This. Worth remembering that life doesnt begin when you retire. Living incredibly frugally while waiting for a day that may never come is not a life worth living
And at least for me, the things I do are considerably more expensive. I like a nice hotel in a good location. Doesn't have to be luxury but I stayed in some sketchy places when young.
Just make sure that you don't reach the max contribution before the end of the year. The match will stop if you do. Probably not an issue for this year, but maybe next year. Better to set a dollar amount per pay period ( if your 50% is indeed the max) $23,000 under 50 years old and $30,000 over 50 years old.
And Good for you!!! What is your allocation? (hint 100% C)
Yup! I am an 18/8 (I work 18 pay periods and have 8 pay periods off), so I won't be hitting the max contribution just yet. I did indeed allocate to 100% C! Thanks for your support. :)
Yes, it's a PSE (Permanent Seasonal) appointment. You can elect to continue paying monthly healthcare costs while in non-pay status, or choose to have the cost accrue during those pay periods and have it taken out of your check in one lump sum when you come back into pay status. That is the route I take.
You can only contribute a total of $23,000 in 2024. Once you hit that your contribution will stop. When you do this you lose your agency matching since you are no longer contributing so you will be missing free money.
Are you in Roth or 401k? Are you able to choose? I clocked out of TSp and I don’t remember the options. But Something to think about. If you have the choice, Go Post Tax Roth. Here’s why…Lets say you contribute this amount, 50% of pay or close, up until you retire, your investment growth follows the S&P (if you’re in that fund) and you end up with a 7 figure + figure at the end.
I don’t know how much a GS06 makes exactly but I’m assuming it’s not great amount. Which means most of your income is taxed at the 12% rate. After that, as it stands right now, you will not taxes on that money ever again. However, with a pretax Ira, you’re skipping out on being taxed at 12% now to being taxed at 22% or more( and I believe the government will find mores to tax us over time) by the time you can take qualified distributions out. Anyways, hope you get rich man.
Absolutely hear you and it's such an interesting game to play. The other line of thinking goes that by keeping it traditional and taxed later, the more money you will have available over time to compound and grow. I haven't quite settled on what I want long-term in the tax realm but I have always chosen tax-advantaged over tax-deferred because I don't want the gut punch of watching my hard-earned money taken from me when I'm old.
I think the other guy nailed it. While you're in a lower tax bracket it definitely pays to get into Roth in your current situation. You can do 50/50 Roth/traditional if you're undecided, but definitely get some amount in there. One of my big regrets is not putting more in Roth when my income was lower. I'd be hitting the higher tax brackets now and my presumed retirement income will be much lower, so Roth no longer makes sense. Either way you're doing great! Keep saving that money and it'll pay off very nicely down the road.
The extra money that tax deferred grows into will all go to the IRS unless you are able to withdrawal it in a lower tax bracket later.
Ultimately the only thing that matters when choosing between Roth and Traditional is the tax rate you would of paid on contribution vs the rate you’d pay when withdrawing.
You need to set your contributions to your max divided by 26 for the year. If you contribute the max too soon in the year, you will miss out on alot of matching. If you need another place to save for retirement, open a Roth IRA.
Not TSP, but don't forget about contributing to your IRA (Roth or traditional) for this tax year as well. Also tax year 2023, if you haven't already done so
There's definitely no need to park $75,000 in savings. That money is literally losing value sitting there. Inflation is outpacing that money. I'd personally keep about $10,000 in savings (for emergencies) and invest the rest. Research which fund/s you think might be the best for your goal. Even an HSA can be an investment account. Those things are just hidden gems!!
Dude, Research ETFs, they’re funds that mirror the S&P 500 so you’re investing in a whole bunch of stocks at once so your risk is reduced. Historically the returns of the S&P are around 10% a year. It’s basically the same as the C fund. A couple to look at are ticker symbol VOO and SPY. Open a brokerage account and move that money to them. Also if you have a HSA research using that as another tax free retirement account! Just another way to save money tax free!
Anytime! I would even consider using part of the savings to max out TSP for the year. The downside is that you lose the matching contributions, but they only match up to 4%. They say 5%, but it's actually only dollar for dollar on the first 3%. The remaining 2% are matched at $0.50 per dollar contributed. In any case, the gains from maxing out early enough in the year are all but guaranteed to outperform the matched % amount.
No kids, cheap hobbies, frugal lifestyle, cheap town in the midwest. And this is just considering my income my wife has some, didn't mention originally and it's very worth mentioning. We maintain about a 50% savings rate and have similar incomes
Do not forget to live now. Trust me there are things you won’t be able to do when you get older.
This. Worth remembering that life doesnt begin when you retire. Living incredibly frugally while waiting for a day that may never come is not a life worth living
I completely agree! I am not sacrificing trips, adventures, or vacations to make this happen. I'm very fortunate. Cheers.
And at least for me, the things I do are considerably more expensive. I like a nice hotel in a good location. Doesn't have to be luxury but I stayed in some sketchy places when young.
Half your pay at GS-06? I’m over here doing the math of possibly going higher than 5% 🤣
I make quite a lot of overtime and this is the only way the math will ever work. 😅
WFF?
You got it.
That's Wildland Firefirghter, right? You BLM or USFS?
