Get the matching amount. That's 100% the best advice. After that pay off any debt that accumulates faster than your investment can grow. If you don't have high debt though, buy buy buy while it's low.
I took a TSP loan a few years back to pay off my credit card, which was becoming a hassle to deal with. Easier to pay 2.5% to TSP than 14% to bank of the month club.
This is a great perspective. Once you get beyond the match (taking free money should be a universal 'heII yeah!') it is definitely all about priorities. there is no one size fits all beyond that. In our case, we max out and still put a little bit away for college. but if we had to pick because money is tight, we would prioritize retirement because there are scholarships and loans for college and no such thing for retirement. and i'm of the belief that one of the best gifts you can give your kids is your own financial security because that's one less thing for them to worry about as you age.
Rule of 55 is great if u are deferring your federal pension to MRA (57 or 60) and don’t want federal health insurance (medical/vision/dental) for life. Costly option if u leave at 55.
@@shawnnahass6886 turns out those benefits aren’t as great as you thought. Fehb is going to be secondary now after this latest ruling that we will need to take Medicare part B regardless if we also want to keep paying for our fehb premiums. Leaving early will cause gap years but most early retirees have planned for that. I’m considering reducing my income through rental property in order to qualify for ACA subsidies until I reach 65. That’s a risk I’m willing to take to do what I want with my remaining good years.
If you had your kids after your late 30's or early 40's, you can use your Roth TSP as a vehicle for saving for college. At 59 and a half, you can withdraw tax free just as your kids are in college. The benefit is that most schools don't count retirement accounts as assets in determining aid but they do consider 523 plans as assets .
Why that's one way to go, it's much smarter to use your retirement money for your *_own_* retirement and insure you have enough for retirement before considering setting money aside for college.
Get the 5% Match Save 3-6mos Household Expenses/Emergency Fund PAY OFF ALL debt ASAP; carry less than 10% INCREASE Retirement Investment Save for Home/Car Maintenance Save for College INVEST more in Retirement
Put your eggs in different baskets folks, I have 2 outside Roth IRA's in Fidelity & Vanguard and only contribute 10% to the TSP, in case I need cash right away and the rain starts pouring, have a an all cash acct. that can be used to check-mate Murphy's law.
You also must remember to avoid the over payment if you own more than one IRA. The grand total to contribute per year is 7500 per 50 year old and older, and only 7000 for those under the age of 50. It is not 7500 per Roth/Traditional IRA.
Once upon a time, my mail stop at Lockheed Missiles & Space Co. Sunnyvale, CA was AFPRO/TMF. My federal coworkers and I would say it stood for "Too Much Fun" being a chapter in a Clancy novel. Enjoy LIfe!
My pet peeve is watching my younger co-workers got out to eat for lunch everyday, when they could brown bag their lunch and invest the extra money into their TSP. Going out to eat once in a while is OK, but everyday, sometimes more than one meal per day, seems too extreme to me. Wait until they retire and see how much less it will be than if they invested at least $25 per week.
Agree with everything you said but I didn't pay off my bad consumer debt before maximizing this last January because my wife and I will be selling our home this month and I planned on using those profits to payoff all bad consumer debt and down-payment on new home. Curious on your thoughts with that strategy
I max out my TSP contributions including 50+ age catch up contributions, 100% C Fund which has performed very well over 23 years. Had some extra cash so I put it in a Schwab taxable account S&P indexed fund, for which I used post tax dollars, have to pay capitals gains taxes on the dividends every year, and no matching of course. I believe the advantages of the taxable account (besides the TSP-like very low maintenance costs) is being able to withdraw without taxes since it was already taxed twice? The TSP is much better due to tax deferment, generous agency matching, and no tax on unrealized gains. Will have to pay taxes when I draw down my TSP, but by then I will be in a much lower tax bracket.
