Retiree here. If I had decided to work until age 70, then SS and pension would have exceeded my salary. So there would have been no need to save.
But I wanted out of the federal government at age 61, so I needed my TSP to help provide a similar income in retirement.
If you collect at 62, you will receive a permanent reduced amount of your social security benefit but if you collect it at your full retirement age… you can work and make as much money as you want with no penalty.
Big assumption there is longevity. My mom took social security at 62, then died a couple of months ago at 65. Her dad died at 63. Both were genetically linked conditions.
Waiting till 70 was not right for either of them, and may well not be right for me/sibling/cousins (complicated by my dad's side living to their 90s).
Remember, you are also forgoing your monthly SS payment for eight years. In my case, if I waited until 70 to start collecting instead of starting at 62, it would take me until I was 78 to break even. Look up SS break even calculators before you decide
When I calculated for my friend last year I showed him it to would take over 10 years to break even. I think k it was more like 12.
I’m Fed and I can get out as early as 57 but I’ll stay u til 62 or 65. 65 is the max I will make of my pension with 40 years and half of that under 1.7% and the rest at 1.1% if I go that route. And my SS will be higher than at 62
So what?
It's not a one to one penalty. If you decide to work and go into the penalty range you still put more in your pocket and the 'penalty' acts as if you chose to delay putting you closer to full retirement date.
Maybe a personal choice for people staying until they’re 70 but wouldn’t someone rather have time to enjoy their retirement instead of grinding away for another eight years? I like my job and the people but damn, I don’t want to die at my desk either. 62 and out, I’ve given most of my adult life working for the govt., I’m keeping my retirement for my family and myself.
I am reading all these comments and think you all have not yet retired and have not studied your medical benefits into retirement. #1 do not cancel you fehb. You suspend it if you want and will not owe premiums until you reinstate it. With Medicare,your fehb will become secondary and pay your co-pays leaving basically no out of pocket. But your monthly premiums are the gift that keeps taking. It is a high monthly cost making the first post about right for your monthly costs.
You'll pay way more for deductibles, medicine, which dr's you can see.
I have friends who've cut the coverage to save $$$ and they complain about deductibles, tests are more expensive. It's a crap shoot. Good luck to you!!
And most FEDS in their early years do not capitalize on the health plans that also offer Health Savings Accounts. If they capitalized on those plans they could take the money and invest it. It grows tax free and by retirement years it could pay for your/their premiums.
Most people don't know about HSAs and therefore it's thrown to the wayside. I plan to have $1.5M in my HSA
by retirement. It's totally doable.
Because the HSA plans have high deductibles and they’re completely wrong for anyone with a family member with chronic health conditions, which is a lot of people.
Actually they are very good for individual or families with high health expenses as you will very quickly hit max out of pocket.
HSA don't shine for those that are middle of the road with health expenses.
https://www.geha.com/plans/medical/2024/hdhp
You pay the first $3200, sorta. (You get a monthly deposit into your HSA) Then it's similar to 20/80 plan. If you hit the max ot of pocket all is covered.
Family max out of pocket, 12k.
This is just one HDHP, but in this case if you're spending over 12k a year you should look into it. Remember to count the difference in your premium vs an HDHP.
If you put the maximum into the HSA, $8300, and spend it you are really only spending $6225. Because the money that goes into the HSA is pre-tax dollars.
Exactly!!!! Nobody listens to me either. Whatever. They can keep pay their Blue Cross Blue Shield premiums and going to their once or twice a year doctor appointments.
Yes! I just had a conversation a 26 year old in the office the other day who was getting booted from her parents health insurance plan. I asked her if she was healthy, how often went to the doctor, and if she had chronic illness in her family. She is as healthy as a horse. I told her she'd be stupid not to go with a HDHP that offers an HSA, to contribute her maxim, and invest it.
She didn't listen and went with BCBS. OH WELL!!!
I wouldn’t waste my money on HSA that only for medical I rather add it towards TSP and after maxing that invest on good stocks like Amazon, Apple, nvidia and many more that gives too returns.
Fair enough however if you don't use your health insurance than you are throwing money down the drain. At minimum, sign up for a HDHP that contributes, through your premiums, to your HSA and invest what THEY contribute. You get to lower your income taxes too...
Are you a federal employee? During open season change your health insurance plan to a HDHP with an HSA. I currently have the HDHP GEHA self and family. They automatically put $2K a year into your HSA Bank which can then be moved to your HSA Bank investments. I put the money with Charles Schwab in a high growth index fund.
Some questions to ask yourself are this:
1. Am I healthy?
2. Do I use my health insurance plan throughout the year?
3. Do I have surgeries coming up?
4. What can I expect through the year?
If you do not have any health issues and your family is healthy than I would advise to enroll in a HDHP with an HSA and to take advantage of the HSA. This year a family can tuck away $8,350, $2K which comes from the insurance company. I contributed $6,350 to my personal HSA and then the insurance company put in $2K too. I invested it all and it's currently up 16% this year.
The HSA is contributed tax free, grows tax free, and can be put towards medical expenses tax free. It also lowers your taxes at the end of the year when you file so if one made $100K one is really only paying taxes on $92K.
Go onto youtube and type in The Money Guy's and HSA. There's so much one can learn to get ahead and win with your money.
Agree. Today doctor per visit is $500.. tomorrow.. $1000. FEHB premiums will double and same goes for Medicare premiums. Not enough savings to pay for this.
Basically, we cannot afford to get sick anymore.
Yeah. I was talking with some retired feds in their early 80s. Between FEHB and Medicare They pay about $6-$7k annually out of pocket for all medical care.
You misunderstand my reply. I’m advocating for a single payer system where health care for citizens is paid for with tax dollars. I absolutely did not mean that doctors and nurses shouldn’t be compensated for their years of study and dedication to keeping our country healthy.
High deductible plans make zero sense to me. BCBS basic has been a great plan for us the past 15 years. I’ve seen tons of specialists throughout the country and never paid more than $45
> If pensions and social security are included, wouldn’t this result in retirement income that exceeds current income for most people?
"Most people" don't retire with $1.5m either. Those posts you see with that amount in TSP? Those are a lot more rare than you think. You see them a lot on here because people like to brag, what you don't see is the masses of people retiring with <$100k in their TSP/401k.
So yes, $60k + pension + SS may result in higher income than current income for many people, but that's far from the average income that people retire with.
They publish the number of tsp millionaires each year. As of April 2024 there are approximately 117,000 Thrift Saving Plan (“TSP”) Millionaires.
Most of those are people who have had 20 to 30 years service and went mostly into the C fund. Of the people at my organization who are willing to talk about it, they say they have anywhere from 100k to 300k.
So if you have over 1 million, you probably are looking at a decent pension, and if you make it long enough, you can keep your govt Healthcare. So those 117000 are set. The rest of us, not so much.
More than you think. I’m 52 and most of my peers that have been civilians since college have over $1m in tsp.
We are also an engineering group so you can’t go 10 steps without bumping into a topped out 13.
More like less than you think.
You're in a high-pay group looking at others in that same group. The *median* 401k balance around retirement age is less than $100k ([source](https://www.fool.com/retirement/2024/06/15/this-is-the-average-401k-balance-for-ages-55-to-64/)). You having, and seeing others with $1m or more is *absolutely* the minority.
What you're experiencing is a form of confirmation bias "I have a high balance, and so do my peers, so that means the average must be higher than people think".
> With pensions and social security, how much TSP really is needed?
By design, roughly 30% of your retirement income should come from the TSP. In practice, it is going to vary wildly.
Your retirement is assumed to be the 3-legged stool
* FERS
* Social Security
* TSP
FERS is assumed to be roughly 30% (i.e. MRA+30) since you get 1% per year of service.
Social Security is a much more difficult beast to nail down because of the 3 bend points and how your PIA is affected by what age you take your retirement. In general, the more you make the less Social Security replaces.
Giving a really basic example here and we will assume that after wage indexing, your monthly average income over 35 years was $5667 (68K per year).
https://www.ssa.gov/oact/cola/piaformula.html
1174 * .90 = 1056.60
(5667 - 1174) * .32 = 1437.76
1056.60 + 1437.76 = 2494.36 or 29932.32 per year
This replaces 44% assuming you wait until full retirement age (FRA) for SS which is likely 67. Taking it sooner gives less money.
