tsp login
Create A Spending Log
/by Dianna TafazoliUse the spending log example to see how you are spending your money. You just might be surprised. As you begin to prepare for Federal retirement, it is important to make certain you are eliminating as much waste as possible. Your spending log might show you where you can cut back and perhaps add a bit more to savings.
Without a lot of thinking, use the table below and quickly jot down how much money you think you spend daily in any given week. You may also itemize the things you spend your money on. Then revisit your personal spending log and examine in detail how you are spending your money.
Personal Spending Log
Weekly |
Income + $ (A) |
Spending – $ (B) |
Sunday | ||
Monday | ||
Tuesday | ||
Wednesday | ||
Thursday | ||
Friday | ||
Saturday |
A minus B gives you a guestimation of how you are spending your money on a weekly basis. Part of your retirement readiness checklist requires you to look at how much money you spend daily and if you can redirect some of the spending to create greater money management efficiency.
Try logging your income and purchases on a daily basis for a month. Analyze the results and decide what you can do differently with your spending.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
An Affordable Luxury – The TSP
/by Dianna TafazoliAffording the TSP
People who don’t consider themselves wealthy often live vicariously by watching the rich and famous on television and reading about them in magazines. They never imagine themselves having the same advantages as ‘the beautiful’ people. How wealth is measured is relative. There are people who are billionaires and millionaires. Then there are people who are thousandaires. The term doesn’t sound too bad to me. If I had $400,000 or $600,000 I wouldn’t consider it a negative thing to have in my possession. While those figures might not qualify you to be in the million dollar or billion dollar club, they qualify you to be in a club that is doing just fine – a club that will allow you to retire on your own terms.
Maximize the TSP Opportunity
The idea is not to think as a minimalist when it comes to possibilities for your life and that of your family. Think of yourself as a maximumlist – willing to maximize every opportunity that comes your way and the TSP is no exception. After all, you are a big investor with a whole team of financial experts keeping watch over your massive portfolio. If you participate in the TSP, then you are an investor with a portfolio housing some of the most sought after stocks, bonds and government securities in the world. Although, your TSP does not necessarily fall into the category of active management – it is taking care of the business of your retirement by managing your federal wealth as directed.
Automatic TSP Enrollment
For a few years now, the TSP has begun to participate in automatic enrollment for new employees coming into the federal service. Each new employee is automatically enrolled in the TSP with the 1% agency contribution going into the G Fund or the Government Securities Investment Fund. The Fund is safe guaranteeing minimal or no loss. The G Fund by statutory law via the authority of the Secretary of Treasury granted by the Congress can determine when the G Fund is unable to be fully invested without exceeding the debit limit. However, this Fund action has no impact on active workers or retirees.
Although the automatic 1% is invested in the G Fund, the new employee can select not to participate in the TSP or they can decide they want their money put into one of the other TSP Funds. Not participating in the Thrift Savings Plan (TSP) is tantamount to putting your money in a bucket and setting fire to it – throwing money away. Putting your money in the TSP is an affordable luxury you don’t have to dream about.
P.S. Always Remember to Share What You Know.
Recommended Articles
For Postal Employees – LiteBlue and the TSP
Federal Retirement Benefit Analysis
Is The Pension Survivor Benefit Best For You? by Todd Carmack
A Little-Known Opportunity Can Increase Your Retirement Income. by Mark Sprague
If You Could Have One Close Friend – Choose the TSP
/by Dianna TafazoliThe TSP offers an advantage both to the employees in the Civil Service Retirement System (CSRS) and those in the Federal Employees Retirement System (FERS). Many CSRS eligible employees tend to ignore the TSP because of no matching contributions. However, the advantage to CSRS employees is the tax-deferment piece. Anytime earnings can be protected from taxes, it is a bonus. The contributions made by CSRS employees have an opportunity to grow without being taxed until they are withdrawn, although there is no agency match. CSRS employees must not miss out on the opportunity to invest in the TSP. Investing in the TSP, acts as a supplement for CSRS employees – just another way of increasing their resources available in retirement.
