I make 165k as a salary and my wife makes
60k (combined of $225k).

From my understanding, a married couple filing jointly cannot contribute the full $7,500 to a Roth IRA if their MAGI is $242k or higher. I am unsure on calculating MAGI, however mentors of mine have said the MAGI number is typically below the actually salary number.

Since our combined salary number before taxes is $225k this year, I went ahead and maxed out my Roth IRA.

I completely forgot that in order to purchase our house this year, I sold $75,000k worth of stock saved in a Vanguard Federal Money Market Fund. I know there aren’t many gains to be had in this type of account, but I am sweating this big time in case this puts our MAGI over 242k.

Does anyone have any advice on how to go about this? I have only contributed about $8,000 to my Roth TSP this year so far. If I now add a higher percentage and do only Traditional TSP for the rest of the calendar year, will this lower my MAGI to safely stay under the $242k threshold? Thanks for any advice.

Edit: I went to my Vanguard account and only have a $6k Realized gain from a separate stock sale. Turns out the 75k I was under the impression I “sold” from the vanguard money market fund wasn’t technically a stock and therefore doesn’t count in capital gains? Thank you.

I am considering leaving federal service after 12 years to go to a remote job in the private sector. The biggest weights in this decision are: keep building my pension for guaranteed money for retirement, or go completely remote and improve my quality of life? Thoughts?

Anyone else dealing with the same intrusive thoughts? Took the early retirement last April and having a hard time with the adjustment and “what if” scenarios. 31 years of service at GS-15 so pension is just under $60k and TSP is holding steady around $1.7m (which I can’t touch for another 4 years). Spouse has a bit more in retirement but no pension when she does retire at the end of this year. It seemed like a no brainer last year to take the offer but I spend a lot of time now wondering if we’ll have enough.

Anyone else do by the same and what do you do to help ease your mind???

Retirement discussion of the week:

Ran a 6(c) case to see what a high-3 difference is really worth, since it's the one pension input still moving when you're close to the door.

The setup, an 1811 (LEO) retiring at 48 with 25 years 6 months of covered service (the any-age-with-25 door, not 50-and-20), 800 hours of unused sick leave, full survivor election, married, California, $810K in the TSP at a 4% draw, planning to 90. Two paths, identical except the high-3: $168,000 vs $188,000. Think of it as a supervisory slot taken or turned down three years before retiring, or a move to a higher level.

Month one

$5,583.67/mo gross, $5,025.30 after the full survivor election. $6,248.39/mo gross, $5,623.55 after survivor.

$598.25 a month, $7,179 a year, for life.

The multiplier is why. Total creditable service is 25.88 years (800 sick-leave hours add 0.38 of a year at the 1.0% tier), so 20 years at 1.7% plus 5.88 at 1.0% is 39.8833%. Take the 10% survivor cut off that and about 36 cents of every high-3 dollar comes back every year. Twenty grand of high-3 is a $7,179-a-year decision.

COLA widens it

At 2%, the gap is the smallest it will ever be on day one:

• 48: $60,304 vs $67,483, spread $7,179
• 65: $84,440 vs $94,492, spread $10,052
• 80: $113,645 vs $127,174, spread $13,529
• 90: $138,532 vs $155,024, spread $16,492

A percentage raise on a bigger number is a bigger raise, 42 years running.

The spouse's check moves too. Full survivor is 50% of the unreduced annuity, so $2,791.83/mo vs $3,124.19/mo for life.

What doesn't move. SRS is $1,487.50/mo in both, $249,900 total, because it runs off your SS estimate at 62 and your FERS years. SS is the same $2,380 at 62. Nobody's high-3 touches either one.

Lifetime. Average take-home $10,826.97 vs $11,596.98, so $770.01 a month, growing from $548 in the 50s to $1,012 in the 80s. Net income to 90 is $5,586,716 vs $5,984,041, a $397,325 gap after paying $84,812 more in federal and CA tax.

Three caveats. The model holds the TSP identical at $810,000, so the bigger contributions and match from those three years aren't in it, which means $397K is the floor. High-3 is basic pay, locality and (for 1811s) availability pay count, overtime and awards don't, so a big OT year won't pull your average up. And nothing here prices three years of supervisory hours at 45, which is the whole reason people turn these jobs down.

Point being, within about five years of your date the high-3 is the last input you can still change, and it's frozen the day you walk out.

Full worked reports for both paths if you want the year-by-year: 

Lower High-3 and Higher High-3

Curious how others weighed this, especially anyone who took a slot they didn't want for the last three years. And if you see a hole in my math, call it out, I'd rather fix it than be wrong quietly.

