New to the forum and retiring this fall

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Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 2:34 pm

**Updated. Please see fourth post**

:sharebeer I just recently discovered bogleheads by accident. Incidentally though, quite a lot of our (my wife's and mine) money is invested with Vanguard. Gonna be retiring September 30 after 32.5 years as a controller, forced retirement at 56. Here's the breakdown, starting with college $. We have about 60k in the Aggressive Age Based Option, moderate risk Vanguard 529k for our son. He is finishing up seventh grade this spring and we contribute $400 a month, and would like to keep doing so. Otherwise, between the two of us, we are in the seven figure+ range, more than half of which is in my TSP, a small roth IRA in my name that I no longer can contribute to, and several IRAs in her name (regular and roth), some "fun" money that is in a couple of other mutual funds (one is the Wellesley), and about 120k in cash and EE/I-bonds.

One fund in her IRA folio is the VGHCX, which lost money last year but has rebounded recently. I welcome advice on that.

My pension will be just above six figure range due to the salary at the busy facilities i worked at. We want to delay drawing SS as long as possible. The big question is how to combine our assets into a three or four fund retirement folio to cover the gap and keep it tax advantaged, for overall growth, and still fund the 529 plan. We only have a $1800 mortgage as our debt. No car payments, no CC debt. Do we need to use "buckets" or are there better options? Our young age combined with my pension would lead me to believe that we should still maintain a large amount of stocks in our portfolio, correct? Should I switch from Wellesley to the Wellington for the "fun" money account? I have many more questions, but will hold off until later, after I have read through this very informative site.

Thanks in advance
Last edited by Tracyfaa on Sun May 28, 2017 3:45 pm, edited 2 times in total.

delamer
Posts: 4184
Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 23, 2017 3:50 pm

Welcome.

While it can be disconcerting to reveal the details of your financial, even anonymously and online, we need more specifucs to give you good advice. Here is the preferred format for asking portfolio questions: viewtopic.php?f=1&t=6212

In addition, tell us the amount of your pension and your annual expenses plus any income that your wife is bringing in. Plus your future Social Security. As far as funding the gap between your income and expenses, the advice will vary depending on the size of the gap and how long you need to cover it.

kmurp
Posts: 251
Joined: Fri Jun 01, 2007 1:53 pm

Re: New to the forum and retiring this fall

Post by kmurp » Tue May 23, 2017 4:13 pm

We'll that pension alone is worth millions so, provided your expenses are at or below that figure you could do pretty much anything you want for asset allocation with your other funds. If the pension is non cola, I imagine it would be smart to at least have a decent amount of stock exposure to make up for inflation.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 5:00 pm

delamer wrote:Welcome.

While it can be disconcerting to reveal the details of your financial, even anonymously and online, we need more specifucs to give you good advice. Here is the preferred format for asking portfolio questions: viewtopic.php?f=1&t=6212

In addition, tell us the amount of your pension and your annual expenses plus any income that your wife is bringing in. Plus your future Social Security. As far as funding the gap between your income and expenses, the advice will vary depending on the size of the gap and how long you need to cover it.
UPDATED

Thanks Delamer, will do. I just can't be too detailed at the moment, as we are still gathering all of our info together. This whole retirement thing has really crept up on us. I just stumbled upon the whole Bogleheads' philosophy late Sunday night and am still sorting through all of the info.

To get started tho, here's some basic info:
Emergency cash: $110,000
Debt: Just one outstanding loan, our mortgage at 3.125 APR, we pay approximately $1900/mo (a little more than required)
Taxes: We file "married filing jointly"
Residence: Illinois (would move away in a heartbeat if wifey would allow!!!)
Age: I will be 56 at retirement on September 30, wife will be 53. Son (for 529k purposes) will be entering eighth grade.
Desired asset allocation: Whatever is best/recommended for our age, based not only on what we have to invest, but also a pension/annuity + compensation for being forced out early due to age of roughly $120k
Current portfolio size: roughly 1.3m, with IRA funds making up 75-80%. TSP is the bulk at around 850k. Specific fund codes aren't available to me right now (not home)

Here's the rest.


Mortgage: (our only debt)3.125 APR, 238,000 remains, pmt is 1690/mo but we pay 1800. Can pay more. Value roughly $450,000.

Pension: roughly 120,000, no COLA until 62 (six more years). For all the ATCs out there that's using the Vision 100 calculation plus the FERS supplement.

Monthly expenses: approximately $5500, (includes mortgage, insurance and property taxes.)

Wife IRAs: (There was never any percentage allocation that we know of. Suggestions welcomed)
Traditional
FDRXX $4323
FCNTX $31728
FBALX $23839
FLVCX $27546
FSPCX $20912
FEXPX $23365
FDVLX $26184
Total: $157,897

Roth

FSLCX $15052
VIGAX $75096
Total: 90,148

non-retirement

NYVTX $90697
VGHCX $47512
VFINX $9045
Total: $147,254

I have a small amount in a roth IRA:
CGMRX $23000 (In the process of transferring to Vanguard)

And of course TSP: 845k. Unfortunately 99% G Fund. Yes, kinda stupid on my part.

SS as of now would be about $2000/mo (if taken at 62) for me.

Too many different $$ piles. I/we want to consolidate but it all seems somewhat overwhelming. Tax implications, etc.
We want to provide as much as possible for our son's future as well, which also includes a few Boglehead ideas from books that were given to me by my neighbor!

Any suggestions would be greatly appreciated.

Dan

Sorry, and hope this is acceptable. and thanks again.
Last edited by Tracyfaa on Sun May 28, 2017 10:43 am, edited 3 times in total.

Sidney
Posts: 6662
Joined: Thu Mar 08, 2007 6:06 pm

Re: New to the forum and retiring this fall

Post by Sidney » Tue May 23, 2017 5:06 pm

Tracyfaa wrote:a pension/annuity + compensation for being forced out early due to age of roughly $120k
Just to clarify - this is $120,000 per year for the rest of your life? Is there a survivor benefit if you predecease your spouse?
I always wanted to be a procrastinator.

delamer
Posts: 4184
Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 23, 2017 5:15 pm

Tracyfaa wrote:
delamer wrote:Welcome.

While it can be disconcerting to reveal the details of your financial, even anonymously and online, we need more specifucs to give you good advice. Here is the preferred format for asking portfolio questions: viewtopic.php?f=1&t=6212

In addition, tell us the amount of your pension and your annual expenses plus any income that your wife is bringing in. Plus your future Social Security. As far as funding the gap between your income and expenses, the advice will vary depending on the size of the gap and how long you need to cover it.
Thanks Delamer, will do. I just can't be too detailed at the moment, as we are still gathering all of our info together. This whole retirement thing has really crept up on us. I just stumbled upon the whole Bogleheads' philosophy late Sunday night and am still sorting through all of the info.

To get started tho, here's some basic info:
Emergency cash: $110,000
Debt: Just one outstanding loan, our mortgage at 3.125 APR, we pay approximately $1900/mo (a little more than required)
Taxes: We file "married filing jointly"
Residence: Illinois (would move away in a heartbeat if wifey would allow!!!)
Age: I will be 56 at retirement on September 30, wife will be 53. Son (for 529k purposes) will be entering eighth grade.
Desired asset allocation: Whatever is best/recommended for our age, based not only on what we have to invest, but also a pension/annuity + compensation for being forced out early due to age of roughly $120k
Current portfolio size: roughly 1.3m, with IRA funds making up 75-80%. TSP is the bulk at around 850k. Specific fund codes aren't available to me right now (not home)

Sorry I can't be more detailed right now. There will be more to follow though. Hope this helps, and thanks again.
Sounds like you found us just in time! Thanks to being heavily in the TSP, you already have succeeded with your investments in the sense that you are in very low cost, index-based options.

