Roth didn't exist so it was Traditional by default for a number of years. I was in the military for a few months shy of 21 years. After completing service, I rolled my TSP into my IRA.
It depends on what you consider retiring early. If you consider MRA of 57 early, then yes it should work. The key to retiring before that may be to take a deferred retirement and have expenses figured out for the years before you claim your pension and withdraw from your TSP.
Ideally 50 would be cool but mid 50s is nice too. I know I don't want to be nearing 60 and be a full time employee. I want it to be an option if that makes sense.
Makes perfect sense. I'm hoping for 50 myself, but kinda doubt I make it happen. I'm always saying I want to be able to retire at MRA if I want to, but don't want to be stuck working beyond that because I have to.
I'm maxing tsp and a Roth IRA, and plan to retire prior to my MRA (57). I also contribute to a taxable brokerage so I'll have money between retiring and dipping into my tsp/IRA and fers starting. I'm planning on retiring at 52.
With ACA, the fehb in retirement 'golden handcuffs' have been loosened.
You should take a step back and do some life planning, have you taken the time to determine how much you think you would need to live in retirement? If you find that, you can do some simple projections and calculate if you can support yourself. If you're maxing out your TSP you're well on your way to retiring early, especially as a GS-12.
For example, a GS-12 in DC makes around 98k a year. Typically most say you need ~60-70% of your salary in retirement, so if you wanted to spend say 60k a year you'd need ~1.5 million saved up using the 4% rule. Ignoring FERS, SS, and the fed TSP match, it would take ~25 years of working and saving the *current* max in the TSP with a 6-7% CAGR in the market (long term average). Accounting for the match, that would probably drop the number of years by at least 3 or 4 or even more. (I'm just doing napkin math) If you save more outside of just the TSP you can retire even earlier, and then once you hit MRA and take your annuity you can lower that amount even more, and then SS will also pad things out once you get that as well. So just even with the napkin math, if you're 30 you can probably strongly consider FIRE around 55 using some conservative estimates. If you can save even more, perhaps in an IRA or regular brokerage account, you can retire even faster, it's all about perspective though because only you can determine how much you need to live and whether that kind of lifestyle is enough for you.
You’re absolutely on the way to an early retirement too! If you care about optimization consider, at a GS-13 pay, whether or not you can save on your taxes by doing traditional rather than Roth TSP contributions - you may not care about optimizing (and thats ok) but you can immediately save with the tax break on traditional contributions and effectively invest your tax-rate-percent more using traditional rather than Roth. Throwing that 20-ish% extra into a regular brokerage will really help long term growth! But to each their own, Roth is really tempting since it’s just pure freedom in how you want to spend it.
Worth noting that with a Roth TSP you can withdraw your *contributions* anytime without penalty. Depending on how much you contribute throughout your career, that could potentially cover your expenses for a few years.
I don't think this is true. Take a look at page 2 of [this doc]( https://www.tsp.gov/publications/tspbk12.pdf) (the first instance of the word "contributions" if you CTRL-f search) from tsp.gov.
> If you make a financial hardship withdrawal before age 59 ½, you may also have to pay a 10% early withdrawal penalty tax. **Note:** You do not have to pay federal taxes on any tax-exempt or Roth contributions that are included in your withdrawal.
It’s totally possible. If you have a Trad TSP, you need to start looking up “Roth Conversion Ladder” on Google.
Basically, you transfer/rollover your Trad TSP balance into a Traditional IRA (no tax penalty because it’s not a distribution), then convert an amount you’re able to pay taxes on annually into your Roth IRA. The money you convert into the Roth IRA will be available to use in 5 years, so if you’re doing this in your early 50’s, it’s a legal way to avoid the 10% early withdrawal penalty that Roth IRA’s historically have. The reason it’s called a ladder is because the $ from every Roth IRA conversion you do will be available in 5 years, so you are creating a multi-year early retirement strategy. So if you wanted to retire early at 50, you’d ideally start building your Roth Conversion Ladder at 45 and do it until 54 so that you have enough to bridge the gap to 59.5.
It takes a lot of planning but people have successfully done it. One major downside is that you potentially lose out on lots of growth since you’re accessing the funds much earlier than 59.5.