I feel like I've gone crazy. I cannot find the Mutual Fund Window when logged into my TSP at all. They have all the same pages still there that explain what the MFW is, but for the life of me cannot locate how to actual opt in to it and start a transfer into it. Did they quietly do away with it? Was it scrapped and I just missed the news? Does anyone actually use it, and if so where are th links to get to it?

That is why long-term care is one of the biggest retirement risks federal retirees cannot afford to ignore.

It is not just a healthcare problem. It is not just an insurance problem. It is a retirement income problem, a family burden problem, and one of the few expenses that can attack a plan from every direction at once.

If you take VERA and are under 55, does the rule of 55 still apply? Or do you have to wait until 59 and 1/2 to take penalty free withdrawals?

I have 300K in TSP c fund 7 years in so far
This year strategy was pulled 50K as a loan to purchase palantier on the deep 120$
My plan is to accelerate this way my personal brokerage to access my money before retirement as I do covered call options. Please provide opinions

Looks like the feds are not keeping up with inflation.

Follow-up to last week's 4% vs 6% withdrawal post.

That one assumed a flat 7% return every year for 38 years, which is how nearly every retirement projection you will ever be handed is built, including the ones people pick a date off of. A straight line is fine for comparing two options against each other. It is a bad way to find out whether either one actually holds up.

So I stress tested the same two paths. Same ATC retiring at 50 with $720,000, same draw rates, 10,000 runs with the returns shuffled. Every run averages the same 7% with 12% volatility. The only thing that changes between them is the order of the good and bad years.

The 4% draw (first chart). The straight line says it never runs dry and ends at 88 with $2,210,522. Across 10,000 markets it ran dry in 3,129 of them, the median run ends with $1,065,870, and the bottom 10% of runs are empty by 76.

Two things worth pulling out of that. The plan that looked bulletproof fails almost a third of the time. And the median outcome is less than half of what the smooth projection promised, on an identical average return. That gap is what volatility costs you.

The 6% draw (second chart). The straight line says the account dies at 78. Across 10,000 markets, 78% of runs die at some point, and the median run is empty at 75.

So the flat projection wasn't just optimistic about whether the money lasts. It was optimistic about when it ends. Half the runs are dry before the age the smooth chart handed me as the answer.

The reason is sequence. Walk out in January 2000 and you get three down years back to back, then negative 37% in 2008 at 58, selling shares the whole way, and 2021 through 2023 raising your withdrawal because the draw is indexed to inflation. Average all 38 years and you can still land near 7% with an empty account. Walk out in March 2009 instead and the first decade compounds before anything goes wrong, so the bad years land on a balance big enough to absorb them. Same plan, same average, and nobody gets to pick which one they retire into.

Two limits. The simulation covers the TSP only, no RMDs, no taxes, no annuity or Social Security underneath, so "ran dry" means the account hit zero and not that the guy is broke. His 6(c) annuity and SS keep paying in all 10,000 runs, which is the part that makes federal early retirement a different problem from the private sector version. And randomized normal returns still aren't real markets, where crashes cluster and tails are fatter, so this is probably generous to the higher draw.

What I'd actually suggest, and the reason I bothered running this: take whatever drawdown number you're planning around and stress test it before you commit to a date. A projection that only shows you the average is showing you one outcome out of thousands, and it tends to be a flattering one. Doesn't matter what you run it in. Just don't let a straight line be the last word on a 38 year retirement.

A withdrawal rate isn't a number you solve once. It's odds you either accept or manage down as you go, and 4% here is 69/31.

If you see a hole in the method, say so. I'd rather fix it than be wrong quietly.

Hello Everyone. As I read through these posts on this subreddit, I see that most of the questions relate to some specific retirement policy or financial benefit. But something that I rarely, if ever, see discussed here is whether there was something about your work environment or your organization's values that no longer aligned with your own values or needs and that driving the desire to want to retire early. Was there something that a boss, colleague, some incident, something that conflicted with your personal or professional values, or some policy from on high somewhere up the chain that made you decide, "I have enough and enough is enough!" ?

I'd really like to hear from different levels of government though I realize this is very heavily skewed towards federal employees. Obviously, you don't want to share overly sensitive information, but I'd like to hear what caused you to say the scales had tilted towards early retirement and not towards sticking it out?

And, how did you come to your decision? If you're not retired yet, what do you think that will be.

Okay, pet peeve time and a simple request- no offense meant: This question is for getting into the weeds about FERS, or TSP, or OPM, or even state pensions or any other alphabet soup. This is not what this question is about and there are plenty of other threads I've seen that get into the weeds on that.

Otherwise, I'd love to hear your thoughts!

Edit: Thanks everyone for the responses so far! I appreciate and have read all of them, trying to respond to each one, but appreciate them all whether you have a direct response from me or not. I will check back periodically to try and respond to future comments.

I've adjusted the question to also include if there was one specific incident or boundary violation with your professional or personal values that pushed you over the line to expedite your retirement?