The other big question is your expenses. With a $120,000 pension, the recommendations for your portfolio will differ depending on whether your expenses are $90,000 or $120,000 or $160,000 or $200,000. Plus your stomach for risk.

Are you getting FERS plus the supplement?

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 5:27 pm

Sidney wrote:
Tracyfaa wrote:a pension/annuity + compensation for being forced out early due to age of roughly $120k
Just to clarify - this is $120,000 per year for the rest of your life? Is there a survivor benefit if you predecease your spouse?

Yes, it's 120k per year, at 62 the extra 20k goes away as SS eligibility kicks in. I/we do not want to tap that until 70(?)
Survivor benefit is either 50% (5% reduction in annuity) or 25% (costing another 5% for a total 10% reduction in annuity). We've chosen the 25% benefit, and to cover the difference with a life insurance policy.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 5:42 pm

delamer wrote:
Tracyfaa wrote:
delamer wrote:Welcome.

While it can be disconcerting to reveal the details of your financial, even anonymously and online, we need more specifucs to give you good advice. Here is the preferred format for asking portfolio questions: viewtopic.php?f=1&t=6212

In addition, tell us the amount of your pension and your annual expenses plus any income that your wife is bringing in. Plus your future Social Security. As far as funding the gap between your income and expenses, the advice will vary depending on the size of the gap and how long you need to cover it.
Thanks Delamer, will do. I just can't be too detailed at the moment, as we are still gathering all of our info together. This whole retirement thing has really crept up on us. I just stumbled upon the whole Bogleheads' philosophy late Sunday night and am still sorting through all of the info.

To get started tho, here's some basic info:
Emergency cash: $110,000
Debt: Just one outstanding loan, our mortgage at 3.125 APR, we pay approximately $1900/mo (a little more than required)
Taxes: We file "married filing jointly"
Residence: Illinois (would move away in a heartbeat if wifey would allow!!!)
Age: I will be 56 at retirement on September 30, wife will be 53. Son (for 529k purposes) will be entering eighth grade.
Desired asset allocation: Whatever is best/recommended for our age, based not only on what we have to invest, but also a pension/annuity + compensation for being forced out early due to age of roughly $120k
Current portfolio size: roughly 1.3m, with IRA funds making up 75-80%. TSP is the bulk at around 850k. Specific fund codes aren't available to me right now (not home)

Sorry I can't be more detailed right now. There will be more to follow though. Hope this helps, and thanks again.
Sounds like you found us just in time! Thanks to being heavily in the TSP, you already have succeeded with your investments in the sense that you are in very low cost, index-based options.

The other big question is your expenses. With a $120,000 pension, the recommendations for your portfolio will differ depending on whether your expenses are $90,000 or $120,000 or $160,000 or $200,000. Plus your stomach for risk.

Are you getting FERS plus the supplement?
Sounds like you're familiar with federal employment. Yes, FERS + the supplement due to the job. As far as TSP, I was planning on moving it all to Vanguard funds for simplicity, as that is where everything else will most likely be. TSP places too many restrictions on how money is taken out. I HAVE, on the other hand, adjusted my TSP contributions going forward to somewhat match the suggested allocations on this site. My gut tells me that although retiring, I still haven't reached "retirement" age (65?) since the FERS pension plus the supplement still provides nearly 75% of what I take home now (minus overtime and CIP). That said, my wife and I are willing to take on more risk than most.

delamer
Posts: 4184
Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 23, 2017 6:02 pm

Tracyfaa wrote:
Sidney wrote:
Tracyfaa wrote:a pension/annuity + compensation for being forced out early due to age of roughly $120k
Just to clarify - this is $120,000 per year for the rest of your life? Is there a survivor benefit if you predecease your spouse?

Yes, it's 120k per year, at 62 the extra 20k goes away as SS eligibility kicks in. I/we do not want to tap that until 70(?)
Survivor benefit is either 50% (5% reduction in annuity) or 25% (costing another 5% for a total 10% reduction in annuity). We've chosen the 25% benefit, and to cover the difference with a life insurance policy.

The other way around on the annuity reduction -- for the survivor to get 50% of the annuity, there is a 10% reduction while the annuitant is living. For the survivor to get 25% of the annuity, there is a 5% reduction while the annuitant is living.

delamer
Posts: 4184
Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 23, 2017 6:22 pm

Tracyfaa wrote:
delamer wrote:
Tracyfaa wrote:
delamer wrote:Welcome.

While it can be disconcerting to reveal the details of your financial, even anonymously and online, we need more specifucs to give you good advice. Here is the preferred format for asking portfolio questions: viewtopic.php?f=1&t=6212

In addition, tell us the amount of your pension and your annual expenses plus any income that your wife is bringing in. Plus your future Social Security. As far as funding the gap between your income and expenses, the advice will vary depending on the size of the gap and how long you need to cover it.
Thanks Delamer, will do. I just can't be too detailed at the moment, as we are still gathering all of our info together. This whole retirement thing has really crept up on us. I just stumbled upon the whole Bogleheads' philosophy late Sunday night and am still sorting through all of the info.

To get started tho, here's some basic info:
Emergency cash: $110,000
Debt: Just one outstanding loan, our mortgage at 3.125 APR, we pay approximately $1900/mo (a little more than required)
Taxes: We file "married filing jointly"
Residence: Illinois (would move away in a heartbeat if wifey would allow!!!)
Age: I will be 56 at retirement on September 30, wife will be 53. Son (for 529k purposes) will be entering eighth grade.
Desired asset allocation: Whatever is best/recommended for our age, based not only on what we have to invest, but also a pension/annuity + compensation for being forced out early due to age of roughly $120k
Current portfolio size: roughly 1.3m, with IRA funds making up 75-80%. TSP is the bulk at around 850k. Specific fund codes aren't available to me right now (not home)

Sorry I can't be more detailed right now. There will be more to follow though. Hope this helps, and thanks again.
Sounds like you found us just in time! Thanks to being heavily in the TSP, you already have succeeded with your investments in the sense that you are in very low cost, index-based options.

The other big question is your expenses. With a $120,000 pension, the recommendations for your portfolio will differ depending on whether your expenses are $90,000 or $120,000 or $160,000 or $200,000. Plus your stomach for risk.

Are you getting FERS plus the supplement?
Sounds like you're familiar with federal employment. Yes, FERS + the supplement due to the job. As far as TSP, I was planning on moving it all to Vanguard funds for simplicity, as that is where everything else will most likely be. TSP places too many restrictions on how money is taken out. I HAVE, on the other hand, adjusted my TSP contributions going forward to somewhat match the suggested allocations on this site. My gut tells me that although retiring, I still haven't reached "retirement" age (65?) since the FERS pension plus the supplement still provides nearly 75% of what I take home now (minus overtime and CIP). That said, my wife and I are willing to take on more risk than most.
Yes, I am a retired fed myself. I think the restrictions on TSP withdrawals are fairly easy to work around, especially when you have significant resources outside TSP. I would highly recommend you leave some money in TSP to keep the account open. As long as you don't close the account, you can always move money back into it to take advantage of the ultra-low costs.

One issue with deferring Social Security until 70 is that you will be required to take RMDs that year too, and the double hit can significantly bump up your taxes. So it may make sense to increase your withdrawals from tax deferred accounts in earlier years to reduce the RMDs required.