As for FERS (Federal Employees Retirement System) employees, it would be well-advised to get very well acquainted with the TSP (Thrift Savings Plan) because it represents the largest part of the retirement profile. The FERS system consists of a basic benefit (.8%) of basic pay, Social Security and the Thrift Savings Plan (TSP). Fully investing in the TSP is a smart step to take towards protecting your retirement future. Saving early and consistently just makes good sense. However, it is never too late to start saving and planning for your future. Taking advantage of the perks of the TSP is probably one of the wisest investments you will ever make.
Currently every member of the federal workforce participating in the TSP have the opportunity to contribute $17,500 annually into the TSP. The Thrift Savings Board has expanded offering both a Traditional TSP and a Roth TSP to the federal workforce. Although the Traditional TSP and Roth TSP are treated separately for tax purposes, it is still one TSP account. In other words, you don’t get to put $17,500 in the Roth and another $17,500 in the Traditional TSP. It is one account governed by the same contribution limits. It would be a sweet treat if such a thing existed, but it does not.
Back to the real world. Once you decide to participate in the TSP, the best decision of your life, then there is an automatic 1% agency contribution whether you make contributions or not. The 1% contribution is yours if you stay in the service for 3 years. However, if you leave prior to the 3 year vesting period, you forfeit everything in the account. If you pass away prior to meeting the vesting requirements, everything in the account is yours. Now that we are clear about the 1% automatic contribution, let’s talk about the rest of the good stuff the TSP has to offer.
The government matches up to 5% of what you contribute to the TSP. Anything over the 5% is not matched. The allocation is the government matches dollar-for-dollar on the first 3 percent of your contribution and 50 cents on the dollar for the next 2% of contributions. It is an unparalleled opportunity to invest in your federal wealth management. Not investing in the TSP is akin to giving away free money. An analogy – we contribute to Social Security and the Disability Trust Fund during our work careers, by having 1.45% withheld from our check for Medicare and 6.25% for Social Security so we earn enough credits (quarters) or Medicare equivalents to qualify for the future benefits offered from either one or both programs. Suppose we had a choice of not making those contributions, then upon reaching retirement age (65) we could not benefit from Medicare Part A or what we call Free Medicare.
We wouldn’t feel very happy about paying for something that should be free because of the investment we made prior. Therefore, investing in the TSP now reaps similar rewards when planning your retirement future. Where else are you going to find such a sweet deal that even 1% would be invested in your future where you virtually had nothing to do except breathe. The Federal Government offers a number of benefits to the federal workforce, but if you don’t take advantage of those benefits, you stand to lose much more than you will ever gain. Educate yourself. Invest in your future and give yourself and your family a real opportunity at retiring well. I will let you in on a secret – the TSP is one of the best friends you will ever meet on your road to retiring with comfort and security.
P. S. Always Remember to Share What You Know.
What is the Difference Between a Broker and an RIA?
/by Dianna TafazoliThis question came into my mailbox. The writer said he asked his HR Director what was the difference between the two and she said she didn’t know. She gave him the right answer. HR Directors are usually not Financial Advisors and typically are not licensed (and therefore shouldn’t) offer investment or financial advice. They know retirement and may have a fairly sound knowledge about certain financial terms and instruments because of their knowledge of benefits. However, I find absolutely nothing unusual about the HR Director’s answer. She probably looked at the writer very strangely and wondered why he was asking her such a questions. We are going to take a shot at answering this question because of our financial literacy educational platform.
The difference between a broker and a registered investment advisor (RIA) has a lot to do with how that professional’s business is structured. This might sound a little unkind, but it is what I believe constitutes the most significant difference between the two. The broker is generally a representative who works for a brokerage firm selling securities. Brokers are not really financial advisors (regardless of the name they might call themselves), but are selling a product. The selling of products generally carries a commission, sort of like in the movie – The Wolf of Wall Street. The brokers, not to say they are not good people, but they truly have a motive to sell a product. The question becomes – Does their interest come before yours? Just a question to think about.
