Pros and Cons: Monthly, Quarterly, Annual Installments?
Moderator: Aitrus
Pros and Cons: Monthly, Quarterly, Annual Installments?
Hi All,
I’ll be retiring in little over a year, and been wondering about which installment option to make when I’m ready to dip into my TSP. I know a lot has to do with personal situation, but that aside, am wondering about any advantages or disadvantages the available installment options have. Anyone care to share their opinion? Appreciate your time.
Jay
I’ll be retiring in little over a year, and been wondering about which installment option to make when I’m ready to dip into my TSP. I know a lot has to do with personal situation, but that aside, am wondering about any advantages or disadvantages the available installment options have. Anyone care to share their opinion? Appreciate your time.
Jay
Re: Pros and Cons: Monthly, Quarterly, Annual Installments?
that’s a very open ended question for a personal decision. Very tough to be able to commit to an answer for you. Do you have any other information you’d like to share? Is this your only income or do you have a pension? So you have family/mortgage/high tax rate?
Too many variables.
Too many variables.
Re: Pros and Cons: Monthly, Quarterly, Annual Installments?
I plan to take monthly payments based on Life Expectancy. That will give me a monthly payment for the rest of my life with a cost of living increase. I can still use the monthly strategies and interfund transfers to manage the money and increase my returns.
Other options don't allow you to manage the funds, or they leave you with static monthly payment that does not account for inflation.
Other options don't allow you to manage the funds, or they leave you with static monthly payment that does not account for inflation.
Re: Pros and Cons: Monthly, Quarterly, Annual Installments?
I am retiring at the end of the year with 35 years (including unused sick leave). With my SS I will retire at about 60% of my current salary. I have no debt other than household expenses, utilities, taxes, etc. I was planning on taking about 2% of my TSP in monthly installments, which would equal about 15% of my current income. But I currently only need about 60% to meet my current expenses. So the TSP is is just extra income.
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Re: Pros and Cons: Monthly, Quarterly, Annual Installments?
I am considering retiring at the end of this year. I will have 35 years plus a year of accumulated sick leave. I will be 57 years old so I would be using the offset until I reach 62.
My goal was 65% replacement of current income. I will be using about 4 to 5% a year withdrawl from TSP. There was a retirement calculator I received from joining a website called FERSGUIDE which I felt was very useful. I am sure there are many others.
My goal was 65% replacement of current income. I will be using about 4 to 5% a year withdrawl from TSP. There was a retirement calculator I received from joining a website called FERSGUIDE which I felt was very useful. I am sure there are many others.
Re: Pros and Cons: Monthly, Quarterly, Annual Installments?
I think the monthly option is the most common and simple option, you know how much you will have coming in each month and it is withdrawn the same time each month. If you use life expectancy calculations (letting TSP calculate) it adjusts automatically each year and you don't have to do anything extra when it come time for RMDs.jbirdway wrote:Hi All,
I’ll be retiring in little over a year, and been wondering about which installment option to make when I’m ready to dip into my TSP. I know a lot has to do with personal situation, but that aside, am wondering about any advantages or disadvantages the available installment options have. Anyone care to share their opinion? Appreciate your time.
Jay
As far as the annual option, if you don't need the money, it allows you account to grow more if you wait until the end of the year to make your withdrawal. Same arguments of whether to frontload you contributions while working would apply in reverse. It all depends on the market and how you have your money invested. If the market tanks you really don't want to sell your shares at a low point either. If you are going to do annual option, I would suggest you select a month that has low volatility, if that is possible.
Having done the paperwork with TSP, I would suggest anything that does not require having to deal with them any more often than necessary and make sure you have enough taxes withheld.
Re: Pros and Cons: Monthly, Quarterly, Annual Installments?
Can one fund be selected for the withdrawal (e.g. G fund), or is it split across all funds you hold at the time?evilanne wrote: It all depends on the market and how you have your money invested. If the market tanks you really don't want to sell your shares at a low point either. If you are going to do annual option, I would suggest you select a month that has low volatility, if that is possible.
Can you choose the day of the month for withdrawals, as you can the month for an annual withdrawal? If so, you could move everything to G prior to the withdrawal.evilanne wrote:I think the monthly option is the most common and simple option, you know how much you will have coming in each month and it is withdrawn the same time each month.
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"Put all your eggs in one basket and then watch that basket."
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- Dean Witter
"Put all your eggs in one basket and then watch that basket."
- Andrew Carnegie
Re: Pros and Cons: Monthly, Quarterly, Annual Installments?
12squared,
It is currently taken proportionally from each of the funds. I wouldn't recommend moving funds around based on the payment date.
Monthly date is based on the day they initially processed full withdrawal, which may take a couple of weeks from the time you send/fax it.
I don't know if you can specify date for annual withdrawal--just that it would have to be prior to December 31st of each year for RMDs.
With outside IRA, quarterly or annual withdrawals might make more sense--to make withdrawals when cash is available without having to sell shares.
It is currently taken proportionally from each of the funds. I wouldn't recommend moving funds around based on the payment date.
Monthly date is based on the day they initially processed full withdrawal, which may take a couple of weeks from the time you send/fax it.
I don't know if you can specify date for annual withdrawal--just that it would have to be prior to December 31st of each year for RMDs.
With outside IRA, quarterly or annual withdrawals might make more sense--to make withdrawals when cash is available without having to sell shares.
Fund Prices2024-03-28
Fund | Price | Day | YTD |
G | $18.15 | 0.05% | 1.05% |
F | $19.08 | -0.06% | -0.74% |
C | $82.21 | 0.11% | 10.55% |
S | $82.43 | 0.30% | 6.92% |
I | $42.57 | -0.24% | 5.95% |
L2065 | $16.38 | 0.02% | 8.37% |
L2060 | $16.39 | 0.02% | 8.38% |
L2055 | $16.39 | 0.02% | 8.38% |
L2050 | $32.73 | 0.01% | 6.95% |
L2045 | $14.91 | 0.02% | 6.58% |
L2040 | $54.38 | 0.02% | 6.22% |
L2035 | $14.34 | 0.02% | 5.79% |
L2030 | $47.67 | 0.02% | 5.38% |
L2025 | $13.15 | 0.03% | 3.43% |
Linc | $25.61 | 0.03% | 2.82% |