In your situation, there really are three stages to retirement: 1) age 56 until 62 (when supplement disappears) then 2) age 62 until you begin Social Security then 3) Social Security forward. I would tend to think in terms of pots of money for each of those stages, with your portfolio being invested accordingly.
Last edited by delamer on Tue May 23, 2017 6:35 pm, edited 1 time in total.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 6:32 pm

delamer wrote:
Tracyfaa wrote:
Sidney wrote:
Tracyfaa wrote:a pension/annuity + compensation for being forced out early due to age of roughly $120k
Just to clarify - this is $120,000 per year for the rest of your life? Is there a survivor benefit if you predecease your spouse?

Yes, it's 120k per year, at 62 the extra 20k goes away as SS eligibility kicks in. I/we do not want to tap that until 70(?)
Survivor benefit is either 50% (5% reduction in annuity) or 25% (costing another 5% for a total 10% reduction in annuity). We've chosen the 25% benefit, and to cover the difference with a life insurance policy.

The other way around on the annuity reduction -- for the survivor to get 50% of the annuity, there is a 10% reduction while the annuitant is living. For the survivor to get 25% of the annuity, there is a 5% reduction while the annuitant is living.
You are correct. We're choosing the smaller of the two reduction options = 25% survivor benefit.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 6:37 pm

delamer wrote:
Tracyfaa wrote:
delamer wrote:
Tracyfaa wrote:
delamer wrote:Welcome.

While it can be disconcerting to reveal the details of your financial, even anonymously and online, we need more specifucs to give you good advice. Here is the preferred format for asking portfolio questions: viewtopic.php?f=1&t=6212

In addition, tell us the amount of your pension and your annual expenses plus any income that your wife is bringing in. Plus your future Social Security. As far as funding the gap between your income and expenses, the advice will vary depending on the size of the gap and how long you need to cover it.
Thanks Delamer, will do. I just can't be too detailed at the moment, as we are still gathering all of our info together. This whole retirement thing has really crept up on us. I just stumbled upon the whole Bogleheads' philosophy late Sunday night and am still sorting through all of the info.

To get started tho, here's some basic info:
Emergency cash: $110,000
Debt: Just one outstanding loan, our mortgage at 3.125 APR, we pay approximately $1900/mo (a little more than required)
Taxes: We file "married filing jointly"
Residence: Illinois (would move away in a heartbeat if wifey would allow!!!)
Age: I will be 56 at retirement on September 30, wife will be 53. Son (for 529k purposes) will be entering eighth grade.
Desired asset allocation: Whatever is best/recommended for our age, based not only on what we have to invest, but also a pension/annuity + compensation for being forced out early due to age of roughly $120k
Current portfolio size: roughly 1.3m, with IRA funds making up 75-80%. TSP is the bulk at around 850k. Specific fund codes aren't available to me right now (not home)

Sorry I can't be more detailed right now. There will be more to follow though. Hope this helps, and thanks again.
Sounds like you found us just in time! Thanks to being heavily in the TSP, you already have succeeded with your investments in the sense that you are in very low cost, index-based options.

The other big question is your expenses. With a $120,000 pension, the recommendations for your portfolio will differ depending on whether your expenses are $90,000 or $120,000 or $160,000 or $200,000. Plus your stomach for risk.

Are you getting FERS plus the supplement?
Sounds like you're familiar with federal employment. Yes, FERS + the supplement due to the job. As far as TSP, I was planning on moving it all to Vanguard funds for simplicity, as that is where everything else will most likely be. TSP places too many restrictions on how money is taken out. I HAVE, on the other hand, adjusted my TSP contributions going forward to somewhat match the suggested allocations on this site. My gut tells me that although retiring, I still haven't reached "retirement" age (65?) since the FERS pension plus the supplement still provides nearly 75% of what I take home now (minus overtime and CIP). That said, my wife and I are willing to take on more risk than most.
Yes, I am a retired fed myself. I think the restrictions on TSP withdrawals are fairly easy to work around, especially when you have significant resources outside TSP. I would highly recommend you leave some money in TSP to keep the account open. As long as you don't close the account, you can always move money back into it to take advantage of the ultra-low costs.

One issue with deferring Social Security until 70 is that you will be required to take RMDs that year too, and the double hit can significantly bump up your taxes. So it may make sense to increase your withdrawals from tax deferred accounts in earlier years to reduce the RMDs required.

In your situation, there really are three stages to retirement: 1) age 56 until 62 (when supplement disappears) then 2) age 62 until you begin Social Security then 3) Social Security forward. I would tend to think in terms if pots of money for each of those stages, with your portfolio being invested accordingly.
Would it be safe to say the G fund could serve as an emergency money fund, a place to park some $$ to get better than bank or TIPS returns? Haven't done much research on TIPS.

delamer
Posts: 4184
Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 23, 2017 6:43 pm

Tracyfaa wrote:
delamer wrote:
Tracyfaa wrote:
delamer wrote:
Tracyfaa wrote:
Thanks Delamer, will do. I just can't be too detailed at the moment, as we are still gathering all of our info together. This whole retirement thing has really crept up on us. I just stumbled upon the whole Bogleheads' philosophy late Sunday night and am still sorting through all of the info.

To get started tho, here's some basic info:
Emergency cash: $110,000
Debt: Just one outstanding loan, our mortgage at 3.125 APR, we pay approximately $1900/mo (a little more than required)
Taxes: We file "married filing jointly"
Residence: Illinois (would move away in a heartbeat if wifey would allow!!!)
Age: I will be 56 at retirement on September 30, wife will be 53. Son (for 529k purposes) will be entering eighth grade.
Desired asset allocation: Whatever is best/recommended for our age, based not only on what we have to invest, but also a pension/annuity + compensation for being forced out early due to age of roughly $120k
Current portfolio size: roughly 1.3m, with IRA funds making up 75-80%. TSP is the bulk at around 850k. Specific fund codes aren't available to me right now (not home)

Sorry I can't be more detailed right now. There will be more to follow though. Hope this helps, and thanks again.
Sounds like you found us just in time! Thanks to being heavily in the TSP, you already have succeeded with your investments in the sense that you are in very low cost, index-based options.

The other big question is your expenses. With a $120,000 pension, the recommendations for your portfolio will differ depending on whether your expenses are $90,000 or $120,000 or $160,000 or $200,000. Plus your stomach for risk.

Are you getting FERS plus the supplement?
Sounds like you're familiar with federal employment. Yes, FERS + the supplement due to the job. As far as TSP, I was planning on moving it all to Vanguard funds for simplicity, as that is where everything else will most likely be. TSP places too many restrictions on how money is taken out. I HAVE, on the other hand, adjusted my TSP contributions going forward to somewhat match the suggested allocations on this site. My gut tells me that although retiring, I still haven't reached "retirement" age (65?) since the FERS pension plus the supplement still provides nearly 75% of what I take home now (minus overtime and CIP). That said, my wife and I are willing to take on more risk than most.
Yes, I am a retired fed myself. I think the restrictions on TSP withdrawals are fairly easy to work around, especially when you have significant resources outside TSP. I would highly recommend you leave some money in TSP to keep the account open. As long as you don't close the account, you can always move money back into it to take advantage of the ultra-low costs.

One issue with deferring Social Security until 70 is that you will be required to take RMDs that year too, and the double hit can significantly bump up your taxes. So it may make sense to increase your withdrawals from tax deferred accounts in earlier years to reduce the RMDs required.

