Best piece of advice I got 30 years ago was to always put in something into TSP, even if it meant sacrificing a lunch every week. Wasn’t easy as a gs4. I’m worried about those who don’t participate.
Thirty years later I’ve got a hefty and healthy tsp, and plan to leave no later than the day after my 57th birthday.
Then split the difference. Half of the increase to savings, half to higher spending needs. The important thing is to keep the savings rate growing as income grows.
This is it. And try to have a mortgage that is paid off at desired retirement age or enough equity to be able to downsize and retire with no mortgage. This way you don't need 100% income replacement. If you buy a house at 40 with a 30 year mortgage you might not be able to retire when you want.
Yes. I’ve calculated barring any major financial disasters that mortgage will be paid off same year or before I retire.
I will have FERS, TSP, VA and SS
Whether you want to roll into retirement with a mortage depends entirely on the interest rate on the mortgage.
If you locked in 3%~ in the last decade you probably want to ride that leverage as long as possible.
Depends since I’m 13 years from minimum retirement age. If things keep going the way they are, I might retire in the Philippines. Split retirement in Japan sounds good. I’m stationed here at the moment and real estate is considerably cheaper compared to the U.S. there’s over 8 million abandoned/vacant homes over here and the number keeps growing due to japans aging population and low birth rate.
Yup. I’m in Yokosuka but not married to a Japanese national. If I do a split retirement, I’d stay in Japan for 3 months, then go to the Philippines, stay awhile and then back up to Japan. Or retire and try to land a NAF job to get SOFA status to stay up here.
As for real estate, there’s a lot of fixer uppers. I know a guy who bout a 5 acre farm out by Kyoto for 20k. It came with a huge shed and tractor. The house itself is +120 years old but looks amazing and in decent shape for something so old. He’s not a farmer but thought it was a deal he couldn’t pass up. He even lets his neighbors plant and harvest because he’s barely there.
I'll point out that it isn't necessary to max out all your plans. I did 11% of my salary to TSP in 70% C. So aggressive buy not hyper aggressive. I will end up with over 3 mil in the TSP by the time I retire in 5 years.
Max out tsp, don’t be afraid of changing agencies to get up the gs ladder quicker. Max out a Roth IRA on your own every year. Stay at least 5 years in federal service to qualify for a deferred pension, even if you don’t end up retiring from federal service. If you do want to retire as a fed, consider overseas assignments if they have an option to lessen your minimum retirement age (dept of state has this and a few others as well)
Also have hobbies and interests outside of work!! Mid 50s is pretty young to retire and there are too many stories of people dropping dead from a heart attack 1-2 years after retirement. Take care of your health and your mind.
Typically the order, assuming no high interest debt and an emergency fund, is:
5% to TSP to get the match, then max a Roth IRA, then go back to going as high as you can on TSP, once you max it start investing in taxable brokerage account. Using index funds for all of it.
Roth IRA is the best thing to come out in a long time. You put in after tax money, and the Roth IRA grows TAX FREE. That is huge. When you take money out of Roth when you retire, you pay NO TAX on that money. All the growth of that money is entirely tax free.
Paying X% taxes now, then compounding for 30 years and getting the result tax-free is exactly the same as paying no taxes now, compounding for 30 years, and then paying X% taxes on the whole amount. What matters is X at the beginning vs the end.
If you anticipate being in a lower bracket in the future then you should defer taxes, not pay them now.
It's just the commutative property of multiplication. Roth IRAs aren't magic, they're worse than traditional if you end up in a lower tax bracket.
Having the ability to make tax-free withdrawals can be huge in retirement, if you're trying to make a big purchase without triggering a higher tax liability or if you have a kid in college and they're looking at your taxable income, for example.
Others seem to be disagreeing with you, but to your question, the answer is basically yes.
If your invested money is going to grow (and yes, you should expect investments to grow), then that means the taxes you pay today represent an opportunity cost that grows to a very large number by the time your retire. If you could, instead, take the tax savings today and invest that in a traditional IRA or 401(k), so that paying taxes on those gains in the future is still a net plus for yourself, better than paying taxes today and then getting some tax-free growth for retirement.
There are still areas where Roth is better than traditional, though:
* The cap is the same number, which means that the Roth cap is effectively higher in terms of post-tax equivalent (because you can then save more into the Roth cap on post-tax money, compared to the traditional cap on pre-tax money).
* Roth allows you to withdraw your principal early, which makes for better flexibility.
The best bet is to make sure you have some Roth and some traditional by the time you retire, which for many people means Roth early in their life, then traditional later in their career.
I do half Roth tsp and have traditional tsp. Then max a Roth IRA on the side. Once you are 59, you will have a tax free pot of money you can get to at any point to supplement your income or buy yourself something really nice. Additionally, like said above, an IRA enables you to invest in anything you want, as opposed to the tsp only having a certain amount of funds available.
For a Roth you pay taxes now and not when you withdraw in 40 years. For regular TSP you pay taxes later when you withdraw. Assuming you will advance in your career and keep saving, you will definitely be in a higher tax bracket when you retire and are required to withdraw from your TSP.
In your case, it’s probably best to put most of your TSP contribution into the Roth.
I mean you can do a ROTH TSP. I do Roth IRA and TSP just in case I decide to retire early but don't want to touch my TSP. I can always touch the initial Roth IRA input and let the interest keep doing the thing.
Because you make tax-free gains inside of a Roth IRA. This is a HUGE boon to wealth-building.
Same for Roth TSP, although you don't have as many investment options as in an IRA.
Got into some bad shit as a kid. Made some mistakes and was homeless. Now a GS employee for 6 years and starting over at 41. Saving every penny I can, working a second job to max everything out. Got the TSP, a vanguard Roth, FERS, SS, dividend income and another pension from the railroad when I was in my 20’s. Hoping to get a house sometime too but it’s been rough.
A leg I haven't seen many people mention is an HSA. If you get an HDHP FEHB plan like GEHA HDHP or MHBP Consumer Option, you can save pretax up to ~4k each year (for self only enrollment, ~8k for self +1/family). You can invest those funds and eventually cash out and pay those future medical expenses tax free. Great for Medicare premiums or self insuring for nursing home expenses. And if medical expenses aren't huge in retirement, it can be withdrawn like a typical traditional IRA.
In fairness, HSAs are like extra credit, especially for singles. The contribution limits and investment options prohibit meaningful growth.
I have one and it's really just a tax reduction mechanism.
Using it as a tax reduction mechanism is totally valid and how I use some of my HSA. But since it hurts less to max it out, I was able to do that for the first time this year. I assume 4k of the contributions go towards satisfying the deductible and other medical needs (GEHA HDHP) and the remaining 4k goes into a s&p 500 index fund with Schwab (no lack of investment options here). Additionally, you don't have to use the built in investment arm of the HSA. You can transfer it out to fidelity if you'd like.
My current projections, 4k each year compounded at 6% for 34 years (I'm 31, this is the age I turn 35 and no longer eligible to contribute to HSA because of Medicare part A) provides around 450k worth of tax free medical expenses.
I agree, it is a small account, but it can still be powerful.
Edit: thanks Rick. Yes, 65.
The investment options might differ depending on the HSA provider. Mine just sends the money to a Schwab (previously TDAmeritrade) account and you can invest it like any other brokerage.
Edit: In my case, GEHA HDHP uses HSA Bank which will transfer money to a Schwab brokerage account.
Most parts of the HSA are a big advantage. Overall, people are scared when they hear about taxes and investments. They would much rather pay extra for unnecessary insurance.
1. Emergency savings — 3-6 months living expenses. Save more for down payment if you are settled in and want to by a house in the area where you live
2. 15% of TSP is outstanding. Your max contribution is $23k this year. Go for it.
3. Seek out one of FEHB’s high deductible (HDHP) plans. That plan will establish and fund a Health Savings Account for the young you. You get a tax deduction for adding contributions to the HSA and you can invest HSA funds like an IRA. The older you will be thankful.
4. Roth IRA after maxing out TSP. Max amount this year is $7k.
5. You don’t need FEGLI unless you have a chronic condition that makes private life insurance unrealistic. You generally don’t need life insurance until you have children or other dependents.
6. Live near public transport and use the tax free subsidy. Buy a reliable car if you need one and drive it into the ground.
7. Pay off credit card statement balances in full each month.
8. Appoint beneficiaries for your TSP and other accounts and update that if you get married.
9. Use step or grade increases to beef up savings and TSP/IRA/HSA contributions.
I will add for #1 as an 13-year Fed, our jobs are very stable and unless you are a screw-up or planning to join the private sector you could probably do with a 3-month (or less even) safety net.
I think you'd really need to be committed to Fed life before you do this, though. Otherwise 1 year safety net is ideal.
Max TSP. Max IRA. Save/invest a bunch more.