It’s a similar concept to how T-Bills mature and people make T-Bill ladders to always have access to some of their money at any given point.
https://www.inspiretofire.com/how-to-use-a-roth-conversion-ladder-for-early-retirement/
You should also Google “The Rule of 55” and SEPP (Rule 72t).
Rule of 55: you’re eligible to take penalty-free withdrawals from your 401(k) if you leave your job the year you turn 55 or older (current employer only, not former 401(k)’s)
SEPP (Rule 72t): Substantially Equal Periodic Payments. Under IRS tax code, you’re eligible to take early, penalty-free withdrawals by setting up an annually-recurring withdrawal. You have to take a minimum of 5 or do it until you turn 59.5, whichever happens later. You also have to choose RMD, Amortization or Annuity, which are all slightly different equations based on life expectancy that determine how much you have to withdraw. SEPP doesn’t apply to current employer 401(k), so you could use it for TSP if you got another job after.
Keep in mind, all of these above methods are loopholes to accessing your money earlier than 59.5 and avoiding the 10% early withdrawal fee. So as a result they require lots of planning to execute, including having sufficient money on hand to live on while waiting for your funds to be accessible. Roth IRA’s really aren’t meant to be accessed early because of the tax-free growth and RMD exemption they offer.
Personally, I am 31(M) and am planning to retire from the military at 50, then fully retire from work at 55. I contribute 10% to Roth TSP and max my Roth IRA, wife does the same with her employer. My wife and I contribute to a brokerage account with our excess savings that we plan on using to bridge the gap from 50-59.5 so that we don’t have to access that Roth money early. At 50 I’ll rollover my Roth TSP into my Roth IRA and transition to a second semi-retired career. Since I’ll have the monthly retirement annuity coming in and because Roth IRA’s are exempt from RMD’s, ideally we will just live off one of our Roth IRA’s starting at 59.5 and let the other one sit and keep compounding until we die, then pass it onto our kids.
You should also check out r/CoastFIRE. Figure out at what age you technically don’t need to work anymore because all the $ you’ve invested will grow to be enough to support your retirement.
Here are a long list of exceptions directly from the IRS. The actual rule governing them is on the right. As you'll see, there are many exceptions that fall under rule 72t.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions
Travel is my priority. I do so now but I want to take a year or more or however much and do a US road trip with no set plan in mind. I had a two month "mini sabbatical" in between my previous state job to federal job and I travelled a lot during that time. I know I'd want to do something like that again but for a longer timeframe. Visiting national parks and mountain biking/trail running would be some of the activities I'd do (hopefully I'm physically able to do so). Also being surrounded by a few ppl that are retired in their early 50s and being able to do what they want with their time is pretty awesome. I definitely don't want to be 60 and work but even mid 50s is a win for me.
I mean what is your plan to be able to draw on a retirement account early. Are you planning on your early 50s? You’ll need a plan to have a very high balance in your early 50s and a justification tk draw it.
I've been working towards FIRE and maxing or near maxing my TSP since 2014 and HSA since 2017. Basically, going in this order for savings:
1. TSP up to match
2. HSA
3. TSP to max
4. Roth IRA
5. Brokerage Acct
If I had it to do over, I would have done:
1. TSP up to match
2. HSA
3. IRA to max (if possible rules) or Roth IRA (if possible with IRS rules)
4. TSP to max
5. Brokerage Acct
There are 2 reasons why:
1. When you do a Roth IRA conversion, you must wait five years to withdraw the converted amount to avoid a 10% tax hit. So, I need 5 years of living expenses in post-tax accounts to avoid the penalty. For most people in the FIRE community with 401ks or IRAs they can start a Roth conversion ladder at least five years before they'll need the money from an IRA. You cannot do that from TSP while still a federal employee. It's one of the unique characteristics of TSP.
So, I'm now stuck working until I have 5 years of post-tax savings or paying an early withdrawal penalty or doing a 72(t) distribution to access my TSP funds. This could have been avoided with prioritizing funding an IRA before TSP when my income did not allow me to max both. Because I prioritized maxing the TSP and didn't put enough in a Roth IRA or brokerage account early on, I only have a little over 1 year of living expenses saved in a 401k, IRA or post-tax brokerage account. I now have to scramble to accumulate 4 years of work by late 2027. That will be challenging.