In your situation, there really are three stages to retirement: 1) age 56 until 62 (when supplement disappears) then 2) age 62 until you begin Social Security then 3) Social Security forward. I would tend to think in terms if pots of money for each of those stages, with your portfolio being invested accordingly.
Would it be safe to say the G fund could serve as an emergency money fund, a place to park some $$ to get better than bank or TIPS returns? Haven't done much research on TIPS.
Yes, G Fund is basically a money market fund with an excellent interest rate.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 6:52 pm

Thanks! off the top of my head SS statement says about $3000/mo at 70. Wife hasn't worked since 2003, and I can't remember for sure what her statement indicates. Not as much, but still worth looking at. What have you done with your TSP?

delamer
Posts: 4184
Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 23, 2017 7:00 pm

Tracyfaa wrote:Thanks! off the top of my head SS statement says about $3000/mo at 70. Wife hasn't worked since 2003, and I can't remember for sure what her statement indicates. Not as much, but still worth looking at. What have you done with your TSP?
I have not touched it; I've been retired almost 2 years. My husband is still working and our expenses are covered by his salary, my pension, and dividends from a taxable account. But my TSP only makes up about 20% of our tax-deferred savings. I can understand why someone in your position might want to move a chunk of it to Vanguard; I just wouldn't close out the TSP altogether.

btenny
Posts: 4396
Joined: Sun Oct 07, 2007 6:47 pm

Re: New to the forum and retiring this fall

Post by btenny » Tue May 23, 2017 7:16 pm

Welcome to Bogleheads. Hope we can give you some help. Do you have a good handle on what your current expenses are per year? We really need to know that to help you understand how to proceed. It sounds like you are OK if you spend from your saving for few years. But you need to use FIREcalc to see how much you draw down your nest egg until you take your retirement pension.

Good Luck.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 23, 2017 8:12 pm

delamer wrote:
Tracyfaa wrote:Thanks! off the top of my head SS statement says about $3000/mo at 70. Wife hasn't worked since 2003, and I can't remember for sure what her statement indicates. Not as much, but still worth looking at. What have you done with your TSP?
I have not touched it; I've been retired almost 2 years. My husband is still working and our expenses are covered by his salary, my pension, and dividends from a taxable account. But my TSP only makes up about 20% of our tax-deferred savings. I can understand why someone in your position might want to move a chunk of it to Vanguard; I just wouldn't close out the TSP altogether.
If you don't mind my asking, what is your TSP fund allocation relative to the rest of your investments?

delamer
Posts: 4184
Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 23, 2017 8:37 pm

Tracyfaa wrote:
delamer wrote:
Tracyfaa wrote:Thanks! off the top of my head SS statement says about $3000/mo at 70. Wife hasn't worked since 2003, and I can't remember for sure what her statement indicates. Not as much, but still worth looking at. What have you done with your TSP?
I have not touched it; I've been retired almost 2 years. My husband is still working and our expenses are covered by his salary, my pension, and dividends from a taxable account. But my TSP only makes up about 20% of our tax-deferred savings. I can understand why someone in your position might want to move a chunk of it to Vanguard; I just wouldn't close out the TSP altogether.
If you don't mind my asking, what is your TSP fund allocation relative to the rest of your investments?
We have our tax-deferred savings in 5 different accounts, in part because my husband is still working and in part because there are couple options that we wanted that aren't available in the TSP or his 401(k). So we have an overall allocation goal for tax-deferred, and picked the best funds within each available account to meet the overall goal. For instance, my husband's 401(k) doesn't have a good small cap stock option, so that goal is met through the TSP and his IRA.

To answer your question, my TSP is about half S fund and the other half I fund. That is in an overall picture of 70% stock funds and 30% bonds/cash. This is the model we use -- Six Ways From Sunday -- but with somewhat different weightings for the six sectors:

https://assetbuilder.com/lazy-portfolios

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Wed May 24, 2017 7:34 am

delamer wrote:
Tracyfaa wrote:
delamer wrote:
Tracyfaa wrote:Thanks! off the top of my head SS statement says about $3000/mo at 70. Wife hasn't worked since 2003, and I can't remember for sure what her statement indicates. Not as much, but still worth looking at. What have you done with your TSP?
I have not touched it; I've been retired almost 2 years. My husband is still working and our expenses are covered by his salary, my pension, and dividends from a taxable account. But my TSP only makes up about 20% of our tax-deferred savings. I can understand why someone in your position might want to move a chunk of it to Vanguard; I just wouldn't close out the TSP altogether.
If you don't mind my asking, what is your TSP fund allocation relative to the rest of your investments?
We have our tax-deferred savings in 5 different accounts, in part because my husband is still working and in part because there are couple options that we wanted that aren't available in the TSP or his 401(k). So we have an overall allocation goal for tax-deferred, and picked the best funds within each available account to meet the overall goal. For instance, my husband's 401(k) doesn't have a good small cap stock option, so that goal is met through the TSP and his IRA.

To answer your question, my TSP is about half S fund and the other half I fund. That is in an overall picture of 70% stock funds and 30% bonds/cash. This is the model we use -- Six Ways From Sunday -- but with somewhat different weightings for the six sectors:

https://assetbuilder.com/lazy-portfolios
Thanks for the info and link. I'll check it out.

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Raymond
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Re: New to the forum and retiring this fall

Post by Raymond » Wed May 24, 2017 8:39 am

Welcome to Bogleheads!

About the mortgage with the 3.125% APR - what is the remaining balance, and would it be possible to pay off a large chunk of it, or even the entire amount?

Any specific college funds such as a 529 plan for your soon-to-be-eighth-grade son, or do you plan to cash-flow his education?

As delamer mentioned earlier, using the format in "Asking Portfolio Questions" organizes your information and makes it easier for us to make suggestions.
"Ritter, Tod und Teufel"

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SquawkIdent
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Re: New to the forum and retiring this fall

Post by SquawkIdent » Wed May 24, 2017 9:00 am

I'll be in your exact spot in 2 years. So I'm very interested in the replies you get from your post.

One thing I would like to add to all of the above so far is to take your time doing this. I've heard honor stories from former co workers about moving 100% of their TSP into an IRA (because of the withdrawal restrictions) and not realizing they can't get back in, if they change their mind later on. It's stuff like that that makes me pause and investigate all the alternatives and their consequences.

Good luck to you and get ready to enjoy retirement!! :sharebeer

delamer
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Re: New to the forum and retiring this fall

Post by delamer » Wed May 24, 2017 10:42 am

SquawkIdent wrote:I'll be in your exact spot in 2 years. So I'm very interested in the replies you get from your post.

One thing I would like to add to all of the above so far is to take your time doing this. I've heard honor stories from former co workers about moving 100% of their TSP into an IRA (because of the withdrawal restrictions) and not realizing they can't get back in, if they change their mind later on. It's stuff like that that makes me pause and investigate all the alternatives and their consequences.

Good luck to you and get ready to enjoy retirement!! :sharebeer
I just checked the TSP rules, and you only need to leave $200 in your account to keep it open. A very small amount to ensure access to an excellent plan. Plus you can move money into TSP from a qualified plan at any time. So you could take a partial withdrawal from the TSP into an IRA and then, say, two years later move some or all of the IRA money back into the TSP.

As far as the withdrawal restrictions go, if you opt for a monthly payment you can change the amount at the end of a calendar year. So if you needed a $60,000 downpayment for a vacation home in year one, you could set a $5,000/month withdrawal for that year. Then, if you needed no money in year two, you could reset the money payment for that year to as little as $25. (You can't stop the monthly payment altogether.)

Also, why take the money out in anticipation of needing more flexibility for withdrawals? Unless you have no savings outside the TSP, leave it in until you actually have the need to take out multiple lump sums (if advanced planning to change the monthly payment does not work for you).

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SquawkIdent
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Re: New to the forum and retiring this fall

Post by SquawkIdent » Wed May 24, 2017 11:20 am

delamer wrote:
SquawkIdent wrote:I'll be in your exact spot in 2 years. So I'm very interested in the replies you get from your post.