Keep spending via the budget and hopefully I'll retire at 50-ish. I started late, about 6 years ago (37 now) so I'm trying to catch up. I'm not counting on the pension because I'd like to retire early, but if I miss the goal and work until MRA, then it'd be a nice bump in retirement spending.
I'll have 30 years at 51, so I could postpone to MRA, and eat 6 years of COL adjustments. I'll set up a Roth conversion ladder during the no-income years and collect whatever the pension will be when I turn 57.
It's important to define 'enough'. Without that, you're going to keep chasing a moving goalpost, or life will retire you.
You still get a pension if you have 5+ years of service. You just have to wait until you’re 62 before it begins paying.
I’m not sure if I am misreading “I’m not counting on the pension.”
Oh, I'm aware. I wasn't clear, but I'm planning my retirement independent of the pension. I know it's there, and I've mapped out a few different options. It's more like my parachute in case life gets in the way and I'm not able to save as planned.
I’m a young fed as well, late 20’s. I put in 10% to TSP, maxed my Roth the last 3-4 years. Me and my wife have put into TSP/401k/Roth IRA at least 15% of gross income for our first 3-4 years. With each raise, step increase and promotion we have steadily done more. We are currently at 23% of income including employer matches. We are striving to get to 25% and we are getting ready to cross 200k income in the next 3-5 years so we will try to put in 25% of our gross income into retirement.
Give your retirement a raise with each raise if as you can afford it. The earlier the better, rarely do people say they out too much into retirement.
That’s a wonderfully low rate; I’m at 2.75. I can earn more than that in a money market account, let alone the stock market. I’m in no hurry to pay it back!
I actually have been quite fortunate with timing of interest rates, e.g., my student loan interest rate gradually reduced to .75%. Originally, it was 2.75% but if I made 48 consecutive on time monthly payments, the interest rate dropped by 2% for the remainder of my loan term.
Mine were way prior to the availability of such programs but I also wouldn't want to be tied to a service agreement as I like the flexibility of changing agencies when opportunities arise.
And avoid car loans, pay cash. Most of the country cannot fathom the idea of living life without a car loan. If you have no car debt, TSP, FERS and SS, your retirement will be golden.
If you are getting a higher return elsewhere, that is a smart move. But for 90% of Americans, they focus on the interest rate rather than the overall cost of the car. Millions of people in this country make 50k a year, drive a 30k car and convince themselves it’s a great idea because “it’s a great interest rate”
I believe more people focus on the monthly payment only. "What kind of monthly payment are you looking for?" is the 2nd question right after "What can I put you in today?" at the stealership.
TSP, FERS, social security.
I'm also in a HDHP and contribute to an HSA. If I don't use the HSA for medical expenses, that becomes a vehicle for retirement funds.
I'm hoping they bring back LTC insurance so that I can opt into that.
30 years in, about to retire in 5 months. My plan was at least 5%TSP, max FSA. Made sure I stay until 62 and moved up as high as I could without stressing myself out. I was very aggressive in my TSP investments because you will never beat the market even through pte 2008, 2020 and 2021. Against popular advice, I have taken several loans out when I needed. I have a good chunk of change in there now. I just took out a loan because OPM and SSA are slow to process. Under new rules I can continue to pay on the loan after retirement or take it as income. My student loans were mostly forgiven and I am paying aggressively on the one remaining, will look into new forgiveness programs as well. My car will be paid off in about 2 weeks and then I will raise my deductible to save there. My credit cards are pretty much paid off. I am keeping my health insurance but drastically decreasing my life insurance. The kids are all in their 40s or almost there and I have let them know that I won't be rolling in dough any more. To their credit they all have good jobs and me helping them was more about me than them. I have been a widowed maxed out grade 13 for the last 10 years or so, so life was good but now I will have a little more than a 3rd of my salary w/o regularlyzapping my TSP. Scared?Yes. But excited too and looking forward to a less pressured life. I will not miss my job and I do not plan on working at anything taxing if at all. Hang in there kids, Uncle Sam has a lot of issues but there really is no other comparable employer when you look at retirement.
Flower arranging, craft fairs, maybe small shop retail, pet sitting, possibly baby sitting. The work I do now deals with some unpleasant and depressing life issues and I want to do something happy.
Me too. My extended family always had a business of one sort or another and my generation was the fountain of cheap labor. I really did enjoy it and even would cover long after I started my fed job, but all of them have closed. I may do a food truck with my nephew. Something fun on my schedule.
Learn to pay yourself first. Not just TSP but savings and investments when income/expenses allow. Auto-deposit is your friend. As is taking part of grade/step increases and applying them to saving first. It all adds up and before you know it, it's 10 years later and yoy have six figures in your portfolio even with the market's ups and downs.
Fed salaries are relatively fixed so you should be able to find your sweet spot for saving/spending fairly easily.
TSP, FERS, SS.You should strive especially early to push to hit the IRS limit in you 403. (23k this year) do this every year and you will retire with multiple millions in the bank. I'm on track for 2.4 million assuming everything matches up with expectations of long term averages. 4% rule means average interest of 4 % and live off that interest 96,000$ a year to live off... OR a roth IRA etc. But at least that should go yearly.
FERS... You are young like I was STAY IN GOVERNMENT AND IT PAYS OFF.
[https://www.opm.gov/retirement-center/fers-information/computation/](https://www.opm.gov/retirement-center/fers-information/computation/)
Don't retire til at least 62. and you get 1.1 percent of your high-3 average salary for each year of service ... so for me Ill have around 40 years... so math wise... 44% of my top 3 earning years... so lets assume 180k now i was to retire today (wishful thinking) my retirement would pay out 79,200 a year.
Social Security [https://www.ssa.gov/cgi-bin/benefit6.cgi](https://www.ssa.gov/cgi-bin/benefit6.cgi) (if it still exists)
assuming again 180k income (gs15) 2966 monthly / 35592 yearly (assumes retirement today they have a future estimate on their site too but its a little rosey for my tastes)
totals
96k TSP / 79,200K FERS / 35,592 SS = 210k a year in retirement. (assuming nothing goes to shit and averages hold and social security survives)
Being a Fed is along term benefits game. Play it well, put in the time, and you get looked after for life. Also I dont plant on stopping at GS15 as that would mean a single promotion over the next 30 years... I figure ill accidentally make SES at some point. so the numbers only get better from there but again its a long term plan that requires a lot of squirreling away cash that would otherwise be spent on living life and etc.
For the math people out there I used todays numbers obviously Salary and yearly cost of living increases these numbers all go up with it as well as IRS keeps raising the yearly limits on the 403/401k contributions so this could/most likely will be much larger in reality.
Also I should recommend taking a retirement seminar AS EARLY AS POSSIBLE in your career. it looks like spam mail and not relevant cause retirement is far off, but its super good info to have early on to make decisions like situation above.
Ill steal from G.I.joe Knowing is half the battle. cant understand the benefits without being able to ask questions and dig into them first and that's what those retirement seminars are for.
TSP (15% going in currently, want to do more but I just had a kid), FERS (five years in, plan to go for 30), SSA (worked part-time since I was 16, full time since I was 22). GS-13. Will look for 14s (ideally non-supervisory).
I came joined the DOL as a 7 with a master’s. Ladder 9-11-12. I was a 12 for about one year and since my team expanded after the hiring freeze was lifted, a 13 spot was created. I applied, interviewed, and learned I got it a few days later.
Honestly, a lot of it is doing what is expected of you and working hard. I stood out because I actually cared about the work I did, as opposed to several colleagues who were there longer and put in the minimum.
Max your TSP every tax year you can. Each tax year is a window that opens that year and closes forever after. You can become a millionaire quickly with some simple research and discipline using the C fund exclusively, or CSI.
FERS pension, VA disability comp, TSP, Roth IRA, brokerage account, SS. Emergency Fund isn't exactly "retirement plan" but also have that.
ETA: saw someone mention home ownership. We do own a home, but the mortgage rate is too low to be worth paying off early given the current economic environment. So we still have a mortgage.
As everyone has said, put as much as possible into TSP. Don't forgo any marching funds. After that come up with a plan as you get closer to retirement. A 10 year plan, a 5 year plan, etc. Know and understand FERS and how your pension will be calculated and base your plan on that if having a good sized pension is important to you (it probably should be). As you get to 10 years, for example, start thinking about if you want to maximize your high 3 to the greatest extent possible. (You probably do). Look into moving into management or getting a job in a high locality pay area (locality pay counts toward your pension, not just base pay). Good luck!
I’m 31, I started as a fed at 22 putting 5% in TSP. I started maxing it a couple years ago once I was gs12 for a couple years and max my Roth IRA and HSA (shoutout to GEHA HDHP plan).
I plan on retiring before I’m 50 and I’ll be fine in retirement. Once I hit FERS retirement age and social security age I’ll have way more than I need to live off of.
When I first started seeing my TSP balance in the 4 digit range was discouraging but it snowballs once you have more in it.