A Registered Investment Advisor (RIA) is required by law to not only give you suitable advice or recommendations, but must act with a tremendous amount of fiduciary responsibility. Both are regulated by the Securities Exchange Act of 1934 but to different degrees or operating parameters. RIAs are required to put the client’s interest first and not their own. In short – if you have a choice, a RIA may be your better option.
The most important requirement is making sure you are educated about what direction you want to take when it comes to financial planning and managing and transferring your wealth.
P. S. Always Remember to Share What You Know.
Can You Participate In The TSP After Retirement?
/by Dianna TafazoliYour Thrift Savings Plan (TSP) is funded via payroll deductions. Therefore, once you are no longer an employee your participation in the TSP stops as far as being able to make contributions. However, you don’t have to take your money out of the TSP, you just cannot put money into it.
TSP After Leaving Federal Employment – TSP Withdrawals
If you leave service and decide to make a TSP withdrawal, you may do so in two ways. You may make a partial TSP withdrawal or a full-withdrawal. You can make a partial withdrawal of $1,000 or more. You can make a request for a partial withdrawal online or use Form TSP-77. If you make a full withdrawal you can request a single payment withdrawal of your entire TSP balance. You may also request a series of monthly payments. In this way you can choose a specific dollar amount to receive each month or you can receive a monthly amount based on your age and your account balance. If you are requesting a specific dollar amounts, the monthly payment must be a minimum of $25.00.
TSP-77 Form
TSP Annuity
You may also elect a TSP life annuity. The TSP life annuity pays you a monthly benefit for life. The TSP will purchase an annuity for you from their provider (Currently Metropolitan Life Insurance Company – MetLife). Make sure that you read up on the pros and cons of purchasing a TSP annuity directly through the TSP (We at PSRetirement.com suggest to strongly consider NOT taking this option). You may also mix up your withdrawals. You may use the methods outlined in the TSP Full Withdrawal option in a number of combinations – single payment, TSP monthly payments or the life annuity. You can combine two options or all three, which ever fits into the plans you have made for you and your family and always make sure to speak with a trust Financial Professional before making any decisions.
Read over your TSP account(s) and make sure you understand how your TSP works in retirement and how to maximize your federal retirement benefits. If you have put a retirement action plan in place, then you want to gain as much information as possible to help you live in retirement on your own terms. FERS employees have to be especially cautious, yet assertive, by fully funding their TSP whenever possible because the TSP is the larget monetary component of the FERS retirement system.
How you manage your financial affairs is an individual matter. However, just like any good work, it takes time to examine and analyze to choose the best options that fit your situation. No two situations are alike, so don’t take a position because it sounds good. Use your planning tools and take a position because it works for you.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
What Thrift Saving Plan Fund Choices Do You Have?
/by AdminThe Thrift Savings Plan (TSP) offered to the current or retired employees of the federal civil service, is one of the simplest and most efficient retirement plans used today. However, out of thousands of civilian and military employees who defer a portion of their earnings into the plan each year, many of them do not have a clear picture of the TSP fund options available in this plan
There are five core investment funds available in the TSP:
#1 – TSP G Fund – Government Securities Investment Fund
Objective – to generate a higher rate of return than inflation without exposing the fund to risk of default and market price fluctuations.
Key Features
– Offers opportunity to earn interest rates similar to U.S. Government notes and bonds without risk of loss of principal.
– Is invested in short-term U.S. Treasury securities particularly issued to the TSP. Payment of principal and interest is guaranteed by the U.S. Government, so no “credit risk.”
– Interest rate resets monthly; is based on the weighted average yield of all outstanding Treasury notes and bonds with 4+ years to maturity.
– Earnings comprise entirely of interest income on the securities.
– Subject to inflation risk.
#2 – TSP F Fund – Fixed Income Index Investment Fund:
Objective – to match the performance of the Barclays Capital U.S. Aggregate Bond Index, a broad index representing the U.S. bond market.
Key Features
– Offers opportunity to earn rates of return more than money market funds in long term, with relatively low risk.
– Risk of nonpayment of interest or principal is relatively low because the fund includes only investment-grade securities and is broadly diversified.
