Pre-Retirement Planning

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

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galveston1
Posts: 148
Joined: Tue Aug 16, 2016 5:29 pm

Pre-Retirement Planning

Post by galveston1 »

I am planning to retire in about 8 years. I will be 62 years old and have 42 years of credible FERS service at that time. So I live and work in the Mid-Atlantic (DC/Baltimore Locality) now and plan to stay here until retirement. We (wife & I) bought a house here in 2013 with a 30-year VA loan mortgage. After retiring, we plan to move to Florida. We plan to sell our current home and buy a retirement home in Florida. (We have no desire to keep our current home and rent it out) I want to finance our new Florida home through the VA again, so that means we have to sell our existing home before I can get another VA loan. I’m exempt from the VA funding fee because I am a veteran receiving VA compensation for a service-connected disability. In order to do that, we will likely move into an apartment for a few months while we look for our new home in Florida. At first, we had planned to retire, then get an apartment in Florida while we house hunt. Then I got to thinking, maybe we should get an apartment in our current location before retiring. My line of thinking is that if we do it this way, then we could actually close on the new home while still employed as a federal worker. I’m not real sure, but it seems like a bank would be more willing to finance someone who’s still employed over a retiree. Plus it might make the transition a little smoother. By this I mean we would have an actual residence address in Florida to list on my retirement package.


I know there are great minds out there and maybe some of you can tell me what you think of this plan. Or even better, maybe you could suggest better options.

Thanks everyone.
In investing, what is comfortable is rarely profitable

Miketurk
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Joined: Fri Mar 25, 2016 8:11 pm

Re: Pre-Retirement Planning

Post by Miketurk »

How much sick leave do you have saved up? Is it enough to burn while you house hunt and close in Florida, or do you plan on just selling it back?

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galveston1
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Re: Pre-Retirement Planning

Post by galveston1 »

Miketurk wrote:How much sick leave do you have saved up? Is it enough to burn while you house hunt and close in Florida, or do you plan on just selling it back?


Do you mean annual leave? I will sell whatever annual leave I have saved when I retire.
In investing, what is comfortable is rarely profitable

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TSPTiming
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Re: Pre-Retirement Planning

Post by TSPTiming »

Galveston,
My wife and I have a similar situation and plan, but your idea of selling your house now, before retiring, is an option I hadn't thought of. We plan to move to Florida when I retire at the end of 2018 or in 2019. I'll have 35 years of combined CSRS (8 years) and FERS time if I can make it to 3/31/19...or if I can grit my teeth and stick it out to 8/31/19 it will make for an easy transition from the TSP to an IRA since I turn 59-1/2 in December 2019.

My plan is the traditional; A) retire, B) prep the house for sale and sell it...and meanwhile take a trip to Florida and find a decent home to rent in the area we like best which is the north side of Melbourne, Viera specifically, so when our current home sells we'd have a place to go to for the transition. Last week my wife discovered that we can rent a house on Patrick AFB with a month-to-month rent, a nice option since we wouldn't need to be tied to a year long lease, so you might check that option at the nearest military base. With this rent-first option we can spend a year or so really getting to know Florida and being sure it's what we want, and pick out the perfect house and locale for us. Who knows, we may decide the summer heat is just too much, and the flat terrain is too boring, and go to plan B which is Gig Harbor, WA...yes, totally the opposite of Florida but it's a great spot... we picked it out a year ago during a 10-day exploration of the Seattle and Portland areas...it's near where I grew up and the things I love most (cool weather, pine trees and mountains, and my WSU Cougars and Seahawks). My wife is the vet in my family, and with her disability status we will pay zero property tax on the house we buy in Florida (FL is one of just two states along with New Mexico with that benefit if you have "total and permanent" status), that's a huge incentive to make FL our permanent residence since we could get our dream home and pay zero tax...unlike WA and most areas of the country FL also has huge numbers of single-story homes to choose from, something we want/need... to escape the summer heat our plan is to spend several months each summer travelling the world to cooler places by renting through airbnb type of sites. So a month in Puget Sound, a month near our kids on the California coast, a month in northern Italy, etc...that's the dream.

