Retirement Budget

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

Moderator: Aitrus

Scarfinger
Posts: 613
Joined: Mon Jan 30, 2012 12:00 am

Retirement Budget

Post by Scarfinger »

I retire in 13 years. I was just trying to get a ball park idea of what my expenses are going to be. Mainly health care and insurance expenses. Are there any retirees here that can enlighten me and other members to expenses or unexpected expenses after retiring.

Medicare premium cost?
Cost of FEHB in retirement?
Lower or higher than expected taxes?

Any other expenses that may help me plan/budget.

Thanks, Joe
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."
Following Daily Seasonal # 139921 as a general guideline.

User avatar
evilanne
Posts: 1886
Joined: Thu May 14, 2015 6:52 pm

Re: Retirement Budget

Post by evilanne »

Don't know much about Medicare except that if you are a high income earner a year or two prior to medicare eligibility, you will pay a higher medicare rate. So don't take any large distributions prior to 65.

Cost of FEHB remains the same. For tax purposes, your premiums are after tax so if you itemize you can use your FEHB premiums + long term care insurance + any of pocket medical/dental/vision expenses over 7.5 or 10% (depending on your age) of you AGI. I had several medical surgeries/procedures in 2018 but I did not reach the maximum out of pocket expenses for the year under my plan. You can look at maximum out of pocket amount as worst case scenario.

Under new tax plan, it is easy to calculate your taxes. If you are drawing from multiple sources of income i.e. Pension, TSP, SS, dividends/capital gains, rents etc. you may need to withhold more from OPM or TSP or make quarterly payments to IRS. Since they only withhold on the amount they pay you and others don't pay any taxes, when you add everything together you are likely to owe. TSP's default withholding for life expectancy payments, "As if married with 3 dependents" is crazy and may subject you to penalties at tax times.

When you draw Social Security, not all of it is taxable. There are 3 rates depending on your income: 0%, 50% or 85%. I think most of the people here at TSPCenter will be taxed on 85% of the SS Income.

Finally, for planning purposes don't look at your salary...look at how much you actually take home and what your needs will be. Take away things like SS, FERS & TSP contributions that you will not be paying when you do retire. Many advisors will tell you that you need 80% of your salary as a rule of thumb. If you are out of debt and have house paid off, you need way less. There are some detailed models you can use that factor in spending, income streams for retirement that are available online. A good source of info is https://www.early-retirement.org

sprakass
Posts: 65
Joined: Fri Oct 01, 2010 9:48 am

Re: Retirement Budget

Post by sprakass »

Everything Evilanne mention is correct. Max out tsp, and have saving stash else where.Begin retired exactly two years today.Have not touch my Tsp. My stash, fers supplement, retired income plus wife working is great. Living a great life in Europe. My Tsp percentage account and Tsp center accout are still the same high risk.

23V23C
Posts: 55
Joined: Sun Sep 24, 2017 2:13 pm

Re: Retirement Budget

Post by 23V23C »

Similar to you, I am 9 years out from retirement and am eager to hear what the Retirees in this forum can share. I found some good advise and guidance for Feds from https://www.federalretirement.net/ on planning budgets/Medicare/FEHB/taxes...etc.

tahoe1167
Posts: 4
Joined: Fri Sep 08, 2017 7:06 am

Re: Retirement Budget

Post by tahoe1167 »

So to continue the topic on taxes, how would you go about filing out your W4-P? Do the default? thank you...

Scorpio70
Posts: 432
Joined: Thu Dec 24, 2015 11:49 am

Re: Retirement Budget

Post by Scorpio70 »

Evilanne is right on everything. I would add that you want to keep the FEHB no matter what, some veterans think that they can just use the VA and that will be fine. You want to have choices in healthcare as you age.

User avatar
evilanne
Posts: 1886
Joined: Thu May 14, 2015 6:52 pm

Re: Retirement Budget

Post by evilanne »

I don't remember ever filling one out https://www.irs.gov/pub/irs-pdf/fw4p.pdf TSP has their own form but you need to select your correct filing status and make sure you withhold enough extra from at least one source of income so that you are paying at least 90% of taxes due each year. You can change your withholdings from OPM pretty easily online at anytime once you retire.