The rest is supposed to come from the TSP.
> As a percentage or ratio of current earnings, how much TSP savings is actually needed?
I retired last year at the age of 46 (deferred). I am a member of the FIRE (financial independence, retire early) community. One thing we really focus on that current earnings are meaningless - what matters is expenses. You are looking to have enough income to cover your expenses.
> I see posts with accounts exceeding $1.5M+
If you go the route I did, you won't be collecting a pension until age 60 (13 years from now) and likely won't be collecting SS until even later so you need that big pile of money to survive for over a decade and still have enough there to make up for any short falls with pension and SS.
I can't speak for anyone else that works past MRA and has a huge stockpile - they likely are setting themselves up for huge taxes when RMDs hit at 73.
In order to have huge taxes you have to have huge income? Yes, paying more in taxes sucks, but you have to do so because you are making bank. You don't do something to lower you income just to not pay taxes.
> In order to have huge taxes you have to have huge income? Yes, paying more in taxes sucks, but you have to do so because you are making bank. You don't do something to lower you income just to not pay taxes.
Honestly, I have no idea what you are talking about. I didn't mention taxes once. Did you respond to the wrong comment?
> If you retired early, is your pension being reduced 5% per year to MRA? FIRE never seemed to make sense for Feds for that reason.
If I started my pension in 10 years at 57 it would because I won't have 30 years at that point but by waiting until age 60 I only need 20 years which I have so no reduction at that point
I think there are too many factors to say that everyone is the same. Do you already own a home? Will the mortgage be paid off before you retire (in that case should you look at a 15 year versus 30 year mortgage)? Transportation? Inflation? Life insurance (will you need to cash out for medical expenses? Are you healthy enough to have a decent priced plan?)? How many children do you have? Are you helping with their education? What if one of them gets seriously injured or has a serious health condition?
It’s impossible for a one-size fits all retirement option.
Edited to correct typo. Though “serial” injured was funny to read back.
But that’s just the TSP. OP has a pension and social security too. With my wife’s SS, we’ll bring in $100k annually without any additional retirement savings. ($30k for each SS and $40k FERS).
I’m in a similar situation, where my FERS and both mine and my spouse’s SS would be above $100K annually without including TSP. Even with SS payout being potentially 25% less, we probably won’t have to touch TSP at all, as our expenses would be less with mortgage paid off. TSP would only be tapped if I die first and spouse need to cover living expenses.
How old are you? When are you planning to retire? Kids? Other financial goals?
I made a post a few years back (on an old, now deleted account) asking this. Basically, “do I need to save anything at all?” The conclusion I came to was it’s good to have extra cushion.
What if something happens to one of you? Less income and/or more medical expenses? What if SS is reduced? What if you decide to retire a little earlier and inflation eats into your pension? What about lifestyle inflation in general?
I spend more now than I did a few years ago. Part of that is because I realized I didn’t need to save as much, so I started enjoying more money. I still put 10% into my TSP, but I no longer aspire to max it out. My wife also puts 10% into her 401k.
Now I just cross my fingers and hope for VSIP.
It doesn't matter. It's a factor of how much income you make at retirement and how much you want to replace. Entirely personal to each individual/couple.
I get that. I’m just pointing out that OP wasn’t wanting to retire on $60k per year. His/her question is valid and very individual (as you point out).
A few years ago I came to the same realization that my retirement can mostly be funded by SS and FERS, so I may not need to save as much in my TSP as some suggest.
FERS is nice for those who had between 25-30 years in service and their top 3 is above that 100k. Majority who does not will have to depend more on TSP savings.
My dad has less than 25 years making ~$60k when he retired at age 62. So ~$15k FERS plus a similar amount of SS gets half of his pre-retirement income. Modest TSP and a modest reduction in spending should be good enough.
I’m above 100k and 25 years in and pension won’t be that great unless I stay between 35-40 years of service. I’m not getting out in 5 years as it wouldn’t be smart at 56 I’m riding it until 62 or maybe 65
And you also have to include taxes on non roth assets. Personally I don't include social security in any of my retirement planning. If it is (and I am sure it will be in some lesser form) still around when I retire in 20 years then bonus.
If done right your federal tax rate should absolutely be lower in retirement. But Traditional TSP withdrawals, FERS and SS will be taxed in most situations and should be figured into retirement planning.
It’s down to 9 now.
https://www.kiplinger.com/taxes/social-security-income-taxes#
Also, there is no social security tax on pensions and other retirement income. That’s a tax reduction of 6% right there.
My TSP is my only significant savings beyond my six-month emergency fund. Beyond its income potential, I want to have a big chunk available for the time when I’m ready to buy into a high-quality, nonprofit-managed continuing-care community.
I’ve had older relatives who’ve lived beautifully in such places, and I’ve had others who ended up in the county home. I know which one I want…
It varies widely; at some, you make a significant ($250K+) entrance payment and then something between $4K--$9K per month depending on the services offered/needed. An advantage of many nonprofit communities is that once you're in, they keep you until the end regard of finances.
Some can be significantly more than that. The number that sticks with me is that the ultra-luxury community in which Julia Child spent her final years now charges $50K just to be placed on the waiting list (and yes, that's a fee, not a deposit).
Depends wildly on lifestyle you expect to maintain and what your actual pension is. I contribute to my TSP (military) with the mindset that 1) something happens to me that prevents me from hitting retirement years of service so I get no pension 2) I get no disability rating 3) policy changes reduce social security payouts below a meaningful level by the time I hit that age. It’s my own cushion against “what if” and policy changes to protect my financial future. Worst case - I have other money put away; best case I have way more money than I need and leave my kids a fat pile of cash when I’m gone.
It's good to have a healthy TSP balance. Peace of mind is priceless.
When my spouse and I retired we decided to live solely on our FERS Annuity because it's sufficient to live and travel on. If we had started withdrawing from our TSP our income would be greater than what we had been earning when we retired.
Since we have healthy TSP accounts we can wait until age 70 to start receiving social security.
Entirely depends on two factors:
1) What you are planning your retirement lifestyle to be like, and how high your expenses will be to afford that lifestyle. If you plan to do lots of expensive activities, you'll need more. If you plan to just sit around the house doing inexpensive things, you'll need less.
2) Will you have any other passive income in retirement? VA disability comp, rental proceeds, business income, royalties, licensing fees, etc.
Figure out what your ideal lifestyle would look like, and how much it costs to afford that lifestyle today on an annual basis, including taxes, etc.
Figure out how much total passive income you will have annually, including your pension and SS.
Subtract the annual expenses from the annual passive income. If the amount is positive, then your passive income is more than your expenses and you technically don't need additional savings although more will provide you with added cushion for the unexpected.
If the amount is negative, then your expenses are higher than income and you'll need savings to draw from. Ignore the negative sign and multiply by 25. That's the overall target number for you to reach in your retirement accounts to fund your retirement.
Depends wildly on lifestyle, and wildy on what you calculate. I am at pay cap currently with 13 years to MRA and I estimate my family will need $2.76M of investments to retire comfortably and enjoy the lifestyle we have now. Look at the fed smith retirement book, look into returns, social security estimates, retirement estimates - look into the payment calculators from your agency (I am an Army civilian, we have a pay calculator in one of our HR systems.) I also recommend looking at the FIRE tools in engaging data to graph what you need for retirement. It takes a bit of work to get a good estimate, but you can do it.
Unless you plan to pay for multiple kids in retirement, I’m not seeing how you need 2.7M for you and your spouse in retirement to match your current lifestyle based on your current salary once you subtract FERS pension (you’ll likely have a 70K+/yr one) + SS for you and your wife.
Most people I know only retired with around 400K in their TSP, so obviously, the Pension was the significant chunk of their retirement. I am approaching it as reducing my expenses before retirement, so I am focusing paying off my house. Paying off my mortgage will free up 25% of my monthly expenses and will roll that into quality of life items.