Your plan is intriguing, but I think you need to be really really sure that you know you want to live in a specific place in FL before going that route...it might be better to take the traditional route and rent in the area think you want to go first, then buy if you do indeed love it after living there a while. For us, I'm really struggling not getting sucked into buying NOW since interest rates won't stay this low forever (last week 30-year VA loans were just 3.125%, wow) and the home prices in Florida are really soaring now...but who knows, we could be near another housing bubble in overheated places on the coasts, and maybe prices will settle back down a bit. We'd also need the equity from our current home before buying, so that makes your idea intriguing. Hmm.

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evilanne
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Re: Pre-Retirement Planning

Post by evilanne »

galveston1 wrote:I am planning to retire in about 8 years. I will be 62 years old and have 42 years of credible FERS service at that time. So I live and work in the Mid-Atlantic (DC/Baltimore Locality) now and plan to stay here until retirement. We (wife & I) bought a house here in 2013 with a 30-year VA loan mortgage. After retiring, we plan to move to Florida. We plan to sell our current home and buy a retirement home in Florida. (We have no desire to keep our current home and rent it out) I want to finance our new Florida home through the VA again, so that means we have to sell our existing home before I can get another VA loan. I’m exempt from the VA funding fee because I am a veteran receiving VA compensation for a service-connected disability. In order to do that, we will likely move into an apartment for a few months while we look for our new home in Florida. At first, we had planned to retire, then get an apartment in Florida while we house hunt. Then I got to thinking, maybe we should get an apartment in our current location before retiring. My line of thinking is that if we do it this way, then we could actually close on the new home while still employed as a federal worker. I’m not real sure, but it seems like a bank would be more willing to finance someone who’s still employed over a retiree. Plus it might make the transition a little smoother. By this I mean we would have an actual residence address in Florida to list on my retirement package.

I know there are great minds out there and maybe some of you can tell me what you think of this plan. Or even better, maybe you could suggest better options.

Thanks everyone.

Why 62? How many years out of the 42 years in FERS were military buy back, if any?

I know there are some advantages to a VA loan. The biggest one they advertise is able to borrow 100% of the home value, which I don't think is a good idea IMO for someone retiring. If you have 20% or more for a down payment on a conventional loan on new home, I don't think there would be that much difference to a VA loan--but I don't know much about VA loans. Many things will depend loan amount, future interest rates (which are unknown), loan terms. such as closing costs, length of the loan, etc., your credit score, whether you will have equity in your current home that could be use to change these factors or pay down the loan sooner. Based on your personal financial situation, you would need to evaluate VA vs Conventional to determine if a VA loan is really more beneficial.
Last edited by evilanne on Tue Jul 04, 2017 12:58 pm, edited 1 time in total.

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evilanne
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Re: Pre-Retirement Planning

Post by evilanne »

I like TSPTiming's idea of renting at the new location. Buying can be an expensive mistake if you end up hating the new location for any reason. There is a retirement community "The Villages" in central FL that also has rental options you can look into.

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galveston1
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Re: Pre-Retirement Planning

Post by galveston1 »

TSPTiming wrote:Galveston,
My wife and I have a similar situation and plan, but your idea of selling your house now, before retiring, is an option I hadn't thought of. We plan to move to Florida when I retire at the end of 2018 or in 2019. I'll have 35 years of combined CSRS (8 years) and FERS time if I can make it to 3/31/19...or if I can grit my teeth and stick it out to 8/31/19 it will make for an easy transition from the TSP to an IRA since I turn 59-1/2 in December 2019.