Social Security doesn't withhold anything unless you request that they do and withholding is on percentage basis. There is a separate form for that https://www.irs.gov/pub/irs-pdf/fw4v.pdf

Midway
Posts: 198
Joined: Tue Feb 28, 2012 6:09 pm

Re: Retirement Budget

Post by Midway »

It's the little things that add up. I scrutinize anything that is a subscription/monthly payment. They add up and drain you.

Don't forget to budget for:
gym memberships
hobby costs
spouse hobby costs
coffee
insurance (car, boat, home, etc...)
registration (car, boat, home, etc...)
tv services
internet
cell phone(s)
transportation costs (fuel, tolls, hotels, airfare)
home and yard maintenance
auto maintenance
new auto
new computer
pet food
veterinarian fee

User avatar
aev
Posts: 37
Joined: Tue Dec 21, 2010 8:43 am

Re: Retirement Budget

Post by aev »

best to place back enough metals (gold/silver) to pay your property taxes until you are 100. worse case they will never be able to take your house.
plan on buying 2 new cars in retirement if you even think you will be driving well into your 80's or 90's.
plan on replacing everything on the house in retirement. that's roof, ac, heater, water tank, etc
and yes, get rid of every subscription/monthly payment you can.
changed to 84373 from trying to follow 85660

haywoodkb
Posts: 67
Joined: Mon Aug 18, 2014 9:53 am

Re: Retirement Budget

Post by haywoodkb »

What do you mean by retirement? It's different for everyone. My previous supervisor retired and traveled around the world. literally. He visited every continent and was gone for nearly a year. Others simply have a lazy morning and build models airplanes. Go ahead, dream. Planning your retirement is more than just taxes and Social Security.

md2018
Posts: 136
Joined: Wed Sep 08, 2010 1:17 pm

Re: Retirement Budget

Post by md2018 »

Don’t forget to move to Florida, like everyone else. No Income tax here but homeowner’s taxes are high. You can pretty much find any housing cost in FL depending on your budget and and how close you want to be to the beaches.

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

Re: Retirement Budget

Post by crondanet5 »

Examine your health situation. What does your GP say about your bloodwork? How can you improve the readings? Money in the bank means nothing if you die at age 67.

Scarfinger
Posts: 613
Joined: Mon Jan 30, 2012 12:00 am

Re: Retirement Budget

Post by Scarfinger »

evilanne wrote:Don't know much about Medicare except that if you are a high income earner a year or two prior to medicare eligibility, you will pay a higher medicare rate. So don't take any large distributions prior to 65.

Cost of FEHB remains the same. For tax purposes, your premiums are after tax so if you itemize you can use your FEHB premiums + long term care insurance + any of pocket medical/dental/vision expenses over 7.5 or 10% (depending on your age) of you AGI. I had several medical surgeries/procedures in 2018 but I did not reach the maximum out of pocket expenses for the year under my plan. You can look at maximum out of pocket amount as worst case scenario.

Under new tax plan, it is easy to calculate your taxes. If you are drawing from multiple sources of income i.e. Pension, TSP, SS, dividends/capital gains, rents etc. you may need to withhold more from OPM or TSP or make quarterly payments to IRS. Since they only withhold on the amount they pay you and others don't pay any taxes, when you add everything together you are likely to owe. TSP's default withholding for life expectancy payments, "As if married with 3 dependents" is crazy and may subject you to penalties at tax times.

When you draw Social Security, not all of it is taxable. There are 3 rates depending on your income: 0%, 50% or 85%. I think most of the people here at TSPCenter will be taxed on 85% of the SS Income.

