Can You Retire with Only $400,000 in Your TSP?
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- เผยแพร่เมื่อ 2 มิ.ย. 2024
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Consider yourself truly Blessed to have a pension AND a TSP account most ppl don’t have anything but Social Security!
Most people dont want to even try to save.
@@inotill not true! You can’t save if you’re making below a living wage!
@@inotill Most people aren't receiving matching funds or even make enough to live on.
Fed service is not a bad gig. Been good to my wife and l. Not super sexy, but it does have some good financial bennies. TSP, SS and FERS and how you manage those three things can make for financial security.
Exactly ! The people who do not have a pension or TSP, support these systems.
Excellent example. I have 79 wirkdays and counting until my retirement🎉
Congratulations 👏🏼👏🏼👏🏼
When I retired with 30 years plus 1 year sick leave, I thought my net (take home) pay would be about 31% of my working net pay (no survivor's benefit reduction). However, with the FERS annuity supplement and less withholding for taxes, SS, TSP contributions, etc, my net income turned out to be about 50% of my working net pay. This more than covers all of my bills and expenses and I have not had to dip into my saving, TSP, or other investments. With cost of living adjustments and living long enough, your pension could pay out more than your TSP.
annnnd when the FERS annuity supplement goes away/when you take your SS benefit, more than likely it'll be greater than that annuity supplement. Wouldn't be surprised if FERS pension + SS turned out to be 60-70% of your working net pay.
50%? Sounds bogus. Who did you work for ? That's unheard of and would be awesome
@@jessemarkle5413 Several factors as to why my working pay stub had so much withholding and why my OPM retirement net check is about 50% of my working net pay: (1) I was a federal scarce-specialty physician with seniority and for the last 3 years was making as much as the President of the United States (minus the perks and Secret Service) so a lot of my pay was in the top tier tax bracket. (2) While working, my pay was divided over 26 pay periods so it was like I was being paid 13 months/year as opposed to 12 months/year in retirement. (3) I was maxing out my annual allowable TSP contributions plus catch up plan (about $1,000 every 2 weeks or $2,000/month) but now with zero TSP contributions in retirement. (4) I retired at age 59.5 and qualify for the FERS annuity supplement until age 62 (bridge to Social Security) which is free bonus money of $1,764/month (again based on my high salary) in retirement that I didn't get while I was working. (5) My wife has her own state pension and we long ago paid off our forever home with zero debt and are beneficiaries of each other's 401k/TSP accounts and are in excellent health, so we both opted for no survivor's benefits with our pensions, thus maximizing our respective pension checks. (6) With a sharp drop in income we dropped down to a a lower tax bracket for markedly reduced federal taxes. (7) No SS withholding, less state tax withholding, and no Medicare withholding. (8) Dropped FEGLI while working which is a terrible deal once one gets 55+. (9) FEHB is still a great deal in retirement (my wife's state retirement health benefits cost 2.5 times as much). So my net monthly OPM check for 30+1 years of service pretty much equals my working 2 week net pay (or 50%). However, now that I am taking monthly installments from my TSP, I have increased federal and state withholding from my pension because it is easier to make those adjustments via OPM, although those taxes are really for the TSP income and not my pension income. When I turn 62, I will lose the FERS annuity supplement and I probably won't file for SS until age 67.
@@jessemarkle5413 , do the math for yourself.
@@jessemarkle5413 It depends what ones working net pay looks like. If you're putting a big chunk of money into your TSP, your net pay will be fairly low.
As I approach my MRA, my net pay is only about 1/3 of my gross with 1/3 going to taxes, insurances and other similar deductions and 1/3 into retirement savings.
My guess is their net working pay may have been similarly low.
I retired 2 years ago from Department of Justice (disabled) without supplement (40%) @ age 51. Now 53. Moved from Chicago Illinois to Kansas. I owned my house in Kansas. Never touched my TSP and can with no penalties (50 - law enforcement) I recently started part time teaching (substitute teacher). Humans are adaptable. You're adjust when necessary. I never touch my emergency fund. Cash on hand. I am a super saver. Many people don't fix this category.
Outstanding. Best wishes.