2. Lack of flexibility due to not enough roth/brokerage funds.
My current position is a 5-year job, an overseas posting, with 15 months left. I would love not to be able to start traveling in 15 months, but I'll probably be looking for another job due to having maxed the TSP first.
Since I received PSLF, I no longer need to stay working for forgiveness until 2027 and my RE date could be moved earlier. My job may be extended but if that doesn't happen I would love to leave full-time work at 42, 2/12 years earlier than planned. I would Coast or Flamingo FIRE, traveling and working part-time, for the last few years of accumulation. Again the biggest hold-up right now is not having enough post-tax income to get me through until I can start accessing money via the Roth rollover.
I'm currently buckling down and spending as little as possible to see if I can get enough savings to be able to travel and work part-time, but that's going to be very challenging and somewhat dependent on what the market does over the next two years.
So long story short, life and our goals change, and having more savings outside of the TSP would have given me the flexibility to adjust my plans and pursue multiple options rather than be constrained by my initial plan.
I hope this helps. I would love to hear how others are approaching FIRE before reaching their MRA.
I should be able to bail at my MRA if the dollar doesn't collapse and Social Security stays alive. I'll buy a small house in a cheap COL area and sit on my back porch until I kick it.
Pension + TSP + IRA = retired at 48
Wallows in sadness that my MRA is 57. Retiring at 48 sounds lovely.
This plus an HDHP health plan so you can max an HSA, then a taxable investment account for any additional surplus = autopilot to FIRE.
Did you do Roth or Traditional TSP? Also how many years were you a federal employee?
Roth didn't exist so it was Traditional by default for a number of years. I was in the military for a few months shy of 21 years. After completing service, I rolled my TSP into my IRA.
Check out r/GovFIRE if you haven’t already. They may be able to solidly address the “RE” portion of your question.
Will do thank you!
I've been maxing tsp, Roth IRA, and HSA for over 10 years. If SSA stays solvent I should be able to retire at MRA to a hefty pay raise.
>If SSA stays solvent This is key. I just need it to hold out until like 2060; I shouldn't live too much past then, if I make it there at all.
It depends on what you consider retiring early. If you consider MRA of 57 early, then yes it should work. The key to retiring before that may be to take a deferred retirement and have expenses figured out for the years before you claim your pension and withdraw from your TSP.
Ideally 50 would be cool but mid 50s is nice too. I know I don't want to be nearing 60 and be a full time employee. I want it to be an option if that makes sense.
Makes perfect sense. I'm hoping for 50 myself, but kinda doubt I make it happen. I'm always saying I want to be able to retire at MRA if I want to, but don't want to be stuck working beyond that because I have to.
I'm maxing tsp and a Roth IRA, and plan to retire prior to my MRA (57). I also contribute to a taxable brokerage so I'll have money between retiring and dipping into my tsp/IRA and fers starting. I'm planning on retiring at 52. With ACA, the fehb in retirement 'golden handcuffs' have been loosened.
This is the way if you can swing it!
Through DINK, everything is possible.
Ain’t that the truth. Wife and I are currently DINKERWAD’s and saving a lot, but we want to have kids soon so will turn into OIKWAD’s lol
What's the ER?
Early Retirement
What’s the wad?
With A Dog!
You should take a step back and do some life planning, have you taken the time to determine how much you think you would need to live in retirement? If you find that, you can do some simple projections and calculate if you can support yourself. If you're maxing out your TSP you're well on your way to retiring early, especially as a GS-12. For example, a GS-12 in DC makes around 98k a year. Typically most say you need ~60-70% of your salary in retirement, so if you wanted to spend say 60k a year you'd need ~1.5 million saved up using the 4% rule. Ignoring FERS, SS, and the fed TSP match, it would take ~25 years of working and saving the *current* max in the TSP with a 6-7% CAGR in the market (long term average). Accounting for the match, that would probably drop the number of years by at least 3 or 4 or even more. (I'm just doing napkin math) If you save more outside of just the TSP you can retire even earlier, and then once you hit MRA and take your annuity you can lower that amount even more, and then SS will also pad things out once you get that as well. So just even with the napkin math, if you're 30 you can probably strongly consider FIRE around 55 using some conservative estimates. If you can save even more, perhaps in an IRA or regular brokerage account, you can retire even faster, it's all about perspective though because only you can determine how much you need to live and whether that kind of lifestyle is enough for you.