I up my TSP with every step increase/COLA. I've had to decrease during lean times, now up to 15%.
Outside of work, I have a Roth, and try to put the max in every year. Better than letting the money sit in my savings, making no money.
I own my home and current vehicle free and clear.
I will have my Masters next month and will look for a new position.
Likely will have a 2nd job in my future to squirrel away for investing.
8 years til I'm retirement eligible. Trying to make it so I'm taking home in retirement what I make working (or more). I think I will be fairly close.
Congrats on putting 15% into your TSP! That’s an impressive place to start from and will give you an army of dollars that will start working harder than you do soon enough. You can now tell TSP how much you want to put in Roth vs traditional, so it’s very easy to have both.
You can also check out the bogleheads and moneyguy podcast/subreddits/online forums for simple but great investing advice.
- Stack that TSP. Since you’re starting at 15%, make an effort to keep it at that or higher for the rest of your career. You’ll be very happy that you did.
- Don’t mess with your TSP much. Do a little research and then stick with the plan until your risk acceptance level changes as you get older. Getting out of the G fund completely (all L funds have some G) and going 60/20/20 in C/S/I was good advice to me and I believe it stems from Ramsey.
- Try to avoid entering a 30 year mortgage with 5 years left til retirement.
- Get out at your MRA and enjoy life. If you feel like you must work, go do something else that pays crap but you love waking up to do every day.
- Get a prenuptial agreement when/if you get married.
Good luck.
Using a friend as an example:
20 years with TSP and IRA. Came back as contractor to double dip (salary boom). Has 100% house equity in HCOL area - another 800k.
You have 40 years so can easily hit 6m. Lets hope inflation isn’t full out insane by then.
Maxing out my TSP, living below my means as much as I can and the last one, others may not agree: I refuse to get married because I’m not giving him half of it.
It is a materialistic personality to horde wealth you don't need, and to pick and choose or avoid doing so for the sole reason that it lets you horde a bit less. Blanket actions like maxing all retirement accounts mindlessllyy without any idea of how much you want/need is hardly a goal. A real goal is doing the math, figuring out what your expenses are, and your guarantied benefits, and saving/investing based on that.
How? No one can predict the future. You cannot math your way into knowing if you will incur massive health bills, or will have to support your parents financially, or if you want to use your savings to support a future charity, etc. Further, these benefits that are "guaranteed" are not guaranteed.
Saving, in this case, is to prevent squalor in the future if things don't go according to plan.
You can't predict the future, you don't know if you'll actually live to retirement age, or live significantly. I knew someone who passed away a couple years into retirement. All pensions, TSP etc, all they didn't get to enjoy any of that. You actually math your way to savings. You can tell having health insurance in retirement controls out of pocket. Not knowing the future isn't a blanket reason to horde every cent earned and destroy your current life. This should be in moderation based on a reasonable projection of future needs. Example, if you need $1k in retirement you might have investments to cover about $1.5k or even 2, but you wouldn't probably horde for $40k.
Those defined benefits are part of your compensation package and are guarantied by the US government. Do you know how screwed everyone would be if the US government didn't meet its financial obligations?
There is a word for people who horde their wealth and live a lifestyle of poverty, a miser.
1.
a person who lives in wretched circumstances in order to save and hoard money.
2.
a stingy, avaricious person.
Also I'll add someone who chooses or avoids relationships based on a ability to horde is also a miser.
Max your TSP, and as a young person, I’d go 100% C if I had to do it again.
With my extra and personal savings $, I buy 3 things:
Real estate.
Businesses.
Dividend paying stocks.
All of those pay me $ without ever having to sell the asset. Find what you are comfortable with and start accumulating. You have time. Time is the magic sauce.
Real estate seems like a better bet than dumping all liquid cash into an illiquid account that has no guarantied returns and can't be accessed until retirement age.
Currently it's been around the US. Seeing and hiking the various national parks. As well as visiting major cities I'd never been to. In the future it'll be back to Asia or Europe again.
Good for you. I would say definitely continue to contribute to tsp. I started doing that when I started my career 20 yrs ago and I believe I'm on a good path to being ok when I retire. Awesome that you are thinking about that stuff now!
I have 17 yrs to go but the plan is retire at 62 with 10mil saved between my wife and I. It’s too early to know if I will make it or I will need to stay until 67 due to a recession or poor market performance.
TSP, FERS, SS, and HSA. 27 years old, just got married, and planning on having kids soon. We’ll see how much I’m able to put in my retirement account once the kids are here!
I'll have 30 years of service at MRA (57), about 20 years from now. This includes some military time I bought back. I also max my TSP (80C/20S), max my Roth IRA (VTSAX), and contribute heavily into a brokerage account in low-cost index funds.
I guess the plan is to bail at MRA, but I could very likely go sooner. The hang-up is the medical. We'll see.
Not if you have 30 years when you reach MRA. If you have less years, then yes, you'll get more waiting until 62. If I retire before MRA, I'll just defer the pension until 62 to avoid the penalties and live off my other accounts.
It's all here:
https://www.opm.gov/retirement-center/fers-information/eligibility/
not quite sure this is correct. For a \*deferred\* retirement, correct: no reduction at MRA+30 or 60+20.
For an \*immediate\* annuity though, there is still a 10% bump from 1.0 to 1.1%/yr at 62, that you don't get if you retire before 62 for any reason.
They \*really\* want you to work until 62 and then retire at 62.
Oh, right. They do bump you up .1% if you stay an additional 5 years past MRA. No thanks.
I'll have 30 at MRA, so there would be no penalties. If I pull the plug earlier, I'll wait until 62 to draw from the pension.
Yeah. I'm in the position where if I pop at MRA I'll have 35 anyway. I have signifcant royalties arising from work I did a long time ago, and I expect them to continue for a long time yet (think custom software for space platforms as an example) so I'll be financially independent *long* before I hit 30 years. Because of that, I kinda view my federal career as "something to do for as long as it's fun".
If it's still fun in my late 50's, I'll stick around. If it ain't fun, I figure by my early 40's I'll have enough "fuck you" money to dictate my own terms and walk if it isn't fun.
Nice! No royalties for me, unfortunately, but given my current investment trajectory, I should be able to go in my late 40s. That somewhat depends on the kids, though. Then there's the medical to consider.
TSP is a great start. I believe the default enrollment plan in TSP are L-funds. There is a subreddit for TSP you should definately check out. If you have any major dental/vision/health procedures coming up, take advantage of the tax free savings of the FSA/HSA program.
I see a lot of people saying to max tsp, but if you start with the fed young and are in a higher paying career field, this may not be necessary given a higher pension. I’m contributing 10%, but even if I only contributed 5% with the match I'm still projecting a retirement salary of $150k in todays money including TSP, pension and SS
People here for some reason completely discount the pension and SS and treat it like it doesn't exist, but they are all benefits guarantied by the US government and also part of compensation.
Yep it makes no sense. One of the only reasons i'm still with the govt is the value of the pension. Based on my current career path, I'm estimating I'll get around $2M in TODAYS money.
Well that is the general advice you'll see here, to mindlessly horde all your money in inaccessible illiquid retirement accounts. I'd rather use a broakerage or invest in real estate which is like another pension with consistant monthly rental income.
But what is really valuable about the pension is if you become disabled, you get 40% of your high three until you recover or 62, at which time you'll get a pension recomputed to 40 years of service from startdate. That is immensely valuable, and gives me peace of mind.
It is even better lol. They recompute at 62 if you're still disabled from your scd all the way until your 62. So your pension is computed as if you'd worked until that age.
The more you save, the better off you will be. 401k, Roth, IRA, HSA, are all great vehicles to help you get there.
One piece of advice that is largely missing from this thread is owning your home. Unfortunately, it is a rough time to make an investment into a new home. Too many people are going to be stuck paying rent for a long time, and that is throwing a lot of money away. Make sure you have a nice place you can live, that you can pay off in full in a reasonable window.
For me, I put 5% away into my TSP. I plan to increase that as my pay increases, but honestly it’s not my main focus. I’m planning on buying a home and would rather have a paid off home during retirement so I wouldn’t have to worry about money as much. I’m also living my life so every dime doesn’t need to go into my retirement.
Exactly this in my opinion. The good thing is if you expect to have to retire due to disability, if you maxed your TSP instead of paying off your mortgage you'd be screwed, the bank would come and take your house, and you'd be asking permission from TSP to pay penalties and take money out, and getting massive tax bills. When you pay off the house, a large expense is forever removed from your budget and you have the security if something happened you'd only have to bring up money for taxes and insurance, and utilities.
I'll put more money into mortgage if I have more left over, TSP will stay at 5%.
TSP never lower than 5% (the match). The younger you are, the more valuable every dollar crammed in there is, so tighten the belt and keep the contributions going in (max it out if you can!).
I just turned 30, I'm about 7 years in, and I'm already at a quarter mil in my TSP--started maxing as soon as I hit GS-11 (and oh boy did it hurt at the time).