Finally, for planning purposes don't look at your salary...look at how much you actually take home and what your needs will be. Take away things like SS, FERS & TSP contributions that you will not be paying when you do retire. Many advisors will tell you that you need 80% of your salary as a rule of thumb. If you are out of debt and have house paid off, you need way less. There are some detailed models you can use that factor in spending, income streams for retirement that are available online. A good source of info is https://www.early-retirement.org
Thanks Evilanne
Midway wrote:It's the little things that add up. I scrutinize anything that is a subscription/monthly payment. They add up and drain you.

Don't forget to budget for:
gym memberships
hobby costs
spouse hobby costs
coffee
insurance (car, boat, home, etc...)
registration (car, boat, home, etc...)
tv services
internet
cell phone(s)
transportation costs (fuel, tolls, hotels, airfare)
home and yard maintenance
auto maintenance
new auto
new computer
pet food
veterinarian fee
Good advice. I have not thought much about everyday small expenses like coffee.
aev wrote:best to place back enough metals (gold/silver) to pay your property taxes until you are 100. worse case they will never be able to take your house.
plan on buying 2 new cars in retirement if you even think you will be driving well into your 80's or 90's.
plan on replacing everything on the house in retirement. that's roof, ac, heater, water tank, etc
and yes, get rid of every subscription/monthly payment you can.
Roof will definitely need replaced by retirement.
haywoodkb wrote:What do you mean by retirement? It's different for everyone. My previous supervisor retired and traveled around the world. literally. He visited every continent and was gone for nearly a year. Others simply have a lazy morning and build models airplanes. Go ahead, dream. Planning your retirement is more than just taxes and Social Security.


Well you a have to start with your expenses to know if you will have enough left over to travel the world.

Yeah it's more than taxes and social security as you can see from the above post. I knew you guys would enlighten me to some cost I had not considered yet. Mission accomplished. Now to figure out if I have the option to travel the world... or will I be limited to daily coffee trips to my back porch. :).
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."
Following Daily Seasonal # 139921 as a general guideline.

Scarfinger
Posts: 613
Joined: Mon Jan 30, 2012 12:00 am

Re: Retirement Budget

Post by Scarfinger »

Scorpio70 wrote:Evilanne is right on everything. I would add that you want to keep the FEHB no matter what, some veterans think that they can just use the VA and that will be fine. You want to have choices in healthcare as you age.
I plan on keeping my FEHB.
crondanet5 wrote:Examine your health situation. What does your GP say about your bloodwork? How can you improve the readings? Money in the bank means nothing if you die at age 67.
Clean bill of health. 5.1 A1C. Everything is great health wise. I got my Dad's genes and they live to their mid to late 80's
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."
Following Daily Seasonal # 139921 as a general guideline.

TLuke
Posts: 12
Joined: Tue Feb 13, 2018 8:33 am

Re: Retirement Budget

Post by TLuke »

We’re living on 75% of our pre-retirement income and doing just fine. We too are thinking about moving to Florida for tax advantages. Actually the FL property taxes are half what we are paying now in Omaha, Nebraska. But FL homeowners insurance may be a little higher. The great unknown right now is if Federal & state taxes/local property/sales taxes will go up as locales and the Fed tries to recoup lost revenues. And examine any investment accounts you may have external to TSP for tax withholding. We have a Schw*b account that does not withhold taxes, so that makes it a little harder to determine tax liability.

Post Reply

Fund Prices2021-04-13

FundPriceDayYTD
G $16.56 0.00% 0.33%
F $20.63 0.24% -2.65%
C $61.91 0.33% 10.73%
S $82.51 0.51% 11.20%
I $37.56 0.28% 6.13%
L2065 $13.54 0.34% 9.12%
L2060 $13.54 0.34% 9.12%
L2055 $13.54 0.34% 9.12%
L2050 $27.70 0.30% 7.33%
L2045 $12.66 0.28% 6.87%
L2040 $46.29 0.26% 6.44%
L2035 $12.25 0.24% 5.93%
L2030 $40.88 0.22% 5.43%
L2025 $11.64 0.17% 4.30%
Linc $22.75 0.09% 2.13%

Pending Allocations

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

What else

"Don't ever half-ass two things. Whole-ass one thing."
- Ron Swanson