20 years U.S. Navy + 14 years Federal Government + V.A. Disability Pension. At what point do you just cut your expenses for a less lavish Retirement, but actually LIVE to see it ? I've sadly seen 3 SES's pass before they made it to Retirement. There really is no "Magic Number", just good fiscal discipline and living within one's means. There's no shame in part-time work, while Semi-Retired either.
You don’t get to be an SES without being success driven. Even those that retire end up in industry. Retirement is for people who really don’t like working.
@@Dave-sw2dm Retirement is not just for "People who really don't like working". You're not going to wish that you "Worked a few more years", just prior to meeting your maker. Working is a means to an end, unless you are a rare inventor or entrepreneur. An SES is neither, but a highly capable manager. None of these senior Defense Contractors work on weekends. Do they just "not like working on Saturday's" ? Same logic.
@@jayp4114 , I was making a generalization just like you did. None of us are promised tomorrow. Doing what you love is important. Some love their careers and would be bored with retirement. Some are able to balance the things they love to do outside of work with accomplishing their work objectives.
No one should wait to retire to live life because you may not live that long.
But retiring without being able to afford to have adventures would be boring.
I do know people who said they wished they would have prepared better for retirement.
I do know people who said they wished they traveled more when they were younger.
I did it. I had planned to work until 2025, yet in 2022, I abruptly retired to spend time with my aging parents and grandchildren. I don't have quite as much money as I had planned, yet it doesn't take money to enjoy and spend time with your loved ones.
@@Dave-sw2dm For most people - they don't continue working for the joy. That's a lie they tell people and themselves. Once you truly hold them accountable you'll heard the truth. It's economic. They can't afford to retire because they are either big spenders or afraid to lose their lifestyle. I consulted with many. Doctors, attorneys, Executives, educators and famous rappers. A popular professor said he wanted to work until 80. He was a CEO of the family six dealerships. They had to sell the business. He been an adjunct professor for 20 years. Convulse business environment turned college professor for the love of teaching over the age of 62. Really? Most top government officials don't have any idea about creating passive income.
This was soooooo helpful thank you!!
Thanks. Lots of great information.
This is exactly what I've told some people. Just do some simple calculations like this to approximate what things will be like in retirement. Looking at your net pay with or without including your TSP gives you a good idea. Of course, in looking at what you net now (before retirement) you do have to consider how sufficient that income is. If that's more than enough, and you're saving more money each month, able to take extra vacations or buy more things that you like, that's good. If you're barely scraping by, running up the credit card balances or living on the streets, that won't change in retirement and may get worse.
Thank u so much for this! Great learning video!
Your videos are so concise and very easy to understand. Thank you for providing this great information!
Great info AGAIN
Thank you. Best explanation I have seen to date.
Great information!
Another great class, each week you've giving us another takeway to make retirement less stressful - Thanks Dallen!
I retired last summer with far less than that. Could not deal with that Postmaster another day.
Yeah similar… r u making it?
@@felicia19061 Yes, i qualified for the supplement, so getting nearly $2800 a month and do a little Uber Eats on the side. Most importantly, i am MUCH happier and MUCH less stressed out.
I retired at 62 with 39 years and with my FERS annuity and S.S. I have not even had to think of drawing from my TSP. The 4% rule that this individual speaks of is a rule for individuals with S.S. and an IRA. Receiving a FERS annuity and SS should leave you enough to live on comfortably, if you don't have a mortgage any longer.
Getting ready to retire from the bop. Nobodies explained tsp to staff ever. Luckily I've put in but damn, sure ain't 400gs. This is crap. Would've been nice if we knew how odds and ends cause retirement pay seems poorhouse after all these years
Love the video. But. Who the heck is living on less than 2gs per month after all these years vested? Ridiculous and a shame. Ramen. Noodles and hotdogs ! Yeah
Very helpful video, I didn’t even know about the SRS supplement as a Special Provisions Employee.
This is great information
Always great info! Thanks so much for all the work you put into this channel.
Thank you so much for your support and commenting!
Thank you and GOD Bless!!!
I’ve done a lot of guesstimates. Now is the time to sit down and figure out the actual numbers and the trade offs between retiring at 62 and 30 or “one more year”. Also the trade offs between drawing more TSP while holding off on SS.
I never looked at it like this before. This was a master class, thanks
Glad you enjoyed it!