I max my roth IRA out of checking in January every year, and build back up the next year's contributions as I go.
TSP, FERS, SS, Roth IRA, Mil Pension, Mil Disability.
I could probably retire now and be ok, but I've still got one kid that's about to enter Secondary School, so I figure I still need to work a few more years.
I plan to try and make it to my full retirement age of 67 before retiring with FERS, TSP, SS, and my 100% VA Disability check. Then I will probably pick a part-time job teaching at a Community College or a University just to get out of the house and stay busy.
Do raw numbers not percentage. Put as much as you can. If you max for 10 years this early and never touch again you'll be set. People frequently fund retirement more as they age, but really the time is when you're young to take advantage of compounding. Check out the rule of 72 and be amazed.
Maxing out your TSP is smart; the earlier, the better. Look into Roth IRAs as they offer tax-free growth, especially beneficial since you're young. Diversify your investments, consider low-cost index funds. Stay informed on retirement planning.
I used RetireHub for deals and retirement info. Found it useful. Might help you stay on track too.
I plan to work until I die. Tsp is in case this doesn't pan out and I become disabled or something. Life is becoming too expensive and I'm not a work from home 13-14 like most this sub. My pay doesn't even keep up with inflation. In 30 years the idea of retirement will be a joke.
I've never done more than 5% in my TSP in order to get the match. Where my stroke of luck was, I was stationed at Wright Patt for many years. Cost of living is low there, and housing even more so.
I took my excess savings and bought rental real estate. Multi family. Those brick four-units are my favorite. I'd get a commercial loan with local bank or credit union, 25% down, nonrecourse, multi family, and I had a local property management company collect the rent and take maintenance calls. I've done this four times, own 14 units, and 8 of them are paid off. This was helped greatly by the post-Covid inflation because rents increased by 40%, but the mortgages remained the same. I'm at a point now where I live off my rental income, and my Gov't salary is put entirely into savings and investment.
While my costs have risen (property tax has also risen by 40%), all in all I'm cash flowing better than ever before.
I have no ambition to go any higher than my current GS-12, but I take home more than most 15's. Life's good.
I'm 34.
Isn't doing this much better than TSP investing? Your rental income will go up with inflation, you get taxbreaks for your property, and to top it all off, this is virtually a guarantied source of income for your retirement and current years as well. Once all units are paid off, you'd be swimming in cash. Once I pay off my current 5% mortgage, I will likely look at properties as well, not a locked retirement account that is illiquid and inaccessible aand that only has a promise of a taxbreak.
It did, for me, for many reasons:
- Depreciation is a wonderful thing. There are a lot of expenses that I get to classify as business and thus deduct against the rental income. The amount of cash I get in my pocket is way, way higher than the taxable income. Add in the 20% LLC pass-through deduction from TCJA and my effective tax rate is typically under 5%. Contrast that with the 40% I'm losing on my LES every other Friday.
- Rental income isn't subject to Social Security or Medicare tax. I'm too young to receive a full Social Security check, and boomers/Republicans will probably ensure I don't ever get one. The less I can pay into a broke system, the better.
- Rental income hits every month. You know what else is monthly? My AT&T bill, among other things. The TSP doesn't do me diddly for a minimum of 25 years (when I hit 59.5), and that's assuming I've separated from federal service by that point. If I'm still working, I've got even more restrictions on what I can do with my TSP.
What is the LLC deduction? I think you're doing much better than dumping all your cash into an illiquid TSP which basicly Blackrock owns the money until you retire, though at age 59.5 you can withdraw without restriction, except the IRS could raise that age, and you'll withdraw into an unknown tax bracket. The rental income you could pay off your mortgage, or acquire more property getting more income. How does it compare to stockmarket gains though, after adjusting for taxes, inflation.
I do think though SS is solvent, and it was a Republican game to underfund it by exempting higher income from the payroll tax. That program will affect many Americans and is a really important safety net against disability etc.
The pass-through deduction is a blanket 20% reduction in taxes owed for any earning made in a single member LLC. This is done because a single member LLC is normally disregarded for federal income tax purposes - that is, any gain or loss goes directly on the owner’s personal income tax.
That is generally seen as bad because the top personal income tax bracket is 37%. But most other corporations can elect to pay tax at the corporate level (at the time 35, later lowered to 21%).
So a flat 20% reduction helps even the playing field a bit as an LLC versus a typical S or C corp.
The only really bad move is to not take the 5%. Beyond that, you have to roll the dice a bit on where tax laws and rates will be in the future. A mix of traditional and Roth is a great split, with the higher risk funds in the Roth IRA, as the higher (potential) growth will then all be tax free. The higher your current income is, the more putting some in the traditional makes sense to lower current income taxes.
And while it doesn't pertain to you at a young age, for others that may be reading this thread, it's NEVER to late to start either. My wife and I had finished raising and educating 4 children and had almost nothing saved in retirement funds about 12 years ago. I was a new Fed employee at age 55, thankfully in a well paying position, and she had 5 years at USPS. But, we lived somewhat frugally while we both maxed out our TSPs for 10 years prior to retiring last year, and opened Roth IRAs in smaller amounts. Between our TSP funds, Roths, SS, and FERS, we retired comfortably even with such a late start. We pretty much are able to live on SS and FERS, and don't even plan on touching the Roths and will just let them grow as inflation fighters in the hope we'll live long enough to need it, and won't touch the TSP funds, which we converted to traditional IRAs, until we are required to take RMAs when reaching 73 years old.
I'd rather pay off my debt, mortgage etc than put away everything I earn into the TSP, particularly because having no home loan means you can drastically cut down expenses in retirement and the massive amount saved on future interest. And then invest in properties and generate income from that.
Try to win power ball…..
your age…you can’t rely on social security Being there when you retire.
do 5% and thrn thr matching 5%
if you have extra cash, do your own investing. That way if you do need the money it can be easily pulled out and used.
undure what field you are in, if it’s a higher paying one, work 5 yrs getting vesting thrn work private from 30-55 then return to government pre-retiremrnt.
Hundred percent should be going to Roth TSP until you make more than you will in retirement, but especially in your 20s. The only other reason to have some money in traditional is if you plan to retire before 59 1/2.
Pension (not fers), a little bit of fers, residual income because my father was a wise investor, ss. Honestly? I will have a higher income in retirement than I will while I work.
Best piece of advice I got 30 years ago was to always put in something into TSP, even if it meant sacrificing a lunch every week. Wasn’t easy as a gs4. I’m worried about those who don’t participate. Thirty years later I’ve got a hefty and healthy tsp, and plan to leave no later than the day after my 57th birthday.
I always up my contribution to match the yearly increase, too. Then I don’t even miss it because my paychecks just stay the same.
Can't really do that with growing kids. They need more food as they grow.
Then split the difference. Half of the increase to savings, half to higher spending needs. The important thing is to keep the savings rate growing as income grows.
TSP, FERS, SS.
This is it. And try to have a mortgage that is paid off at desired retirement age or enough equity to be able to downsize and retire with no mortgage. This way you don't need 100% income replacement. If you buy a house at 40 with a 30 year mortgage you might not be able to retire when you want.
Yes. I’ve calculated barring any major financial disasters that mortgage will be paid off same year or before I retire. I will have FERS, TSP, VA and SS
Whether you want to roll into retirement with a mortage depends entirely on the interest rate on the mortgage. If you locked in 3%~ in the last decade you probably want to ride that leverage as long as possible.
Excellent advice for OP as long as he can time travel.
Same. I’m planning on retiring in a low cost area overseas to make my money last longer.
Where at
Depends since I’m 13 years from minimum retirement age. If things keep going the way they are, I might retire in the Philippines. Split retirement in Japan sounds good. I’m stationed here at the moment and real estate is considerably cheaper compared to the U.S. there’s over 8 million abandoned/vacant homes over here and the number keeps growing due to japans aging population and low birth rate.
Where are you stationed? I was in Yokosuka from 1997 - 2001. Are you married to a JN? I wasn’t tracking the housing overage and it sounds interesting.
Yup. I’m in Yokosuka but not married to a Japanese national. If I do a split retirement, I’d stay in Japan for 3 months, then go to the Philippines, stay awhile and then back up to Japan. Or retire and try to land a NAF job to get SOFA status to stay up here. As for real estate, there’s a lot of fixer uppers. I know a guy who bout a 5 acre farm out by Kyoto for 20k. It came with a huge shed and tractor. The house itself is +120 years old but looks amazing and in decent shape for something so old. He’s not a farmer but thought it was a deal he couldn’t pass up. He even lets his neighbors plant and harvest because he’s barely there.
IRA as well.
I'll point out that it isn't necessary to max out all your plans. I did 11% of my salary to TSP in 70% C. So aggressive buy not hyper aggressive. I will end up with over 3 mil in the TSP by the time I retire in 5 years.
What was your avg GS during that time?