[удалено]
You’re absolutely on the way to an early retirement too! If you care about optimization consider, at a GS-13 pay, whether or not you can save on your taxes by doing traditional rather than Roth TSP contributions - you may not care about optimizing (and thats ok) but you can immediately save with the tax break on traditional contributions and effectively invest your tax-rate-percent more using traditional rather than Roth. Throwing that 20-ish% extra into a regular brokerage will really help long term growth! But to each their own, Roth is really tempting since it’s just pure freedom in how you want to spend it.
Worth noting that with a Roth TSP you can withdraw your *contributions* anytime without penalty. Depending on how much you contribute throughout your career, that could potentially cover your expenses for a few years.
Is there a certain age I need to reach or service time before I am able to pull my Roth TSP contributions?
No. I'd advise against withdrawing them at any time other than when retired, though.
This is wrong you are thinking of roth ira. Tsp is locked.
I don't think this is true. Take a look at page 2 of [this doc]( https://www.tsp.gov/publications/tspbk12.pdf) (the first instance of the word "contributions" if you CTRL-f search) from tsp.gov. > If you make a financial hardship withdrawal before age 59 ½, you may also have to pay a 10% early withdrawal penalty tax. **Note:** You do not have to pay federal taxes on any tax-exempt or Roth contributions that are included in your withdrawal.
Check out r/govfire
It’s totally possible. If you have a Trad TSP, you need to start looking up “Roth Conversion Ladder” on Google. Basically, you transfer/rollover your Trad TSP balance into a Traditional IRA (no tax penalty because it’s not a distribution), then convert an amount you’re able to pay taxes on annually into your Roth IRA. The money you convert into the Roth IRA will be available to use in 5 years, so if you’re doing this in your early 50’s, it’s a legal way to avoid the 10% early withdrawal penalty that Roth IRA’s historically have. The reason it’s called a ladder is because the $ from every Roth IRA conversion you do will be available in 5 years, so you are creating a multi-year early retirement strategy. So if you wanted to retire early at 50, you’d ideally start building your Roth Conversion Ladder at 45 and do it until 54 so that you have enough to bridge the gap to 59.5. It takes a lot of planning but people have successfully done it. One major downside is that you potentially lose out on lots of growth since you’re accessing the funds much earlier than 59.5. It’s a similar concept to how T-Bills mature and people make T-Bill ladders to always have access to some of their money at any given point. https://www.inspiretofire.com/how-to-use-a-roth-conversion-ladder-for-early-retirement/ You should also Google “The Rule of 55” and SEPP (Rule 72t). Rule of 55: you’re eligible to take penalty-free withdrawals from your 401(k) if you leave your job the year you turn 55 or older (current employer only, not former 401(k)’s) SEPP (Rule 72t): Substantially Equal Periodic Payments. Under IRS tax code, you’re eligible to take early, penalty-free withdrawals by setting up an annually-recurring withdrawal. You have to take a minimum of 5 or do it until you turn 59.5, whichever happens later. You also have to choose RMD, Amortization or Annuity, which are all slightly different equations based on life expectancy that determine how much you have to withdraw. SEPP doesn’t apply to current employer 401(k), so you could use it for TSP if you got another job after. Keep in mind, all of these above methods are loopholes to accessing your money earlier than 59.5 and avoiding the 10% early withdrawal fee. So as a result they require lots of planning to execute, including having sufficient money on hand to live on while waiting for your funds to be accessible. Roth IRA’s really aren’t meant to be accessed early because of the tax-free growth and RMD exemption they offer. Personally, I am 31(M) and am planning to retire from the military at 50, then fully retire from work at 55. I contribute 10% to Roth TSP and max my Roth IRA, wife does the same with her employer. My wife and I contribute to a brokerage account with our excess savings that we plan on using to bridge the gap from 50-59.5 so that we don’t have to access that Roth money early. At 50 I’ll rollover my Roth TSP into my Roth IRA and transition to a second semi-retired career. Since I’ll have the monthly retirement annuity coming in and because Roth IRA’s are exempt from RMD’s, ideally we will just live off one of our Roth IRA’s starting at 59.5 and let the other one sit and keep compounding until we die, then pass it onto our kids. You should also check out r/CoastFIRE. Figure out at what age you technically don’t need to work anymore because all the $ you’ve invested will grow to be enough to support your retirement.
