The United States Government has made federal retirement preparation easier to save up for the future by making available a contributions account called the Thrift Savings Plan. Members of the uniformed service are also a part of this program.
TSP makes it possible for retirees to have some form of income. With the TSP program, federal employees get similar retirement benefits as those in the private sector.
TSP is a component, among three others, of Federal Employee Retirement System. The other two are social security and FERS annuity. TSP gives the investor several options to pick from. These options can be broken down as follows:-
- Also Read: Are You Eligible for the Federal Employee Retirement System (FERS)? Find Out Here
- Also Read: Why TSP Withdrawal Options Might Be More Flexible Than You Think for Federal Retirees
- Also Read: The Top Federal Employee Benefits You Should Be Tapping Into Right Now
2. The fixed income index investment fund – F Fund which has a low risk.
3. The common stock index investment – C Fund which has moderate risk.
4. The small capitalization stock index investment – S Fund
5. The international stock index investment – I Fund which is more volatile than the C Fund.
6. The specific lifecycle fund – L Fund
The L Fund series is a combination of all the G, F, C, S and I funds. However, if you’re not pleased with the L Fund, you can create your own combination of preferences from the other five investment options.
The good news is that it’s never too early to start your federal retirement preparation. You can start saving on your first day of work. Proper planning is key to a financially secure retirement.
FERS makes sure that later on your spouse and your kids are provided for, not only while you work but also after you’ve retired. It is therefore vital that you update your beneficiaries regularly in case there are changes such as divorce or any new children.
As a FERS employee, one has to make sure that they contribute a minimum of 5% of your salary to your TSP which the government matches up. Your contributions are matched at a rate of one dollar per dollar for the first 3% and fifty cents per dollar for the remaining 2%. Any contributions above 5% are not matched.
There are limits, however, whereby those below age 50 can contribute up to $18,500 annually while employees 50 years or older can contribute an additional sum of $6,000, called the catch-up contribution. It couldn’t get any better than this!
As you work, keep your retirement in mind. Make sure you live comfortably in future by getting a suitable Federal Retirement Savings plan.