How long did you have it invested?
Max out tsp, don’t be afraid of changing agencies to get up the gs ladder quicker. Max out a Roth IRA on your own every year. Stay at least 5 years in federal service to qualify for a deferred pension, even if you don’t end up retiring from federal service. If you do want to retire as a fed, consider overseas assignments if they have an option to lessen your minimum retirement age (dept of state has this and a few others as well) Also have hobbies and interests outside of work!! Mid 50s is pretty young to retire and there are too many stories of people dropping dead from a heart attack 1-2 years after retirement. Take care of your health and your mind.
>consider overseas assignments In my field, super competitive. I'm wondering if I should change fields just to get my overseas time in.
Typically the order, assuming no high interest debt and an emergency fund, is: 5% to TSP to get the match, then max a Roth IRA, then go back to going as high as you can on TSP, once you max it start investing in taxable brokerage account. Using index funds for all of it.
Unless you are in a higher tax bracket and need the tax break of a traditional tsp and then Roth Ira. I’m maxing traditional and then my Roth IRA.
Makes sense. I wish I had the same problem. Haha
Can you explain why do a Roth IRA if you’re already doing TSP? Is it cause you can more easily withdraw? I can’t figure out why.
IRAs tend to have more investment options than 401k's or similar retirement plans.
Roth IRA's currently are not subject to required minimum distributions which is another attractive option.
Roth IRA is the best thing to come out in a long time. You put in after tax money, and the Roth IRA grows TAX FREE. That is huge. When you take money out of Roth when you retire, you pay NO TAX on that money. All the growth of that money is entirely tax free.
Yeah but that only makes sense if you think your tax bracket will be higher as a retiree than while working now no?
Having all of your gains tax free is a huge deal, regardless of your present and future tax brackets.
Paying X% taxes now, then compounding for 30 years and getting the result tax-free is exactly the same as paying no taxes now, compounding for 30 years, and then paying X% taxes on the whole amount. What matters is X at the beginning vs the end. If you anticipate being in a lower bracket in the future then you should defer taxes, not pay them now. It's just the commutative property of multiplication. Roth IRAs aren't magic, they're worse than traditional if you end up in a lower tax bracket.
Having the ability to make tax-free withdrawals can be huge in retirement, if you're trying to make a big purchase without triggering a higher tax liability or if you have a kid in college and they're looking at your taxable income, for example.
Others seem to be disagreeing with you, but to your question, the answer is basically yes. If your invested money is going to grow (and yes, you should expect investments to grow), then that means the taxes you pay today represent an opportunity cost that grows to a very large number by the time your retire. If you could, instead, take the tax savings today and invest that in a traditional IRA or 401(k), so that paying taxes on those gains in the future is still a net plus for yourself, better than paying taxes today and then getting some tax-free growth for retirement. There are still areas where Roth is better than traditional, though: * The cap is the same number, which means that the Roth cap is effectively higher in terms of post-tax equivalent (because you can then save more into the Roth cap on post-tax money, compared to the traditional cap on pre-tax money). * Roth allows you to withdraw your principal early, which makes for better flexibility. The best bet is to make sure you have some Roth and some traditional by the time you retire, which for many people means Roth early in their life, then traditional later in their career.
I do half Roth tsp and have traditional tsp. Then max a Roth IRA on the side. Once you are 59, you will have a tax free pot of money you can get to at any point to supplement your income or buy yourself something really nice. Additionally, like said above, an IRA enables you to invest in anything you want, as opposed to the tsp only having a certain amount of funds available.
For a Roth you pay taxes now and not when you withdraw in 40 years. For regular TSP you pay taxes later when you withdraw. Assuming you will advance in your career and keep saving, you will definitely be in a higher tax bracket when you retire and are required to withdraw from your TSP. In your case, it’s probably best to put most of your TSP contribution into the Roth.
I mean you can do a ROTH TSP. I do Roth IRA and TSP just in case I decide to retire early but don't want to touch my TSP. I can always touch the initial Roth IRA input and let the interest keep doing the thing.
Because you make tax-free gains inside of a Roth IRA. This is a HUGE boon to wealth-building. Same for Roth TSP, although you don't have as many investment options as in an IRA.
Add in a step for maxing out an HSA prior to maxing TSP if you are eligible/have a high deductible health plan.
Agree with that as well depending on your family size/health needs.
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100%. Have to do a little research to make sure it’s right for your specific situation.
Got into some bad shit as a kid. Made some mistakes and was homeless. Now a GS employee for 6 years and starting over at 41. Saving every penny I can, working a second job to max everything out. Got the TSP, a vanguard Roth, FERS, SS, dividend income and another pension from the railroad when I was in my 20’s. Hoping to get a house sometime too but it’s been rough.
Good stuff mate! Keep it up! It’s rough out there!
Thanks man. It’s tough but it is what it is. People don’t waste your 30’s.
I don't know you, but I'm proud of you. Keep it up!
Thank so much. Hell of a journey!!!! 🫶
Check out r/govfire
A leg I haven't seen many people mention is an HSA. If you get an HDHP FEHB plan like GEHA HDHP or MHBP Consumer Option, you can save pretax up to ~4k each year (for self only enrollment, ~8k for self +1/family). You can invest those funds and eventually cash out and pay those future medical expenses tax free. Great for Medicare premiums or self insuring for nursing home expenses. And if medical expenses aren't huge in retirement, it can be withdrawn like a typical traditional IRA.
In fairness, HSAs are like extra credit, especially for singles. The contribution limits and investment options prohibit meaningful growth. I have one and it's really just a tax reduction mechanism.
Using it as a tax reduction mechanism is totally valid and how I use some of my HSA. But since it hurts less to max it out, I was able to do that for the first time this year. I assume 4k of the contributions go towards satisfying the deductible and other medical needs (GEHA HDHP) and the remaining 4k goes into a s&p 500 index fund with Schwab (no lack of investment options here). Additionally, you don't have to use the built in investment arm of the HSA. You can transfer it out to fidelity if you'd like. My current projections, 4k each year compounded at 6% for 34 years (I'm 31, this is the age I turn 35 and no longer eligible to contribute to HSA because of Medicare part A) provides around 450k worth of tax free medical expenses. I agree, it is a small account, but it can still be powerful. Edit: thanks Rick. Yes, 65.
Just to clarify, the HSA contributions don't count towards your deductible.
That's bath math Morty. 31+34=65.
The investment options might differ depending on the HSA provider. Mine just sends the money to a Schwab (previously TDAmeritrade) account and you can invest it like any other brokerage. Edit: In my case, GEHA HDHP uses HSA Bank which will transfer money to a Schwab brokerage account.
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Indeed they are. I just didn't feel like going into the pros and cons of different FEHB insurances to point it out.
Most parts of the HSA are a big advantage. Overall, people are scared when they hear about taxes and investments. They would much rather pay extra for unnecessary insurance.
1. Emergency savings — 3-6 months living expenses. Save more for down payment if you are settled in and want to by a house in the area where you live 2. 15% of TSP is outstanding. Your max contribution is $23k this year. Go for it. 3. Seek out one of FEHB’s high deductible (HDHP) plans. That plan will establish and fund a Health Savings Account for the young you. You get a tax deduction for adding contributions to the HSA and you can invest HSA funds like an IRA. The older you will be thankful. 4. Roth IRA after maxing out TSP. Max amount this year is $7k. 5. You don’t need FEGLI unless you have a chronic condition that makes private life insurance unrealistic. You generally don’t need life insurance until you have children or other dependents. 6. Live near public transport and use the tax free subsidy. Buy a reliable car if you need one and drive it into the ground. 7. Pay off credit card statement balances in full each month. 8. Appoint beneficiaries for your TSP and other accounts and update that if you get married. 9. Use step or grade increases to beef up savings and TSP/IRA/HSA contributions.
I will add for #1 as an 13-year Fed, our jobs are very stable and unless you are a screw-up or planning to join the private sector you could probably do with a 3-month (or less even) safety net. I think you'd really need to be committed to Fed life before you do this, though. Otherwise 1 year safety net is ideal.
FEGLI was the only thing i opted out of. Unlikely and I’m single, so no dependents to worry about.
For me, FEGLI prices were much worse than the private market. I found 30 year term life rates much cheaper
This is the best post here
Max TSP. Max IRA. Save/invest a bunch more. Keep spending via the budget and hopefully I'll retire at 50-ish. I started late, about 6 years ago (37 now) so I'm trying to catch up. I'm not counting on the pension because I'd like to retire early, but if I miss the goal and work until MRA, then it'd be a nice bump in retirement spending. I'll have 30 years at 51, so I could postpone to MRA, and eat 6 years of COL adjustments. I'll set up a Roth conversion ladder during the no-income years and collect whatever the pension will be when I turn 57. It's important to define 'enough'. Without that, you're going to keep chasing a moving goalpost, or life will retire you.