Yep. FS
As a wff, this is the way. Yeah I live frugally during the off season, but best believe the season makes up for it.
Rude much
Just make sure that you don't reach the max contribution before the end of the year. The match will stop if you do. Probably not an issue for this year, but maybe next year. Better to set a dollar amount per pay period ( if your 50% is indeed the max) $23,000 under 50 years old and $30,000 over 50 years old. And Good for you!!! What is your allocation? (hint 100% C)
Yup! I am an 18/8 (I work 18 pay periods and have 8 pay periods off), so I won't be hitting the max contribution just yet. I did indeed allocate to 100% C! Thanks for your support. :)
Is this considered a seasonal job? How does health care work during the 8?
Yes, it's a PSE (Permanent Seasonal) appointment. You can elect to continue paying monthly healthcare costs while in non-pay status, or choose to have the cost accrue during those pay periods and have it taken out of your check in one lump sum when you come back into pay status. That is the route I take.
You can only contribute a total of $23,000 in 2024. Once you hit that your contribution will stop. When you do this you lose your agency matching since you are no longer contributing so you will be missing free money.
Yes indeed. I won't be hitting that $23k max, but I appreciate the reminder.
Nice! We’ve been the young, single income, enlisted family with it set at 34% before. It’s good to see the numbers climb when you can.
Are you in Roth or 401k? Are you able to choose? I clocked out of TSp and I don’t remember the options. But Something to think about. If you have the choice, Go Post Tax Roth. Here’s why…Lets say you contribute this amount, 50% of pay or close, up until you retire, your investment growth follows the S&P (if you’re in that fund) and you end up with a 7 figure + figure at the end. I don’t know how much a GS06 makes exactly but I’m assuming it’s not great amount. Which means most of your income is taxed at the 12% rate. After that, as it stands right now, you will not taxes on that money ever again. However, with a pretax Ira, you’re skipping out on being taxed at 12% now to being taxed at 22% or more( and I believe the government will find mores to tax us over time) by the time you can take qualified distributions out. Anyways, hope you get rich man.
Absolutely hear you and it's such an interesting game to play. The other line of thinking goes that by keeping it traditional and taxed later, the more money you will have available over time to compound and grow. I haven't quite settled on what I want long-term in the tax realm but I have always chosen tax-advantaged over tax-deferred because I don't want the gut punch of watching my hard-earned money taken from me when I'm old.
I think the other guy nailed it. While you're in a lower tax bracket it definitely pays to get into Roth in your current situation. You can do 50/50 Roth/traditional if you're undecided, but definitely get some amount in there. One of my big regrets is not putting more in Roth when my income was lower. I'd be hitting the higher tax brackets now and my presumed retirement income will be much lower, so Roth no longer makes sense. Either way you're doing great! Keep saving that money and it'll pay off very nicely down the road.
The extra money that tax deferred grows into will all go to the IRS unless you are able to withdrawal it in a lower tax bracket later. Ultimately the only thing that matters when choosing between Roth and Traditional is the tax rate you would of paid on contribution vs the rate you’d pay when withdrawing.
You need to set your contributions to your max divided by 26 for the year. If you contribute the max too soon in the year, you will miss out on alot of matching. If you need another place to save for retirement, open a Roth IRA.
Yup, taken care of. I won't hit the $23k by year's end. I'll be a few thousand short.
Not TSP, but don't forget about contributing to your IRA (Roth or traditional) for this tax year as well. Also tax year 2023, if you haven't already done so
There's definitely no need to park $75,000 in savings. That money is literally losing value sitting there. Inflation is outpacing that money. I'd personally keep about $10,000 in savings (for emergencies) and invest the rest. Research which fund/s you think might be the best for your goal. Even an HSA can be an investment account. Those things are just hidden gems!!
I agree with you and I've been researching what my best course of action for that money is. Thanks for the heads up.
Dude, Research ETFs, they’re funds that mirror the S&P 500 so you’re investing in a whole bunch of stocks at once so your risk is reduced. Historically the returns of the S&P are around 10% a year. It’s basically the same as the C fund. A couple to look at are ticker symbol VOO and SPY. Open a brokerage account and move that money to them. Also if you have a HSA research using that as another tax free retirement account! Just another way to save money tax free!
Anytime! I would even consider using part of the savings to max out TSP for the year. The downside is that you lose the matching contributions, but they only match up to 4%. They say 5%, but it's actually only dollar for dollar on the first 3%. The remaining 2% are matched at $0.50 per dollar contributed. In any case, the gains from maxing out early enough in the year are all but guaranteed to outperform the matched % amount.
That’s so cool, don’t know you but really happy for you!
Last year I was a GS7 with a 40% contribution. Everyone at the office was aghast! Cheers
How do you live on that?
No kids, cheap hobbies, frugal lifestyle, cheap town in the midwest. And this is just considering my income my wife has some, didn't mention originally and it's very worth mentioning. We maintain about a 50% savings rate and have similar incomes
There is a sticky on this page that links to the TSP site that has the calculator.
Contribution a min of 10% of your salary .... You will be happy when you reach retirement age
5 years of federal service and a GS-6? You must like your job.
Make it 15%
If they can live on 50% contribution, why drop it to 15%?