One thing I would like to add to all of the above so far is to take your time doing this. I've heard honor stories from former co workers about moving 100% of their TSP into an IRA (because of the withdrawal restrictions) and not realizing they can't get back in, if they change their mind later on. It's stuff like that that makes me pause and investigate all the alternatives and their consequences.

Good luck to you and get ready to enjoy retirement!! :sharebeer
I just checked the TSP rules, and you only need to leave $200 in your account to keep it open. A very small amount to ensure access to an excellent plan. Plus you can move money into TSP from a qualified plan at any time. So you could take a partial withdrawal from the TSP into an IRA and then, say, two years later move some or all of the IRA money back into the TSP.

As far as the withdrawal restrictions go, if you opt for a monthly payment you can change the amount at the end of a calendar year. So if you needed a $60,000 downpayment for a vacation home in year one, you could set a $5,000/month withdrawal for that year. Then, if you needed no money in year two, you could reset the money payment for that year to as little as $25. (You can't stop the monthly payment altogether.)

Also, why take the money out in anticipation of needing more flexibility for withdrawals? Unless you have no savings outside the TSP, leave it in until you actually have the need to take out multiple lump sums (if advanced planning to change the monthly payment does not work for you).
I'm not agreeing or disagreeing with you. Many different options. Some didn't like the overall withdrawal options and others didn't like that they couldn't take out whatever they wanted month to month. And changing that amount as they please. Others were not happy just having 5 investment choices.

That is true though that $200 will keep the account open and active. They obviously didn't know that. Because several now regret their decision to 100% leave the TSP.

Lots of different scenarios and my point was to think this through thoroughly before doing anything. There is no rush to do anything.

One thing we can all agree on is there is nothing available like the G fund. :sharebeer

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Wed May 24, 2017 11:32 am

delamer wrote:
SquawkIdent wrote:I'll be in your exact spot in 2 years. So I'm very interested in the replies you get from your post.

One thing I would like to add to all of the above so far is to take your time doing this. I've heard honor stories from former co workers about moving 100% of their TSP into an IRA (because of the withdrawal restrictions) and not realizing they can't get back in, if they change their mind later on. It's stuff like that that makes me pause and investigate all the alternatives and their consequences.

Good luck to you and get ready to enjoy retirement!! :sharebeer
I just checked the TSP rules, and you only need to leave $200 in your account to keep it open. A very small amount to ensure access to an excellent plan. Plus you can move money into TSP from a qualified plan at any time. So you could take a partial withdrawal from the TSP into an IRA and then, say, two years later move some or all of the IRA money back into the TSP.

As far as the withdrawal restrictions go, if you opt for a monthly payment you can change the amount at the end of a calendar year. So if you needed a $60,000 downpayment for a vacation home in year one, you could set a $5,000/month withdrawal for that year. Then, if you needed no money in year two, you could reset the money payment for that year to as little as $25. (You can't stop the monthly payment altogether.)

Also, why take the money out in anticipation of needing more flexibility for withdrawals? Unless you have no savings outside the TSP, leave it in until you actually have the need to take out multiple lump sums (if advanced planning to change the monthly payment does not work for you).
Excellent ideas. Thanks so much!! My wife and I have much to discuss. She SAYS she would rather I just take care of it all, but I know what she REALLY means is to make sure I run everything by her first!! And the vacation home is a wonderful idea.

In response to one of the other posts, we want to fund the 529k until no longer legal to do so, or no longer needed, if he gets scholarships and what not. We have many ee/i-bonds (around 20k worth) that can also be gifted to him (?) or already have his name on them. I have considered putting them in his 529k in some capacity, and am aware of the legal issues and requirements. Will have to read up on all of that.

I agree, the G fund has no equal! I'll definitely keep some $$ in there.

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Re: New to the forum and retiring this fall

Post by delamer » Wed May 24, 2017 11:33 am

SquawkIdent wrote:
delamer wrote:
SquawkIdent wrote:I'll be in your exact spot in 2 years. So I'm very interested in the replies you get from your post.

One thing I would like to add to all of the above so far is to take your time doing this. I've heard honor stories from former co workers about moving 100% of their TSP into an IRA (because of the withdrawal restrictions) and not realizing they can't get back in, if they change their mind later on. It's stuff like that that makes me pause and investigate all the alternatives and their consequences.

Good luck to you and get ready to enjoy retirement!! :sharebeer
I just checked the TSP rules, and you only need to leave $200 in your account to keep it open. A very small amount to ensure access to an excellent plan. Plus you can move money into TSP from a qualified plan at any time. So you could take a partial withdrawal from the TSP into an IRA and then, say, two years later move some or all of the IRA money back into the TSP.

As far as the withdrawal restrictions go, if you opt for a monthly payment you can change the amount at the end of a calendar year. So if you needed a $60,000 downpayment for a vacation home in year one, you could set a $5,000/month withdrawal for that year. Then, if you needed no money in year two, you could reset the money payment for that year to as little as $25. (You can't stop the monthly payment altogether.)

Also, why take the money out in anticipation of needing more flexibility for withdrawals? Unless you have no savings outside the TSP, leave it in until you actually have the need to take out multiple lump sums (if advanced planning to change the monthly payment does not work for you).
I'm not agreeing or disagreeing with you. Many different options. Some didn't like the overall withdrawal options and others didn't like that they couldn't take out whatever they wanted month to month. And changing that amount as they please. Others were not happy just having 5 investment choices.

That is true though that $200 will keep the account open and active. They obviously didn't know that. Because several now regret their decision to 100% leave the TSP.

Lots of different scenarios and my point was to think this through thoroughly before doing anything. There is no rush to do anything.

One thing we can all agree on is there is nothing available like the G fund. :sharebeer
I agree with you that there can be good reasons to rollover some money out of the TSP. I just think some people overreact to the restrictions and don't think through the implications of whether their own needs could be met by the TSP even with those restrictions in place.

As you said, there really is no rush to do anything. Get informed (like about the $200) and then decide.

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Wed May 24, 2017 11:38 am

Raymond wrote:Welcome to Bogleheads!

About the mortgage with the 3.125% APR - what is the remaining balance, and would it be possible to pay off a large chunk of it, or even the entire amount?

Any specific college funds such as a 529 plan for your soon-to-be-eighth-grade son, or do you plan to cash-flow his education?

As delamer mentioned earlier, using the format in "Asking Portfolio Questions" organizes your information and makes it easier for us to make suggestions.
I'll try and post the particulars of our mortgage later today and see if any of you have thoughts to share.

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Sat May 27, 2017 7:15 am

Hi all, here's an update:

Mortgage: 3.125 APR, 238,000 remains, pmt is 1690/mo but we pay 1800. Can pay more.

Wife IRAs:
Traditional
FDRXX $4323
FCNTX $31728
FBALX $23839
FLVCX $27546
FSPCX $20912
FEXPX $23365
FDVLX $26184

Roth

FSLCX $15052
VIGAX $75096

non-retirement

NYVTX $90697
VGHCX $47512
VFINX $9045

I have a small amount in a roth IRA:
CGMRX $23000

And of course TSP: 845k.

Too many different $$ piles. I/we want to consolidate but it all seems somewhat overwhelming. Tax implications, etc.

Any suggestions would be greatly appreciated.

Dan

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Re: New to the forum and retiring this fall

Post by Shackleton » Sat May 27, 2017 7:55 am

Sorry to be pedantic, but you're still not posting in the preferred format and editing the first post of your thread to keep it all in one place. This extra work on your part, to get ALL the information together in one post (the first post) allows members to easily see your entire financial picture. If you keep putting information into this thread in dribs and drabs, forum members have to re-read the entire thread to understand your situation each time they respond and you are unlikely to get as much benefit here as you could. If you read a few other posts by people that have done the hard work to gather and post in the preferred format, you will see they get very complete responses that take into account the full financial situation.

