Retirement Budget

Managing your TSP and alternate investment options after retirement or separation from service.

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shop38
Posts: 1
Joined: Fri Oct 02, 2020 11:29 am

Re: Retirement Budget

Post by shop38 »

I am less than 2 years before retirement date. My wife and I wanted to know what we spend so we can plan on what we will need so we did the online budget program called "Mint". You can set this up in a couple of hours and then it runs pretty much by itself. We don't use it to limit our spending. We use it to track our spending. Our Income shown is what we take home, not gross, and its all automatic. We just check it each month to see how any changes we make to spending gets us closer to what we will need when we retire. Best eye opener out there. We also didn't try saying our spending will be less because we bought an appliance or made a major repair because those do not stop when you retire.

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inla$vega$
Posts: 94
Joined: Mon Nov 07, 2011 4:06 pm

Re: Retirement Budget

Post by inla$vega$ »

Retired 10 months ago and getting the RMD from TSP because over 70 1/2.

As stated earlier definitely keep FEHB and depending on health conditions and age you may want to also sign up for Medicare Part B at $145/month after retiring [assuming no earned income]. You have up to 8 months to sign up after retiring. It doesn't take but the cost of one procedure to more than cover your out of pocket expenses. Also some FEHB policies will pay you back a portion of Part B premiums [$800 for BCBS].

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Retirement Budget

Post by crondanet5 »

Does the MINT program put 10% of your take-home pay in savings?

Midway
Posts: 210
Joined: Tue Feb 28, 2012 6:09 pm

Re: Retirement Budget

Post by Midway »

inla$vega$ wrote: Also some FEHB policies will pay you back a portion of Part B premiums [$800 for BCBS].
I can't find this in writing. Does anyone have a reference for this?

Never mind, found it!
https://www.fepblue.org/our-plans/Medic ... mbursement

Scarfinger
Posts: 644
Joined: Mon Jan 30, 2012 12:00 am

Re: Retirement Budget

Post by Scarfinger »

crondanet5 wrote:Does the MINT program put 10% of your take-home pay in savings?
I got board this weekend and updated my retirement budget and income.

I did a quick assessment with smartasset.com and learned something new. It calculated my effective tax rate as 18% now and my effective tax rate in retirement as 12% taking federal, state (Ohio) and local taxes into account. It recommended investing in a 401K vs Roth considering my taxes "should" be lower at retirement. But I am still putting 2% into a Roth and 18% into my 401K.

I have not checked out MINT yet but it sounds interesting.

When I get around to it I will post my budget numbers so you guys (and gals) can critique it. Be gentle LOL.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
7/30/21: Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund

Scarfinger
Posts: 644
Joined: Mon Jan 30, 2012 12:00 am

Re: Retirement Budget

Post by Scarfinger »

I updated my retirement budget to include car and home repairs. So far and with good health, everything is going to work out. The only thing I may add in is long term care insurance. I used 15% as my effective tax rate at retirement. Base on smartasset.com calculations my effective tax rate would only be 12%.

Retirement: at age 65 and 10 months (Date: December 31, 2033)

FERS Pension
years worked: 27
high avg 3 years: $63,000
over 20 years: x1.1%
(63000 x .011) x27 = $18,711 (1559.25 month)

Social Security: at age 65 and 10 months
Avg $61,000 per year
Monthly benefit: $2,015
Yearly: $24,180

Depending on account balance at retirement:
TSP yearly income: $24,000 (2,000 month) or 18,000 ($1,500 month).

Retirement income variations:
@65 + 10 months: Soc Sec + FERS = $42,891 (3574.25 month)
Soc Sec + FERS + TSP($18,000) = $66,891 (5074.25 month)
Soc Sec + FERS + TSP($24,000) = $66,891 (5574.25 month)
--------------------------------------------

Retirement budget: *house is paid off*

House: Taxes + Insurance: (1500 + 900) / 12 months = $200.00 per month
Healthcare: 400.00
Medicare: 350.00
Car: 400.00
Groceries and gas: 510.00
Cable + Streaming: 165.00
Cell Phones: 65.00
Sewer + Water: 140.00
Electric: 150
Gas: 150
Entertainment: 200 month
Unexpected repairs: car and home: 780 + 1200 yearly = $165 month
**
Total Budget cost = 2895.00 +15% tax (434.25) = $3,329.25 Gross monthly income NEEDED
**
Soc Sec + FERS = $42,891 (3574.25 month) - bills ($3,329.25) = +245 extra per month

Soc Sec + FERS + TSP($18,000) = $60,891 (5074.25 month) - bills ($3,329.25) = +1745 extra per month

Soc Sec + FERS + TSP($24,000) = $66,891 (5574.25 month) - bills ($3,329.25) = +2289 extra per month
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
7/30/21: Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Retirement Budget

Post by crondanet5 »

Definitely go long term care insurance and pray you never need it.

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evilanne
Posts: 1969
Joined: Thu May 14, 2015 6:52 pm

Re: Retirement Budget

Post by evilanne »

Scarfinger wrote: Mon Dec 21, 2020 6:39 pm I updated my retirement budget to include car and home repairs. So far and with good health, everything is going to work out. The only thing I may add in is long term care insurance.
I'm not sold on long term care insurance, you don't know if you will ever use it, prices continue to go up and with each option they have a lifetime benefit. If you don't use it, it is a sunk cost...you get nothing back. Based on your figures it looks like you probably have more than enough money in your TSP to self insure. You may want to consider putting the amount you would pay for the plan(s) into a Roth IRA while you are working. I am slowly doing conversions to build up my Roth accounts which will grow tax free and does not require any RMD. If I need it, the money will be available and I can use it without having to file any claim for reimbursement. If I don't need it, it will go to my beneficiaries tax free someday.

You can play with the numbers yourself to see how much you or your wife should have set aside for long term care if you do self insure.
https://www.ltcfeds.com/tools/cost-of-care
https://www.ltcfeds.com/tools/premium-calculator (see Premiums not guaranteed note)

It looks like you have everything pretty much figured. Things you may want to consider if you have not already is what your RMDs will be when you reach 72 and whether that could put you in a different tax bracket. Have you compared the tax brackets for Single vs Married Filing Jointly and considered the impact on the surviving spouse?

Scarfinger
Posts: 644
Joined: Mon Jan 30, 2012 12:00 am

Re: Retirement Budget

Post by Scarfinger »

I live simple. I have looked at RMD's and they will not be a problem. My relatives live into their 80's and are generally healthy people. I probably will not buy Long Term Health Insurance.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
7/30/21: Paul Merriman 2 fund strat: (age - 25) x2.5 = TDF + balance into S fund

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Fund Prices2021-10-25

FundPriceDayYTD
G $16.69 0.01% 1.10%
F $20.80 0.07% -1.86%
C $68.74 0.47% 22.95%
S $87.98 0.72% 18.57%
I $39.33 -0.18% 11.13%
L2065 $14.64 0.28% 17.98%
L2060 $14.64 0.28% 17.98%
L2055 $14.64 0.28% 17.98%
L2050 $29.60 0.24% 14.69%
L2045 $13.49 0.22% 13.82%
L2040 $49.13 0.21% 12.98%
L2035 $12.96 0.19% 11.98%
L2030 $43.05 0.17% 11.01%
L2025 $12.13 0.13% 8.66%
Linc $23.33 0.08% 4.71%

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Pending Allocations

Under development. For now, you may view Pending Allocations by going to "fantasy TSP" and selecting "Leaderboard sort" of "Pending Allocations".