Having a million dollars in one's TSP sounds like a lot, but it is really only a starting point of real investment growth and not a great end goal for a married couple to retire on. It's not until your investments reach a critical mass in the range of $1M to $1.5M that the money starts making real money and the growth curve goes from linear to exponential. For example $100,000 invested in a TSP that makes 10% in a year (typical C Fund growth) only made you $10,000. But 10% growth on $1M is $100,000 which is talking some real money.
Unless you live in the high-cost area of the east or west coast your $1.5m is just plain silly. I retired with 39 years in FERS and S.S. and I have no need to even touch my TSP account.
Minus taxes😂
Except the years one's TSP is down 10% or more.
@jojowhite9296 please what is FERS? Like a pension? Thanks
Sheesh...1mil is a lot though 😢...I mean we still have to live our life now and plan for retirement ....and how much does the average person make, plus dealing with inflation, caring for a family etc Sigh....
His video honestly gives me hope...because I keep hearing this 1-5mill number and it's seems impossible which makes retirement seem scary
Sure you can. Average TSP balance is about 182K. Try to retire with one wife (who may have a career also), little debt and you should be able to easily live of your FERS pension and Social Security only. TSP can be your reward for not spending money on stupid stuff over the years and making poor choices.
How can average TSP be that low? Is that including people who entered federal service as a second career? Then they may have a 401 K as well as the TSP. Being in the C fund for 30 years would have easily put someone over a million dollars.
@@Dave-sw2dm nope lot of other factors. Did they take out loans against the TSP over the years? I grade 9 would not have as much as a GS-15. Also did they put everything into G fund or C fund? $182K is not that low. Go check the average 401K balance to compare
@@bannertraveller5879 , considering that the OP said live conservatively and save for the future, After a 30 year career, 182k is a low balance at retirement. The purpose of the TSP is to save for retirement. Yes, there are a lot of reasons why some people don’t have more, but those people will probably struggle trying to live off SS and FERS pension so will probably have to work until 68 or longer.
Taxes kill everything
Thank you. Your calculations are the same ones I've been doing. Glad to know my approach makes sense. So hard to decide right now with the inflation.
Are you basing the 4% rule on G fund alone or a mixture of the funds
@@b.williams3095 Neither, really. This will only account for the first year or two. I want to roll over my TSP into a Roth outside the TSP and then do something else with it. Not sure what yet, but I am sure staying in the G fund would be a worst case scenario.
Let's be realistic, let's presume you retire with you home paid off and you live in a state with no taxes on retirement income. Then 400k is probably enough unless you're living in NYC or the bay area. I live in downtown Chicago. Presuming I retire at GS13 (I'm a GS 12 and have done a temp. promotion to 13 so far), I get 20 years of service, I estimated that I will have an annual income of 85-90k per year to live off of in retirement if I take the minimum TSP withdraws. If I live off of 75-80 (just my annuity + social security), that money will go longer. I don't imagine I will live into my 90s giveing my health issues (epilepsy) and family history of blood pressure. I'll presume early 80s at best. So I'm ok with budgeting 15-20 years of actual enjoyment in retirement 65-75, then slow it down. Any money I inherit from my mom, dad, or grandparents will go to make sure I'm mortgage free. Remember as you age, you spend less on average unless you are just a compulsive spender. Minimize expenses before retirement is the key and realize that for many of us the actual window to enjoy retirement is 1-2 decades.
WRONG
@@bradenhooper2850 Y
@@bradenhooper2850 lol
@@bradenhooper2850please explain.
400gs? Wish I had that. Over 20 in and I can't invest all my pay from each check like that
Yes the scenario it’s different for federal employees and individuals with pensions. You probably don’t need as large amount from your TSP as say someone with only Social Security. At age 58 l will have 39 years of service. I am fortunate to be able to retire comfortably if l make it to 58 in a few more years.
Thank so much very helpful ❤
So glad!
Retiring overseas is an option for some.
ROTH tsp folks. The vast majority of your balance in your tsp at retirement time is from GROWTH, not from money that you actually put in. If it’s in ROTH, that’s tax free!