– Earnings comprise of interest income on the securities and gains (or losses) in the value of the securities.
#3 – TSP C Fund – Common Stock Index Investment Fund
Objective – to match the performance of the Standard and Poor’s 500 (S&P 500) Index, a broad market index made up of stocks of 500 large to medium-sized U.S. companies.
Key Features
– Offers opportunity to earn high investment return in long term from a diversified portfolio of stocks of large and medium-sized US companies.
– Risk of loss if the S&P 500 Index declines in response to changes in overall economic conditions (market risk).
– Earnings comprise of gains (or losses) in the prices of stocks and dividend income.
#4 – TSP S Fund – Small Cap Stock Index Investment Fund:
Objective – to match the performance of the Dow Jones U.S. Completion Total Stock Market Index, a broad market index made up of stocks of U.S. companies not included in the S&P 500 Index.
Key Features
– Offers opportunity to earn high investment return in long term by investing in stocks of small and medium sized US companies.
– Risk of loss if the Dow Jones US Completion TSM Index moves up or down due to changes in economic conditions.
– Earnings comprise of gains (or losses) in the prices of stocks and dividend income.
#5 – TSP I Fund – International Stock Index Investment Fund”
Objective – to match the performance of the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index.
Key Features
– Offers opportunity to earn a potentially high investment return in long term by investing sticks of companies in developed countries outside the US.
– Risk of loss if the EAFE Index responds to changes in economic conditions or to increase in the value of US dollar.
– Earnings comprise of the gains (or losses) in stock prices, currency fluctuations of US dollar value and dividend income
#6 – TSP L Funds – “Lifecycle” Funds:
Objective – to provide the highest expected rate of return for the amount of risk expected.
Key Features
– Diversify participant accounts among the G, F, C, S, and I Funds by using tailored investment mixes.
– Do not guarantee protection against loss or elimination of risk.
– Returns are nearly equal to the weighted average of the G, F, C, S, and I Funds’ returns.
– Earnings are calculated daily, with a daily share price for each L Fund.
Federal Employees: Have you made Tax Considerations for TSP?
/by AdminTSP Tax Considerations
Understanding the tax treatment of Thrift Savings Plan (TSP) payments can help federal employees avoid making costly mistakes. The rules governing distributions from your TSP are complicated and the tax treatment of TSP Annuity is also complex, it is important to be informed and knowledgeable about the various TSP tax regulations. Tax rules vary depending on which method you opt for as you access your money or as you roll your TSP into an IRA and then subsequently withdrawal money in the future.
TSP Rollovers
If you opt for a TSP to IRA rollover, you withdrawal money from your TSP and deposit those funds into your traditional IRA or eligible employer plan. If you elect to receive the funds directly, instead of making a direct rollover, you have 60 days to re-deposit the funds into a qualified plan (like a 401k) or IRA.
Therefore, if you rollover your entire TSP balance, you will not owe any immediate taxes on the amount you move from plan to plan (TSP to IRA for instance). However, should you rollover only a portion of the money in your TSP and receive the remaining portion in a TSP distribution, you will owe taxes on the amount not rolled into your IRA.
TSP Withdrawals
Should you wish to withdrawal some of your savings from your TSP to make those funds available for living expenses, 100% of these withdrawals will become subject to Federal income tax, and might also be subject to a 10% early withdrawal penalty tax if the recipient is not yet 59 1/2 years old.
There are methods to withdrawal funds from your IRA designed to avoid these penalties and the rules governing the distributions from you TSP also take into consideration the potential need of a recipient to access these funds. – Generally the TSP is more generous with regard to the withdrawal options available. You should consult with your own financial professional before making any TSP withdrawal decisions to ensure you fully understand the impacts.
Note: The TSP cannot accept transfers from Roth IRAs.
Death and the TSP
/by Dianna TafazoliWhen a retired federal employee dies, notification should not only be made to the Office of Personnel Management but to the Thrift Savings Plan (TSP) if the deceased was a participant. Notification should be made as soon as possible to the TSP by a family member or a representative of the deceased.
