Don’t you just love blog posts with snappy titles such as the one above? Nothing, I repeat nothing, gets hormones raging and testosterone pumping than retirement finances. It’s enough to send you… well, for a really long nap. May I offer you a pillow and some chamomile tea? Some more Mantovani perhaps?
Gorgeous insists that no matter what my topic is, I need to tag every published post with the words sex, infidelity, cats, booze, and chocolate to nail the big readership statistics. She says I need to “sex it up” a bit.
Perhaps. But I just can’t fathom stooping to such lengths for a mere bump in blog popularity.
But as the tired old line goes, “now that I have your attention…” I do have news. In spite of my oft-digression to the mundanities of life, this blog still purports to be focused on the topic of early retirement. To the six faithful readers who for some reason follow without fail, I promise that imbecility will return in full flower with the very next posting.
The big news is that I am absolutely filthy, stinking rich! Sort of anyway. We all judge affluence through different sets of standards, of course. So you’ll just have to accept that by my own standards, I am well-heeled and loaded. In fact, I actually have been rich since the day I retired. But because of recent circumstances, specifically my short attention span, I only now just re-discovered this wonderful fact.
I am revealing said affluentness in the same manner that Donald Trump regularly shares the details of his own substantial fortune: by simply declaring myself to be rich. The difference is that while I am merely mentioning it in passing, The Donald is far more gauche because he actually goes into detail about the size of his massive wealth. I will therefore not disclose the size of mine. This comes from a lifetime of conditioning myself to avoid comparisons to other men. Self-preservation has taught me to just acknowledge that the other fella is always manifestly bigger. Changing the conversation to a more civilized and polite discourse is usually a better idea.
So today, I wish to tell you about my bulging 401(k) balance.
Since retiring, most of my efforts have gone towards sparring with my former employer over the dollar amount of my annuity. My nemesis, the United States Office of Personnel Management (OPM), has managed to confound both me and my former H.R. officer, the ever diligent “Blue Eyes.” For reasons only known to them, OPM has never fully explained the incomprehensible calculation that allegedly explains the amount of money that my ex-wife is receiving from my pension. They recently responded to a second follow-up query I made, but their answer left us even more confused than before. For now I’ve decided that it’s best to simply let the matter rest. I do lay out the possibility of filing an appeal with OPM’s new Beijing branch office at a later date.
Because of this months-long distraction, I nearly forgot about a second limb of the allegedly erstwhile three-legged stool of retirement: my 401(k). A recent statement I received shows that its value rose sharply in the year since I retired. While I am still nowhere near Mr. Trump’s estimated and self-expressed worth, I do have an amount that I know would have greatly impressed my father. Dad used to watch Louis Rukeyser’s “Wall Street Week” on public television each Friday night without fail. Sadly though, he was never able to apply very much of what he learned to his own life. When he became too old to manage his finances any longer, I remember being shocked at how the man who could suavely parrot economic news from TV and newspaper reports, was himself a bit of a monetary disaster. It thus became a bell-ringing moment for me that I needed get serious about my own savings.
In spite of being married at the time to a woman whose fidelity to the American economy was so strong that she made sure to stimulate it at every opportunity, I still managed to sock away as much as I could with every pay period. The federal government’s 401(k)-style program for employees is called the Thrift Savings Plan (TSP). In good years and bad, I made sure to contribute no less than 10% of my pay, often more. I was also fortunate to receive an employer match on the first 5% of what I contributed at each pay period. No matter what kind of financial calamity that took place in my real-life world (home repairs, parental assisted living care costs, hurricane damage to Florida investment condos, etc.), I faithfully contributed to the TSP for all pay periods without thinking twice about it.
As my marriage began to crumble under the weight of my ex-wife’s gambling addiction, we found ourselves liquidating nearly everything that we owned in order to retire debts. Individual stocks of blue chip companies that I had originally purchased primarily for investment education needed to be sold to pay the divorce lawyers. By the time our divorce was final, I was for the most part left only with the 401(k) as my sole source of savings. As sad and devastating as a marriage ending is for everyone involved, I felt luckier than most that I was at least coming out of it with some financial viability. Or as I asked Gorgeous a few years later in a less polished way, “So, like, I’m still a catch, yeah?”
I took advantage of early retirement one year before my official date of eligibility. Although working just a few years more would have made more sense, I knew that between my annuity, what I would eventually get from Social Security, and the amount Gorgeous makes from her clients, that we would be fine so long as we moved to an area with a lower cost of living. We have done this.
The 401(k) funds sit untouched. They hopefully will survive occasional fits of market volatility and will grow enough for when we start to draw from them in later years– when the hair is grayer and the wrinkles become more pronounced than they are at present.
My hope is to not begin making any withdrawals from these funds until age 65 at the very earliest. But as we all know, life can throw curve balls when we least expect it with health issues, environmental factors, and financial challenges. So while my plan is to safeguard the nest egg at all costs, I do acknowledge that sometimes even the best laid plans need to be altered. In any event, retirement funds are not allowed to be withdrawn without penalty until age 59 1/2, and I have a small handful of years yet for when I reach that age.
I had always planned on keeping these 401(k) funds in my former employer’s plan forever (there are no requirements to remove it after retirement). But in addition to the recent hacks on federal government computers, other disturbing events have also taken place which impact federal retirees. This time the perpetrators are not our Chinese adversaries but rather our own United States Congress. Congress it seems can’t seem to keep its hands off the TSP funds (see here and here).¹ As a result, I am now strongly considering rolling over my funds out and into a private IRA with one of the major mutual fund companies. Because of the generally low fees associated with index funds, I believe I can match the low-cost management of the TSP and not have to worry about whether a member of Congress has a new idea by “borrowing” from my own personal piggy bank.
I will make my decision probably by the end of August. If you see me leaving a broker’s office with my silk blazer and an ascot around my neck, you’ll know the deed has been done. In the meantime, please stop gawking at both my money and my tushy. It’s not polite to stare.
What have you done with your retirement funds? Please share. Your story, I mean. Not your money!
¹ Correction: After publishing this post, it was pointed out to me by an alert reader that the Washington Post article of March 13, 2015 specifies that it is a Treasury Department action to raid the TSP G Fund for debt ceiling relief and not Congress. I stand corrected and am grateful for the notification.