I tried and IRS Penalized me saying I was saving too much. I need better understanding
You may contribute to a Roth but the government contributes their share to traditional TSP
That's fine if you can afford to contribute the maximum amount. Most people on a budget can contribute more if they do it pre-tax . And no matter how you slice it, starting out with more in your tsp is better. Let me put it another way. You're familiar with that exercise where you start out with a penny and double it every day for 30 days? Think how much you would have if you started with two pennies.
Adjust your budget to fit your circumstances.
I hope $400k is enough! I’m getting ready to retire with $230k. 35 years of federal service but only 26 count because of non-permanent appointments 1989-2000. I’m going to make it work.
I got a lot less than that. But 30 years is long enough and I will make due with what I got. I will try to max out what I can in TSP but I am staying out of debt as much as possible. Maybe I can find a rich wife that wants a lazy husband. Lol. 😁👍
You mentioned that the amount can increase of TSP withdrawal based in Inflation. Your example was 16,000 and the you said if inflation is 5% next year it would be another 5%. How do you figure that out and 5% of what? Thanks in advance!
Great video, very informative.
I would be interested in seeing examples of folks who have been using the 4% rule for a number of years, and see exactly what they are pulling out each month and what their TSP balance was at start and ending balance.
@stevedavis3370 why do you care what others are doing. Hire a financial advisor and focus on your retirement plan.
@@Retired-jr3qs to test the theory, why else would you want to see those numbers???? Actually see the 4% rule working. Has nothing to do with hiring a financial advisor. I’m educated enough to not need a financial advisor. I’ve saved enough to be comfortable.
Railroader pay heavily into their own pensions. We don't get social security also. It was taken away from us, even when we paid into it.
Well that sure sux.
A lot of dividend etf you can put your money in and get paid monthly like Jedi
Jepi
You think you could do a video of a typical postal letter carrier retirement with 1 million in thrift
The supplement stops at at age 62 and rteplaced with SSA.
yes and SSA will 'most likely' be much more than the FERS annuity supplement.
Is the 4% rule based on the G fund alone or a mixture of the 4 different funds
Bengen study used 60/40 (stocks/bonds). So for tsp would be C and F. Although, technically C is S&P 500. Tons of info on TH-cam and internet about that study and if it is still valid or applicable.
Don’t forget your net $1,800 now you taking home is counting your TSP money your having taken out for retirement. When you retire you will not have that money taken out so bigger net pay.
My retirement experience was a nightmare, roughly 8 to 9 months with no pay. Not what I was prepared for.
What agency did you work for? I have never heard of it takin that long get paid.
What is a good % estimate to use to figure fed tax taken out?
No reason to estimate just look at income I. Retirement then go to tax tables and calculate tax liability or you can rely on GRB to calculate which I think underestimates it
Just remember, OASDI is a flat 7.65% that you get taxed on your employed income that doesn't get taxed on your pension. That's a clear 7.65% additional you'll receive just for not working
TSP is only one part of a Fed Retirement. You must also consider your "pension" and SS. So...$400k in your TSP should be enough depending on your spending. The question cannot be answered as asked.
How accurate is the data from the GRB Platform?
I retired 28 April. I had 22yrs in and took 15 months absence & had 5 years of PT. I reviewed my OP file and double checked all SF50s. After one correction, I filled in GRB. I found it to be accurate. If there are errors with OPM file then it might not.
The real issues are getting reliable information from RSSO. You can ask 3 different people the same question and get 3 different answers. There has been a lot of turnover. To that extent many employees in training. Be patient & persistent. Best of luck.
Using the GRB for retiring with 30 yrs + my MRA, I will receive more, not including the supplement, than he states in this video and I make less than 60,000/yr. I also am not taking the health or life insurance with me - gonna wing it til I'm eligible for Medicare - pay cash - or die naturally, lol.
@@heatheresteubing-fisher9729 not a good idea. All you need is one event, and you would be bankrupt. That's an awful big risk to take to save some money. Also, many take their FEHB with them in retirement because Medicare pays 80% and their FEHB acts as a medigap which is highly recommended. That is because unlike when you are working, there is no cap on the 20% you have to pick up. Depending on your health, that can be quite costly.
Should fed retiree buy Medicare part D?
No if you still have your federal insurance.
Dividends baby! Dividends!