If an individual dies who is still an active employee in the federal service or a member of the uniformed services, then the report of death should be made to the deceased employing agency or service. If the employer is a former or retired employee, the family member or representative should call the TSP at 1-877-968-3778 to speak to a TSP service representative.
With the TSP, it is important to move forward as quickly as possible in providing the necessary information to the TSP so that a determination of potential beneficiaries can be made. After completing the forms, a TSP-17 for regular employees and a TSP-U-17 for the uniformed services, a death certificate must accompany the submission. The completed form and all supporting documents can be mailed to TSP Death Benefits Processing Unit-P.O. Box 4450, Fairfax Virginia 22038-4450 or you may overnight it to ATTN: TSP Death Benefits Processing Unit, 12210 Fairfax Town Center, Unit 906, Fairfax, VA 22033.
P. S. Always Remember to Share What You Know.
Death Benefits
RELATED TSP ARTICLES
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
Thrift Savings Plan / Power of Attorney (POA)
/by Dianna TafazoliThere are circumstances where the death of a loved one is so overwhelming, taking care of necessary business might have to be delegated to someone else – this is where the Thrift Savings Plan Power of Attorney (POA) would come into play. There is absolutely nothing wrong with getting help to handle affairs when the task simply seems too much or you might decide the situation would be best handled by a professional.
The Thrift Savings Plan (TSP) has provisions for a Power of Attorney (POA) to be used to represent your account. The TSP Power of Attorney can be used to appoint someone else to act on your behalf. It does not have to be a professional, but someone you trust to handle your affairs and act in your best interest.
The person you designate as your TSP Power of Attorney may handle all of your affairs associated with your TSP, including borrowing or making withdrawals from the account. On the other hand, you might simply want the TSP Power of Attorney to handle certain aspects of your account. The extent to which you want your TSP Power of Attorney to act on your behalf is entirely up to you. There is a Special Power of Attorney Form that is available at the TSP allowing for the designation of your TSP Power of Attorney.
The TSP suggests reading the booklet Court Orders and Power of Attorney to gain a better understanding of the provisions, issues and guidelines and language used for granting Power of Attorney. It is important to understand the process, procedures, your rights and responsibilities and the decision to withdraw a TSP POA.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
TSP Payments to Beneficiaries
/by Dianna TafazoliWhen a family member passes away most of us are not only pained by the passing but saturated with how to pay for the arrangements and everything else that comes with death. Even if we know that our loved one had life insurance or other means to take care of things, it may not be immediate that those funds are made available. Make sure you receive your TSP payments.
In the case of TSP funds, although you can request accelerated or expedited processing, generally it takes about 60 days or better to receive payment. Once the original notification of death is made, participant’s beneficiaries have been determined and all the information has been gathered, the process may take several months. Filling out the information required for submission to the TSP is critical. The sooner you do your part, the faster the TSP can begin the process.
Because receiving payments might be delayed in process, you should notify the TSP about any changes to your address, phone number, or other means of notification. Not to mention you should consider working with a knowledgable financial planner who can help you ensure that you have enough money to live on before your TSP funds become available. When notifying the TSP of any changes be sure to place your name and Social Security Number on the correspondence as the beneficiary along with the name and Social Security Number of the deceased TSP participant.
Therefore, when you are making plans it is important to have knowledge of such information beforehand so that both you and your family will know that if something happens to you, what you intend for your family to have may not be immediately available. Evaluate what might be done to making the waiting process more tolerable. Just as it takes a little time for you to receive your first annuity payment upon retirement, generally everything else takes a little time to guarantee the integrity of the process.
P. S. Always Remember to Share What You Know.
TSP 90 form – Withdrawal Request for Beneficiary Participants
RELATED TSP ARTICLES
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
TSP 17 Distributions at Death
/by Dianna TafazoliTSP 17
When an individual passes away who was a participant in the TSP and has a valid designation of beneficiary form on file on the date of death, the TSP will make the distribution accordingly (Use Form TSP 17). However, if there is no designated beneficiary on file, the TSP will distribute the entire account in accordance with the Order of Precedence.
