Since you aren’t required to take distributions from your TSP until age 70 ½, you might wonder if you should wait until the absolute last minute to do so. After all, that gives your money more time to grow, right? Plus, maybe you don’t need the money just yet.
It’s true that leaving your money in the TSP can potentially allow it a longer time to grow. And you’d probably save yourself from the worst retirement fear of all; no one wants to run through their savings too early, and face a financial shortfall later in retirement.
On the other hand, we know that making decisions based upon fear is not usually the best way to proceed. It’s probably best if your financial plan is based upon more than just fear of an uncertain future. And by delaying distributions until the last minute, you might be overlooking the big picture.
So, what’s the big picture, exactly? While delaying TSP distributions can be a good idea for some reasons, you know know about the downside as well:
- You might increase tax liability when you finally do take distributions
- You might enjoy your retirement less in your sixties, which might be your prime time for travel and hobbies
- If you plan to gift some of your income to your adult children anyway, they might be better off receiving that income now
- You could overlook other opportunities that might suit you better
The bottom line is that there is no retirement income path that is right for every single person. If you’re trying to decide when to begin distributions from your TSP, or want to know more about other options, schedule an appointment with us before you make any big decisions. We might even help you identify new opportunities that you would have overlooked otherwise.