Greetings all. Looking for some input on a potential new vehicle purchase. For background:

41yo M, Income: 150k annual. No side gigs.

Debts: Zero. Paid off house (350k value), car (2013 - 5k value), and no student loans.

Investments: 50k HYSA emergency fund (including ~20k for planned vehicle purchase), Maxed 401k split between traditional and Roth (~$350k balance). Maxed annual Roth IRA and money market account (~280k balance). Not HSA eligible due to health insurance plan. I’m also a SCE federal employee that will be entitled to a 34% pension when I’m eligible to retire in 12 years.

My true monthly expenses average around 1.5k per month (not having a mortgage is fantastic) after all is said and done and I’m currently investing about 45% of my income. With that said, I’d really like to purchase a newer (2024-2026) used truck for around 40-45k. Ideally something higher than base model with higher mileage as I don’t drive my personal vehicles a ton due to having a take home vehicle for work.

Thoughts? Is this going to put me a rough spot when it comes to trying to retire at 52? While I know I could buy the vehicle tomorrow and still likely be fine, how much of a dent would I really feel? Thanks in advance.

6c Retirement discussion of the week:

Ran the numbers for a guy I'll call Dave. ATC, walking out the tower at 50 with 25 years of good time under 6(c). High-3 of $155,000, about 1,040 hours of sick leave on the books, married, Virginia, taking the full survivor benefit. He's got $720,000 in the TSP.

The pension side is the same no matter what he does with the TSP: $4,592 a month from the annuity, plus a $1,425 a month supplement until it shuts off at 62, then Social Security at 62 of $2,275 a month.

The whole question was the TSP. Everybody quotes the 4% rule. Dave's argument was that the 4% rule got built for people retiring at 65 with a 30 year horizon, and he's got a pension floor underneath him that a private sector guy doesn't, so why not pull 6% and enjoy his 50s.

Honestly, fair question. So I ran it both ways, planning to 88, 7% return, 2.5% inflation, 2% COLA on the pension.

Year one At 4%: $2,400 a month out of the TSP. Total take-home $6,984 a month. At 6%: $3,600 a month out of the TSP. Total take-home $7,971 a month.

So 6% is $987 a month better right out of the gate, at exactly the age he actually wants the money. That's real and I'm not going to wave it away. Cumulatively, through age 77, the 6% path has put $447,920 more in his pocket.

Then it stops. The 6% account runs dry at 78.

Decade averages say it better than I can. Average monthly take-home:

The year it breaks: at 77 the 6% path is taking home $13,199 a month. At 78 it's $7,995. At 79 it's $7,408. The pension and Social Security keep right on paying (that's the good thing about a 6(c) annuity, it does not run out), but the TSP is gone and it isn't coming back.

Cumulative take-home crosses over at 84. Ride it out to 88 and the 4% path is $428,329 ahead, with $1,714,697 still sitting in the account. The 6% path ends at zero.

A few honest catches, because this is messier than "4% good, 6% bad":

1. These are all nominal dollars. That $6,989 a month in his 80s is 2050s and 2060s money, not today's money. Cuts both ways though: the 4% path's $14,045 isn't as rich as it looks either.
2. The 4% path pays MORE tax, not less. $661,448 vs $570,302 over the lifetime. That's what a big balance buys you: RMDs. From 73 on, Dave isn't really pulling 4% anymore, the RMD takes over and forces more out than he asked for. By 88 it's yanking $126,183 a year whether he wants it or not. If the idea of the IRS setting your withdrawal schedule bugs you, that's a legitimate mark against hoarding it.
3. Flat 7% every single year, which is not how markets work. A rough first decade would hurt the 6% path a lot worse than the 4% one, and my model can't show that. If anything these numbers are generous to 6%.
4. Nobody ends up broke here. Even with the TSP at zero, the pension and SS have the 6% path at $6,381 a month at 88. It's a big step down, not a catastrophe. Worth saying out loud, because the usual version of this post makes it sound like you end up eating cat food.

My read: the interesting part isn't which number is "right." It's that 6% buys you 27 good years and then hands you a cliff at 78 that you can see coming from a mile off and can't do much about once you're standing on it. If Dave genuinely values money at 52 more than money at 82, that is a defensible choice. He just ought to pick it on purpose instead of finding out at 77.

Curious how others weighed this, especially anyone who went out in their early 50s. Did you set a rate and hold it, or do you flex year to year based on what the market did? And if you see a hole in my math, call it out, I'd rather fix it than be wrong quietly.

Full worked report for each path if anyone wants to pick through the year by year:
4% path vs  6% path

** Follow-up Monte Carlo simulation for 4% and 6% https://www.reddit.com/r/govfire/s/EKVj8WmNxb