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Old 11-04-2011, 06:15 AM
 
Location: Manassas, VA
1,559 posts, read 3,186,053 times
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Quote:
Originally Posted by mrgoodwx View Post
I would be very careful about using the TSP money before retirement.
My husband will be retired, lol, just not me! Does that count
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Old 11-04-2011, 10:38 AM
 
Location: Sequim, WA
786 posts, read 1,907,970 times
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Vermonter...I had gotten the impression your husband would still be working and you were going to borrow out of the TSP. Now I've read your subsequent post. As far as tapping into the TSP and putting it into a Roth, you'll have to pay the taxes on that up front but you probably know that. Depending on your income, you may find that withdrawing over a period of time keeps that money from being taxed at a higher rate.

There is a "spectrum of caution" that retirees exhibit. I'm probably toward the extreme on the cautionary side. My wife and I are still half a dozen years shy of Medicare. I've been retired 4 1/2 years but am very reluctant to tap into my TSP account.

This past summer, I did think about it. We were planning to build a new house. Four years ago (when I first investigated this project), we could have sold our present home and built a new home on acreage away from town...and broken even on cost. Now, because of the decline in our property value, we would have a gap of at least $60k. While we were thinking about whether or not to tap into my TSP to cover the gap, our builder declared bankruptcy...and our back-up builder also went bankrupt. I actually felt a little relieved that we didn't have to make the TSP decision.

But...you know your finances better than anyone else...and what you are comfortable with. If you know you'll have a comfortable stream of income and don't expect to really need the TSP...it may be a good use of the money. All of us have to make those personal decisions without the aid of a crystal ball.
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Old 11-04-2011, 04:21 PM
 
Location: SoCal desert
8,093 posts, read 13,238,618 times
Reputation: 14870
Quote:
Originally Posted by vermonter16 View Post
However, in building the house - we need liquid cash.... We can't get everything from our home of course and some things just won't wait. So, we either skimp on things such as a roof (which I don't want to do but....) or we find some extra cash somewhere.
Quote:
Originally Posted by vermonter16 View Post
This wouldn't happen until sometime next year anyways - I'm just trying to look ahead at what we may be faced with.
Why not just go into Extreme Savings Mode for a year? Cut your expenses to the bone for a year, sock away as much as possible and see what you can come up with.
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Old 11-04-2011, 04:26 PM
 
5,397 posts, read 6,540,598 times
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Dave Ramsey Yes!
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Old 11-04-2011, 05:31 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,938,980 times
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I have lived in Florida for over 40 years. So I know zero - nothing - zip - nada about energy efficiency in Vermont. Like what will it cost - and what will it save - and over how long a time.

When we built our house here in NE Florida - we took a course (it was a contractors' course but normal people could attend) on energy efficient ways to build in this area. And a lot of the stuff that people were trying to sell you here - things like double paned windows that work up north and heat pumps that work down south - were a bunch of nonsense in terms of saving energy costs here. Biggest saver here is making sure all your A/C duct work is totally 100% sealed up tight.

Now obviously your mileage in Vermont will vary about 3000% from our mileage in Florida in terms of various energy saving things . But it makes a lot of sense to ask: 1) how much does it cost; 2) how much will I save; and 3) over what period of time. E.g., if you're 60 and it will take you 25 years to break even - well forget about it (unless it's something you want - like heat in your floors - and you can afford it). Robyn
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Old 11-11-2011, 09:47 AM
 
1,061 posts, read 1,642,055 times
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I'm 58 and plan to retire in a few years (anywhere from 2-3 years). I have substantial retirement savings in the form of an IRA (well into 7 figures), have medical coverage from a former employer, and had originally planned to dip into retirement savings to build my retirement house. The more I thought about it though, I began to ask myself why I should tap into my savings at all, paying taxes on the withdrawals, and depleting principal, when it is so cheap to borrow money these days? With 30 year rates where they are, I plan to borrow and hope to never pay it off. The tax advantages are a bonus and I haven't depleted any of the principal on what I've saved and invested over the years.

I did a similar thing when I bought the land to build a retirement home on. I had hundreds of thousands of $ of equity in my current home which seemed like such a waste since ownership just locks it up. So I did a cash out refi for a 30 year term, got a nice low interest rate, gained the tax advantages of that 30 year amortization, and used the large amount of equity I had in my current house to pay cash for the land to build my new home. The land is now a down payment on my new home construction in the eyes of the bank since the amount they'll loan to you is based upon the value of the fully constructed home. i.e., the market value of the property after completion.

I simply don't view a house as an asset, to me a house is a drain on finances and if you own it outright, you can't use that value for anything as you get older unless you sell or refinance anyway.
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Old 11-11-2011, 03:49 PM
 
4,346 posts, read 6,061,197 times
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Quote:
Originally Posted by motordavid View Post
-If your husband taps into his TSP, (I wiki'd it, but am no expert, lol!), those withdrawals may be taxable, (like IRA withdrawals are), and regardless, it diminishes his TSP balance considerably, and 'early', over the next couple years.
Exactly! We thought we were about $20,000 short for our recent build to add the extra bells and whistles. We were advised NOT to cash in any of our retirement savings/investments because money is cheap right now. We got a nice equity line and as it turned out we didn't need to touch it but it's in place should we need it.
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Old 05-24-2012, 06:45 AM
 
Location: Manassas, VA
1,559 posts, read 3,186,053 times
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I know its been quite awhile but I wanted to update the situation. After researching and looking at various angles we decided NOT to tap into the TSP at this point in time. We are in the middle of getting a construction loan to complete the house fully and have decided to stay one extra year where we are and SAVE as much as we possibly can and then re-evaluate at that time (or sooner if for some reason we win the lotto or something . That way, we can keep our mortgage low with a low APR when it comes time and keep the retirement in reserves. Once we got over the hurdle of staying in the area for another year and me getting a new job (my job of 14 years contractually ends next week) it became a no-brainer and I think makes a lot of sense.
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Old 05-24-2012, 08:48 AM
 
Location: SW MO
23,605 posts, read 31,497,588 times
Reputation: 29076
The only reason I'd dip into a TSP if I had one would be to scrub walls. But I don't think you're talkin' 'bout tri-sodium phosphate.
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Old 05-24-2012, 09:12 AM
 
Location: Tennessee
34,692 posts, read 33,704,884 times
Reputation: 51921
No, but that's just me. My TSP exists for unforseen medical emergencies.
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