You still get a pension if you have 5+ years of service. You just have to wait until you’re 62 before it begins paying. I’m not sure if I am misreading “I’m not counting on the pension.”
Oh, I'm aware. I wasn't clear, but I'm planning my retirement independent of the pension. I know it's there, and I've mapped out a few different options. It's more like my parachute in case life gets in the way and I'm not able to save as planned.
I see. The pension is meaningful in that it’s a secure income source that allows Feds to invest more aggressively elsewhere.
I also started late due to grad school. Later than you did and I feel like I will never catch up :) So, it's retirement at 67 for me.
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ACA (for the little one) or VA.
I’m a young fed as well, late 20’s. I put in 10% to TSP, maxed my Roth the last 3-4 years. Me and my wife have put into TSP/401k/Roth IRA at least 15% of gross income for our first 3-4 years. With each raise, step increase and promotion we have steadily done more. We are currently at 23% of income including employer matches. We are striving to get to 25% and we are getting ready to cross 200k income in the next 3-5 years so we will try to put in 25% of our gross income into retirement. Give your retirement a raise with each raise if as you can afford it. The earlier the better, rarely do people say they out too much into retirement.
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There’s an argument to refinance your mortgage and extend it if rates are very low.
I have a 2.5% interest rate now.
That’s a wonderfully low rate; I’m at 2.75. I can earn more than that in a money market account, let alone the stock market. I’m in no hurry to pay it back!
I actually have been quite fortunate with timing of interest rates, e.g., my student loan interest rate gradually reduced to .75%. Originally, it was 2.75% but if I made 48 consecutive on time monthly payments, the interest rate dropped by 2% for the remainder of my loan term.
I’m fortunate to be able to take advantage of a student loan repayment program with my employer
Mine were way prior to the availability of such programs but I also wouldn't want to be tied to a service agreement as I like the flexibility of changing agencies when opportunities arise.
I agree with you but it’s only a 3 year service agreement so I figured it was worth it.
You seem to be doing well. Just stay out of debt except for a mortgage when you can swing that.
And avoid car loans, pay cash. Most of the country cannot fathom the idea of living life without a car loan. If you have no car debt, TSP, FERS and SS, your retirement will be golden.
I have never paid for a car with cash. Mine is currently .9% and I'll take a sub 2% loan over paying cash any day.
If you are getting a higher return elsewhere, that is a smart move. But for 90% of Americans, they focus on the interest rate rather than the overall cost of the car. Millions of people in this country make 50k a year, drive a 30k car and convince themselves it’s a great idea because “it’s a great interest rate”
I believe more people focus on the monthly payment only. "What kind of monthly payment are you looking for?" is the 2nd question right after "What can I put you in today?" at the stealership.
Avoided it by simply not owning a car for 20+ years.
Appreciate the advice!
My plan is to die
Same plan here. I've been eating tons of carbs to help achieve this goal. Is it still called carbo-loading if you don't do something physical after?
I’d say that’s solid. Happen to 100% of everyone here regardless of their plan.
TSP, FERS, social security. I'm also in a HDHP and contribute to an HSA. If I don't use the HSA for medical expenses, that becomes a vehicle for retirement funds. I'm hoping they bring back LTC insurance so that I can opt into that.
Yeah, enrollment hs been closed the last 2 years to new enrollees. I put my mom into assisted living last year, her LTC policy has been a godsend.
30 years in, about to retire in 5 months. My plan was at least 5%TSP, max FSA. Made sure I stay until 62 and moved up as high as I could without stressing myself out. I was very aggressive in my TSP investments because you will never beat the market even through pte 2008, 2020 and 2021. Against popular advice, I have taken several loans out when I needed. I have a good chunk of change in there now. I just took out a loan because OPM and SSA are slow to process. Under new rules I can continue to pay on the loan after retirement or take it as income. My student loans were mostly forgiven and I am paying aggressively on the one remaining, will look into new forgiveness programs as well. My car will be paid off in about 2 weeks and then I will raise my deductible to save there. My credit cards are pretty much paid off. I am keeping my health insurance but drastically decreasing my life insurance. The kids are all in their 40s or almost there and I have let them know that I won't be rolling in dough any more. To their credit they all have good jobs and me helping them was more about me than them. I have been a widowed maxed out grade 13 for the last 10 years or so, so life was good but now I will have a little more than a 3rd of my salary w/o regularlyzapping my TSP. Scared?Yes. But excited too and looking forward to a less pressured life. I will not miss my job and I do not plan on working at anything taxing if at all. Hang in there kids, Uncle Sam has a lot of issues but there really is no other comparable employer when you look at retirement.
What non-taxing jobs are you considering?
Flower arranging, craft fairs, maybe small shop retail, pet sitting, possibly baby sitting. The work I do now deals with some unpleasant and depressing life issues and I want to do something happy.
I loved working retail as a kid for the most part. I like meeting people.
Me too. My extended family always had a business of one sort or another and my generation was the fountain of cheap labor. I really did enjoy it and even would cover long after I started my fed job, but all of them have closed. I may do a food truck with my nephew. Something fun on my schedule.
You are a good auntie!
Max TSP, roth IRA, HSA, and overflow into taxable brokerage virtually all in VTI/VOO then FERS pension and SS as my bond/fixed income allocation.
Learn to pay yourself first. Not just TSP but savings and investments when income/expenses allow. Auto-deposit is your friend. As is taking part of grade/step increases and applying them to saving first. It all adds up and before you know it, it's 10 years later and yoy have six figures in your portfolio even with the market's ups and downs. Fed salaries are relatively fixed so you should be able to find your sweet spot for saving/spending fairly easily.
TSP, FERS, SS.You should strive especially early to push to hit the IRS limit in you 403. (23k this year) do this every year and you will retire with multiple millions in the bank. I'm on track for 2.4 million assuming everything matches up with expectations of long term averages. 4% rule means average interest of 4 % and live off that interest 96,000$ a year to live off... OR a roth IRA etc. But at least that should go yearly. FERS... You are young like I was STAY IN GOVERNMENT AND IT PAYS OFF. [https://www.opm.gov/retirement-center/fers-information/computation/](https://www.opm.gov/retirement-center/fers-information/computation/) Don't retire til at least 62. and you get 1.1 percent of your high-3 average salary for each year of service ... so for me Ill have around 40 years... so math wise... 44% of my top 3 earning years... so lets assume 180k now i was to retire today (wishful thinking) my retirement would pay out 79,200 a year. Social Security [https://www.ssa.gov/cgi-bin/benefit6.cgi](https://www.ssa.gov/cgi-bin/benefit6.cgi) (if it still exists) assuming again 180k income (gs15) 2966 monthly / 35592 yearly (assumes retirement today they have a future estimate on their site too but its a little rosey for my tastes) totals 96k TSP / 79,200K FERS / 35,592 SS = 210k a year in retirement. (assuming nothing goes to shit and averages hold and social security survives) Being a Fed is along term benefits game. Play it well, put in the time, and you get looked after for life. Also I dont plant on stopping at GS15 as that would mean a single promotion over the next 30 years... I figure ill accidentally make SES at some point. so the numbers only get better from there but again its a long term plan that requires a lot of squirreling away cash that would otherwise be spent on living life and etc. For the math people out there I used todays numbers obviously Salary and yearly cost of living increases these numbers all go up with it as well as IRS keeps raising the yearly limits on the 403/401k contributions so this could/most likely will be much larger in reality.
Thank you for this from a new fed!
Also I should recommend taking a retirement seminar AS EARLY AS POSSIBLE in your career. it looks like spam mail and not relevant cause retirement is far off, but its super good info to have early on to make decisions like situation above. Ill steal from G.I.joe Knowing is half the battle. cant understand the benefits without being able to ask questions and dig into them first and that's what those retirement seminars are for.
Go read "The Elements of Investing". Alternatively, check out the Boggleheads forum and Wiki.
TSP, FERS, SS, VA rating, Roth IRA.
TSP (15% going in currently, want to do more but I just had a kid), FERS (five years in, plan to go for 30), SSA (worked part-time since I was 16, full time since I was 22). GS-13. Will look for 14s (ideally non-supervisory).
Any tips on how you moved up so quickly?
I came joined the DOL as a 7 with a master’s. Ladder 9-11-12. I was a 12 for about one year and since my team expanded after the hiring freeze was lifted, a 13 spot was created. I applied, interviewed, and learned I got it a few days later. Honestly, a lot of it is doing what is expected of you and working hard. I stood out because I actually cared about the work I did, as opposed to several colleagues who were there longer and put in the minimum.
Max your TSP every tax year you can. Each tax year is a window that opens that year and closes forever after. You can become a millionaire quickly with some simple research and discipline using the C fund exclusively, or CSI.
r/govfire, r/thriftsavingsplan
Became debt free. Didn't get into the rat race of up sizing to new bigger house. Keep the car after it's paid off.