I'd say 'Yes' and 'No'. There are a lot of things to consider before thinking about how much someone needs to have in their TSP for retirement. Looking at what debt there is, along with monthly living expenses, area one lives and it's 'cost of living', and many other items to consider. Some have lower costs after retirement, while others may have higher, due to what they want to do after retiring. There are some who have no problem having everything covered with just their pension or less. Some have problems with the pension, social security, 401k, IRAs and TSP withdrawals not being enough.
This is because of how they lived. If they retired in the same area - not much should change in lifestyle. There no more TSP contributions, union dues, and other expenses. You're only replacing take home salary not gross.
The key is not having debt in retirement
If you’re pulling down 100k you take home more than 1800 every 2 weeks
Not necessarily. It would depend on the person's deductions. Perhaps they are maxing out their TSP while working or almost maxing it out. Additionally, they may be maxing out their HSA or FSA, and may be paying for full family health insurance and high option dental and vision plans, as well.
Have subject if you could make a video on. What happens when you max out your tsp Roth and pass the legal amount allowed? How does IRS look into that? What if your 50 years old or older, do you get penalized for putting over the legal amount into your TSP Roth?
Is your Roth deposit auto deducted from your paycheck? If so, then it won't go if you're over, it just comes to you on your paycheck, taxed.
You’re not able to contribute more than the yearly TSP contribution limit. This is why you’re cautioned to contribute only enough each pay period so you don’t reach the contribution limit before the end of the year and miss out on employer matching contributions. Once you do reach the yearly contribution amount, then your TSP allotment stops. If you had an allotment of $750 set up and only had $250 left to reach the yearly contribution limit for TSP, then $250 would go to TSP and the $500 left over would be added back into your gross pay. Your TSP allotment wouldn’t be reactivated again until next year.
You presented it too well. The only thing that’s not clear to me is why is it only 4% of the 400k TSP is supposed to be taken out each year. Actually that $16,000 from TSP will last for 25 years. Can you tell us more about that?
That 4% is using the expected gain each year from your TSP, so you never have to touch the TSP principal. You live off the interest. Plus your pension, SS. etc.
Hi Dallen, I am first again.
Math at 6:43 is actually $1225
It's a sloppy 2. he puts a line through his 7's so he's subtracting 225, not 275.
Always remember. If the U.S. becomes unaffordable in retirement, look overseas.
The fact that they tax your pension is total BS
All I need is for my TSP to take me to 70, as that is when I will take SS
It’s really not that difficult. $200 a month for 40 years invested in C fund will get you at the million mark. Sit it forget it and turn off the news my friends. 😊
So I retired in Dec. In order to take out 10000 I had to add 4000 for taxes in order to get the 10000.😢
Your math doesn't add up, $12,500 - 20% = $10,000😮
@@b.coxemba6799 It was actually 40% they took for taxes.
Please don't assume the average government employee makes a 100 grand. I do love your videos but just not the case
Thanks for the feedback!
@@PlanYourFederalBenefits Thank you for considering.
This video is totally bogus. A FED making about $60,000.00 per year with a 5% TSP contribution would net around $1,800 per pay period. So their TSP and FERS would be nothing like you assume in this example. Very poor job.
You're calculating something different than him, poor job bloke.
@@barbsinclair7352 Absolutely not. He’s conflating a much smaller income for monthly take home pay to pretend a person can cover their retirement expenses. So you can understand: A federal employee who’s taking home on average $1,800.00 per pay period is no where near this “average $100,000.00 per year” myth and would not have the FERs deceptively portrayed in this video. AND it’s extremely unlikely they would have the TSP amounts claimed. Do you work for this guy or something mate?
@@memonk11 No but I am a Federal employee, this is an example, nothing more, you have to create your own scenario.
@@barbsinclair7352 Wow, the FEDs are really scraping the bottom of the barrel. I sincerely hope you are not in any kind position of importance if you don't understand basic math. Or even worse: you're denying reality because of some deluded self-righteousness. Either way, God help America if you're a FED.
@@memonk11 what nonsense are you spouting? 400k in the TSP at retirement is small potatoes. With the match, I've got 180k in mine and I have 23 yearseft until retirement. If you think 400k is unachievable then you must think these people are only in federal service for 5 years. With just my contributions and the match (no compound interest for next 23 years) I'd come out with 450k at my MRA. With compound interest and sticking to the C fund for next say 15 years should easily achieve 1M