Question 1
I have maxed my contributions in the TSP and a ROTH IRA and I am blessed to have money left over. Where should I be putting that money so that it continues to work for me?
Answer 1
If your spouse has a 401k or IRA then you can consider funding those as well.
However, once you max out all your retirement accounts then the next best place is probably just a brokerage account. And while a brokerage account doesn’t have some of the tax benefits of a retirement account it certainly has more flexibility in how you can use the money.
Just remember that in a brokerage account, you pay taxes as you earn dividends, receive interest, or sell an investment for a gain. This is different from most retirement accounts with which you only have to worry about taxes when you remove the funds from the account.
Question 2
I will have several sources of income when I and my wife retire in 2022. They are military pension, military disability, Social Security, and my FERS pension. My wife will have Social Security and a FERS pension as well. I looked at our monthly net income before and after retirement and there is only a $700 deficit before withdrawing from TSP. Given this, how should we invest our TSP?
Answer 2
It all comes down to when/how you plan on using your TSP in retirement.
I would use the bucket strategy which you can learn all about here.
Question 3
Can any portion of TSP holdings be rolled into an external IRA prior to your MRA while employed?
Answer 3
The short answer is no, there really aren’t any attractive options to do this.
There are 3 options to access your TSP before retirement.
-Financial Hardship Withdrawal
-Age-Based In-service Withdrawal
-TSP Loan
But none of these options allow you to do an IRA rollover before your MRA (minimum retirement age)
You can learn more about these TSP withdrawal options here.
Question 4
Is there any advantage to having FEHB, Medicare, and Tricare for life in retirement? I am eligible for tricare at 60 so do I keep FEHB and enroll in Tricare but then end FEHB at 65 when I am eligible for Medicare? Or do I keep all three?
Answer 4
It all comes down to what type of coverage/cost you are comfortable with.
Some people are just fine to have only Tricare before 65 but others really want to have more treatment options than what is provided by Tricare.
These people tend to have FEHB and Tricare at the same time.
However, once you turn 65 you will be forced to be on Medicare part B which does have a monthly premium.
Many people are just fine with Tricare and Medicare but you certainly can pay for FEHB as well if you’d like.
Just remember, if you decide to get rid of FEHB in retirement, make sure to suspend it and not cancel it. This way you can rejoin FEHB later if you decide to.
Here is more information about Tricare for Life and Medicare.