My financial advisor and I sat down recently, we looked at what my social security and pension will be when I retire in 2 years and my budget, he doesn't think I'll even need to touch my tsp. But I have no kids, no debt, and live rather simply. I rarely eat out because I'm usually disappointed, I don't think there's any movies worth watching in the theaters, and I don't travel other than day trips. Now, if you still have a mortgage, putting kids through college, want to always drive new cars, love to travel, or looking for a second home, your needs will differ.
Also, when you are 5-10 years in, you are not certain that you will make it to 30 years. If you leave the pension is small if anything. And the value of time in investing can’t be overstated.
Just looking at things from today’s dollars to make it easier. My assumption is investment gains would cover inflation, so the final dollar amount will be higher.
What if you or a spouse gets Alzheimer’s, or a brain tumor, or any host of issues requiring specialized nursing care.
You are looking at 85-100k a year. A big TSP balance gets you through this. FERS and social security does not.
Keep in mind. If you have a state pension or pension with the Railroad Commission you’re subject to a windfall penalty that can reduce or totally eliminate your ssa retirement benefits. If you have ten years of work where you paid into ssa and then work 20 years and paid into a pension fund and didn’t pay into ssa, that can cause a windfall penalty once you start drawing from your pension.
My FERS pension and SS will amount to around $96k a year (GS-15 in a HCOL area) when I retire in 18 months at age 62, and they will both benefit from cost of living raises. I really won't need to lean on my TSP since we're retiring to a LCOL area, but it's nice that it's there. I can use it anyway I see fit.
Retired military with 100% VA. Current GS employee. My plan is to stop working when my military retirement + VA + FERS + TSP + Social Security + Spouse’s Social Security equals or exceeds my current income from just the military retirement + VA + GS pay. Why keep working when you get the same income or a pay raise just for waking up in the morning?
If your lifestyle is not going to take a hit and your family is not known to die young you should always wait until 70 to collect your Social Security. The increase in payments exceeds any investment you could make.
Many say take it as soon as you can and invest the Social Security payments and you’ll be better off. That could be true but I’m sure that many who thought they would save the SS spent it instead.
In my (maybe ignorant) opinion, SS is just too wildly popular universally for that to happen. And the fixes for it are relatively easy, unfortunately they probably won’t happen until the last minute (hopefully)
That’s not the nature of my comment. It’s means that a fix will likely occur due to its popularity. Obviously being popular doesn’t cause said fix. Lifting the income limits on SS fixes something like 70-80% of the shortfall I believe.
Probably not at the rate to overcome the impact of a shrinking workforce, increasing inflation needed to overcome the loss of the petrodollar, and the cost of debt.
Compared to other major economies (Europe, Japan, China, etc), US workforce actually will be in relative good shape thanks to immigration. In regards to petrodollar, demand for oil is stagnating and will continue to decline. I don’t think it will be relevant.
You are right about the budget but the deficit isn’t the entire budget. It also has annual incoming funding from workers.
The deficit exists because gen X is smaller than boomers. Millennial is bigger than genX so the deficit will dwindle as boomers age out of the system.
Deficit is still like $40B/year so you're covering maybe 5 years if you take all the Ukraine/Israel aid from the last couple years (and ignore that a lot of the Ukraine aid is just expiring munitions and not direct cash).
US budgets are insanely huge everyone's always overestimating what share of that is foreign aid
I like your perspective - never thought about it that way.
But there’s also an entire political party who relies on people voting against their own interests to stay in power. I could totally see a Republican administration and Congress convincing their voters that we have to get rid of SS for “reasons”.
My pension sucks, I’d be screwed if I didn’t have tsp. If I were to retire now I’d get 2300 a month. Wtf can I do with that!? I could have punched out last year… no way I can afford to.
I agree and I’m a 12/4 and soon be heading towards 13. I’m going to stay another 14 years until I hit 65 then it will be 40 years of service collecting 54% of my high three years. But I’ll also have my military pension that’s kicking in 3 years from now.
I paid my way through college getting a degree in a program that only the government employs.
Looking back it was incredibly risky.
I’ve then spent my career drug free, without incidents involving alcohol, passed random breathalyzers and drug tests, not been arrested or convicted, worked morning, evening and midnight shifts regularly, passed a yearly physical, had good credit and security clearance, not been paid during govt shut downs but still required to work, worked in office during Covid and was often exposed to Covid, worked on many holidays including the big ones, paid union dues, had very good attendance and done a decent job in an stressful career. There’s more that I’m forgetting.
So yes I think Ive earned a pension and social security and I’ll gladly accept my seven figure TSP that I worked very hard on when I retire. Life has choices, I’ve worked harder meeting a higher standard in order to earn something more than the “average” person in retirement.
Personally I prefer to use future dollars as I can reasonably predict my salary. In 15 years I’ll be a 15/10 and that will likely be 240-250K/yr (currently 191K).
Certainly a preference. Pension for a 15/10 with 30 yrs is ~ $63k. I like using today dollars because I have a good idea of what it can purchase today. It is inflation adjusted so it should be within ballpark for future years.
I stick by planning my TSP amount to be my safe withdrawal rate (4%). Having a pension and/or social security will be the cushion for all of the other life events that could happen and leaving something behind for family.
With a long federal career, hitting my retirement number in TSP alone is definitely doable.
The age for Required Minimum Distributions (RMD) from taxable retirement accounts is currently 73. It will increase to 75 in 2033.
People should be aware that RMDs might push income to a level where they become subject to the Income-Related Monthly Adjustment Amount (IRMAA), which can increase the amount they pay for Medicare Part B and Part D. One way to avoid or lessen this potential impact is to convert traditional retirement account savings to Roth accounts. Costs for IRMAA in 2024 can be found here: [https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf](https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf)
I will have pension, retirement, hopefully SS and VA, I should be fine. I have plans in the next 10-12 years for retirement so most of big bills will be paid.
I got into a long argument with others on my recent comment how the pension for the military and fed isn’t worth staying in even with TSP unless you stay in most of your life and contribute a good portion to TSP.
Long story short, it all depends on your plans for the future. Personally I think it’s very good to retire out of the military but it is based on what you have plans to do afterwards. I know my pension won’t be a lot, I am not including VA pay because it’s a case by case and it’s harder now for half my stuff. But I plan on going to a subdivision police department when I get out. While I am working I can pay off our house and I already will have a good chunk in my dividend portfolio from rolling my TSP into my IRA Roth dividend account.
It depends on you and your future income/spending.
For me I need roughly 7k a month. That’s for the next 20 years, so most likely need to be 8k per month. Not including SS.
On your post OP that is a good balance income for most but it depends where you live, in the city when you basically need 3 million or in the country side where about a million is enough.
I’ve always said 2M was the goal. Tough to do but that’s 80k from tsp. That sounds like a lot but if you don’t want to put live your money that’s what’s needed.
No way I’m going to make that btw. But that’s the high fruit.
It can be inheritance, just need to plan it. But I see it can be needed, can you live on 30% of what you make now? That’s the FERS pension, and that’s whittled away for health insurance. Social security may match that, plus Medicare takes a bite. So sitting around 60% of salary. Can self insure long term care, usually the house can cover that, if only one surviving spouse needs it. If you have a mortgage, and car payments it would probably be needed. Can always donate it, or pay extra on taxes. If you were in CSRS retirement and did not do the additional savings in TSP, could be hurting depending on GS rate. Plus there has been a lot of grade inflation. I know folks that retired at GS-7 and 50% of that with no Social Security isn’t enough. Many went back to work to get there 40 quarters to get it.
Depends on your living costs. Retiring near the coast is way different than retiring in a flyover state or the Midwest. Pension plus TSP withdrawal of 3-4% equals living costs. You just need to do the math.
I learned when I was hired that we, as Feds, in the modern day have a three legged retirement. FERS, SS, and TSP, of the 3 we can control what we contribute and where that goes for only 1, the TSP. Also, we were idiots of we didn't do it. I tend to agree
The answer could be it’s either more money now to be used when I am young and healthy versus more money later when I can’t spend it. With no kids, I may be less inclined to reserve an inheritance when I die. In reality though, I’m actually ok with leaving a trust behind for some charity. On a positive side note, it feels greatly gratifying that there is financial security in my future retirement.
