Financial Advice Q&A

New Member
Posts: 1
Question
What should I do with my TSP?
[ Edited ]

I retired quickly without any planning and I still have my money in TSP. I merely got out of the higher risk funds and went 50/50 into the Government and the Life funds. I should be OK with my FERS and Social Security income. What do I do with my TSP to not take a big hit but have quick availability if needed?

Other Answers: 1
Community Manager
Posts: 226

Who needs financial planning, right? Just kidding, but your good habits over the years allowed you to create a situation where your inflation adjusted guaranteed income streams -- in the form of FERS retirement and Social Security -- cover your regular expenses.  That's a great place to be!

 

First, let me say that I'm a huge fan of the Thrift Savings Plan.  I would love to see 100% of federal employees and those that serve in uniform contributing to the TSP.  It's a valuable tool to save for the future.  That being said, in situations like yours, it doesn't offer a lot of flexibility.

 

I say that because once you separate or retire you are only allowed to take a single partial withdrawal.   Yes, there are withdrawal options.  You can set up monthly payments from your TSP based on your life expectancy or request a specific monthly amount or even set up an annuity or a combination of those approaches.  However, if your preference is to periodically tap into your retirement savings to cover a vacation, car purchase or other expense that comes up from time to time, the TSP is not particularly handy.

 

Exploring a Rollover?

Get more information from USAA here.

I realize you've made it this far without a whole lot of planning effort, but now seems like a good time to change that. Begin by determining if the available withdrawal options for the TSP will work in your situation.  If they won't work, you can explore rolling over the TSP to an IRA.  With an IRA you wouldn't be restricted as to how and when you make withdrawals. Just keep in mind that withdrawing from either an IRA or the TSP would have tax implications (and possible penalties if you're under age 59 1/2).    

 

Here's a link to the TSP Publication on your withdrawal options.  I really don't have enough information to provide you guidance on your investment selection, but you can give one of our advisors here at USAA a call at 800-771-9960 and they can review both your portfolio and withdrawal options.

 

Good luck and congratulations!

 

JJ

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