Maxing out TSP

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Max out. You never know what the future holds with pensions.

Sure you do.

You really are stupid. No certainties in life other tax/death.

I think the point is that if government pensions and SS fail, then the money in the 401k is probably lost also. If you want to protect from a crash that causes the US government pension scheme to fail, you probably need to "invest" in gold, bitcoin, or guns and hide various currencies under your mattress.

The concern with SS and FERS isn't an economic crash, but political risk.

[Anonymous]

Anonymous wrote:I would not assume that social security, or government pensions, are any less secure than money invested in a 401k. Quite the opposite. The Cntral government is usually the last thing to fail. That said, property/real estate may be safer.

Social Security is less secure since it does not have a defined value. A 401k has a well defined value, it fluctuates, but there is a number. Similarly, government pensions have a number. How much is social security worth. There is a forumla, but I don't think anyone has ever said that it will not change.

[Anonymous]

The SS and FERS doomsayers are drastically overstating their cases. It is possible that SS gets adjusted down from current scheme, but it's essentially a neglible possibility that you get nothing. Same with your FERs pension -- it may move to "high-5" payout or some other tweaks and adjustments but it won't be wiped out completely.

Given that you are in line for 2 pensions and 2 SS streams, you really are OK if you just continue with 10% total (5+5 match) into the TSP.

Given conservative projections, the TSP should hit something like $1M in 30-35 years. Conservatively, you're looking at another $50k+/year in 2 FERS pensions for 2 30-35 year careers, probably more depending on your income growth. Very conservatively, you'd also get another $40k per year in 2 SS payouts.

Those are all 2018 dollars. Even if you adjust the SS and FERs by 2/3, you're talking $60k per year plus whatever you can draw from your TSP. At the 4% rule, you could expect to take $40k per year from the TSP.

That gives you $100k per year in annual retirement income. That is the figure in 2018 dollars (the nominal number would be higher).

Even after taxes, given your current income and spending (and especially if you pay off a mortgage in the next 30 years), that puts you on track for a secure retirement.

Tl;dr: if you have extra room in your budget, by all means increase your TSP contributions. But if money is tight, then just stay the course. You are doing OK. As you get raises, make sure to increase your retirement contributions with each pay increase.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We aren't making the assumption that pension and SS will still be around when we retire.

This is ridiculous. If the Federal Government reneges on its SS and pension obligations then bonds and stocks will probably also be worthless.

It really isn't. Plan for the worst and hope for the best OP. You should max out and invest aggressively (in stocks) if you are young and plan to stay in the govt. I just crossed 1 mil point and kicking myself for not being aggressive and not starting full contribution sooner. Nobody told me when I was young. Don't make the same mistake.

Same. Max out if you can. Wish I had started maxing out sooner. Sitting at 40 here and thankful my DH had the foresight to max out when he was in his 20's.

[Anonymous]

Anonymous wrote:The SS and FERS doomsayers are drastically overstating their cases. It is possible that SS gets adjusted down from current scheme, but it's essentially a neglible possibility that you get nothing. Same with your FERs pension -- it may move to "high-5" payout or some other tweaks and adjustments but it won't be wiped out completely.

Given that you are in line for 2 pensions and 2 SS streams, you really are OK if you just continue with 10% total (5+5 match) into the TSP.

Given conservative projections, the TSP should hit something like $1M in 30-35 years. Conservatively, you're looking at another $50k+/year in 2 FERS pensions for 2 30-35 year careers, probably more depending on your income growth. Very conservatively, you'd also get another $40k per year in 2 SS payouts.

Those are all 2018 dollars. Even if you adjust the SS and FERs by 2/3, you're talking $60k per year plus whatever you can draw from your TSP. At the 4% rule, you could expect to take $40k per year from the TSP.

That gives you $100k per year in annual retirement income. That is the figure in 2018 dollars (the nominal number would be higher).

Even after taxes, given your current income and spending (and especially if you pay off a mortgage in the next 30 years), that puts you on track for a secure retirement.

Tl;dr: if you have extra room in your budget, by all means increase your TSP contributions. But if money is tight, then just stay the course. You are doing OK. As you get raises, make sure to increase your retirement contributions with each pay increase.