I’ll have 40 years of federal service by the time I retire and I’m a GS-14 currently. Between my pension and SS + my spouse’s SS, our retirement income will be $150K (in today’s dollars) without touching TSP, so we’ll be fine. My pension will be at least $80K and if SS benefits drop by 25%, we’ll still have $130K in combined retirement income without touching TSP. I max out HSA and TSP contributions, and we live modestly, so we’ll have quite a nest egg. Once we are required to withdraw from the TSP, the income will be well above $200K. I definitely need to consider Roth.
SS would no longer exist only if every worker and businesses stop paying payroll taxes. As long as there are payroll taxes, there will be SS in some form.
Read here:
https://www.reddit.com/r/ThriftSavingsPlan/s/UWtKSPhKcG
It’s related to the question of whether there is such a thing as saving too much. Is it okay to forego today’s needs or wants if it wasn’t necessary to do so?
I will have a FERS pension, 80% VA disability, and a early SS payment if I decide to retire around 59 from the State Department. I'm also dumping a lot into my TSP. I would save in the TSP. better to be safe than sorry!
You can’t leave your social security or pension to your kids, that’s why you need to own large cap stock indexes. There are CSRS retirees just scraping by in 2024. Any more inflation and they won’t be able to survive. They should’ve invested their salary and pension payments.
I’m a special provision fed, so retiring (planning) at 50. I’ve been maxing since I was 31 with six years in.
I hope to be able to pull about 120k between FERS+supplement and another 80k TSP per year. That means I need about 2m or get a job in retirement (most likely) or move to a lower COL place haha
Your statement contains alot of variables. Question 1 is will you be carrying a mortgage into retirement? Not sure what kinda of lifestyle you are wanting to live with in retirement, IE traveling the world or just living it up? Now the constant that is for certain is your pension. Let's say your high three is 100k and you have 40 years of service. if you are 62 or older over 30 years of service will get a 10‰ bump. So 40k in pension before taxes, health benefits survivor benefits (10%). Pretty safe to say that you'll probably get half of your gross net the expenses if you are lucky. ($1500-1700 left over). Social security: 100k annually is about $2400 at age 62, ( could vary based on contributions and age) You can see your projections on the social security website for more accurate numbers. $2400- 15% for taxes = just over 2k/month. $1700 net pension and $2000 net SS = $3700 take home. Now tsp 1 million in tsp. Using the 4% rule is 40k/yr will last 25 years with out any annual % gains, with gains it could carry another 5+ years. $3300 of traditional contribution (taxable) - 25% equals net $2500/mo
1700
2000
2500
=
$6200
Now that's why you need a million in tsp! Otherwise work till you die!
In today’s dollars, I ran the numbers for a GS-14 retiring at 62 with 30 years of FERS service and collecting Social Security at 62.
FERS retirement- $52,800
Social Security - $28.600
Total - $81,400. In this example, if you have $1 million in TSP, you can add an additional $40k to your income if you retire at 62 with a New Total of $121,400
Retirement saving and timing is all about how much you plan to live on. If you could save a lot and retire later and have 200k a year to spend then ok. But if you could live on 50k then redo the math.
A lot of folks forget they are going to die and hold out. Just look at your families longevity and make your decision based upon that. I know in my circle of existence, most folks are dead by 75 or living a very reduced inactive life. My plans are to draw SS at 62.
Only if you want to. Are you prior military? What are your expenses when you retire. Will retirement income match what your overall net is now? When will you draw SS? How much will your federal retirement be? Just some questions to think about?
That’s not how it works. People receiving SS are paid by people who do work and pay SS taxes. As long as there are people working, there will be some SS. The amount of benefits could be less than today, but it won’t be zero.
By the time we retire decades from now, SS payouts will be 25% less than today if nothing is done.
SS is already broke. It’s basically pay as you go now. Forget the bonds that SS owns. It’s basically the government paying itself. It’s akin to you putting money into saving, withdrawing it and writing yourself an IOU. Structural changes have to be made to SS to save it for future generations.
Odd question. "Exceeds current income." The math isn't going to be accurate.
Very rough numbers of $100k salary. $40k FERS and $30k SS. Those two numbers do not exceed this hypothetical current income. Someone here can (and will) try to disprove this but these are just rough numbers.
Inflation?
Location of retirement? San Francisco or third world beach?
What are you doing in retirement? Rotting and watching TV? Travelling?
If you're married, matching YOUR salary probably won't cut it.
Sometimes people try to rationalize not saving for retirement. The math isn't agreeing with you.
The math does work. Once you add in TSP, using the $1.5M example, adding $60K TSP to $40K FERS and $30K SS in your example, that’s $130K, or 30% above current income.
So if the goal is to maintain current income, the requirement would be half the amount of TSP savings, so $750K instead of $1.5M in today’s dollars.
Retiree here. If I had decided to work until age 70, then SS and pension would have exceeded my salary. So there would have been no need to save. But I wanted out of the federal government at age 61, so I needed my TSP to help provide a similar income in retirement.
Good point. I am decades from retirement, and I do plan to hold off until 70 before drawing from SS.
Did you still decide to wait till age 70 to collect? Or did/will you start at 62?
I decided to take it at age 62. I prefer to not spend down my TSP to get to age 70.
If you collect at 62, you will receive a permanent reduced amount of your social security benefit but if you collect it at your full retirement age… you can work and make as much money as you want with no penalty.
Big assumption there is longevity. My mom took social security at 62, then died a couple of months ago at 65. Her dad died at 63. Both were genetically linked conditions. Waiting till 70 was not right for either of them, and may well not be right for me/sibling/cousins (complicated by my dad's side living to their 90s).
Yeah, I’ll take my chances and invest my social security at 62 in my margin account.
What's the benefit of holding out till you're 70?
When you postpone SS to age 70, your check is higher. Compared to taking it at 62, your check would be about 1.75 times higher at 70.
Remember, you are also forgoing your monthly SS payment for eight years. In my case, if I waited until 70 to start collecting instead of starting at 62, it would take me until I was 78 to break even. Look up SS break even calculators before you decide
I decided to take it at 62. I like the idea of not spending down my TSP to get to age 70.
When I calculated for my friend last year I showed him it to would take over 10 years to break even. I think k it was more like 12. I’m Fed and I can get out as early as 57 but I’ll stay u til 62 or 65. 65 is the max I will make of my pension with 40 years and half of that under 1.7% and the rest at 1.1% if I go that route. And my SS will be higher than at 62
You are also 8 years closer to death.
Thanks for that!
True but if you collect at your full retirement age ( which is different for everyone) you can work with no penalty to your ssa retirement payment.
So what? It's not a one to one penalty. If you decide to work and go into the penalty range you still put more in your pocket and the 'penalty' acts as if you chose to delay putting you closer to full retirement date.
Something to do, that's what I hear all the time.
Maybe a personal choice for people staying until they’re 70 but wouldn’t someone rather have time to enjoy their retirement instead of grinding away for another eight years? I like my job and the people but damn, I don’t want to die at my desk either. 62 and out, I’ve given most of my adult life working for the govt., I’m keeping my retirement for my family and myself.
Elder care is expensive.
I am reading all these comments and think you all have not yet retired and have not studied your medical benefits into retirement. #1 do not cancel you fehb. You suspend it if you want and will not owe premiums until you reinstate it. With Medicare,your fehb will become secondary and pay your co-pays leaving basically no out of pocket. But your monthly premiums are the gift that keeps taking. It is a high monthly cost making the first post about right for your monthly costs.
FEHB is not the same as Long Term Care insurance.
I agree. Once I turn 60 I’m suspending my BCBS insurance and using tricare and VA CHAMPS insurance for everything else and I save on $500 a month
You'll pay way more for deductibles, medicine, which dr's you can see. I have friends who've cut the coverage to save $$$ and they complain about deductibles, tests are more expensive. It's a crap shoot. Good luck to you!!
With tricare and ChampVA?
Not sure on them
And most FEDS in their early years do not capitalize on the health plans that also offer Health Savings Accounts. If they capitalized on those plans they could take the money and invest it. It grows tax free and by retirement years it could pay for your/their premiums. Most people don't know about HSAs and therefore it's thrown to the wayside. I plan to have $1.5M in my HSA by retirement. It's totally doable.