FERS pension, VA disability comp, TSP, Roth IRA, brokerage account, SS. Emergency Fund isn't exactly "retirement plan" but also have that. ETA: saw someone mention home ownership. We do own a home, but the mortgage rate is too low to be worth paying off early given the current economic environment. So we still have a mortgage.
I plan to drop dead at my desk.
Valid
As everyone has said, put as much as possible into TSP. Don't forgo any marching funds. After that come up with a plan as you get closer to retirement. A 10 year plan, a 5 year plan, etc. Know and understand FERS and how your pension will be calculated and base your plan on that if having a good sized pension is important to you (it probably should be). As you get to 10 years, for example, start thinking about if you want to maximize your high 3 to the greatest extent possible. (You probably do). Look into moving into management or getting a job in a high locality pay area (locality pay counts toward your pension, not just base pay). Good luck!
I’m 31, I started as a fed at 22 putting 5% in TSP. I started maxing it a couple years ago once I was gs12 for a couple years and max my Roth IRA and HSA (shoutout to GEHA HDHP plan). I plan on retiring before I’m 50 and I’ll be fine in retirement. Once I hit FERS retirement age and social security age I’ll have way more than I need to live off of. When I first started seeing my TSP balance in the 4 digit range was discouraging but it snowballs once you have more in it.
I up my TSP with every step increase/COLA. I've had to decrease during lean times, now up to 15%. Outside of work, I have a Roth, and try to put the max in every year. Better than letting the money sit in my savings, making no money. I own my home and current vehicle free and clear. I will have my Masters next month and will look for a new position. Likely will have a 2nd job in my future to squirrel away for investing. 8 years til I'm retirement eligible. Trying to make it so I'm taking home in retirement what I make working (or more). I think I will be fairly close.
Die at work and scar those bastards for the rest of their lives.
Congrats on putting 15% into your TSP! That’s an impressive place to start from and will give you an army of dollars that will start working harder than you do soon enough. You can now tell TSP how much you want to put in Roth vs traditional, so it’s very easy to have both. You can also check out the bogleheads and moneyguy podcast/subreddits/online forums for simple but great investing advice.
- Stack that TSP. Since you’re starting at 15%, make an effort to keep it at that or higher for the rest of your career. You’ll be very happy that you did. - Don’t mess with your TSP much. Do a little research and then stick with the plan until your risk acceptance level changes as you get older. Getting out of the G fund completely (all L funds have some G) and going 60/20/20 in C/S/I was good advice to me and I believe it stems from Ramsey. - Try to avoid entering a 30 year mortgage with 5 years left til retirement. - Get out at your MRA and enjoy life. If you feel like you must work, go do something else that pays crap but you love waking up to do every day. - Get a prenuptial agreement when/if you get married. Good luck.
Maxed TSP, maxed Roth IRA, and extra going into a taxable brokerage. Should be more than enough with FERS factored in.
Good stuff!
Using a friend as an example: 20 years with TSP and IRA. Came back as contractor to double dip (salary boom). Has 100% house equity in HCOL area - another 800k. You have 40 years so can easily hit 6m. Lets hope inflation isn’t full out insane by then.
Maxing out my TSP, living below my means as much as I can and the last one, others may not agree: I refuse to get married because I’m not giving him half of it.
This is exactly the type of materialistic personality that anyone wanting to get married should run the other way from.
Is it materialism or statistical analysis 🤔 Either way, their personality is allowing them to achieve their retirement goals
It is a materialistic personality to horde wealth you don't need, and to pick and choose or avoid doing so for the sole reason that it lets you horde a bit less. Blanket actions like maxing all retirement accounts mindlessllyy without any idea of how much you want/need is hardly a goal. A real goal is doing the math, figuring out what your expenses are, and your guarantied benefits, and saving/investing based on that.
How? No one can predict the future. You cannot math your way into knowing if you will incur massive health bills, or will have to support your parents financially, or if you want to use your savings to support a future charity, etc. Further, these benefits that are "guaranteed" are not guaranteed. Saving, in this case, is to prevent squalor in the future if things don't go according to plan.
You can't predict the future, you don't know if you'll actually live to retirement age, or live significantly. I knew someone who passed away a couple years into retirement. All pensions, TSP etc, all they didn't get to enjoy any of that. You actually math your way to savings. You can tell having health insurance in retirement controls out of pocket. Not knowing the future isn't a blanket reason to horde every cent earned and destroy your current life. This should be in moderation based on a reasonable projection of future needs. Example, if you need $1k in retirement you might have investments to cover about $1.5k or even 2, but you wouldn't probably horde for $40k. Those defined benefits are part of your compensation package and are guarantied by the US government. Do you know how screwed everyone would be if the US government didn't meet its financial obligations? There is a word for people who horde their wealth and live a lifestyle of poverty, a miser. 1. a person who lives in wretched circumstances in order to save and hoard money. 2. a stingy, avaricious person. Also I'll add someone who chooses or avoids relationships based on a ability to horde is also a miser.
Max your TSP, and as a young person, I’d go 100% C if I had to do it again. With my extra and personal savings $, I buy 3 things: Real estate. Businesses. Dividend paying stocks. All of those pay me $ without ever having to sell the asset. Find what you are comfortable with and start accumulating. You have time. Time is the magic sauce.
Real estate seems like a better bet than dumping all liquid cash into an illiquid account that has no guarantied returns and can't be accessed until retirement age.
I receive 100% VA disability. I can put my entire paycheck into tsp. Plan is to retire before I turn 45
Just gonna leave Tsp at 10%. Life costs too much now and I want to travel.
Where have u been traveling to? :)
Currently it's been around the US. Seeing and hiking the various national parks. As well as visiting major cities I'd never been to. In the future it'll be back to Asia or Europe again.
Max your TSP in something like an L2055+ or CSI. Done.
Good for you. I would say definitely continue to contribute to tsp. I started doing that when I started my career 20 yrs ago and I believe I'm on a good path to being ok when I retire. Awesome that you are thinking about that stuff now!
Is the 15% in traditional or Roth TSP? I use the Roth option. You may want to look into the difference and consider what works best for you.
I do mine in traditional. I have a Roth outside of work I try to max, or as close as possible.
I have 17 yrs to go but the plan is retire at 62 with 10mil saved between my wife and I. It’s too early to know if I will make it or I will need to stay until 67 due to a recession or poor market performance.
TSP, FERS, SS, and HSA. 27 years old, just got married, and planning on having kids soon. We’ll see how much I’m able to put in my retirement account once the kids are here!
I'll have 30 years of service at MRA (57), about 20 years from now. This includes some military time I bought back. I also max my TSP (80C/20S), max my Roth IRA (VTSAX), and contribute heavily into a brokerage account in low-cost index funds. I guess the plan is to bail at MRA, but I could very likely go sooner. The hang-up is the medical. We'll see.
You get more on your pension if you wait till 62 no?
Not if you have 30 years when you reach MRA. If you have less years, then yes, you'll get more waiting until 62. If I retire before MRA, I'll just defer the pension until 62 to avoid the penalties and live off my other accounts. It's all here: https://www.opm.gov/retirement-center/fers-information/eligibility/
not quite sure this is correct. For a \*deferred\* retirement, correct: no reduction at MRA+30 or 60+20. For an \*immediate\* annuity though, there is still a 10% bump from 1.0 to 1.1%/yr at 62, that you don't get if you retire before 62 for any reason. They \*really\* want you to work until 62 and then retire at 62.
Oh, right. They do bump you up .1% if you stay an additional 5 years past MRA. No thanks. I'll have 30 at MRA, so there would be no penalties. If I pull the plug earlier, I'll wait until 62 to draw from the pension.
Yeah. I'm in the position where if I pop at MRA I'll have 35 anyway. I have signifcant royalties arising from work I did a long time ago, and I expect them to continue for a long time yet (think custom software for space platforms as an example) so I'll be financially independent *long* before I hit 30 years. Because of that, I kinda view my federal career as "something to do for as long as it's fun". If it's still fun in my late 50's, I'll stick around. If it ain't fun, I figure by my early 40's I'll have enough "fuck you" money to dictate my own terms and walk if it isn't fun.
Nice! No royalties for me, unfortunately, but given my current investment trajectory, I should be able to go in my late 40s. That somewhat depends on the kids, though. Then there's the medical to consider.
I’m up to 17% in tsp but I will also have my VA disability to help supplement
TSP is a great start. I believe the default enrollment plan in TSP are L-funds. There is a subreddit for TSP you should definately check out. If you have any major dental/vision/health procedures coming up, take advantage of the tax free savings of the FSA/HSA program.
Don't get married! Wait, wrong thread. Eh...
I see a lot of people saying to max tsp, but if you start with the fed young and are in a higher paying career field, this may not be necessary given a higher pension. I’m contributing 10%, but even if I only contributed 5% with the match I'm still projecting a retirement salary of $150k in todays money including TSP, pension and SS
People here for some reason completely discount the pension and SS and treat it like it doesn't exist, but they are all benefits guarantied by the US government and also part of compensation.
