Saving for retirement will always be the right thing to do. A thrift savings plan is one of the most secure retirement plans a federal employee can employ in saving towards retirement.
The TSP is one of the three sources of income of the Federal Employee Retirement System alongside Social Security and FERS annuity.
However, it is the only income source amongst the three that allows complete control of the contribution to the employee. Hence, it's regarded as the most flexible federal employee retirement system.
The power of choice the TSP affords federal employees is second to none. However, many of these employees are left in the dark, not knowing how to get the most value from their savings in the thrift savings plan and guarantee a better retirement.
- Also Read: 3 Reasons Certain Federal Employees Can Retire Years Earlier Than Their Peers Without Penalties
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- Also Read: Roth IRA Basics for Beginners: What’s There to Learn?
PUT SAVINGS IN ROTH TSP:
Roth TSP allows you to make savings after tax deductions. This means that all money in the Roth can be withdrawn after retirement without paying future taxes. It is advisable to put money in Roth, as it holds more value because it is tax-free.
START CONTRIBUTING EARLY:
The importance of saving towards retirement cannot be overemphasized. Moreover, it is important to start early. While in the early stages of a federal job, the income might be small; committing a part of it to your retirement plan will always pay off in the long run.
CONSTANTLY INCREASE YOUR CONTRIBUTION:
This should be like an automatic response to every raise in salary. To make the most of your TSP, you need to make constant increases in contributions yearly. It does not have to be every cent of the extra income; however, a minor increase in your savings towards retirement will make a significant difference.
AVOID THE TEMPTATION TO BORROW FROM YOUR TSP:
Unforeseen circumstances, an unchecked appetite for flashy things, and the like can spur anyone to borrow from his TSP account. The TSP is designed to make money work for you, and sadly, borrowing defeats that course. Although we understand the case of borrowing for medical emergencies; however, if you can avoid it, do not borrow from the fund.
ALWAYS CONSULT AN EXPERT:
A poorly calculated move in your TSP account could prove damaging to your past efforts. To minimize the chances of this, always consult a professional before making any major decision, as some mistakes may prove too costly and are sometimes irredeemable.
Life after retirement could be exciting or challenging. It all depends on the choices you make today. Make the most of your thrift savings plan and follow the tips mentioned in the article.
