Ask The Experts: Money Matters

By Mike Miles

TSP withdrawal Part II

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Q. I have $300,000 in my Thrift Savings Plan and am retiring soon. I plan on taking $40,000 out to put into my checking and then roll the remaining $260,000 into an account that I can make monthly withdrawals for the rest of my life. I am 60 years old. What percentage of this should I take out monthly (I’ve heard anywhere between 4 percent and 6 percent) … to make it last? What is your recommendation?

A. First, you should take out enough to create a spending fund and then take the monthly withdrawals from your TSP account. No need to give up the TSP’s exceptional advantages. There is no generally safe maximum withdrawal rate for everyone. That rule of thumb you’ve heard of is useless and dangerous. The maximum safe withdrawal rate depends entirely upon your circumstances, including how the money is managed. Without the proper analysis and management, you’re flying blind.

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