mmmmmbeer wrote:Alright so I'm just shotgunning this Anne. I'm 42.5, I will probably retire at 50.
My TSP balance as of today is 260k.
Projected balance @ 1st eligible in 7 years:
9% avg ROR = $721,480.00
10% = $761,572.49
11% = $803,736.69
12% = $848,063.86
14% = $943,589.80
Even if I started right now putting everything going forward into a Roth TSP that's what... 24k x 7 years = 168k and then I start withdrawing from all of it combined. I don't know how much it will grow enough in comparison of the 260k I currently have in traditional.
Plus my tax rate right now is higher than it will be then for sure. Between the wife and I we're @ around 200k. I don't think between her salary, and my pension/tsp we'll be at that later, so taxes now will be more expensive then later.
At 10% rate of return, $168K would be about $250K in Roth at retirement plus government matching that would be in traditional. The big advantage of Roth is you don't have to take RMDs at age 70.5.
You are probably right on the tax rate being lower in retirement, at least initially. If you had $750K at retirement and withdrew $5K/month, assuming 10% RoR you would have ~$1,592,000 at age 71 when RMDs kick in https://www.tsp.gov/PlanningTools/Calcu ... dentAge=50
. If you consistently averaged 10% in retirement look at your RMDs at age 71 and beyond: https://www.tsp.gov/PlanningTools/Calcu ... dentAge=50
Much of it depends on your life expectancy, but if either you or your wife dies, the surviving spouse's taxes will likely be more with a single filing status.
If you retire in 7 years, kids will be 15 & 20, one in high school and one half way through college if you are lucky. I would worry more about funding their education without any huge debt rather than giving them a large sum later. Once they are out on their own, your tax deductions will decrease.