My plan is the traditional; A) retire, B) prep the house for sale and sell it...and meanwhile take a trip to Florida and find a decent home to rent in the area we like best which is the north side of Melbourne, Viera specifically, so when our current home sells we'd have a place to go to for the transition. Last week my wife discovered that we can rent a house on Patrick AFB with a month-to-month rent, a nice option since we wouldn't need to be tied to a year long lease, so you might check that option at the nearest military base. With this rent-first option we can spend a year or so really getting to know Florida and being sure it's what we want, and pick out the perfect house and locale for us. Who knows, we may decide the summer heat is just too much, and the flat terrain is too boring, and go to plan B which is Gig Harbor, WA...yes, totally the opposite of Florida but it's a great spot... we picked it out a year ago during a 10-day exploration of the Seattle and Portland areas...it's near where I grew up and the things I love most (cool weather, pine trees and mountains, and my WSU Cougars and Seahawks). My wife is the vet in my family, and with her disability status we will pay zero property tax on the house we buy in Florida (FL is one of just two states along with New Mexico with that benefit if you have "total and permanent" status), that's a huge incentive to make FL our permanent residence since we could get our dream home and pay zero tax...unlike WA and most areas of the country FL also has huge numbers of single-story homes to choose from, something we want/need... to escape the summer heat our plan is to spend several months each summer travelling the world to cooler places by renting through airbnb type of sites. So a month in Puget Sound, a month near our kids on the California coast, a month in northern Italy, etc...that's the dream.

Your plan is intriguing, but I think you need to be really really sure that you know you want to live in a specific place in FL before going that route...it might be better to take the traditional route and rent in the area think you want to go first, then buy if you do indeed love it after living there a while. For us, I'm really struggling not getting sucked into buying NOW since interest rates won't stay this low forever (last week 30-year VA loans were just 3.125%, wow) and the home prices in Florida are really soaring now...but who knows, we could be near another housing bubble in overheated places on the coasts, and maybe prices will settle back down a bit. We'd also need the equity from our current home before buying, so that makes your idea intriguing. Hmm.


TSPTiming – This is EXACTLY the thought provoking response I was hoping for. You have REALLY given me some food for thought!! Thank you.

We are planning to settle in the Tampa area, so I am definitely going to look into the option of renting on base (maybe McDill A.F.B.). Heck, that might even be an option for a longer term plan. You also make a very persuasive case for renting in the Tampa area to be completely sure that we want to make that area our permanent home. And as you pointed out, renting there would make for a more relaxing and thorough house hunting experience. We’ve been visiting Tampa yearly for the past 3 years and will be down there again this coming September. I’m definitely hoping to go with a single-story home too.
In investing, what is comfortable is rarely profitable

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galveston1
Posts: 148
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Re: Pre-Retirement Planning

Post by galveston1 »

evilanne wrote:
galveston1 wrote:I am planning to retire in about 8 years. I will be 62 years old and have 42 years of credible FERS service at that time. So I live and work in the Mid-Atlantic (DC/Baltimore Locality) now and plan to stay here until retirement. We (wife & I) bought a house here in 2013 with a 30-year VA loan mortgage. After retiring, we plan to move to Florida. We plan to sell our current home and buy a retirement home in Florida. (We have no desire to keep our current home and rent it out) I want to finance our new Florida home through the VA again, so that means we have to sell our existing home before I can get another VA loan. I’m exempt from the VA funding fee because I am a veteran receiving VA compensation for a service-connected disability. In order to do that, we will likely move into an apartment for a few months while we look for our new home in Florida. At first, we had planned to retire, then get an apartment in Florida while we house hunt. Then I got to thinking, maybe we should get an apartment in our current location before retiring. My line of thinking is that if we do it this way, then we could actually close on the new home while still employed as a federal worker. I’m not real sure, but it seems like a bank would be more willing to finance someone who’s still employed over a retiree. Plus it might make the transition a little smoother. By this I mean we would have an actual residence address in Florida to list on my retirement package.

I know there are great minds out there and maybe some of you can tell me what you think of this plan. Or even better, maybe you could suggest better options.

Thanks everyone.

Why 62? How many years out of the 42 years in FERS were military buy back, if any?