I realize you said you didn't have access to all the information right this moment, so I encourage you to wait until you have time to do it right to maximize both your and the members' time in responding. Meanwhile you can read the Getting Started section of the wiki. I was the same when I found BH, I wanted to jump right in, but doing the hard work of posting in the suggested format, getting all the names of your funds and their expense ratios, figuring out your marginal tax rate, etc is part of the learning process for you and shows respect to the people that spend so much of their time to help advise people here.
“Superhuman effort isn't worth a damn unless it achieves results.” ~Ernest Shackleton

fundseeker
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Re: New to the forum and retiring this fall

Post by fundseeker » Sat May 27, 2017 8:00 am

Just curious, but under FERS at 32.5 years, wouldn't you be at approximately 46.5% (1.7% x 20 = 34%) + (1% x 12.5 years = 12.5%) of your high three? And if so, your pension will be more than $100k? ATCs must get paid very well.

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Re: New to the forum and retiring this fall

Post by cherijoh » Sat May 27, 2017 8:08 am

Tracyfaa wrote:Hi all, here's an update:

Mortgage: 3.125 APR, 238,000 remains, pmt is 1690/mo but we pay 1800. Can pay more.
It looks like you still have a way to go on that mortgage. If you continue paying it off at the current rate when will the mortgage be paid off?

Had it been your intention to stay in this house once you retired (i.e., when you thought you would retire voluntarily)? This could influence whether it makes sense to further accelerate your mortgage payments or to maximize your available cash flow by keeping the mortgage and its below-market interest rate.

Also, how would paying off the house influence the calculations related to financial aid for your kid's college education? (I don't have kids, so it may have zero impact - but I think this deserves to be investigated).

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Sat May 27, 2017 9:37 am

Shackleton wrote:Sorry to be pedantic, but you're still not posting in the preferred format and editing the first post of your thread to keep it all in one place. This extra work on your part, to get ALL the information together in one post (the first post) allows members to easily see your entire financial picture. If you keep putting information into this thread in dribs and drabs, forum members have to re-read the entire thread to understand your situation each time they respond and you are unlikely to get as much benefit here as you could. If you read a few other posts by people that have done the hard work to gather and post in the preferred format, you will see they get very complete responses that take into account the full financial situation.

I realize you said you didn't have access to all the information right this moment, so I encourage you to wait until you have time to do it right to maximize both your and the members' time in responding. Meanwhile you can read the Getting Started section of the wiki. I was the same when I found BH, I wanted to jump right in, but doing the hard work of posting in the suggested format, getting all the names of your funds and their expense ratios, figuring out your marginal tax rate, etc is part of the learning process for you and shows respect to the people that spend so much of their time to help advise people here.
Oops. Sorry about that. Forgot, to be honest. I'll tryand fix it. Ill just delete everything and start over if that's preferable

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Sat May 27, 2017 9:43 am

fundseeker wrote:Just curious, but under FERS at 32.5 years, wouldn't you be at approximately 46.5% (1.7% x 20 = 34%) + (1% x 12.5 years = 12.5%) of your high three? And if so, your pension will be more than $100k? ATCs must get paid very well.
Only at the busiest and most conplex facilities.

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Raymond
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Re: New to the forum and retiring this fall

Post by Raymond » Sun May 28, 2017 8:49 am

Tracyfaa wrote:Oops. Sorry about that. Forgot, to be honest. I'll tryand fix it. Ill just delete everything and start over if that's preferable
You don't have to delete everything - when you have all the information together, just edit your first post by copy and pasting the format from the "Asking Portfolio Questions" into it, and filling in the necessary spots.

Please include the names of each non-TSP mutual fund along with the tickers and expense ratio. You can find this information by searching Morningstar.com and finding the fund or stock page there.

For example, here's the page for Davis NY Venture A (NYVTX): http://www.morningstar.com/funds/XNAS/NYVTX/quote.html

Also, although the specific amount in each account is useful, what is even more helpful is the percentage of the total portfolio is in each fund.

You would post this as:

10% (this is just a wild-a** guess) Davis NY Venture A (NYVTX), expenses 0.89%

And please specify the funds you use in the TSP (G Fund, F Fund, etc.)
"Ritter, Tod und Teufel"

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Sun May 28, 2017 10:49 am

Roger.

Please see updated info near the top of the thread now. I've not posted expense ratios/fees as I am not yet concerned with that part of our nest egg. My/our goal will be to simplify all moneys, over time, into a more manageable three to five fund portfolio, with Vanguard, unless alternate recommendations are suggested.

Thanks in advance,
D

P. S. And please, if I have not mentioned anything, don't hesitate to ask, but don't bite my head off either. :oops:

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Sun May 28, 2017 10:53 am

Tracyfaa wrote:
fundseeker wrote:Just curious, but under FERS at 32.5 years, wouldn't you be at approximately 46.5% (1.7% x 20 = 34%) + (1% x 12.5 years = 12.5%) of your high three? And if so, your pension will be more than $100k? ATCs must get paid very well.
Only at the busiest and most conplex facilities.
Also under the new Vision 100 ATC plan it's 1.7 for all years as an ATC with requirements met. I'll be at 55.25%

D

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Re: New to the forum and retiring this fall

Post by LadyGeek » Mon May 29, 2017 8:52 pm

A good approach is to treat everything as one big portfolio. I took your latest numbers and put them in a quick spreadsheet. What comes out immediately is that the TSP is a whopping 66.89% of your total portfolio. The next largest is your wife's Traditional IRA at 12.50%.

I'm using the "Code" tags because posting this without it would lose the column alignments.

Code: Select all

Wife IRA			
Wife Traditional IRA			
0.34%	$4,323.00		FDRXX
2.51%	$31,728.00		FCNTX
1.89%	$23,839.00		FBALX
2.18%	$27,546.00		FLVCX
1.66%	$20,912.00		FSPCX
1.85%	$23,365.00		FEXPX
2.07%	$26,184.00		FDVLX
12.50%	Total IRA	$157,897.00	
			
Wife Roth IRA			
			
1.19%	$15,052.00		FSLCX
5.94%	$75,096.00		VIGAX
7.14%	Total Roth IRA	$90,148.00	
			
Husband Roth IRA			
1.82%	$23,000.00	$23,000.00	CGMRX
			
Husband TSP			
66.89%	$845,000.00	$845,000.00	G fund
			
Taxable			
7.18%	$90,697.00		NYVTX
3.76%	$47,512.00		VGHCX
0.72%	$9,045.00		VFINX
11.66%	Total taxable	$147,254.00	
			
	Total portfolio:	$1,263,299.00	
The idea is to get an ideal of your total Asset allocation (ratio of stocks / bonds) which should align with your desired level of Risk tolerance (how much your stomach can withstand the daily swings of the market).

The next step would be for you to figure out what those ticker symbols mean in terms of stock and bonds. From there, we can figure out how to simplify everything. Could you revise your post to include the names of those funds? (Yes, we can do it. But, it's a good learning experience for you.)

Bear in mind this is just for your investments, but it's a necessary piece of the puzzle. Your pension, mortgage, and monthly expenses are other essential pieces. Once you have all the pieces in place, the puzzle should start to become clear with what's going on.

You should keep everything in a spreadsheet. Just pick one from the wiki: Using a spreadsheet to maintain a portfolio. Note that you don't need to buy Microsoft Excel. LibreOffice Calc is free and open source software that runs on Windows, Mac, and Linux just fine.