First – a surviving spouse;
Second – the children of the deceased to be shared in equal portions, if a child of the deceased has passed away, then the children of the deceased child will receive the portion that the deceased child would have been entitled to;
Third – the parents with equal shares or the surviving parent;
Fourth – the executor of the estate;
Fifth – if none of the above exist, the next of kin in the state where the deceased lived at the time of death; not where he/she passed away.
Visit your personnel folder and your TSP account often to make sure you have made necessary changes and updates so that your resources will be distributed in the way you intended.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
TSP: Completing the TSP 17
/by Dianna TafazoliTSP Beneficiaries
You are required to complete the TSP 17 form so that the TSP can determine potential beneficiaries. The TSP 17 has several parts and must be completed with care. Always check with the TSP to make certain that all forms you are requested to complete have been updated and are current. When new TSP forms are rolled out all previous editions of the form become obsolete and cannot be used. So make sure you are completing the right form.
TSP – 17
The information relating to TSP 17 Form (also referred to as the Deceased Participant Form) has a number of sections that require your careful attention. Section 1 is information about the deceased participant. Section 2 is information about the person submitting the form. Section 3 is information about potential beneficiaries. This is the part that can be very challenging. You may not have all of the information and you may not know the information. When you don’t know the information simply check the – Don’t Know- box and follow the instructions. Section 4 of the TSP 17 form asks about detailed information about potential beneficiaries. Remember, provide as much information on the TSP 17 form as you can and if you don’t know write on the line -Don’t Know. Section 5 asks that you provide referral information so that they can contact someone else who might be able to provide the information you don’t know. This section needs you to provide any information possible even if a telephone number or address is not known. Section 6 of the TSP 17 form is the additional information area where you provide any additional information you think might help with the distribution of the deceased participant’s account. Section 7 is the certification area where you affix your signature to affirm the information given.
Don’t forget to attach a copy of the deceased participant’s death certificate. The more thorough and accurate you are, the quicker the agency can execute the process.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
For Postal Employees – LiteBlue
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
Retirement Cannot Be A Secret
/by Dianna TafazoliYour plans for retirement should include your family. Retirement is a family decision where communication is most important. There are so many benefits with provisions that can be complicated in the federal retirement systems. The federal employee as well as family members need to understand the fundamental concepts of all federal retirement and health benefits available.
Take time to discuss with your family how you feel about retirement. If you are experiencing some emotional separation about your impending retirement, discuss it with your family members or someone you can trust. Talking about your concerns and issues will make the transition from work to retirement much easier.
Don’t go through the challenges of retirement alone. If you don’t feel comfortable talking to your family about your fears and anxieties, you can always get counseling from a career coach or some other professional familiar with the highs and lows people experience about retirement.
If you know other people who have retired try talking to them. Let them share their experiences with you and I am sure what they describe will resonate with what you are feeling. Retirement for many is like saying goodbye to an old friend and that is always painful, even causing some tears to fall. There is absolutely nothing wrong about missing what has been such a significant part of your life for such a long time. There is nothing wrong with being afraid or feeling that you are no longer valued. Allow yourself a time to grieve, maybe 30 minutes, okay an hour and then shake it off and say – Look out world, I am ready for the next new adventure and this time I am doing on my own terms.
You can find the rainbow in retirement if you see all the years you worked as preparation for the best years of your life.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
Save Don’t Spend
/by Dianna TafazoliOne concept that should be a part of the fabric of our being is save, save, save during the last five years of our federal work career. Hopefully you have been contributing to your TSP since you began working, but certainly the last 5 years before retirement is a time you should save like never before. These last 5 years should be seen as preparing to come into the home stretch of your retirement years.
If you don’t spend money then you should be saving money. The spending you should be doing during the five years prior to retirement should only be for paying those expenses you must – rent/mortgage, utility bills, food, and other must-pay, mandatory items. No extra unnecessary spending should take place during this time.
You are saving now so that you don’t have to pay later and find yourself unhappy, and unsecured in your retirement years. Be frugal during the last five years of your work life, after all you have worked for 20 to 30 years and you should have acquired most of the things you needed and wanted.