I know there are some advantages to a VA loan. The biggest one they advertise is able to borrow 100% of the home value, which I don't think is a good idea IMO for someone retiring. If you have 20% or more for a down payment on a conventional loan on new home, I don't think there would be that much difference to a VA loan--but I don't know much about VA loans. Many things will depend loan amount, future interest rates (which are unknown), loan terms. such as closing costs, length of the loan, etc., your credit score, whether you will have equity in your current home that could be use to change these factors or pay down the loan sooner. Based on your personal financial situation, you would need to evaluate VA vs Conventional to determine if a VA loan is really more beneficial.


evilanne – Thank you for the response.

62 is my “Retirement NLT” date. It’s possible that I may retire a bit earlier, but careful, ongoing evaluations of my financial situation have shown me that at age 62, we’ll be in great financial shape to fully enjoy life and all our plans for retirement. I have 9½ years of military time that I already bought back. That’s included in the 42 years total.

As I said above, TSPTiming’s response was great. Funny you should mention “The Villages”. A friend of mine just gave me the same tip a while back. I ordered their welcome package and it’s really nice. And with the amenities fee of just $145 a month you get access to everything. They even have a special where you can visit for 4 nights or more and they give you 2 bikes and a golf cart and you can stay there for only $99 per night. But we gave it some thought and neither of us wants to go that route. I might have a more favorable impression if I were a golfer though! :mrgreen:
In investing, what is comfortable is rarely profitable

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TSPTiming
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Re: Pre-Retirement Planning

Post by TSPTiming »

Yep, it's not an easy decision on where exactly to settle. A co-worker of mine retired to Sarasota last year and loves it. We've driven all over central FL a few times. Places north of Orlando like The Villages haven't peaked our interest, and we also want to be within 15 miles or so from the coast to get those cooling ocean breezes. Last year our exploration included the area from Tampa down to Fort Meyers. There are some very nice areas, but to us that whole area just seems rather remote, which is something we've dealt with in New Mexico for 13 years and are tired of. Just FYI, the reasons we like the Viera area include:
- It's central to Miami, Tampa and Jacksonville, which adds to opportunities for day trips.
- It's only 45 minutes from Orlando, close enough to inspire kids to visit, but not so close they'll want to move in LOL. Orlando is lots of fun but we figured out we don't want to live there, too crowded.
- There's a reason NASA chose Cape Canaveral, in addition to all the available land hurricanes also tend to veer away from that part of the coast.
- It's just quiet, never any traffic jams, and yet it's new and nice and there's outstanding medical services/hospitals
- My wife insists on getting a pontoon boat, and you can't beat the Indian River for easy fishing opportunities.
- Port Canaveral is right there and we like cruises
- No sinkhole worries in eastern FL
- View rocket launches from your backyard!
- The beaches are plentiful and seem less crowded than on the Gulf Coast, the ones north of Cape Canaveral are nearly deserted.

We haven't looked at the area just north of Tampa yet, so that's on the exploration list. I'm also looking forward to checking out the new "Margaritaville" development that's opening up near Daytona Beach this fall.
https://www.latitudemargaritaville.com/

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galveston1
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Re: Pre-Retirement Planning

Post by galveston1 »

This is more great information!

We feel the same about being near the coast. We went to Clearwater beach in late September once and the water was still very warm. We both love the beach. I have to admit though that you have me thinking about the east coast of Florida now. But I wonder how warm the waters are over there in the fall? I had actually forgotten about those pesky sinkholes. Hmmm. I need to do some research on that issue for the Tampa area. I did a 2-month TDY to Holloman A.F.B., NM once. I know exactly what you mean by remote.

Anyway, if you keep this up, you may have me for a neighbor in a few years. Now I gotta go look into that "Margaritaville" development.

Great stuff.
In investing, what is comfortable is rarely profitable

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TSPTiming
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Re: Pre-Retirement Planning

Post by TSPTiming »

Here's a must listen for you...about 22 minutes in Jim Puplava talks about renting before you buy:
http://www.financialsense.com/real-esta ... le-reprise

By renting first we'd also have time to build new if we choose. Joyal is my favorite custom home builder in the Viera area. You've inspired me and I was just going through the floor plans daydreaming. Maybe if I go a few more years to age 62 like you're planning to we could actually afford one of the larger ones since my TSP could be joining the $1M club by then... the Villa Portofino would let us have our dream game room...pool table, air hockey, a couple video games and slot machines, pinball...then it's out to the covered pool for a drink while I watch the pool girl clean...oops, my wife says it's a pool boy LOL.

http://joyal-homes.com/floor-plans-3/

Sigh, but home prices are now going up much faster than salaries and there's no end in sight. Maybe the answer is to turn the tables and move in with our Millennial kids, then we can afford to travel like we want LOL.