Important: Getting your allocations to the nearest 5% is "good enough". I posted my results to 2 decimal places to help you see how this was calculated. For example: 66.89% = 845,000.00 / 1263.299.00

If you get stuck, just ask for help.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 30, 2017 12:36 am

LadyGeek wrote:A good approach is to treat everything as one big portfolio. I took your latest numbers and put them in a quick spreadsheet. What comes out immediately is that the TSP is a whopping 66.89% of your total portfolio. The next largest is your wife's Traditional IRA at 12.50%.

I'm using the "Code" tags because posting this without it would lose the column alignments.

Code: Select all

Wife IRA			
Wife Traditional IRA			
0.34%	$4,323.00		FDRXX
2.51%	$31,728.00		FCNTX
1.89%	$23,839.00		FBALX
2.18%	$27,546.00		FLVCX
1.66%	$20,912.00		FSPCX
1.85%	$23,365.00		FEXPX
2.07%	$26,184.00		FDVLX
12.50%	Total IRA	$157,897.00	
			
Wife Roth IRA			
			
1.19%	$15,052.00		FSLCX
5.94%	$75,096.00		VIGAX
7.14%	Total Roth IRA	$90,148.00	
			
Husband Roth IRA			
1.82%	$23,000.00	$23,000.00	CGMRX
			
Husband TSP			
66.89%	$845,000.00	$845,000.00	G fund
			
Taxable			
7.18%	$90,697.00		NYVTX
3.76%	$47,512.00		VGHCX
0.72%	$9,045.00		VFINX
11.66%	Total taxable	$147,254.00	
			
	Total portfolio:	$1,263,299.00	
The idea is to get an ideal of your total Asset allocation (ratio of stocks / bonds) which should align with your desired level of Risk tolerance (how much your stomach can withstand the daily swings of the market).

The next step would be for you to figure out what those ticker symbols mean in terms of stock and bonds. From there, we can figure out how to simplify everything. Could you revise your post to include the names of those funds? (Yes, we can do it. But, it's a good learning experience for you.)

Bear in mind this is just for your investments, but it's a necessary piece of the puzzle. Your pension, mortgage, and monthly expenses are other essential pieces. Once you have all the pieces in place, the puzzle should start to become clear with what's going on.

You should keep everything in a spreadsheet. Just pick one from the wiki: Using a spreadsheet to maintain a portfolio. Note that you don't need to buy Microsoft Excel. LibreOffice Calc is free and open source software that runs on Windows, Mac, and Linux just fine.

Important: Getting your allocations to the nearest 5% is "good enough". I posted my results to 2 decimal places to help you see how this was calculated. For example: 66.89% = 845,000.00 / 1263.299.00

If you get stuck, just ask for help.
You've been a great help! I can't thank you enough.

Dan

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Re: New to the forum and retiring this fall

Post by Bfwolf » Tue May 30, 2017 1:22 am

Is the 25% survivor benefit for the pension a done deal, i.e. you can't change it?

What are the details of the life insurance policy for you?

Your most valuable asset is that pension, and I think it's the thing we've got to focus on first and make sure your wife is protected in case you pass away much earlier than she does.

Tracyfaa
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Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 30, 2017 9:44 am

It can be changed back to 50% before officially retiring, but at what cost? The 25% costs 5% of my pension. The 50% (maximum) costs 10% of pension. That works out to an additional cost of approximately $5,000/year. The federal retirement experts I've spoken with so far have shown figures that the extra 25% in survivor annuity can be better covered with MUCH less expensive life insurance, which I do have, and will continue for the foreseeable future through FEGLI.

Am I more valuable dead than alive??? :shock:

Along with a 1.3 mil nest egg, I currently have salary with the 5X option (probably more than we've need the last couple of years) and will be backing it down to a more appropriate level as we age. I don't recall the technical details, but as I age there is a point where I no longer pay any premium (65) but coverage still continues for life, With a gradual reduction to 25%. We do have additional option B which will cover the additional.

I'm considering a small 20 year term policy if it proves money wise.

Thoughts?

Dan

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Re: New to the forum and retiring this fall

Post by travellight » Tue May 30, 2017 10:45 am

As someone with a pension when I retire, I will just share my thoughts and personal philosophies and hope it helps. I consider myself moderate risk tolerant and that informs my personal choices.

With a sizable pension coming, I figure I can afford to be not conservative in my asset allocation. At the time I came to that decision, I put all future investments into stocks and stopped contributing to bonds. The bonds I held then now comprise 10% of my portfolio. I think this allows me to be as aggressive as possible which we are fortunate to be able to do with a pension.

I would not feel comfortable with an unpaid mortgage at retirement so I have been intense on paying off my mortgages. I actually achieved this about 6 months ago and then started my taxable investment account. OTOH, I chose not to do a 529 plan for various reasons. I am paying for college now with current income which is a significant bite at 70-80k per year when you add travel expenses.

I have a vacation home but I bought it when I was 30 and it is paid off. I would prioritize paying off your current mortgage before taking on a vacation home. It is good to really know your annual spending going into this. For someone who is not devoted to spreadsheets and all the effort involved, I use mint dot com and take on the very small security risk for the benefit of the tracking information it provides.

I don't mind having a complex set of investments. I have a ROTH IRA at one bank, taxable investment accounts at 2 other banks, cash at 3-4 other banks, 401k at another bank. I think of it as 3 buckets: ROTH IRA (should be most aggressive which it isn't and I need to change what I have it in), 401K (aggressive), and taxable (looking for tax strategic funds and no or low dividend such as Berkshire Hathaway since I hope to always be in the highest tax bracket, even in retirement).

Bfwolf
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Re: New to the forum and retiring this fall

Post by Bfwolf » Tue May 30, 2017 11:20 am

Tracyfaa wrote:It can be changed back to 50% before officially retiring, but at what cost? The 25% costs 5% of my pension. The 50% (maximum) costs 10% of pension. That works out to an additional cost of approximately $5,000/year. The federal retirement experts I've spoken with so far have shown figures that the extra 25% in survivor annuity can be better covered with MUCH less expensive life insurance, which I do have, and will continue for the foreseeable future through FEGLI.

Am I more valuable dead than alive??? :shock:

Along with a 1.3 mil nest egg, I currently have salary with the 5X option (probably more than we've need the last couple of years) and will be backing it down to a more appropriate level as we age. I don't recall the technical details, but as I age there is a point where I no longer pay any premium (65) but coverage still continues for life, With a gradual reduction to 25%. We do have additional option B which will cover the additional.

I'm considering a small 20 year term policy if it proves money wise.

Thoughts?

Dan
How much does the FEGLI cost? I used immediateannuities.com to get a sense for how much it would cost to replace your pension ($100,000 of annual income) at various ages of your wife's life. Here's rough answers:

55: $1,855,000
60: $1,772,000
65: $1,591,000
70: $1,423,000
75: $1,200,000
80: $980,000
85: $752,000
90: $555,000

It would seem to me that if you select the 25% survivor option, you need enough insurance to pay out 75% of those amounts if you want your wife to be able to replace your lost pension fully.

Also, it seems to me that if it doesn't make sense to give up 5% of your pension value to go from 25% to 50% survivor, it probably doesn't make sense to give up 5% to go from 0% to 25% survivor. i.e. you'll probably either want as much survivor benefit as possible or no survivor benefit.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 30, 2017 11:38 am

travellight wrote:As someone with a pension when I retire, I will just share my thoughts and personal philosophies and hope it helps. I consider myself moderate risk tolerant and that informs my personal choices.

With a sizable pension coming, I figure I can afford to be not conservative in my asset allocation. At the time I came to that decision, I put all future investments into stocks and stopped contributing to bonds. The bonds I held then now comprise 10% of my portfolio. I think this allows me to be as aggressive as possible which we are fortunate to be able to do with a pension.

