How to avoid bump in tax bracket due to temp work

Welcome to the club!  Good problems to have.I’d max out both of your conventional TSPs now.  When he retires (and when you retire) then you can roll your TSP over to a conventional IRA and convert it to a Roth IRA.  Do a little of the conversion every year, up to the top of the 15% tax bracket, until you have everything in a Roth.  Keep in mind that you’ll want to finish that conversion before your pension starts, because your two pensions will probably put you solidly in the 25% bracket.Another option on bunching charitable deductions is to use a charitable gift fund with Fidelity or Vanguard.  It decouples the timing of the tax deduction from the donation to the charity.  You can load the CGF anytime you want and take the tax deduction in that year.  You can distribute the grants to your charities all at once (if that works for you) or on your original annual schedule.  This way you could donate two or three years of contributions to the CGF this year (while your income is high), take the deduction all during this tax year, and then distribute the grants from the CGF over the next 2-3 years.

I agree with your Texas veteran approach to college for your kids.  It’s one of the reasons that our daughter switched her residency from Hawaii to Texas this year.

Here’s more thoughts, and I apologize if I’m preaching to the choir.

If you both make it to retirement eligibility then all of your savings will only have to bridge the years between his active-duty pension and your Reserve pension.  It’s quite possible that by the time you’re 60 years old, your two pensions will exceed your spending.  Every dual-military couple I know has this “issue”, so when you’re straightening out your real estate make sure that you also have a landlord exit strategy.

When you both get pensions, you need to decide whether you want each other’s SBP.  My spouse and I elected not to take out SBP on each other because we’d rather have the 6.5% now to spend on each other.  If one of us dies now, the survivor has more than enough assets to do just fine without SBP.  If you’re concerned about the safety margin, another option would be to take out term life policies on each other to expire at age 60 (when your pension starts) or age 70 (when you’ll be taking Social Security).  That’s generally cheaper than 30 years of SBP premiums.

Your SBP decision may also have to take your kids into account, especially if they have special needs with an insurable interest in SBP.

For the last 11 years I’ve been leisurely converting our two conventional IRAs and two TSPs to Roth IRAs, and not worrying too much about skipping a year when our income goes over the 15% bracket.  This year I realized that our income (and my spouse’s Reserve pension) when she reaches age 60 could push us right through the 25% tax bracket into the 28% bracket.  In addition to that, our accounts have experienced considerable growth during that time.  I only have eight years left to finish these conversions, and now I’m not worried about straying up into the 25% tax bracket to get it done.

Retiring early vs company-paid health insurance

I worked hard at my job and became good at it such that I am now in love with my job. The benefits are off the charts awesome here and I could not imagine working any where else that could give something comparable.

The pay scale is a little low and the ladder pretty much tops off in just a few steps, but I can imagine working here until I retire, or they lay me off. But on that note, if it actually came to the moment of retiring and I still feel about this job as I do now, I would have a lot of trouble giving notice because this job really draws me in and engages me.

While the health plan itself is a nice benefit, it’s not the deal breaker that would keep me chained if I ever felt that way. Now, give me a few terrible diseases and a stack of hospital bills where we fully leverage this insurance plan and my tune might change an octave or two…. just kidding, please don’t 😦