What to do. Would like to hear your advise.

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shackman16's picture
shackman16
Status: Member (Offline)
Joined: Dec 19 2011
Posts: 1
What to do. Would like to hear your advise.

I am 44 years old and have recently been medically retired from the Dept of Defense for injuries recieved while activated a couple of years ago. I am also drawing a VA compensation for these injuries. I will draw 60% of my high 3 years income for the 1st year, and 40% of my high 3 until I reach they age of 62, then everything will be refigured like I never left. I am also being retired from the military with 23 years of service. Right now I am drawing about $200.00 a month more retirement than I was bringing home while I was working. My VA comp payment every month pays for my house payment and 1/2 of my monthly bills and I will draw that until my death.

My question is this. I have about $100,000 in a thrift reirement plan from work. I can no longer contribute to it as I am no longer a federal worker, but the money can stay in there until I reach the age of 70. I have thought about cashing it all out, paying off about 25,000 in bills, and buying gold and silver with the rest, about 50,000 after i am penalized for withdrawing early. I have always kept at least $15,000 to $20,000 in my savings and still do to this day. I don't want to lose any more money from things that happen in other countries that effect our stock market. I have no more money in stocks or anything as I cashed them out a couple of years ago when I broke even from what I lost on black friday.

So there is my story. I will probably go back to some sort of work and can make up to 80% of my high 3 before it will affect my disability retirement, more out of boredom than need. What are some of your thoughts. Thanks in advance.

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Welcome, Shackman16!

Welcome, Shackman16!

Thank you for your service!

You are not alone in being worried about your economic future and hard-earned savings. We all are. In fact, we see a lot of posts from newcomers asking questions very much like yours.

So while the answer is always that you have to decide for yourself what to do, based on evaluation of various factors and number crunching your situation more detail, with a view towards your future income and expenses... Some issues and concerns remain relatively common and you may find some insights available.

To start, you may want to take a look at some of the previous discussions (linked to below).

Sincerely,

Poet

---------------

Should I cash in my retirement account and pay the penalty?
http://www.peakprosperity.com/forum/should-i-cash-my-retirement-account-and-pay-penalty/66351

401(k)
http://www.peakprosperity.com/forum/401k/55664

Anyone Taking The 10% Penalty And Cashing Out 401k or IRA?
http://www.peakprosperity.com/forum/anyone-taking-10-penalty-and-cashing-out-401k-or-ira/14434

Should I Cash Out Early On My State Retirement?
http://www.peakprosperity.com/forum/should-i-cash-out-early-my-state-retirement/50137

Cashing Out Your Retirement Early And Buy PM's?
http://www.peakprosperity.com/forum/cashing-out-your-retirement-early-and-buy-pms/51538

I am sure there are other similar threads lying around somewhere...

MrEnergyCzar's picture
MrEnergyCzar
Status: Bronze Member (Offline)
Joined: Oct 14 2010
Posts: 54
penalty

Of course speak with a professsional but with that penalty, it sounds crazy.  You could probably transfer it to an IRA non-profit fund company like Vanguard if the annual fees are high in your plan but paying off the debts another way and preserving that would be what I'd try and do.....

 

MrEnergyCzar 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Shackman

As I see it, all your eggs are in the "status quo" basket... i.e.  you have a good pension setup based on your service, and assuming that the dollar retains a reasonable bit of buying power, and the gov't stays reasonably solvent, then you are set... .the $100K account is just some icing on the cake.  My Dad lives a good, status quo retired life, with a solid corp. pension and top shelf SS payout.. and he uses his old 401K for travel expenses, a new car.... you know, the icing on the cake.  

But the roots of this status quo plan are in the unsustainable system we have now.  I share your deep concern that having a plan that depends entirely on the perpetuation of the status quo, the petro dollar, and the solvency of various pension programs, may lead to personal disaster.  

I would therefore advocate doing exactly what you have outlined, in contrast to what my other CM brethren above have suggested... with one difference - I would NOT pay off debt.  You say you still have significant earning power ahead.... you are employable.. that is great.. you have many options.  But as you are feeling deep inside... as you are currently situated, were the status quo to blow sky high and the dollar to take a big haircut, you have no current footing in hard assets.  You could lose everything.  So to my thinking, you need to get some Gold/Silver ASAP... while prices are actually pretty well beaten down, and you need to get as much as you can afford.    

On the debt;  You have earning power... you are solvent in the status quo system.  You have liquid savings that could almost pay off your debt if you were in a pinch.  But in a dollar bust future... debt in current dollars gets inflated away... and all you have left is your alternative investments (like Gold/Silver).  In your case, I advocate maximizing your immediate investment in Gold/Silver, to the exclusion of paying off debt.  $50K is a nice number.... almost gets you a monster box of Silver ASE's, and 20 oz of Gold!  You become your own central bank, and you sleep well!

It is easy to be afraid to make the leap into precious metals, or to think different than we have been taught for so long (pay off debt!)... but these are not normal times.  

PS... I am lobbying my wife to blowup the smaller of the two IRA's she has to do exactly as you are considering,... have not won her over yet, though she is generally very supportive of my prep's otherwise.  

 

       

     

dmger14's picture
dmger14
Status: Bronze Member (Offline)
Joined: Dec 7 2011
Posts: 83
Jim makes a lot of sense to

Jim makes a lot of sense to me.  Just read an article today on this site (I believe) indicating that California's pension system is going under.  Seems to me the risk of confiscation/socialization is HIGH within the next handful of years. 

dmger14's picture
dmger14
Status: Bronze Member (Offline)
Joined: Dec 7 2011
Posts: 83
Jim makes a lot of sense to

Jim makes a lot of sense to me.  Just read an article today on this site (I believe) indicating that California's pension system is going under.  Seems to me the risk of confiscation/socialization is HIGH within the next handful of years. 

txgirl69's picture
txgirl69
Status: Bronze Member (Offline)
Joined: Apr 20 2009
Posts: 96
My Brother in Arms

Welcome Shackman16,

We share a similar predicament. However, I'm still in service for a few more years . I chose to liquidate my TSP, both the civilian and the military side. I took the hit for the penalties rather than lose everything later on. The stock market really hasn't made any money in a decade anyway......

Do I have any regrets about it? Suze Orman can say what she wants, I sleep like a baby at night!

 

I absolutely do not trust the system. I used it to buy PMs, food and some more 12 gauge shells....

 

Best Wishes, Rita

 

 

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