I would not feel comfortable with an unpaid mortgage at retirement so I have been intense on paying off my mortgages. I actually achieved this about 6 months ago and then started my taxable investment account. OTOH, I chose not to do a 529 plan for various reasons. I am paying for college now with current income which is a significant bite at 70-80k per year when you add travel expenses.

I have a vacation home but I bought it when I was 30 and it is paid off. I would prioritize paying off your current mortgage before taking on a vacation home. It is good to really know your annual spending going into this. For someone who is not devoted to spreadsheets and all the effort involved, I use mint dot com and take on the very small security risk for the benefit of the tracking information it provides.

I don't mind having a complex set of investments. I have a ROTH IRA at one bank, taxable investment accounts at 2 other banks, cash at 3-4 other banks, 401k at another bank. I think of it as 3 buckets: ROTH IRA (should be most aggressive which it isn't and I need to change what I have it in), 401K (aggressive), and taxable (looking for tax strategic funds and no or low dividend such as Berkshire Hathaway since I hope to always be in the highest tax bracket, even in retirement).
I'm thinking moderate tolerance as well in our case. Ultimately I want to make things more manageable for my wife if either I pass first, or if I am unable to handle the retiremant finances. Bottom line is I at least need her to understand it all. I may check out mint.

Thanks

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 30, 2017 11:44 am

Tracyfaa wrote:It can be changed back to 50% before officially retiring, but at what cost? The 25% costs 5% of my pension. The 50% (maximum) costs 10% of pension. That works out to an additional cost of approximately $5,000/year. The federal retirement experts I've spoken with so far have shown figures that the extra 25% in survivor annuity can be better covered with MUCH less expensive life insurance, which I do have, and will continue for the foreseeable future through FEGLI.

Am I more valuable dead than alive??? :shock:

Along with a 1.3 mil nest egg, I currently have salary with the 5X option (probably more than we've need the last couple of years) and will be backing it down to a more appropriate level as we age. I don't recall the technical details, but as I age there is a point where I no longer pay any premium (65) but coverage still continues for life, With a gradual reduction to 25%. We do have additional option B which will cover the additional.

I'm considering a small 20 year term policy if it proves money wise.

Thoughts?

Dan
If I understand your plan correctly, your wife is giving up half of her survivor annuity -- which is substantially, although not fully, inflation-adjusted -- for a lump sum payment at your death. This lump sum will need to be invested, which will require your wife to either make investment decisions herself or pay someone else to do so. And if the market has a significant, extended decline at any point after you die, then this pension-replacement amount could lose value. If left in cash, then it will lose purchasing power due to inflation.

Also, this loss of pension income for her will occur at the same time as her Social Security payment will drop, since she will only be receiving a survivor benefit based on your SS and lose any benefit of her own. So her total annuitized income will take an even bigger hit than if she was getting a 50% survior benefit from your pension.

Given the above, and your overall level of assets, there would need to be a large cost savings for buying life insurance versus the $5,000 cost of the pension reduction for me to go with the life insurance. For me, even if the life insurance cost was zero, the savings wouldn't be worth it. (We went with the 50% survivor option for my husband.)

Think about this in the worst case scenario, where you retire on Friday and get run over by a bus on Saturday. What financial situation would you want for your wife?
Last edited by delamer on Tue May 30, 2017 12:05 pm, edited 1 time in total.

Tracyfaa
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Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 30, 2017 11:54 am

Definitely worth thinking about.

Thanks.

Dottie57
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Joined: Thu May 19, 2016 5:43 pm

Re: New to the forum and retiring this fall

Post by Dottie57 » Tue May 30, 2017 12:01 pm

Tracyfaa wrote:Definitely worth thinking about.

Thanks.

Are you signficantly younger than your spouse? It doesn't sound good for the spouse to have - 25% survivor pension even with a small (why Small?) insurance policy. If spouse is older, then maybe ok. Are you sure there isn't a 100% benefit forthe spouse with cost money f receiving a reduced bnefit now?

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 30, 2017 12:05 pm

Dottie57 wrote:
Tracyfaa wrote:Definitely worth thinking about.

Thanks.

Are you signficantly younger than your spouse? It doesn't sound good for the spouse to have - 25% survivor pension even with a small (why Small?) insurance policy. If spouse is older, then maybe ok. Are you sure there isn't a 100% benefit forthe spouse with cost money f receiving a reduced bnefit now?
Not under FERS.

Tracyfaa
Posts: 57
Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 30, 2017 2:46 pm

Dottie57 wrote:
Tracyfaa wrote:Definitely worth thinking about.

Thanks.

Are you signficantly younger than your spouse? It doesn't sound good for the spouse to have - 25% survivor pension even with a small (why Small?) insurance policy. If spouse is older, then maybe ok. Are you sure there isn't a 100% benefit forthe spouse with cost money f receiving a reduced bnefit now?
Size is a relative term in this instance. But she is younger than I by three years. The decision is a tough one to make though. By my research, it'll probably be $2500/yr for a $500,000 term policy, but also at the end of 20 years it is gone. (Assuming I live that long...I certainly expect to.) And that's equal to $25,000 X 20 years, and $25k is also the difference between the two survivor benefits choices. For the full survivor benefit I'll pay twice that amount (5k) to get $25k/yr. that may never come in to play, but that also, OTOH, doesn't disappear after 20 years.

My head is spinning. :oops:

I'm now leaning toward this:

It would give us peace of mind knowing that the full benefit would be in place, and the extra $2500/yr we'd be paying would not be missed, taking into account our nest egg.

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: New to the forum and retiring this fall

Post by delamer » Tue May 30, 2017 2:50 pm

Tracyfaa wrote:
Dottie57 wrote:
Tracyfaa wrote:Definitely worth thinking about.

Thanks.

Are you signficantly younger than your spouse? It doesn't sound good for the spouse to have - 25% survivor pension even with a small (why Small?) insurance policy. If spouse is older, then maybe ok. Are you sure there isn't a 100% benefit forthe spouse with cost money f receiving a reduced bnefit now?
Size is a relative term in this instance. But she is younger than I by three years. The decision is a tough one to make though. By my research, it'll probably be $2500/yr for a $500,000 term policy, but also at the end of 20 years it is gone. (Assuming I live that long...I certainly expect to.) And that's equal to $25,000 X 20 years, and $25k is also the difference between the two survivor benefits choices. For the full survivor benefit I'll pay twice that amount (5k) to get $25k/yr. that may never come in to play, but that also, OTOH, doesn't disappear after 20 years.

My head is spinning. :oops:

I'm now leaning toward this:

It would give us peace of mind knowing that the full benefit would be in place, and the extra $2500/yr we'd be paying would not be missed, taking into account our nest egg.
Does your wife have a preference? She is the one who'll live with the consequences of the decision, as your survivor.

Tracyfaa
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Joined: Tue May 23, 2017 1:28 pm

Re: New to the forum and retiring this fall

Post by Tracyfaa » Tue May 30, 2017 2:58 pm

Well, I am sure she would much prefer the full benefit, even if it costs a little more from my pension. We discussed it today before I left for work. Of utmost importance is peace of mind for her and our son. And me.

D

hale2
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Re: New to the forum and retiring this fall

Post by hale2 » Tue May 30, 2017 5:56 pm

Just stick with 25% and a term policy. 25% allows her to keep FEHB. And remember, your pension is taxable while life insurance is income tax free, so you'll need less insurance than you probably think. You have enough money that she'll be just fine with the reduced pension and life insurance. And if you outlive your life insurance policy, her needs will be less since she has 20 years less life expectancy than she has now.
Yes, I personally did what I just recommended. I crunched the numbers and showed my wife the results. Her only comment was she wished it could be less than 25% since the cost for the survivor benefit was so high.

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