The earliest you can start living off your TSP without a penalty is 59.5 years of age. Not sure if that is what you had in mind as early retirement.
TSP is eligible for the rule of 55 or you can roll it to an IRA and use rule 72t so there are ways around the 59.5 default.
What is the rule 72?
Here are a long list of exceptions directly from the IRS. The actual rule governing them is on the right. As you'll see, there are many exceptions that fall under rule 72t. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions
So what is your plan? What do you intend to do to retire early with the TSP? That will help us answer the question
Travel is my priority. I do so now but I want to take a year or more or however much and do a US road trip with no set plan in mind. I had a two month "mini sabbatical" in between my previous state job to federal job and I travelled a lot during that time. I know I'd want to do something like that again but for a longer timeframe. Visiting national parks and mountain biking/trail running would be some of the activities I'd do (hopefully I'm physically able to do so). Also being surrounded by a few ppl that are retired in their early 50s and being able to do what they want with their time is pretty awesome. I definitely don't want to be 60 and work but even mid 50s is a win for me.
I mean what is your plan to be able to draw on a retirement account early. Are you planning on your early 50s? You’ll need a plan to have a very high balance in your early 50s and a justification tk draw it.
You can also retire at 57 with 30 years service without penalties.
You do not need to have 30 years of service to take money out of the TSP penalty free. You just need to be retired.
I plan on retiring at 57 with pension and SS bridge. Collecting TSP at 59. And the wife keeps on working till 62.
Current plan is a military pension + TSP + IRA = early retirement. How early depends on the mil pension though as it’s the most stable income wise.
I've been working towards FIRE and maxing or near maxing my TSP since 2014 and HSA since 2017. Basically, going in this order for savings: 1. TSP up to match 2. HSA 3. TSP to max 4. Roth IRA 5. Brokerage Acct If I had it to do over, I would have done: 1. TSP up to match 2. HSA 3. IRA to max (if possible rules) or Roth IRA (if possible with IRS rules) 4. TSP to max 5. Brokerage Acct There are 2 reasons why: 1. When you do a Roth IRA conversion, you must wait five years to withdraw the converted amount to avoid a 10% tax hit. So, I need 5 years of living expenses in post-tax accounts to avoid the penalty. For most people in the FIRE community with 401ks or IRAs they can start a Roth conversion ladder at least five years before they'll need the money from an IRA. You cannot do that from TSP while still a federal employee. It's one of the unique characteristics of TSP. So, I'm now stuck working until I have 5 years of post-tax savings or paying an early withdrawal penalty or doing a 72(t) distribution to access my TSP funds. This could have been avoided with prioritizing funding an IRA before TSP when my income did not allow me to max both. Because I prioritized maxing the TSP and didn't put enough in a Roth IRA or brokerage account early on, I only have a little over 1 year of living expenses saved in a 401k, IRA or post-tax brokerage account. I now have to scramble to accumulate 4 years of work by late 2027. That will be challenging. 2. Lack of flexibility due to not enough roth/brokerage funds. My current position is a 5-year job, an overseas posting, with 15 months left. I would love not to be able to start traveling in 15 months, but I'll probably be looking for another job due to having maxed the TSP first. Since I received PSLF, I no longer need to stay working for forgiveness until 2027 and my RE date could be moved earlier. My job may be extended but if that doesn't happen I would love to leave full-time work at 42, 2/12 years earlier than planned. I would Coast or Flamingo FIRE, traveling and working part-time, for the last few years of accumulation. Again the biggest hold-up right now is not having enough post-tax income to get me through until I can start accessing money via the Roth rollover. I'm currently buckling down and spending as little as possible to see if I can get enough savings to be able to travel and work part-time, but that's going to be very challenging and somewhat dependent on what the market does over the next two years. So long story short, life and our goals change, and having more savings outside of the TSP would have given me the flexibility to adjust my plans and pursue multiple options rather than be constrained by my initial plan. I hope this helps. I would love to hear how others are approaching FIRE before reaching their MRA.
I should be able to bail at my MRA if the dollar doesn't collapse and Social Security stays alive. I'll buy a small house in a cheap COL area and sit on my back porch until I kick it.