Can you explain the new Social security change from age 62 to 67. If I'm retiring at 56.5 with 39 years will I get supplement till just 62 or will I get it till I'm able to claim social security ? If not, then I'm forced to work till I have 50 years of service. That's not good. Still wondering how they can change my retirement as I approach 1.5 years left. thank you michael
As a dual status technician forced to retire at age 60 from my civilian job due to my no longer being eligible militarily, they pay the FERS Supplement until I reach 62. The feeling I get is that they figure that I am eligible for Social Security at that point and can use that along with my FERS pension at 60. My Social Security Full Retirment Age or FRA was determined to be 67 since I was born in the early to mid 60s. When you decide to choose your Social Security is determined more by your birth year, and has no bearing on what you have put time wise into the Federal Employment System. You can take from your TSP post 55 years of age no penalty, if you have completed 30 years of service, otherwise you have to wait till you are 59.5 years of age.
@@richardallen1816 I understand how the supplement works and why. It was announced this week (voted by congress) to raise the social security minimum age from 62 to 67. Do to people living longer. so we do not have the option to claim at 62 starting. It will be minimum age of 67 or older. so if I retire at 56.5 years with the gov. with 39 years of service. and no SS till I'm 67 will the supplement end at my birth Month of my 67 birthday? This is a new passed change
Please meet with a personnel specialist BEFORE you retire. You may be confusing the Social Security and the Federal Retirement System. Social Security is a 3 part Social Insurance Program. If you work the money is automatically taken out of your check for future use. For retirement purposes anyone born 1960 or later receives their FULL retirement benefit at 67. You are allowed to take a reduced retirement benefit at 62 (it’s about a 30-32 percent reduction) provided you do not earn over a certain income from work. As a federal employee you receive your pension and FERS Supplemental payment if you qualify and retire prior to age 62( in your case minimum 30 years of service at your minimum retirement age). The Supplement is to bridge the gap until you turn age 62. It stops are age 62 regardless if you take Social Security or not. That’s a personal decision if you want to take a age reduction in your Social Security benefit.
The only problem will be when you have too much in the TSP when manditory distributions kick in and part of your distribution is taxed at a higher rate. My goal is to never pay more than the current 12 percent tax when I retire. So by diversifiying my portfolio and paying some additonal tax now at a lower rate benefits me later.
There are always qualified charities to give too, to help lower your tax burden...College payments can also be written off if you fronted them. Losses on Stocks can be written down. Just some suggestions, and not financial advice, as I am not licensed to offer that in any way shap or form. Just my opinion on things.
@@sylvesterstain If you lose your job and owe a TSP loan balance, TSP will consider it a distribution if you cannot pay it back. 10% penalty to IRS. If you took it under court order for financial hardship, my belief is that the TSP would not charge the 10% per IRS bylaws, due to the judgement in the case. Consult with a proper TSP representative to explain it though. This is just my opinion on how I understand it to work.
Anybody know if when on your pension and the social security supplement, does also taking your TSP by a set amount monthly affect your pension or social security supplement dollar amount?
I taking monthly withdrawals from TSP and IRA along with pension while I delay Social Security to do Roth conversions. All treated as ordinary taxable income that does impact if Social Security is taxable, starting when I am 63 if Medicare will be more expensive. Not sure by what you mean by "supplement dollar amount".
I am maxing mine out. I am also finding a Roth IRA. I started while working overseas and am fighting to continue to fund both as a priority.
Get the match and then pay off debt and they use the money that you were paying off the debt with to fund the TSP
Get the matching amount. That's 100% the best advice. After that pay off any debt that accumulates faster than your investment can grow. If you don't have high debt though, buy buy buy while it's low.
Sure way to lose. Max it out, $20,500.
Its your money, save it!!
I took a TSP loan a few years back to pay off my credit card, which was becoming a hassle to deal with. Easier to pay 2.5% to TSP than 14% to bank of the month club.
Thanks for sharing!
This is a great perspective. Once you get beyond the match (taking free money should be a universal 'heII yeah!') it is definitely all about priorities. there is no one size fits all beyond that. In our case, we max out and still put a little bit away for college. but if we had to pick because money is tight, we would prioritize retirement because there are scholarships and loans for college and no such thing for retirement. and i'm of the belief that one of the best gifts you can give your kids is your own financial security because that's one less thing for them to worry about as you age.
Thanks for sharing!
