Retirement feedback appreciated!

Bennie Franklin

Active member
In an attempt to compare rate of return for C fund vs privately managed, I checked Fidelity Magellan for no particular reason. C fund tracks the S&P and Fidelity Magellan plays in that space. Three, five and ten year returns for the TSP C fund were 14, 15, and 13.9. Fidelity DID barely beat those returns in the three and five year category (16, and 16). But over a ten year average lost to the TSP by .5% at 13.4. The Vangaurd 500 fund did not beat the TSP in any category. There are many, many funds to compare however.
 

DB.Cooper

Well-known member
I had a few years where my income was too high to qualify for a tax deduction on IRAs, so for those years I did ROTH IRAs.... orherwise all of my retiement contributions have been traditional/tax deferred.... :unsure:
 

Femail Carrier

New member
I've always took the tax deduction and only have a few ROTH accounts.... if you have income levels that disqualify you for the tax deductions, then that's the best time to do a ROTH contribution.... :unsure:
This article REALLY sums up the whole ROTH/Traditional argument. "The benefits of ROTH for typical investors is simply not there".


28 years ago as a RCA, I opened a traditional IRA and deposited $1,000 per year for 5 years in a brokerage account just investing in a mutual fund. Got out of the mutual fund and bought Netflix, Apple and other stocks. That $5,500 has grown to $127K. Had it been in a Roth it would all be tax free
 

Bennie Franklin

Active member
Yes, sadly the ROTH was not around 28 years ago. Yes, ABSOLUTELY an RCA today should open a ROTH IRA since they can't participate in the TSP. They have no other choice but to invest after tax money. But once you get in the TSP there is a good argument for the traditional 401K. Your $1000 is fully invested from day one in a traditional account. If you want to put your $1000 in the ROTH TSP, it instantly becomes $750 invested after paying 25% tax (for example). How long will it take the $750 to just catch up to what would have been in the traditional? How much more will that extra in the traditional compound over the years? What if you end up in the same or lower tax bracket as when you were working?
 

stillfirstclass

Well-known member
Yes, sadly the ROTH was not around 28 years ago. Yes, ABSOLUTELY an RCA today should open a ROTH IRA since they can't participate in the TSP. They have no other choice but to invest after tax money. But once you get in the TSP there is a good argument for the traditional 401K. Your $1000 is fully invested from day one in a traditional account. If you want to put your $1000 in the ROTH TSP, it instantly becomes $750 invested after paying 25% tax (for example). How long will it take the $750 to just catch up to what would have been in the traditional? How much more will that extra in the traditional compound over the years? What if you end up in the same or lower tax bracket as when you were working?
the popularity of roth was gigantic when it first appeared.. there was a short time frame when you could convert your traditional to a roth with no tax on the earnings.. 20 years ago I was putting $ in the traditional, but with 5 kids I was paying zero taxes, should have been in the roth? probably.. very close to retiring i m putting into the roth because I want a chunk tax free in the start of retirement
 

Charlie Brown

Well-known member
My 2cents here. I have both Roth and a Traditional IRAS, all of my postal investment went to the Traditional IRA while I started a Roth out of other investment income. I live on SS, FERS and my Traditional IRA. I live well and will not run out of money BUT taxes are an issue. It's popular and easy to say you'll be in a lower tax bracket when you retire but that's probably not true in many/most cases. You may end up with a lower effective tax rate but mine hasn't been much lower at all. You still pay Federal tax on about 99.2% of your FERS, 100% of your Traditional IRA and depending on income up to 85% of your Social Security. (some of you also pay state tax on these too) For me Federal tax is the largest bill I pay, even more than my small mortgage every year. If a Roth was available when I first started (it wasn't) I would taken that option especially knowing what I know now. They both have benefits and paying taxes while I was working was just another bill, a little more to the government. Paying taxes in retirement sucks and should be avoided if possible. IMHO
 

Altoonaflyer

Well-known member
The important thing is that you have a plan and are taking steps to implement those steps for your financial future. Run some different scenario, rates of return, tsp vs Roth, etc. In the end, there are always unforeseen challenges that will pop up. Living below my means and investing for the future has been a good thing for me.
 

gettingcloser

Active member
Why are you in ROTH? It doesn't sound like you are going to be making more taxable money in retirement than when you were working. In retirement, you will be more than likely in a lower tax bracket than when you were both working. What you are doing is paying the higher rate now, putting in LESS (which will therefore compound less, and will ultimately have less banked) then finding yourself at the same or lower rate. Some people mention Roth IRA's (opening accounts other than our epic perk the TSP) They frequently pay insane commissions with those. I suggest reading the spirited debate in the thread: "Beware Roth 401K choices". It is from last year. Read through the whole thing, getting around the arguments, there are great nuggets of information in there.
Yeah, I see different benefits in Roth and traditional. We’ve got some in both Roth and traditional with our jobs and IRA. I like the idea of having a good source of money in retirement tax free. It may cost me some in the end but I just like a healthy bit being in both Roth and traditional when we hit retirement.
 