I generally agree with this. I think high 5 is a possibility with FERS. There was (is?) a proposal floating out there to kill the COLA in FERS which would significantly reduce the value of the pension. I guess we'll see if that goes anywhere this year.

[Anonymous]

Anonymous wrote:The SS and FERS doomsayers are drastically overstating their cases. It is possible that SS gets adjusted down from current scheme, but it's essentially a neglible possibility that you get nothing. Same with your FERs pension -- it may move to "high-5" payout or some other tweaks and adjustments but it won't be wiped out completely.

Given that you are in line for 2 pensions and 2 SS streams, you really are OK if you just continue with 10% total (5+5 match) into the TSP.

Given conservative projections, the TSP should hit something like $1M in 30-35 years. Conservatively, you're looking at another $50k+/year in 2 FERS pensions for 2 30-35 year careers, probably more depending on your income growth. Very conservatively, you'd also get another $40k per year in 2 SS payouts.

Those are all 2018 dollars. Even if you adjust the SS and FERs by 2/3, you're talking $60k per year plus whatever you can draw from your TSP. At the 4% rule, you could expect to take $40k per year from the TSP.

That gives you $100k per year in annual retirement income. That is the figure in 2018 dollars (the nominal number would be higher).

Even after taxes, given your current income and spending (and especially if you pay off a mortgage in the next 30 years), that puts you on track for a secure retirement.

Tl;dr: if you have extra room in your budget, by all means increase your TSP contributions. But if money is tight, then just stay the course. You are doing OK. As you get raises, make sure to increase your retirement contributions with each pay increase.

Anything is possible with a stroke of a pen. Don’t be surprised if republicans try to attack FERS and SS. If not now, later....especially if we continue to elect neo-fascists in office.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The SS and FERS doomsayers are drastically overstating their cases. It is possible that SS gets adjusted down from current scheme, but it's essentially a neglible possibility that you get nothing. Same with your FERs pension -- it may move to "high-5" payout or some other tweaks and adjustments but it won't be wiped out completely.

Given that you are in line for 2 pensions and 2 SS streams, you really are OK if you just continue with 10% total (5+5 match) into the TSP.

Given conservative projections, the TSP should hit something like $1M in 30-35 years. Conservatively, you're looking at another $50k+/year in 2 FERS pensions for 2 30-35 year careers, probably more depending on your income growth. Very conservatively, you'd also get another $40k per year in 2 SS payouts.

Those are all 2018 dollars. Even if you adjust the SS and FERs by 2/3, you're talking $60k per year plus whatever you can draw from your TSP. At the 4% rule, you could expect to take $40k per year from the TSP.

That gives you $100k per year in annual retirement income. That is the figure in 2018 dollars (the nominal number would be higher).

Even after taxes, given your current income and spending (and especially if you pay off a mortgage in the next 30 years), that puts you on track for a secure retirement.

Tl;dr: if you have extra room in your budget, by all means increase your TSP contributions. But if money is tight, then just stay the course. You are doing OK. As you get raises, make sure to increase your retirement contributions with each pay increase.

Anything is possible with a stroke of a pen. Don’t be surprised if republicans try to attack FERS and SS. If not now, later....especially if we continue to elect neo-fascists in office.

+1. At least FERS, they wanted to try 2017. Ryan always talks about going after the entitlement programs.

[Anonymous]

Try to put as much as possible in as soon as you can. I started out at 7%, I think, and would just raise it 1-2% every once in a while. That made very little impact on my paycheck and I have now been maxing for several years.

Also, don't depend too heavily on FERS. All of my calculations make it seem like it's not that much of a contribution. For instance, I'm a GS-14 and have been a fed for about 10 years. So, I would get something in the ballpark of $10k each year from FERS, which is nice, but not a huge contribution as far as I can tell...

[Anonymous]

Anonymous wrote:The SS and FERS doomsayers are drastically overstating their cases. It is possible that SS gets adjusted down from current scheme, but it's essentially a neglible possibility that you get nothing. Same with your FERs pension -- it may move to "high-5" payout or some other tweaks and adjustments but it won't be wiped out completely.