Haws, you got this right!
My pleasure :)
Rule of 55 allows access penalty free only for the TSP funds not outside IRA’s. So retiring early is still an option with the TSP
Rule of 55 is great if u are deferring your federal pension to MRA (57 or 60) and don’t want federal health insurance (medical/vision/dental) for life. Costly option if u leave at 55.
@@shawnnahass6886 turns out those benefits aren’t as great as you thought. Fehb is going to be secondary now after this latest ruling that we will need to take Medicare part B regardless if we also want to keep paying for our fehb premiums. Leaving early will cause gap years but most early retirees have planned for that. I’m considering reducing my income through rental property in order to qualify for ACA subsidies until I reach 65. That’s a risk I’m willing to take to do what I want with my remaining good years.
If you had your kids after your late 30's or early 40's, you can use your Roth TSP as a vehicle for saving for college. At 59 and a half, you can withdraw tax free just as your kids are in college. The benefit is that most schools don't count retirement accounts as assets in determining aid but they do consider 523 plans as assets .
Why that's one way to go, it's much smarter to use your retirement money for your *_own_* retirement and insure you have enough for retirement before considering setting money aside for college.
Get the 5% Match
Save 3-6mos Household Expenses/Emergency Fund
PAY OFF ALL debt ASAP; carry less than 10%
INCREASE Retirement Investment
Save for Home/Car Maintenance
Save for College
INVEST more in Retirement
Put your eggs in different baskets folks, I have 2 outside Roth IRA's in Fidelity & Vanguard and only contribute 10% to the TSP, in case I need cash right away and the rain starts pouring, have a an all cash acct. that can be used to check-mate Murphy's law.
You also must remember to avoid the over payment if you own more than one IRA. The grand total to contribute per year is 7500 per 50 year old and older, and only 7000 for those under the age of 50. It is not 7500 per Roth/Traditional IRA.
@@richardallen1816 only put 3500 in each,
most is in index funds outside Roth IRA’s being diversified is the way to go
@@richardallen1816 No. $6000 and $7,000 for IRAs.
Thanks for sharing!
Once upon a time, my mail stop at Lockheed Missiles & Space Co. Sunnyvale, CA was AFPRO/TMF. My federal coworkers and I would say it stood for "Too Much Fun" being a chapter in a Clancy novel. Enjoy LIfe!
Thanks for sharing!
My pet peeve is watching my younger co-workers got out to eat for lunch everyday, when they could brown bag their lunch and invest the extra money into their TSP. Going out to eat once in a while is OK, but everyday, sometimes more than one meal per day, seems too extreme to me. Wait until they retire and see how much less it will be than if they invested at least $25 per week.
Agree with everything you said but I didn't pay off my bad consumer debt before maximizing this last January because my wife and I will be selling our home this month and I planned on using those profits to payoff all bad consumer debt and down-payment on new home. Curious on your thoughts with that strategy
It'll probably be fine you'll just want to get your consumer debt as soon as you can.
I max out my TSP contributions including 50+ age catch up contributions, 100% C Fund which has performed very well over 23 years. Had some extra cash so I put it in a Schwab taxable account S&P indexed fund, for which I used post tax dollars, have to pay capitals gains taxes on the dividends every year, and no matching of course. I believe the advantages of the taxable account (besides the TSP-like very low maintenance costs) is being able to withdraw without taxes since it was already taxed twice? The TSP is much better due to tax deferment, generous agency matching, and no tax on unrealized gains. Will have to pay taxes when I draw down my TSP, but by then I will be in a much lower tax bracket.
$6,000 to Roth IRA every year likely better option before starting taxable brokerage account.
I have a taxable brokerage account I contribute 200 bucks a month too. Tsp is great, but I want access to some of my money.
You don't have to go "On and On" about it.
@@Tolohtony was I?