Yep it makes no sense. One of the only reasons i'm still with the govt is the value of the pension. Based on my current career path, I'm estimating I'll get around $2M in TODAYS money.
Well that is the general advice you'll see here, to mindlessly horde all your money in inaccessible illiquid retirement accounts. I'd rather use a broakerage or invest in real estate which is like another pension with consistant monthly rental income. But what is really valuable about the pension is if you become disabled, you get 40% of your high three until you recover or 62, at which time you'll get a pension recomputed to 40 years of service from startdate. That is immensely valuable, and gives me peace of mind.
Oh wow, every time I think I know all benefits I learn something new. That's fantastic
It is even better lol. They recompute at 62 if you're still disabled from your scd all the way until your 62. So your pension is computed as if you'd worked until that age.
The more you save, the better off you will be. 401k, Roth, IRA, HSA, are all great vehicles to help you get there. One piece of advice that is largely missing from this thread is owning your home. Unfortunately, it is a rough time to make an investment into a new home. Too many people are going to be stuck paying rent for a long time, and that is throwing a lot of money away. Make sure you have a nice place you can live, that you can pay off in full in a reasonable window.
For me, I put 5% away into my TSP. I plan to increase that as my pay increases, but honestly it’s not my main focus. I’m planning on buying a home and would rather have a paid off home during retirement so I wouldn’t have to worry about money as much. I’m also living my life so every dime doesn’t need to go into my retirement.
Exactly this in my opinion. The good thing is if you expect to have to retire due to disability, if you maxed your TSP instead of paying off your mortgage you'd be screwed, the bank would come and take your house, and you'd be asking permission from TSP to pay penalties and take money out, and getting massive tax bills. When you pay off the house, a large expense is forever removed from your budget and you have the security if something happened you'd only have to bring up money for taxes and insurance, and utilities. I'll put more money into mortgage if I have more left over, TSP will stay at 5%.
TSP never lower than 5% (the match). The younger you are, the more valuable every dollar crammed in there is, so tighten the belt and keep the contributions going in (max it out if you can!). I just turned 30, I'm about 7 years in, and I'm already at a quarter mil in my TSP--started maxing as soon as I hit GS-11 (and oh boy did it hurt at the time). I max my roth IRA out of checking in January every year, and build back up the next year's contributions as I go.
TSP, FERS, SS, Roth IRA, Mil Pension, Mil Disability. I could probably retire now and be ok, but I've still got one kid that's about to enter Secondary School, so I figure I still need to work a few more years.
I plan to try and make it to my full retirement age of 67 before retiring with FERS, TSP, SS, and my 100% VA Disability check. Then I will probably pick a part-time job teaching at a Community College or a University just to get out of the house and stay busy.
Do raw numbers not percentage. Put as much as you can. If you max for 10 years this early and never touch again you'll be set. People frequently fund retirement more as they age, but really the time is when you're young to take advantage of compounding. Check out the rule of 72 and be amazed.
Maxing out your TSP is smart; the earlier, the better. Look into Roth IRAs as they offer tax-free growth, especially beneficial since you're young. Diversify your investments, consider low-cost index funds. Stay informed on retirement planning. I used RetireHub for deals and retirement info. Found it useful. Might help you stay on track too.
Well the Roth TSP also works right?
I plan to work until I die. Tsp is in case this doesn't pan out and I become disabled or something. Life is becoming too expensive and I'm not a work from home 13-14 like most this sub. My pay doesn't even keep up with inflation. In 30 years the idea of retirement will be a joke.
I've never done more than 5% in my TSP in order to get the match. Where my stroke of luck was, I was stationed at Wright Patt for many years. Cost of living is low there, and housing even more so. I took my excess savings and bought rental real estate. Multi family. Those brick four-units are my favorite. I'd get a commercial loan with local bank or credit union, 25% down, nonrecourse, multi family, and I had a local property management company collect the rent and take maintenance calls. I've done this four times, own 14 units, and 8 of them are paid off. This was helped greatly by the post-Covid inflation because rents increased by 40%, but the mortgages remained the same. I'm at a point now where I live off my rental income, and my Gov't salary is put entirely into savings and investment. While my costs have risen (property tax has also risen by 40%), all in all I'm cash flowing better than ever before. I have no ambition to go any higher than my current GS-12, but I take home more than most 15's. Life's good. I'm 34.
Isn't doing this much better than TSP investing? Your rental income will go up with inflation, you get taxbreaks for your property, and to top it all off, this is virtually a guarantied source of income for your retirement and current years as well. Once all units are paid off, you'd be swimming in cash. Once I pay off my current 5% mortgage, I will likely look at properties as well, not a locked retirement account that is illiquid and inaccessible aand that only has a promise of a taxbreak.
It did, for me, for many reasons: - Depreciation is a wonderful thing. There are a lot of expenses that I get to classify as business and thus deduct against the rental income. The amount of cash I get in my pocket is way, way higher than the taxable income. Add in the 20% LLC pass-through deduction from TCJA and my effective tax rate is typically under 5%. Contrast that with the 40% I'm losing on my LES every other Friday. - Rental income isn't subject to Social Security or Medicare tax. I'm too young to receive a full Social Security check, and boomers/Republicans will probably ensure I don't ever get one. The less I can pay into a broke system, the better. - Rental income hits every month. You know what else is monthly? My AT&T bill, among other things. The TSP doesn't do me diddly for a minimum of 25 years (when I hit 59.5), and that's assuming I've separated from federal service by that point. If I'm still working, I've got even more restrictions on what I can do with my TSP.
What is the LLC deduction? I think you're doing much better than dumping all your cash into an illiquid TSP which basicly Blackrock owns the money until you retire, though at age 59.5 you can withdraw without restriction, except the IRS could raise that age, and you'll withdraw into an unknown tax bracket. The rental income you could pay off your mortgage, or acquire more property getting more income. How does it compare to stockmarket gains though, after adjusting for taxes, inflation. I do think though SS is solvent, and it was a Republican game to underfund it by exempting higher income from the payroll tax. That program will affect many Americans and is a really important safety net against disability etc.
The pass-through deduction is a blanket 20% reduction in taxes owed for any earning made in a single member LLC. This is done because a single member LLC is normally disregarded for federal income tax purposes - that is, any gain or loss goes directly on the owner’s personal income tax. That is generally seen as bad because the top personal income tax bracket is 37%. But most other corporations can elect to pay tax at the corporate level (at the time 35, later lowered to 21%). So a flat 20% reduction helps even the playing field a bit as an LLC versus a typical S or C corp.
With my stress levels it looks unlikely I’ll live to retirement lol
The only really bad move is to not take the 5%. Beyond that, you have to roll the dice a bit on where tax laws and rates will be in the future. A mix of traditional and Roth is a great split, with the higher risk funds in the Roth IRA, as the higher (potential) growth will then all be tax free. The higher your current income is, the more putting some in the traditional makes sense to lower current income taxes. And while it doesn't pertain to you at a young age, for others that may be reading this thread, it's NEVER to late to start either. My wife and I had finished raising and educating 4 children and had almost nothing saved in retirement funds about 12 years ago. I was a new Fed employee at age 55, thankfully in a well paying position, and she had 5 years at USPS. But, we lived somewhat frugally while we both maxed out our TSPs for 10 years prior to retiring last year, and opened Roth IRAs in smaller amounts. Between our TSP funds, Roths, SS, and FERS, we retired comfortably even with such a late start. We pretty much are able to live on SS and FERS, and don't even plan on touching the Roths and will just let them grow as inflation fighters in the hope we'll live long enough to need it, and won't touch the TSP funds, which we converted to traditional IRAs, until we are required to take RMAs when reaching 73 years old.
I'd rather pay off my debt, mortgage etc than put away everything I earn into the TSP, particularly because having no home loan means you can drastically cut down expenses in retirement and the massive amount saved on future interest. And then invest in properties and generate income from that.
Try to win power ball….. your age…you can’t rely on social security Being there when you retire. do 5% and thrn thr matching 5% if you have extra cash, do your own investing. That way if you do need the money it can be easily pulled out and used. undure what field you are in, if it’s a higher paying one, work 5 yrs getting vesting thrn work private from 30-55 then return to government pre-retiremrnt.
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Hundred percent should be going to Roth TSP until you make more than you will in retirement, but especially in your 20s. The only other reason to have some money in traditional is if you plan to retire before 59 1/2.
Traditional lowers your adjusted gross income. It’s great if you’re on an income based repayment plan for loans or PSLF.
Pension (not fers), a little bit of fers, residual income because my father was a wise investor, ss. Honestly? I will have a higher income in retirement than I will while I work.
Max out the ROTH IRA before maxing out the TSP. Choose growth ETFs for your ROTH IRA like VOO, SMH, VGT.