validation through owning expensive things and fancy job titles before realizing that NONE of that really matters. All that stuff you obsess to own--ends up owning you. And there's nothing more tragic waste of time and thought than to wake up in the morning driven to "flex" your worth to people who either accepted you for who your already are (good friends) or weren't worth a second of your time (bad friends).

If I keep squirreling money, eventually someone else is going to end up with a huge wad that I spent my entire working life squirreling.

I have no problem passing on what's left of my wealth after I croak to my heirs--as long as they put it to good use. In a way, this would be my legacy. The gift of generational wealth I would consider it an honor to bestow. For me, my life has always been ultimately about them.

[BelieveGod]

REally appreciate your cantor! Im listening.

[Bubba]

If I keep squirreling money, eventually someone else is going to end up with a huge wad that I spent my entire working life squirreling.

I have no problem passing on what's left of my wealth after I croak to my heirs--as long as they put it to good use. In a way, this would be my legacy. The gift of generational wealth I would consider it an honor to bestow. For me, my life has always been ultimately about them.
[/quote]

Actually there is where I'm stuck. I would prefer to leave something for my kids. Why? Because nothing has been left for me. I don't want that for my kids. In fact, I plan on doing something that might or might not work out. I plan to buy an annuity contract in 10 or 20 years and pour in some high amount of cash (maybe $50k or more). The idea is that this becomes a fund for my kids that they can only access after they retire. They also could not pull much out, so that their children could access it too. The idea is to leave money there to compound over time, potentially many, many years. That amount, whatever that'll be, will be stuck in 100% stocks forevs. Obviously it's just a plan and I have no clue where I'll get that amount, but I think if you can build something and leave it to your children/grand/great and so on it'll actually mean something. We'll see if that is an actual thing in the future...