Nearing retirement questions?

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

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jimcasada
Posts: 199
Joined: Mon Jan 12, 2015 4:40 pm

Nearing retirement questions?

Post by jimcasada »

I some questions that maybe someone here could help me with. I understand that total 2023 contribution limit eligible for matching funds will be $22,500 ($30k, counting $7500 "catchup" contributions).

I just recently applied to receive my full age Social Security payments beginning this Jan, and was planning to fully retire from my current gov job probably in May. Currently, I have been contributing just enough each pay period to reach my maximum contribution limit by the end of the year.

What if I increased my contribution enough to reach the 2023 basic contribution limit of $22,500 by the time I retire in May? Would I receive all or most of my matchings funds before I leave in May 2023?

I'm thinking since I should be receiving my SS payments by that time, I could afford the reduced take-home pay for a while. Maybe reducing my adjusted gross income now could help my kids with financial aid and scholarships, as my oldest one will be going to college next year? Any thoughts or suggestions?

Thanks, Jim.

ripp002
Posts: 29
Joined: Sun Apr 26, 2020 4:55 pm

Re: Nearing retirement questions?

Post by ripp002 »

Congratulations to you Mr. Jim. I’ll be 62 on Tuesday, but plan to stick around for awhile.

There are monthly pre-retirement classes on teams. I’d start there and just ask. I have an idea, but, I’m not an expert in this area.

Wishing you the best,

Ripp

ripp002
Posts: 29
Joined: Sun Apr 26, 2020 4:55 pm

Re: Nearing retirement questions?

Post by ripp002 »

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ProduceMan
Posts: 547
Joined: Thu Jan 18, 2018 12:01 pm

Re: Nearing retirement questions?

Post by ProduceMan »

You will only get the maximum gov matching contribution limit of 5% each pay period. No matter how much you contribute.

So, you will get all you can as of your last pay check.
Moneys’ Money Making Money (4M)

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evilanne
Posts: 2017
Joined: Thu May 14, 2015 6:52 pm

Re: Nearing retirement questions?

Post by evilanne »

You will get the 5% match on the regular contributions but if you delay your retirement you won't get any matching after you hit your max, which is why you generally spread it out throughout the year. In order to do catch up amount you have to be signed up for the maximum in regular contributions for the year, although I'm not sure how close they monitor this when you retire in middle of the year. Make sure you have enough in income minus mandatory withholdings to cover the amount of any contribution (if the amount is greater than the amount available, they will not make any contribution). You cannot have any TSP withheld from your annual leave payout.

It generally takes 1 month to get partial payments started & 4-6 months for OPM to finalize your retirement payments so it is a good idea to have enough cash on hand in the event there are any complications.
Your income will be reduce by increasing your traditional contributions but I'm not sure how your income will impact financial aid for your dependent's college. If your goal is to reduce your income for the year, why start taking SS before you actually retire? Depending on you tax situation, up to 85% of your SS is taxable income.

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jimcasada
Posts: 199
Joined: Mon Jan 12, 2015 4:40 pm

Re: Nearing retirement questions?

Post by jimcasada »

My original plan was to leave at the end of this year, but now I'm thinking if I stayed over a few months and dumped almost all my income into TSP, I could give my TSP an extra boost while keeping my income down for the year. I also have about $40k in Navy retirement backpay that hopefully will be coming in after Jan 1. I say "hopefully" because it might come in before the end of this year, but there is nothing I can do about that.

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