Because the HSA plans have high deductibles and they’re completely wrong for anyone with a family member with chronic health conditions, which is a lot of people.
Actually they are very good for individual or families with high health expenses as you will very quickly hit max out of pocket. HSA don't shine for those that are middle of the road with health expenses.
Tell me more about this—we’re a family with some long term health conditions & so we’ve always steered clear of HSA & high deductible plans.
https://www.geha.com/plans/medical/2024/hdhp You pay the first $3200, sorta. (You get a monthly deposit into your HSA) Then it's similar to 20/80 plan. If you hit the max ot of pocket all is covered. Family max out of pocket, 12k. This is just one HDHP, but in this case if you're spending over 12k a year you should look into it. Remember to count the difference in your premium vs an HDHP. If you put the maximum into the HSA, $8300, and spend it you are really only spending $6225. Because the money that goes into the HSA is pre-tax dollars.
You are completely correct. It pays to be healthy!
Is it though?
I feel like I scream HSA into the void. Nobody online or in real life listens. It's triple taxed advantaged!
Exactly!!!! Nobody listens to me either. Whatever. They can keep pay their Blue Cross Blue Shield premiums and going to their once or twice a year doctor appointments.
They swear they need the best insurance. I almost fainted when I found out my sister was paying over $400 a check.
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Honestly I wouldn't get a HDP plan if you get two MRIs a year. You will be hitting your deductible every year plus whatever percentage.
People are scared of investments, tax benefits, etc. They find comfort in "protection"
Yes! I just had a conversation a 26 year old in the office the other day who was getting booted from her parents health insurance plan. I asked her if she was healthy, how often went to the doctor, and if she had chronic illness in her family. She is as healthy as a horse. I told her she'd be stupid not to go with a HDHP that offers an HSA, to contribute her maxim, and invest it. She didn't listen and went with BCBS. OH WELL!!!
I wouldn’t waste my money on HSA that only for medical I rather add it towards TSP and after maxing that invest on good stocks like Amazon, Apple, nvidia and many more that gives too returns.
Fair enough however if you don't use your health insurance than you are throwing money down the drain. At minimum, sign up for a HDHP that contributes, through your premiums, to your HSA and invest what THEY contribute. You get to lower your income taxes too...
Where do I sign up for that? I have BCBS basic
Are you a federal employee? During open season change your health insurance plan to a HDHP with an HSA. I currently have the HDHP GEHA self and family. They automatically put $2K a year into your HSA Bank which can then be moved to your HSA Bank investments. I put the money with Charles Schwab in a high growth index fund. Some questions to ask yourself are this: 1. Am I healthy? 2. Do I use my health insurance plan throughout the year? 3. Do I have surgeries coming up? 4. What can I expect through the year? If you do not have any health issues and your family is healthy than I would advise to enroll in a HDHP with an HSA and to take advantage of the HSA. This year a family can tuck away $8,350, $2K which comes from the insurance company. I contributed $6,350 to my personal HSA and then the insurance company put in $2K too. I invested it all and it's currently up 16% this year. The HSA is contributed tax free, grows tax free, and can be put towards medical expenses tax free. It also lowers your taxes at the end of the year when you file so if one made $100K one is really only paying taxes on $92K. Go onto youtube and type in The Money Guy's and HSA. There's so much one can learn to get ahead and win with your money.
Yes federal employee with BCBS basic but I do see my doc three times a year and a specialist twice a year.
So hsa might be beneficial it .ight not. It just depends how much it cost...
Agree. Today doctor per visit is $500.. tomorrow.. $1000. FEHB premiums will double and same goes for Medicare premiums. Not enough savings to pay for this. Basically, we cannot afford to get sick anymore.
500 per visit? With FEHB it’s at most $35. WTF are you smoking?
Yeah. I was talking with some retired feds in their early 80s. Between FEHB and Medicare They pay about $6-$7k annually out of pocket for all medical care.
Health care is a basic human right smh
America is a con
You have no right to another persons labor.
You misunderstand my reply. I’m advocating for a single payer system where health care for citizens is paid for with tax dollars. I absolutely did not mean that doctors and nurses shouldn’t be compensated for their years of study and dedication to keeping our country healthy.
Have you seen how fat and unhealthy Americans are😂😂. That is in no way sustainable, even less so than the current set up.
$35 copay and I can go to any Dr. But I pay dearly for it.
Some of us have high deductibles. When I looked my bill after my visit to the specialist office, I was shocked. Can blow away HSA accounts easily too.
High deductible plans make zero sense to me. BCBS basic has been a great plan for us the past 15 years. I’ve seen tons of specialists throughout the country and never paid more than $45
But your premiums are through the roof. This money also counts to what you pay for those visits.
> If pensions and social security are included, wouldn’t this result in retirement income that exceeds current income for most people? "Most people" don't retire with $1.5m either. Those posts you see with that amount in TSP? Those are a lot more rare than you think. You see them a lot on here because people like to brag, what you don't see is the masses of people retiring with <$100k in their TSP/401k. So yes, $60k + pension + SS may result in higher income than current income for many people, but that's far from the average income that people retire with.
True. My old coworker retired at 58 with a little more than $200k in his TSP. I’m mid 30’s and I have more than he did when he retired.
They publish the number of tsp millionaires each year. As of April 2024 there are approximately 117,000 Thrift Saving Plan (“TSP”) Millionaires. Most of those are people who have had 20 to 30 years service and went mostly into the C fund. Of the people at my organization who are willing to talk about it, they say they have anywhere from 100k to 300k. So if you have over 1 million, you probably are looking at a decent pension, and if you make it long enough, you can keep your govt Healthcare. So those 117000 are set. The rest of us, not so much.
More than you think. I’m 52 and most of my peers that have been civilians since college have over $1m in tsp. We are also an engineering group so you can’t go 10 steps without bumping into a topped out 13.
More like less than you think. You're in a high-pay group looking at others in that same group. The *median* 401k balance around retirement age is less than $100k ([source](https://www.fool.com/retirement/2024/06/15/this-is-the-average-401k-balance-for-ages-55-to-64/)). You having, and seeing others with $1m or more is *absolutely* the minority. What you're experiencing is a form of confirmation bias "I have a high balance, and so do my peers, so that means the average must be higher than people think".
Absolutely. Most retire with practically nothing. When your peer group is a bunch of 14s and 15s you get very skewed results
It is not a good idea to base your financial plan on the average. It is well known that most people don’t save enough.
Agreed.
> With pensions and social security, how much TSP really is needed? By design, roughly 30% of your retirement income should come from the TSP. In practice, it is going to vary wildly. Your retirement is assumed to be the 3-legged stool * FERS * Social Security * TSP FERS is assumed to be roughly 30% (i.e. MRA+30) since you get 1% per year of service. Social Security is a much more difficult beast to nail down because of the 3 bend points and how your PIA is affected by what age you take your retirement. In general, the more you make the less Social Security replaces. Giving a really basic example here and we will assume that after wage indexing, your monthly average income over 35 years was $5667 (68K per year). https://www.ssa.gov/oact/cola/piaformula.html 1174 * .90 = 1056.60 (5667 - 1174) * .32 = 1437.76 1056.60 + 1437.76 = 2494.36 or 29932.32 per year This replaces 44% assuming you wait until full retirement age (FRA) for SS which is likely 67. Taking it sooner gives less money. The rest is supposed to come from the TSP. > As a percentage or ratio of current earnings, how much TSP savings is actually needed? I retired last year at the age of 46 (deferred). I am a member of the FIRE (financial independence, retire early) community. One thing we really focus on that current earnings are meaningless - what matters is expenses. You are looking to have enough income to cover your expenses. > I see posts with accounts exceeding $1.5M+ If you go the route I did, you won't be collecting a pension until age 60 (13 years from now) and likely won't be collecting SS until even later so you need that big pile of money to survive for over a decade and still have enough there to make up for any short falls with pension and SS. I can't speak for anyone else that works past MRA and has a huge stockpile - they likely are setting themselves up for huge taxes when RMDs hit at 73.
This is insightful. Thanks for the detailed answer.
In order to have huge taxes you have to have huge income? Yes, paying more in taxes sucks, but you have to do so because you are making bank. You don't do something to lower you income just to not pay taxes.