Given that you are in line for 2 pensions and 2 SS streams, you really are OK if you just continue with 10% total (5+5 match) into the TSP.

Given conservative projections, the TSP should hit something like $1M in 30-35 years. Conservatively, you're looking at another $50k+/year in 2 FERS pensions for 2 30-35 year careers, probably more depending on your income growth. Very conservatively, you'd also get another $40k per year in 2 SS payouts.

Those are all 2018 dollars. Even if you adjust the SS and FERs by 2/3, you're talking $60k per year plus whatever you can draw from your TSP. At the 4% rule, you could expect to take $40k per year from the TSP.

That gives you $100k per year in annual retirement income. That is the figure in 2018 dollars (the nominal number would be higher).

Even after taxes, given your current income and spending (and especially if you pay off a mortgage in the next 30 years), that puts you on track for a secure retirement.

Tl;dr: if you have extra room in your budget, by all means increase your TSP contributions. But if money is tight, then just stay the course. You are doing OK. As you get raises, make sure to increase your retirement contributions with each pay increase.

OP here. Thank you for this. This makes sense to me. If we max out our TSP and Roth IRA we would be saving, with the match, 36% of our HHI. I have never seen any financial adviser recommend saving 36% percent. Saving 36% plus the pension just seems completely ridiculous.

The way I have been thinking about it is that conservatively I think we can count on SS covering around 30% of our final salary and the pension another 25%. Figuring we can live on 75% of our final salary (which is pretty conservative given we want to move to a lower CoL area), then we will need our TSP to cover 20% of our final salary. Using the also conservative 4% draw down rule means we need to save 500% of our final salary. If our TSP contributions grow 3% faster than our salary increases (which seems very conservative), then with a 10% contribution (5%+ match), then we are there in 26 or 27 years.

Maybe we should bump our savings up to 15% or 20% of our HHI a year, but no way do we need to hit 36%.

[Anonymous]

OP - do you have kids? Everything gets f'ed up once little ones show up. i mean seriously...

[Anonymous]

Anonymous wrote:Try to put as much as possible in as soon as you can. I started out at 7%, I think, and would just raise it 1-2% every once in a while. That made very little impact on my paycheck and I have now been maxing for several years.

Also, don't depend too heavily on FERS. All of my calculations make it seem like it's not that much of a contribution. For instance, I'm a GS-14 and have been a fed for about 10 years. So, I would get something in the ballpark of $10k each year from FERS, which is nice, but not a huge contribution as far as I can tell...

If you stay, your pension can easily be over 25% of your final salary (technically high 3 maybe someday high 5), that is nothing to sneeze at.

[Anonymous]

I predict SS will be OK...to many senior voters. But Fed benefits are an easy target. Everyone thinks feds are overpaid and lazy.. (I am a hard working fed so I don't think so but...)

[Anonymous]

Anonymous wrote:I predict SS will be OK...to many senior voters. But Fed benefits are an easy target. Everyone thinks feds are overpaid and lazy.. (I am a hard working fed so I don't think so but...)

Yes, again, the Fed pension will be made incrementally worse, but it won't go away completely for existing employees. It may eventually go away completely for new hires and be phased out that way.

[Anonymous]

You should be saving 15% of your income. It's up to you to decide whether you want to make that 15% of each worker's income or 15% of your household income.

Realize that if you do 15% of the household income ... and then a little thing like divorce comes along, you will not have saved your 15%. Could you each save 10%? With the gov. matching $$, that would take you to about 15%.

You never know if one of you will have medical issues or divorce or whatever. If you don't really need that extra 5% for housing, food, childcare, then put it in TSP. You will be really glad you did.

[Anonymous]

Anonymous wrote:OP - do you have kids? Everything gets f'ed up once little ones show up. i mean seriously...

+1 If you don't have kids but are planning on them, you should put as much in retirement now as you can; you can dial it back to pay for child care. You don't want to get used to spending the money and then get shell shocked when you get a huge new bill. If you don't have kids it's not as much of a worry (though I'm risk averse and like to save aggressively either way).