When you are contemplating retirement you should scale way back on your spending so that your debts are reduced significantly. The only large debt that might go into retirement with you is unfortunately a mortgage.
Every time you think about spending during the last five years of your retirement, think about how much you want to live in comfort and security and Save ferociously.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
Federal Retirement Benefit Analysis
Thrift Savings Plan: Saving for Your TSP
/by Dianna TafazoliSaving for Your Thrift Savings Plan
Funding your Thrift Savings Plan (TSP) account through TSP.gov, with the specifc goal of getting the maximum benefits, is a good goal to set. The IRS sets a limit on how much federal employees can contribute to the TSP. The great design of the TSP is that agencies participate in a matching scenario. Although the IRS sets a limit on contribution levels, the rule of thumb is to make certain you don’t reach that limit too early and miss out of the agency match paid over 26 pay periods in a year.
Paying attention to your TSP matching contributions is possibly even more important than what TSP fund you select. This is because the TSP match can act like ‘Free Money’ because for every dollar you contribute (up to the maximum match) your Agency contributes an identical amount to your TSP. – Its like doubling your money, Day-One.
You can also wait too late to get all of your matching benefits of our TSP accounts.. Therefore, you want to pay close attention to your contribution levels and the time it will take to reach the maximum limit and still receive matching funds. This situation is of particular concern if your salary changes. The level of contribution necessary to reach your maximum contribution changes depending on your salary.
If you set out to reach your contribution level too quickly called front-loading, you run the risk of reaching the level prior to the end of the 26 pay periods; depriving you of the maximum agency match. It is important to watch your TSP contribution levels so that you can contribute your 5% in all 26 pay periods to get the TSP match the agency offers.
You can also visit your agency TSP.gov representative or go online at and view your TSP.gov Account to see how much you need to contribute each pay period to make certain you are not reaching your contribution limit too early in order to realize the agency’s 5% TSP match.
P. S. Always Remember to Share What You Know.
RELATED TSP ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Is All ‘Your’ TSP Money Actually Yours?
TSP: Is All ‘Your’ TSP Money Actually Yours
/by Dianna TafazoliIs All Your TSP Money Yours?
Within your TSP.gov Account the money you invest in the Thrift Savings Plan (TSP) and the agency match is yours immediately and you are therefore vested. However, the agency’s automatic 1% contribution has a few strings attached.
For individuals in the Civil Service Retirement System (CSRS), this is not a concern. CSRS employees may participate in the TSP but are not eligible to receive any matching funds. Nonetheless, it is still a useful tool for deferring taxes and helping to save for retirement. Your TSP.gov Account acts as a supplement for CSRS employees in planning their retirement.
FERS employees on the other hand receive matching funds into their TSP.gov account along with an automatic 1% contribution. FERS employees are eligible to keep the 1% contribution after becoming vested by acquiring tenure of at least 3 years with the Federal Government. FERS employees who work in the Congress and certain other non-career employees need only 2 years to become vested in the Thrift Savings Program.
If you are participating in the Thrift Savings Program and decide to leave the federal service prior to the 3 year vesting period, the automatic 1% and the earnings from the agency 1% contribution will no longer be yours to keep. However if you die before leaving service you are vested in all the monies in your Thrift Savings Program account.
Your TSP.gov account (see your account here) is a wonderful vehicle for not only managing taxes but helping federal and postal employees save for retirement.
P. S. Always Remember to Share What You Know.
You may also find information on your TSP Funds interesting, or certain Tax implications of your TSP.gov investments.
RELATED TSP ARTICLES
Thrift Savings Plan (TSP) Withdrawal Options
For Postal Employees – LiteBlue and the TSP
Federal and Postal Employees – Choosing a Financial Professional
Tax – Deferred Advantages
/by Dianna TafazoliWhat do tax-deferred instruments like the Thrift Savings Plan do for federal and postal employees? Most importantly, the instrument can give the employee a larger amount of money to take home. Taxes are calculated against your earnings on a pre-tax basis. For example, if you earned $1,000 and placed $200 in your Thrift Savings Plan (TSP) account, instead of paying taxes on $1,000, you would only pay taxes on $800 and the $200 would be deposited into your account for later use. This scenario would give you more because less money is being deducted from your earnings today and your $200 would be invested for later use.