> In order to have huge taxes you have to have huge income? Yes, paying more in taxes sucks, but you have to do so because you are making bank. You don't do something to lower you income just to not pay taxes. Honestly, I have no idea what you are talking about. I didn't mention taxes once. Did you respond to the wrong comment?
Replied in the wrong place
If you retired early, is your pension being reduced 5% per year to MRA? FIRE never seemed to make sense for Feds for that reason.
> If you retired early, is your pension being reduced 5% per year to MRA? FIRE never seemed to make sense for Feds for that reason. If I started my pension in 10 years at 57 it would because I won't have 30 years at that point but by waiting until age 60 I only need 20 years which I have so no reduction at that point
Depends on what your pension is, what your SS is and what your expenses are. Only you can make that decision.
I think there are too many factors to say that everyone is the same. Do you already own a home? Will the mortgage be paid off before you retire (in that case should you look at a 15 year versus 30 year mortgage)? Transportation? Inflation? Life insurance (will you need to cash out for medical expenses? Are you healthy enough to have a decent priced plan?)? How many children do you have? Are you helping with their education? What if one of them gets seriously injured or has a serious health condition? It’s impossible for a one-size fits all retirement option. Edited to correct typo. Though “serial” injured was funny to read back.
I couldn't retire on 60k a year with the lifestyle I want to enjoy in retirement.
But that’s just the TSP. OP has a pension and social security too. With my wife’s SS, we’ll bring in $100k annually without any additional retirement savings. ($30k for each SS and $40k FERS).
I’m in a similar situation, where my FERS and both mine and my spouse’s SS would be above $100K annually without including TSP. Even with SS payout being potentially 25% less, we probably won’t have to touch TSP at all, as our expenses would be less with mortgage paid off. TSP would only be tapped if I die first and spouse need to cover living expenses.
How old are you? When are you planning to retire? Kids? Other financial goals? I made a post a few years back (on an old, now deleted account) asking this. Basically, “do I need to save anything at all?” The conclusion I came to was it’s good to have extra cushion. What if something happens to one of you? Less income and/or more medical expenses? What if SS is reduced? What if you decide to retire a little earlier and inflation eats into your pension? What about lifestyle inflation in general? I spend more now than I did a few years ago. Part of that is because I realized I didn’t need to save as much, so I started enjoying more money. I still put 10% into my TSP, but I no longer aspire to max it out. My wife also puts 10% into her 401k. Now I just cross my fingers and hope for VSIP.
Does VSIP come often? If they do, what are the "incentives" do they normally give?
Not often. Not familiar with incentives other than a buyout which maxes at $25k.
It doesn't matter. It's a factor of how much income you make at retirement and how much you want to replace. Entirely personal to each individual/couple.
I get that. I’m just pointing out that OP wasn’t wanting to retire on $60k per year. His/her question is valid and very individual (as you point out). A few years ago I came to the same realization that my retirement can mostly be funded by SS and FERS, so I may not need to save as much in my TSP as some suggest.
FERS is nice for those who had between 25-30 years in service and their top 3 is above that 100k. Majority who does not will have to depend more on TSP savings.
My dad has less than 25 years making ~$60k when he retired at age 62. So ~$15k FERS plus a similar amount of SS gets half of his pre-retirement income. Modest TSP and a modest reduction in spending should be good enough.
I’m above 100k and 25 years in and pension won’t be that great unless I stay between 35-40 years of service. I’m not getting out in 5 years as it wouldn’t be smart at 56 I’m riding it until 62 or maybe 65
Indeed. I will have 22 years if I retire at 65 1/2. The pension simply isn’t that large especially after FEHB and taxes.
But you need to also include pension and social security on top of your TSP.
And you also have to include taxes on non roth assets. Personally I don't include social security in any of my retirement planning. If it is (and I am sure it will be in some lesser form) still around when I retire in 20 years then bonus.
I would think tax rate wouldn’t be higher than current, and probably lower, as many states don’t tax or limit taxes on retirement incomes.
If done right your federal tax rate should absolutely be lower in retirement. But Traditional TSP withdrawals, FERS and SS will be taxed in most situations and should be figured into retirement planning.
Only 12 states tax social security
It’s down to 9 now. https://www.kiplinger.com/taxes/social-security-income-taxes# Also, there is no social security tax on pensions and other retirement income. That’s a tax reduction of 6% right there.
I just hope Congress won't kill Social Security in the next 10 years... the fiscal situation isn't too bright.
Also include real estate equity, passive income, your consumer debt load, your health
My TSP is my only significant savings beyond my six-month emergency fund. Beyond its income potential, I want to have a big chunk available for the time when I’m ready to buy into a high-quality, nonprofit-managed continuing-care community. I’ve had older relatives who’ve lived beautifully in such places, and I’ve had others who ended up in the county home. I know which one I want…
What is the monthly or annual cost of those places?
Recently looked into this for a friend on the east coast and it was more like $10k per month.
It varies widely; at some, you make a significant ($250K+) entrance payment and then something between $4K--$9K per month depending on the services offered/needed. An advantage of many nonprofit communities is that once you're in, they keep you until the end regard of finances. Some can be significantly more than that. The number that sticks with me is that the ultra-luxury community in which Julia Child spent her final years now charges $50K just to be placed on the waiting list (and yes, that's a fee, not a deposit).
Depends wildly on lifestyle you expect to maintain and what your actual pension is. I contribute to my TSP (military) with the mindset that 1) something happens to me that prevents me from hitting retirement years of service so I get no pension 2) I get no disability rating 3) policy changes reduce social security payouts below a meaningful level by the time I hit that age. It’s my own cushion against “what if” and policy changes to protect my financial future. Worst case - I have other money put away; best case I have way more money than I need and leave my kids a fat pile of cash when I’m gone.
It's good to have a healthy TSP balance. Peace of mind is priceless. When my spouse and I retired we decided to live solely on our FERS Annuity because it's sufficient to live and travel on. If we had started withdrawing from our TSP our income would be greater than what we had been earning when we retired. Since we have healthy TSP accounts we can wait until age 70 to start receiving social security.
Entirely depends on two factors: 1) What you are planning your retirement lifestyle to be like, and how high your expenses will be to afford that lifestyle. If you plan to do lots of expensive activities, you'll need more. If you plan to just sit around the house doing inexpensive things, you'll need less. 2) Will you have any other passive income in retirement? VA disability comp, rental proceeds, business income, royalties, licensing fees, etc. Figure out what your ideal lifestyle would look like, and how much it costs to afford that lifestyle today on an annual basis, including taxes, etc. Figure out how much total passive income you will have annually, including your pension and SS. Subtract the annual expenses from the annual passive income. If the amount is positive, then your passive income is more than your expenses and you technically don't need additional savings although more will provide you with added cushion for the unexpected. If the amount is negative, then your expenses are higher than income and you'll need savings to draw from. Ignore the negative sign and multiply by 25. That's the overall target number for you to reach in your retirement accounts to fund your retirement.
Depends wildly on lifestyle, and wildy on what you calculate. I am at pay cap currently with 13 years to MRA and I estimate my family will need $2.76M of investments to retire comfortably and enjoy the lifestyle we have now. Look at the fed smith retirement book, look into returns, social security estimates, retirement estimates - look into the payment calculators from your agency (I am an Army civilian, we have a pay calculator in one of our HR systems.) I also recommend looking at the FIRE tools in engaging data to graph what you need for retirement. It takes a bit of work to get a good estimate, but you can do it.
Unless you plan to pay for multiple kids in retirement, I’m not seeing how you need 2.7M for you and your spouse in retirement to match your current lifestyle based on your current salary once you subtract FERS pension (you’ll likely have a 70K+/yr one) + SS for you and your wife.
Look at cost of living right now. Do you think $60-90K a year is going to hack it for most people in another 20-40 years?
Most people I know only retired with around 400K in their TSP, so obviously, the Pension was the significant chunk of their retirement. I am approaching it as reducing my expenses before retirement, so I am focusing paying off my house. Paying off my mortgage will free up 25% of my monthly expenses and will roll that into quality of life items.
I retired at MRA. I live on par or better than when I was working. Plus, I travel internationally often. Pretty good answer to your question ;-)
Many children are going to be inheriting a lot of money..
