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Let the Thrift Savings Plan (TSP) Help You Retire Well by Jay Hunt

January 6, 2014

Let the Thrift Savings Plan (TSP) Help You Retire Well

by Jay Hunt

Jay Hunt of Stratico Retirement and Insurance Solutions is in the business of helping people, and here he discusses the benefits of the TSP, and what it has to offer.

Each year many public sector employees face one of the most significant challenges of their work career – what they should and need to do with regards to their TSP account and TSP Fund Selection

? Will you be ready for the next adventure in your life? Will your savings match your income needs? Will you have the tools needed to turn challenges into opportunities that will outlast you and allow you to maintain the lifestyle you have grown accustomed to?
In this article and several other articles, we will publish in the ‘Retire Well’ series we will share the ten most important things you need to know and do to ensure a successful, comfortable transition into your next adventure – retirement.
Item #1- Let the Thrift Savings Plan help you Retire Well:
The Federal Government offers two retirement systems – Civil Service Retirement System (CSRS) for those individuals employed before January 1, 1984 and did not convert to FERS, and the Federal Employees Retirement System (FERS) for those individuals hired on or after January 1, 1984.

For FERS employees, TSP is one of the three legs of the stool that make up their retirement system in addition to the Basic Benefit Plan and Social Security. If an employee fails to participate fully in the Thrift Savings Plan, it is like losing one of the legs of the stool causing an imbalance. As a matter of fact, the TSP is potentially the largest component of the FERS enhanced by the employee’s contributions and the matching agency contributions. Maximum participation from the Agency Employer is a huge benefit that should be given strong consideration to ensure that you will see the benefits of your hard work by capitalizing on all available resources to retire well.

Although under CSRS employees do no reap the benefit of the agency automatic l% matching contribution for TSP, participation in the TSP is allowed. Having the opportunity to defer tax obligations on one’s income is an advantage that should not be overlooked; thereby, being one of the primary reasons why CSRS employees should consider maximizing participation in the TSP.

In essence by deferring the taxes due on earnings, a greater savings over a period of time with the added advantage of earning interest is realized. For both CSRS and FERS employees participating in the TSP is a formula for saving towards your retirement future and generating a plan that will increase your opportunity to retire well and cement the lifestyle you have worked hard to achieve.

The Thrift Savings Plan contribution limits for catch-up contributions for those ages 50 and older change from year to year and federal employees should always keep themselves aware of the most recent year TSP Contribution Limits. P. S. Always remember to share what you know.