@@Just_Stevo th-cam.com/video/ljuJnUYozUg/w-d-xo.html
@@Just_Stevo No. You weren’t. I do hope you are at least using the TSP for the matching 😀
@@noway5976 oh I get the match plus some. I'm at 15 percent
Can you explain the new Social security change from age 62 to 67. If I'm retiring at 56.5 with 39 years will I get supplement till just 62 or will I get it till I'm able to claim social security ? If not, then I'm forced to work till I have 50 years of service. That's not good. Still wondering how they can change my retirement as I approach 1.5 years left. thank you michael
As a dual status technician forced to retire at age 60 from my civilian job due to my no longer being eligible militarily, they pay the FERS Supplement until I reach 62. The feeling I get is that they figure that I am eligible for Social Security at that point and can use that along with my FERS pension at 60. My Social Security Full Retirment Age or FRA was determined to be 67 since I was born in the early to mid 60s. When you decide to choose your Social Security is determined more by your birth year, and has no bearing on what you have put time wise into the Federal Employment System. You can take from your TSP post 55 years of age no penalty, if you have completed 30 years of service, otherwise you have to wait till you are 59.5 years of age.
@@richardallen1816 I understand how the supplement works and why. It was announced this week (voted by congress) to raise the social security minimum age from 62 to 67. Do to people living longer. so we do not have the option to claim at 62 starting. It will be minimum age of 67 or older. so if I retire at 56.5 years with the gov. with 39 years of service. and no SS till I'm 67 will the supplement end at my birth Month of my 67 birthday? This is a new passed change
Look for CNBC life changes April 3 2022
Please meet with a personnel specialist BEFORE you retire. You may be confusing the Social Security and the Federal Retirement System. Social Security is a 3 part Social Insurance Program. If you work the money is automatically taken out of your check for future use. For retirement purposes anyone born 1960 or later receives their FULL retirement benefit at 67. You are allowed to take a reduced retirement benefit at 62 (it’s about a 30-32 percent reduction) provided you do not earn over a certain income from work. As a federal employee you receive your pension and FERS Supplemental payment if you qualify and retire prior to age 62( in your case minimum 30 years of service at your minimum retirement age). The Supplement is to bridge the gap until you turn age 62. It stops are age 62 regardless if you take Social Security or not. That’s a personal decision if you want to take a age reduction in your Social Security benefit.
The match doesnt count against the max though correct?
I think right. But I'm no actual expert.
Correct. Only the employees contributions count towards the max (excluding agency contribution)
I am not maxing out my TSP but am putting more in to help lower my tax burden. I have very few other options.
The only problem will be when you have too much in the TSP when manditory distributions kick in and part of your distribution is taxed at a higher rate. My goal is to never pay more than the current 12 percent tax when I retire. So by diversifiying my portfolio and paying some additonal tax now at a lower rate benefits me later.
There are always qualified charities to give too, to help lower your tax burden...College payments can also be written off if you fronted them. Losses on Stocks can be written down. Just some suggestions, and not financial advice, as I am not licensed to offer that in any way shap or form. Just my opinion on things.
Thanks for sharing!
A tsp is an emergency fund, loan when you need it without applying. Max that baby and forget it!
I guess the question is what would happen if you somehow lost your job? But I still agree with you. lol.
@@sylvesterstain No more contributions, im guessing. Probably still be able to keep and manage the existing funds through tsp.
@@jefferywalton8176 ya but you would not have emergency fund. I assume that’s the point of not using your TSP loan as your emergency fund.
@@sylvesterstain If you lose your job and owe a TSP loan balance, TSP will consider it a distribution if you cannot pay it back. 10% penalty to IRS. If you took it under court order for financial hardship, my belief is that the TSP would not charge the 10% per IRS bylaws, due to the judgement in the case. Consult with a proper TSP representative to explain it though. This is just my opinion on how I understand it to work.
Thanks for sharing!
Anybody know if when on your pension and the social security supplement, does also taking your TSP by a set amount monthly affect your pension or social security supplement dollar amount?
I don't think it does because it isn't considered earned income.
No
I taking monthly withdrawals from TSP and IRA along with pension while I delay Social Security to do Roth conversions. All treated as ordinary taxable income that does impact if Social Security is taxable, starting when I am 63 if Medicare will be more expensive. Not sure by what you mean by "supplement dollar amount".
No but it’s all taxable unless Roth