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galveston1
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Re: Pre-Retirement Planning

Post by galveston1 »

Thanks for the site link. I listened to the podcast and bookmarked the site to add to my arsenal. According to the TSP.gov calculator I can join the $1M club in 8 years (age 62) if I keep up my current contributions (maxed on regular and catch-up) and earn at least 8%. I also checked out the Joyal site. Some nice floor plans, but 4,350 sq ft is a bit more house than I'm looking for...LOL. Oh, but I WILL have that covered pool thank you very much! And a jacuzzi. My wife has already made it crystal clear that those two options are non-negotiable.

I think the idea of renting in Florida for at least a year is excellent advice. The retirement picture became much clearer today. Thanks.
In investing, what is comfortable is rarely profitable

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Aitrus
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Re: Pre-Retirement Planning

Post by Aitrus »

Galveston,

I spent about 8 years in the FL panhandle stationed at Eglin. That area's pretty laid back as well. Warm water, just a few hours from Biloxi, MS or New Orleans if you want to take a weekend road trip. Several good cities to choose from - the Fort Walton Beach / Destin area has Eglin AFB and Hurlburt Field. Pensacola (home of the Blue Angels) has a naval base , and Panama City has Tyndall AFB. The airport at Fort Walton Beach is a half-hour hop to Atlanta, and from there you fly to wherever you want. You miss most of the storms, and for any that do come your way there's a lot of roads headed northward onto higher ground. The problem with other parts of the FL peninsula is that if you want to evacuate, then it's likely that everybody else does too, so you have a good chance of getting stuck on a highway when the storm rolls over you. For me, Florida was nice for the first year or two, then I got tired of the heat, insane humidity, bugs, black mold, the spring breakers, and the crabgrass. But if you like sunny weather, golfing and palms then you might like it there.

Right now I live in eastern Washington, and I'll probably retire here. We're in the foothills of the Rocky Mountains, and it reminds us a lot of central Alaska, but with better weather and cheaper cost of living. Just across the border in Idaho is Coeur d'Alene. Very pretty area, they treat retirees very well, and there's a lot to do if you're the outdoorsy type and don't like crowds. There are lots of away-from-it-all little towns near lakes or rivers in this area of Pacific Northwest. Post Falls, Hayden Lake, Spirit Lake, Sandpoint, Ponderay, Bonner's Ferry, Spokane Valley, Nine Mile Falls, Long Lake, Tumtum, Kettle Falls, etc. Plus you can't throw a stick around here without it landing in a ski resort or national forest.

Over on the other side of the state you have the Cascades, and there's dozens of great small towns all over the place. Bavarian villages like Leavenworth, lots of little resort towns where you can buy a small house as a getaway that you rent out when you're not there, etc.
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galveston1
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Re: Pre-Retirement Planning

Post by galveston1 »

Thanks Aitrus. I'm somewhat familiar with the Florida panhandle myself. I was stationed at Tyndall when I was active duty. And as my username suggests, I grew up on Galveston island so I'm no stranger to storms. LOL. I think we've pretty much decided on central Florida at this point, but with 8 years left anything can happen right? But I don't think anything could deter me from living near a southern beach. A place like "Latitude Margaritaville" that TSPTiming mentioned is right up my alley.
In investing, what is comfortable is rarely profitable

spooner4
Posts: 41
Joined: Sun Dec 25, 2011 9:17 pm

Re: Pre-Retirement Planning

Post by spooner4 »

No problems with banks, since retired 13 yrs ago, purchased a Condo and 2 Homes in Florida, also purchased a home in New England, life is good..

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