Throughout the country, most people expect that they will retire at some point in their sixties. This makes sense, because most of us need to work for several decades in order to save up enough money to retire. We aren’t eligible for early Social Security benefits until age 62, either, or even later for our full scheduled benefits (age 65 to 67, depending upon year of birth). So, it makes sense that most of us assume we will retire around age 65 or so, give or take a few years.
But for federal employees, the picture sometimes looks a bit different. Let’s say you’re 54 years old, and you’ve completed 30 years of service. You’re beginning to dream about retirement, and you don’t want to wait another decade. Would it be possible to retire now?
That depends upon a number of factors, of course, but you might be interested to know that your Thrift Savings Plan is subject to different rules than the similar 401k plans commonly offered within the private sector. If you separate from federal service in the year that you turn 55, the TSP will allow withdrawals of monthly payments, assuming you meet a few other requirements. This is a pretty important benefit, because with comparable retirement funds like the 401k, participants usually must be age 59 ½ before they can withdraw money without a 10 percent tax penalty (the penalty can be waived in some circumstances, but the rules are strict regarding this).
That’s encouraging news! Of course, you still won’t be able to access your Social Security benefits until the usual age. You’ll need to reach your full retirement age in order to draw full benefits, or you can take early benefits at age 62 (but your checks will be reduced by about 25 percent).
Other factors to consider include your debts, and personal lifestyle factors. It’s always a good idea to pay down debts as much as possible, before transitioning to a fixed income. You’ll enjoy much more room in your retirement budget this way. Also consider any major expenses coming up in your life: Do you still have children in college or graduate school? Were you hoping to move somewhere in retirement? Are any large home repairs looming?
We can help you analyze your overall situation and then decide if an earlier retirement might work for you. Just give us a call, and we’ll schedule an appointment to review your benefits and the different possibilities available to you.