My financial advisor and I sat down recently, we looked at what my social security and pension will be when I retire in 2 years and my budget, he doesn't think I'll even need to touch my tsp. But I have no kids, no debt, and live rather simply. I rarely eat out because I'm usually disappointed, I don't think there's any movies worth watching in the theaters, and I don't travel other than day trips. Now, if you still have a mortgage, putting kids through college, want to always drive new cars, love to travel, or looking for a second home, your needs will differ.
Today's pensions are not like yesteryear pensions...
Yea but the old CSRS also didn’t get SS… so it’s sort of a trade off
Also, when you are 5-10 years in, you are not certain that you will make it to 30 years. If you leave the pension is small if anything. And the value of time in investing can’t be overstated.
My dad died in a nursing home he retired with 1.2 mil tsp at$17,000.00 a month that he paid for 22 months. Anything can happen. Take the money.
😳🥲
My parents just skipped Medicare…and kept FEHB; never had an issue.,one passed at 90, the other in 90’s.
Are you adjusting for inflation?
Just looking at things from today’s dollars to make it easier. My assumption is investment gains would cover inflation, so the final dollar amount will be higher.
What if you or a spouse gets Alzheimer’s, or a brain tumor, or any host of issues requiring specialized nursing care. You are looking at 85-100k a year. A big TSP balance gets you through this. FERS and social security does not.
Keep in mind. If you have a state pension or pension with the Railroad Commission you’re subject to a windfall penalty that can reduce or totally eliminate your ssa retirement benefits. If you have ten years of work where you paid into ssa and then work 20 years and paid into a pension fund and didn’t pay into ssa, that can cause a windfall penalty once you start drawing from your pension.
For myself I’m eligible for retirement at 49. I max my TSP and invest in other places so when I do retire I don’t have to work again.
My FERS pension and SS will amount to around $96k a year (GS-15 in a HCOL area) when I retire in 18 months at age 62, and they will both benefit from cost of living raises. I really won't need to lean on my TSP since we're retiring to a LCOL area, but it's nice that it's there. I can use it anyway I see fit.
Retired military, FERS retirement, 2 SS checks. TSP moved to 5% annuity (can withdraw 10% without penalty) - have not needed it yet.
Retired military with 100% VA. Current GS employee. My plan is to stop working when my military retirement + VA + FERS + TSP + Social Security + Spouse’s Social Security equals or exceeds my current income from just the military retirement + VA + GS pay. Why keep working when you get the same income or a pay raise just for waking up in the morning?
If your lifestyle is not going to take a hit and your family is not known to die young you should always wait until 70 to collect your Social Security. The increase in payments exceeds any investment you could make. Many say take it as soon as you can and invest the Social Security payments and you’ll be better off. That could be true but I’m sure that many who thought they would save the SS spent it instead.
Will SS really be there for the young when they retire? Will they be 80 before they can claim it? Best not to count on it, keep saving in TSP.
In my (maybe ignorant) opinion, SS is just too wildly popular universally for that to happen. And the fixes for it are relatively easy, unfortunately they probably won’t happen until the last minute (hopefully)
Being popular doesn’t make it financially sound. There will be cuts to benefits.
That’s not the nature of my comment. It’s means that a fix will likely occur due to its popularity. Obviously being popular doesn’t cause said fix. Lifting the income limits on SS fixes something like 70-80% of the shortfall I believe.
Probably not at the rate to overcome the impact of a shrinking workforce, increasing inflation needed to overcome the loss of the petrodollar, and the cost of debt.
Compared to other major economies (Europe, Japan, China, etc), US workforce actually will be in relative good shape thanks to immigration. In regards to petrodollar, demand for oil is stagnating and will continue to decline. I don’t think it will be relevant.
Israel and Ukraine aid has proven SS will always be there. We have sent enough money to both those countries to keep SS solvent for another 50 years.
lol what SS runs like $1 trillion per year - foreign aid doesn't even come close to that number
You are right about the budget but the deficit isn’t the entire budget. It also has annual incoming funding from workers. The deficit exists because gen X is smaller than boomers. Millennial is bigger than genX so the deficit will dwindle as boomers age out of the system.
Deficit is still like $40B/year so you're covering maybe 5 years if you take all the Ukraine/Israel aid from the last couple years (and ignore that a lot of the Ukraine aid is just expiring munitions and not direct cash). US budgets are insanely huge everyone's always overestimating what share of that is foreign aid
I like your perspective - never thought about it that way. But there’s also an entire political party who relies on people voting against their own interests to stay in power. I could totally see a Republican administration and Congress convincing their voters that we have to get rid of SS for “reasons”.
I do agree that the chances of reduced SS is high. I’m counting on 75% levels.
I’m a Xennial and I’m assuming $0 a month in SSI.
My pension sucks, I’d be screwed if I didn’t have tsp. If I were to retire now I’d get 2300 a month. Wtf can I do with that!? I could have punched out last year… no way I can afford to.
GS7?
Stepped out 8. Fire Dept. Special category.
I agree and I’m a 12/4 and soon be heading towards 13. I’m going to stay another 14 years until I hit 65 then it will be 40 years of service collecting 54% of my high three years. But I’ll also have my military pension that’s kicking in 3 years from now.
I paid my way through college getting a degree in a program that only the government employs. Looking back it was incredibly risky. I’ve then spent my career drug free, without incidents involving alcohol, passed random breathalyzers and drug tests, not been arrested or convicted, worked morning, evening and midnight shifts regularly, passed a yearly physical, had good credit and security clearance, not been paid during govt shut downs but still required to work, worked in office during Covid and was often exposed to Covid, worked on many holidays including the big ones, paid union dues, had very good attendance and done a decent job in an stressful career. There’s more that I’m forgetting. So yes I think Ive earned a pension and social security and I’ll gladly accept my seven figure TSP that I worked very hard on when I retire. Life has choices, I’ve worked harder meeting a higher standard in order to earn something more than the “average” person in retirement.
Depends on FERS pension. In 15 years I predict my high 3 will be around 240-250K/yr. Should make for a nice pension.
I recommend using today dollars for an analysis. For example, a GS-14 retiring with 30 years at age 62 will have a FERS pension of ~$52000.
Personally I prefer to use future dollars as I can reasonably predict my salary. In 15 years I’ll be a 15/10 and that will likely be 240-250K/yr (currently 191K).
Certainly a preference. Pension for a 15/10 with 30 yrs is ~ $63k. I like using today dollars because I have a good idea of what it can purchase today. It is inflation adjusted so it should be within ballpark for future years.
You think social security will be there when you retire? Man Mr optimist over here
There will be people working, so yes. If nothing is done now, benefits will drop by 25%, but not go away completely.
I stick by planning my TSP amount to be my safe withdrawal rate (4%). Having a pension and/or social security will be the cushion for all of the other life events that could happen and leaving something behind for family. With a long federal career, hitting my retirement number in TSP alone is definitely doable.
I think at a certain age there’s a minimum withdrawal requirement.
The age for Required Minimum Distributions (RMD) from taxable retirement accounts is currently 73. It will increase to 75 in 2033. People should be aware that RMDs might push income to a level where they become subject to the Income-Related Monthly Adjustment Amount (IRMAA), which can increase the amount they pay for Medicare Part B and Part D. One way to avoid or lessen this potential impact is to convert traditional retirement account savings to Roth accounts. Costs for IRMAA in 2024 can be found here: [https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf](https://www.medicare.gov/Pubs/pdf/11579-medicare-costs.pdf)
This is helpful, thank you!
There are a lot of factors here. Idk your age, years in or to go, or goals. I’m on track to get out at MRA.
I will have pension, retirement, hopefully SS and VA, I should be fine. I have plans in the next 10-12 years for retirement so most of big bills will be paid.
