Among the many households I help, many work for the US Government. Whether your employer is the post office, VA, or military, a well-managed TSP can be an excellent retirement vehicle. The TSP is similar to a 401k plan for private sector employees. However, BEWARE, there are some landmines you must avoid to make sure your retirement is not in danger.
Very few FERS or CSRS employees actually understand these retirement benefits. Your hard earned money is at stake if these benefits are incorrectly used. Whether you are a GS1 or GS15 employee, understanding what to do with your plan is crucial for a successful retirement.
- Are you contributing up to 5% of your paycheck to take advantage of the Agency Match? If not, why? You are leaving "free" money on the table! But how much above the 5% contribution is right for you?
- How much of your paycheck do you contribute to the Roth (after tax) TSP vs. Traditional (pre-tax) TSP? Does contributing into both make sense for you? Depending on your retirement age goal, tax situation and risk tolerance, our team will help find the right answers.
- What professional investment philosophy do you use to pick your investments inside your TSP? From the L funds to the individual G, F, C, S, I funds. Keep in mind the lifecycle funds only take into account your age and that’s it. Risk tolerance and personal goals are excluded. Why not customize your allocation based on all important factors?
- If over 59.5yo did you know there is a way out of the TSP without penalty or taxes? Why be forced to invest your entire life among five different investment options?
- Are you invested 100% in the G fund? If so I am assuming you are very safe and conservative. That is fine except you need to consider inflation is 2-3% per year which may wipe out any return from the G fund historical returns. Think about how much more expensive stamps and groceries are nowadays from just 10 years ago.
- Are you re-balancing your TSP portfolio at least 1-2 times per year? Re-balancing means shifting back your investment fund allocation to a custom allocation based on your goals, risk and time horizon. The start of 2017 is a great time to consider this given the recent “Trump Rally” we have witnessed.
- TSP, FERS Annuity and Social Security. What do you do with all three of these? When do you use these accounts to make sure you don’t run out of money in retirement? Financial planning helps manage these issues before they become problems.
If you would like a one-on-one personalized review of your TSP, an independent Certified Financial Planner can meet with you at no cost. Call or email me to schedule a day & time for us to get you on the right track as soon as possible.