THE TSP PROVIDES A LARGE PORTION OF YOUR TOTAL INCOME NEEDED IN RETIREMENT
Because the TSP provides a large portion of your total income needed in retirement , knowing how much income is needed from this source is an important part in your planning process . Breaking down your FERS annuity and Social Security benefits will provide you with the remaining income needed from the TSP . A Federal Retirement Consultant ( FRC ) can help you determine the right time to take advantage of retirement plans , the right fund allocation strategies to elect , and generally how to get a picture of how the entire process works . Working with an FRC is a great first step for anyone who is considering retirement .
ELIMINATE UNDUE INVESTMENT RISK This can be a tough one for many federal employees . Investing can be a total head trip . Have you found yourself asking these questions :
“ How do I know what investments to select in my TSP account ?” “ How much should I have in the C Fund , or the S Fund , or any of the others ?” “ Should I go for one of the Lifecycle Funds ? Or should I just play it safe and put it all in the G Fund ?” In my experience , this is an area that most struggle with . Too many federal employees have either been too conservatively invested early on in their careers or are taking too much risk when nearing their final working years prior to retirement . Both mistakes can have a hugely negative impact on your investment and future goals . Having proper diversification throughout your working years is very important in the overall growth of your account .
The general rule of thumb is to gauge how much time you will have until you will need to withdraw funds . The longer you have , the more risk you can afford to take . You will have time to recover from any significant losses in your account . But what if you are within a few years of wanting to retire ?
A significant loss right before retirement could completely derail your plans . You may not have time to recover . This could possibly cause you to delay your retirement plans all together . Taking proper measures to safeguard your nest egg when nearing retirement is absolutely crucial . You must also keep inflation in mind as this too can deplete your account ’ s purchasing power .
TAKE ADVANTAGE OF CATCH-UP CONTRIBUTIONS In addition to making regular TSP contributions , you may also make TSP catchup contributions if you are age 50 or older ( or will be turning age 50 in 2021 ). The 2021 IRS annual limit for catch-up contributions remains at $ 6,500 . This amount is in addition to the regular TSP limit of $ 19,500 . Extra contributions will help you build additional savings and are intended to offset the potential financial burden of retirement . When planning , these valuable contributions should be taken into account . If you can , take advantage of catch-up contributions .
WRAPPING THINGS UP Making investment decisions and retirement plans can be a hard and emotional process . The TSP is a great opportunity for building retirement investments , but it has its limitations and challenges . We work hard and make sacrifices to save money for retirement , and we deserve that our money is working hard for us . We want to be ensured that our economic outlook is good and that our nest egg is safe . We want to know that we will be able to do all the things we planned and dreamed for our lives . After all , it ’ s not just your money , it ’ s your future .
Melissa Grass , FRC is the Founder and CEO of Freedom Federal Educators . She has received numerous certifications through The American College and FINRA throughout her career . She has completed the FedEd training through FFEBA and earned the FRC ( Federal Retirement Consultant ) designation . Her professional expertise makes her uniquely qualified to conduct educational seminars and workshops as a Federal Benefits Trainer with both the Federation of Federal Benefit Advocates and FFE to help HR personnel and assist federal employees in fully understanding their federal benefits . She specializes in working one on one with federal employees to assist them in the areas of TSP strategies , FERS / CSRS retirement annuities , FEGLI life insurance and retirement income planning . She has over 27 years of experience and has personally helped hundreds of clients with retirement planning and assisted them with securing millions of dollars in IRA accounts . Melissa also serves as the President of Freedom Financial , a financial firm specializing in retirement income planning for federal employees .
FREEDOMFEDED . COM THRIFT SAVINGS PLAN 13