Is a tax deferment election the best choice for every federal employee? This is a situation that requires evaluation of one’s individual circumstances. Prior to the expansion of the TSP’s structure, a tax deferred program was the only option available. Now participants in the Thrift Savings Plan can decide to defer their taxes via the Traditional TSP or pay taxes up front via the Roth TSP.
The Traditional Thrift Savings Plan allows you to defer taxes and only pay the taxes when the funds are withdrawn. The Roth TSP requires paying the taxes up front which eliminates having to pay taxes when the funds are withdrawn. The Roth TSP also allows for tax-free earnings when certain conditions are met.
Employees can now see if the Traditional TSP or the Roth TSP or both fit into their plans to retire well and meet their individual needs. Visit your TSP.gov Account to review the information on the TSP and how it helps in planning your retirement future.
P. S. Always Remember to Share What You Know.
It is also important to review your TSP fund selections and make sure that your reaching your retirement goals
Financial Advisors and Federal Employees
/by Dianna TafazoliI was recently asked if my trainer of financial advisors and planners interested in the federal workforce differed from training federal workers? Without missing a beat, I said most emphatically “It certainly does.” It is more intense because financial advisors for federal employees need to know more about the Federal Retirement Systems than the federal workforce themselves.
The Federal Retirement Systems probably have some of the best benefits you will find all things being equal. It, too, is a system of immense rules and regulations that can be undeniably complex, even for someone who has spent a career absorbing all of the nooks and crannies.
The Civil Service Retirement System (CSRS) often referred to as the old retirement system was enacted in 1920. The world has changed a number of times since then and many amendments have been made to the system. One must be constantly updated on the changes so as to be an excellent source of information dissemination. I find that many financial advisors and planners I work with who wish to begin helping the federal workforce think of simply helping the workers manage their money. There is nothing wrong with that premise only that would leave the federal employee missing out on a great number of potential benefits
Federal Employees Partnering with Financial Advisors
Financial Advisors and Financial Planners (really the same thing) are important pieces of the partnership needed to guide the federal employee workforce to safe harbor so that their sails can withstand the uncertainty of storms that will surely come in their lives. To strategize such a journey requires acquiring a very sound knowledge of the Federal Retirement Systems (FERS, CSRS, FEGLI, FSAFEDS, etc.).
We are not talking about becoming Federal Retirement Specialists, but we are talking about partnerships that will equip these professionals to help manage the financial resources of a very unique group of employees. When you cast your net to work with the federal workforce in helping to plan their retirement, it needs to be cast wide because federal employees are as diverse as their many duties and responsibilities.
Although there are two retirement systems technically, there are a number of aspects that apply to special categories of employees as well, like firefighters, air traffic controllers and law enforcement officials.
Yes, my approach to conversational training with financial professionals is much more intense and absolutely focused on ensuring they know the language of the federal retirement systems and its workforce so that they can give them the tools necessary to retire in comfort and security.
If the federal workforce gets a course in the basics of the Federal Retirement Systems, then the professionals they entrust to handle their hard earned money – get the ADVANCED-ZERO TOLERANCE version with lots of hand-holding collaboration. I learn as much from Financial Advisors and Planners as they learn from me. We are all invested in making life in retirement and before a little easier to maneuver for federal workforce.
Financial Advisors who are knowledgable in federal and postal benefits need to be able to help you with your TSP account and Thrift Savings Plan fund choices, your Federal Employees Group Life Insurance (FEGLI) selection (both while employed and any potential reduction elections that you might want) and also possibly help you with your FSAFEDS and FEHB elections.
P. S. Always Remember to Share What You Know.
Recommended Articles
For Postal Employees – LiteBlue and the TSP
Federal Retirement Benefit Analysis
Is The Pension Survivor Benefit Best For You? by Todd Carmack
A Little-Known Opportunity Can Increase Your Retirement Income. by Mark Sprague