DB.Cooper

Well-known member
Yeah, I see different benefits in Roth and traditional. We’ve got some in both Roth and traditional with our jobs and IRA. I like the idea of having a good source of money in retirement tax free. It may cost me some in the end but I just like a healthy bit being in both Roth and traditional when we hit retirement.
I've pondered this as well, as I'm nearing retirement.... what sources of income to spend, 1st, 2nd, 3rd, etc....

Probably wanna spending the pension, SS, etc., 1st.... then maybe taxable investments, then tax deferred investments, maybe tax free.....

At some point I hope to turn it over to an investment advisor and let them tell me what is best..... :unsure:
 

DB.Cooper

Well-known member
I had investment person, break down how my tsp is divided up. Probably a good idea to talk with an IA sooner rather than later.
I'm not even sure about how best to select a good IA..... it may be sad, but I look at who gets what from different investment firms... some well off peeps seem to get statements and so forth from Fisher investments, some Merrill Lynch.... I dunno.... any recommendations out there??? :unsure:
 

hockey94

Well-known member
Any friends, relatives use one ?? I had around 4 diff reps with E. Jones, was done with them. I lucked out and found someone else (smaller company).
 

DB.Cooper

Well-known member
I have a brother in law who is pretty well set.... he has a local small outfit that requires a minimum portfolio of 750k.... he's a few states away from me.... so not sure how widely they go geographically.... I know another guy who's with a Merrill Lynch person.... I see the Fisher Investments commercials that say, we do better when you do better... I like that philosophy.... :unsure:
 

Yerflagsup

Active member
I've pondered this as well, as I'm nearing retirement.... what sources of income to spend, 1st, 2nd, 3rd, etc....

Probably wanna spending the pension, SS, etc., 1st.... then maybe taxable investments, then tax deferred investments, maybe tax free.....

At some point I hope to turn it over to an investment advisor and let them tell me what is best..... :unsure:
If you go half way down the page to the numbered list here ...that seemed to give some very general tips.
 

Yerflagsup

Active member
I have a brother in law who is pretty well set.... he has a local small outfit that requires a minimum portfolio of 750k.... he's a few states away from me.... so not sure how widely they go geographically.... I know another guy who's with a Merrill Lynch person.... I see the Fisher Investments commercials that say, we do better when you do better... I like that philosophy.... :unsure:
The advisors that charge an annual percentage on how much of your money they have under management may feel the same way. IE if you give them $200k to invest, and their cut is 1% annually, it would behoove them to build that $200k into $400k so their 1% cut has now doubled. (we do better...when you do better).
 
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gettingcloser

Active member
My 2cents here. I have both Roth and a Traditional IRAS, all of my postal investment went to the Traditional IRA while I started a Roth out of other investment income. I live on SS, FERS and my Traditional IRA. I live well and will not run out of money BUT taxes are an issue. It's popular and easy to say you'll be in a lower tax bracket when you retire but that's probably not true in many/most cases. You may end up with a lower effective tax rate but mine hasn't been much lower at all. You still pay Federal tax on about 99.2% of your FERS, 100% of your Traditional IRA and depending on income up to 85% of your Social Security. (some of you also pay state tax on these too) For me Federal tax is the largest bill I pay, even more than my small mortgage every year. If a Roth was available when I first started (it wasn't) I would taken that option especially knowing what I know now. They both have benefits and paying taxes while I was working was just another bill, a little more to the government. Paying taxes in retirement sucks and should be avoided if possible. IMHO
Yeah, I hear a lot that most people will be in lower tax bracket in retirement.....well I don’t plan my retirement based on most people. Our HOPE is to take out enough in retirement to match our yearly incomes and possibly exceed it early on for some travel and such. We love below our means, are close to paying off our house by age 45, and invest as much as we can regularly. I like Roth for the idea I can live below my means now, STILL invest what I would have with traditional, and still have a good bit to withdraw tax free when I’m retired and no longer have a job to rely on. I’m willing to with less now to have more security and luxuries later.
 

gettingcloser

Active member
Yes, sadly the ROTH was not around 28 years ago. Yes, ABSOLUTELY an RCA today should open a ROTH IRA since they can't participate in the TSP. They have no other choice but to invest after tax money. But once you get in the TSP there is a good argument for the traditional 401K. Your $1000 is fully invested from day one in a traditional account. If you want to put your $1000 in the ROTH TSP, it instantly becomes $750 invested after paying 25% tax (for example). How long will it take the $750 to just catch up to what would have been in the traditional? How much more will that extra in the traditional compound over the years? What if you end up in the same or lower tax bracket as when you were working?
I have an honest question... if you put $1000 in a Roth, how does it become $750
Invested? I see the point that if you put your tax savings and invested it in traditional. BUT what if you commit to out the same amount in Roth and live with a little less for tax free withdrawals in retirement. Pros and cons to both.
 

Jay12345

Member
I have an honest question... if you put $1000 in a Roth, how does it become $750
Invested? I see the point that if you put your tax savings and invested it in traditional. BUT what if you commit to out the same amount in Roth and live with a little less for tax free withdrawals in retirement. Pros and cons to both.
It doesn't. With a Roth you use money that you have already paid taxes on, so they are assuming that you have $1000 and after you pay your taxes of 25% for example which would be $250, you would have $750 left over to put in your Roth. When you do your taxes, do you know what tax bracket you are in? If you are in a low tax bracket, go with the Roth.
 
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