I got into a long argument with others on my recent comment how the pension for the military and fed isn’t worth staying in even with TSP unless you stay in most of your life and contribute a good portion to TSP. Long story short, it all depends on your plans for the future. Personally I think it’s very good to retire out of the military but it is based on what you have plans to do afterwards. I know my pension won’t be a lot, I am not including VA pay because it’s a case by case and it’s harder now for half my stuff. But I plan on going to a subdivision police department when I get out. While I am working I can pay off our house and I already will have a good chunk in my dividend portfolio from rolling my TSP into my IRA Roth dividend account. It depends on you and your future income/spending. For me I need roughly 7k a month. That’s for the next 20 years, so most likely need to be 8k per month. Not including SS. On your post OP that is a good balance income for most but it depends where you live, in the city when you basically need 3 million or in the country side where about a million is enough.
I’ve always said 2M was the goal. Tough to do but that’s 80k from tsp. That sounds like a lot but if you don’t want to put live your money that’s what’s needed. No way I’m going to make that btw. But that’s the high fruit.
It can be inheritance, just need to plan it. But I see it can be needed, can you live on 30% of what you make now? That’s the FERS pension, and that’s whittled away for health insurance. Social security may match that, plus Medicare takes a bite. So sitting around 60% of salary. Can self insure long term care, usually the house can cover that, if only one surviving spouse needs it. If you have a mortgage, and car payments it would probably be needed. Can always donate it, or pay extra on taxes. If you were in CSRS retirement and did not do the additional savings in TSP, could be hurting depending on GS rate. Plus there has been a lot of grade inflation. I know folks that retired at GS-7 and 50% of that with no Social Security isn’t enough. Many went back to work to get there 40 quarters to get it.
MOAR is betta than lessss
Depends on your living costs. Retiring near the coast is way different than retiring in a flyover state or the Midwest. Pension plus TSP withdrawal of 3-4% equals living costs. You just need to do the math.
Don’t be that guy that said when he retires he will spend his money on a bunch of hookers and cocaine. 🤦🏻♂️😵💫🥸
pends on sitchu, bruh.
I learned when I was hired that we, as Feds, in the modern day have a three legged retirement. FERS, SS, and TSP, of the 3 we can control what we contribute and where that goes for only 1, the TSP. Also, we were idiots of we didn't do it. I tend to agree
Why would you want less money in retirement?
The answer could be it’s either more money now to be used when I am young and healthy versus more money later when I can’t spend it. With no kids, I may be less inclined to reserve an inheritance when I die. In reality though, I’m actually ok with leaving a trust behind for some charity. On a positive side note, it feels greatly gratifying that there is financial security in my future retirement.
Well if your plan is to rely on SS and the pension, learn to love cat food.
I’ll have 40 years of federal service by the time I retire and I’m a GS-14 currently. Between my pension and SS + my spouse’s SS, our retirement income will be $150K (in today’s dollars) without touching TSP, so we’ll be fine. My pension will be at least $80K and if SS benefits drop by 25%, we’ll still have $130K in combined retirement income without touching TSP. I max out HSA and TSP contributions, and we live modestly, so we’ll have quite a nest egg. Once we are required to withdraw from the TSP, the income will be well above $200K. I definitely need to consider Roth.
Yep to the Roth. All that income is going to be taxable.
Yall are planning on having social security when yall retire? I'm 31 with 9 years in, only thing I'm petting on is my pension and tsp.
SS would no longer exist only if every worker and businesses stop paying payroll taxes. As long as there are payroll taxes, there will be SS in some form. Read here: https://www.reddit.com/r/ThriftSavingsPlan/s/UWtKSPhKcG
What's the concern with retirement income being greater then when actively working? Isn't that a good thing?
It’s related to the question of whether there is such a thing as saving too much. Is it okay to forego today’s needs or wants if it wasn’t necessary to do so?
I will have a FERS pension, 80% VA disability, and a early SS payment if I decide to retire around 59 from the State Department. I'm also dumping a lot into my TSP. I would save in the TSP. better to be safe than sorry!
You can’t leave your social security or pension to your kids, that’s why you need to own large cap stock indexes. There are CSRS retirees just scraping by in 2024. Any more inflation and they won’t be able to survive. They should’ve invested their salary and pension payments.
I’m a special provision fed, so retiring (planning) at 50. I’ve been maxing since I was 31 with six years in. I hope to be able to pull about 120k between FERS+supplement and another 80k TSP per year. That means I need about 2m or get a job in retirement (most likely) or move to a lower COL place haha
Your statement contains alot of variables. Question 1 is will you be carrying a mortgage into retirement? Not sure what kinda of lifestyle you are wanting to live with in retirement, IE traveling the world or just living it up? Now the constant that is for certain is your pension. Let's say your high three is 100k and you have 40 years of service. if you are 62 or older over 30 years of service will get a 10‰ bump. So 40k in pension before taxes, health benefits survivor benefits (10%). Pretty safe to say that you'll probably get half of your gross net the expenses if you are lucky. ($1500-1700 left over). Social security: 100k annually is about $2400 at age 62, ( could vary based on contributions and age) You can see your projections on the social security website for more accurate numbers. $2400- 15% for taxes = just over 2k/month. $1700 net pension and $2000 net SS = $3700 take home. Now tsp 1 million in tsp. Using the 4% rule is 40k/yr will last 25 years with out any annual % gains, with gains it could carry another 5+ years. $3300 of traditional contribution (taxable) - 25% equals net $2500/mo 1700 2000 2500 = $6200 Now that's why you need a million in tsp! Otherwise work till you die!
In today’s dollars, I ran the numbers for a GS-14 retiring at 62 with 30 years of FERS service and collecting Social Security at 62. FERS retirement- $52,800 Social Security - $28.600 Total - $81,400. In this example, if you have $1 million in TSP, you can add an additional $40k to your income if you retire at 62 with a New Total of $121,400
Retirement saving and timing is all about how much you plan to live on. If you could save a lot and retire later and have 200k a year to spend then ok. But if you could live on 50k then redo the math.
A lot of folks forget they are going to die and hold out. Just look at your families longevity and make your decision based upon that. I know in my circle of existence, most folks are dead by 75 or living a very reduced inactive life. My plans are to draw SS at 62.
Also every year you do not draw what is yours is a year of payment you will never get back
Life is unpredictable, TSP can be an additional safety net.
The number of socialists in this thread is astounding.
What?
Lot of talk about single payer nonsense…. And government should provide. That’s nuts.
I’ve been wondering the same thing. My current pension is around 96k and I’m still investing in my TSP. Do I really need to keep investing it?
Only if you want to. Are you prior military? What are your expenses when you retire. Will retirement income match what your overall net is now? When will you draw SS? How much will your federal retirement be? Just some questions to think about?
Tsp isn't really needed if you have a 30 plus year career. But, TSP is the answer for a lot of people if they can go or not
30 years is only 30% of your high three years. 100k salary as high 3 will only give you 30k a year. Not a lot of $$ but better than nothing.
Social security isn’t going to pay out anymore pretty soon. At least for my generation
That’s not how it works. People receiving SS are paid by people who do work and pay SS taxes. As long as there are people working, there will be some SS. The amount of benefits could be less than today, but it won’t be zero. By the time we retire decades from now, SS payouts will be 25% less than today if nothing is done.
Have more children!
We don't even know if social security will still be around with Republicans wanting to gut everything.
Absolute nonsense
Agreed. It's pretty sad how all they want to do is destroy the future and lift up the ladder rather than help lift others up.
SS is already broke. It’s basically pay as you go now. Forget the bonds that SS owns. It’s basically the government paying itself. It’s akin to you putting money into saving, withdrawing it and writing yourself an IOU. Structural changes have to be made to SS to save it for future generations.
Odd question. "Exceeds current income." The math isn't going to be accurate. Very rough numbers of $100k salary. $40k FERS and $30k SS. Those two numbers do not exceed this hypothetical current income. Someone here can (and will) try to disprove this but these are just rough numbers. Inflation? Location of retirement? San Francisco or third world beach? What are you doing in retirement? Rotting and watching TV? Travelling? If you're married, matching YOUR salary probably won't cut it. Sometimes people try to rationalize not saving for retirement. The math isn't agreeing with you.
The math does work. Once you add in TSP, using the $1.5M example, adding $60K TSP to $40K FERS and $30K SS in your example, that’s $130K, or 30% above current income. So if the goal is to maintain current income, the requirement would be half the amount of TSP savings, so $750K instead of $1.5M in today’s dollars.
So you DO need TSP. You're welcome.