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Avoid These Thrift Savings Plan Mistakes


TSP or thrift saving plan is a great investment and saving plan for federal professionals. After all, you might be already investing in this plan as a federal employee. The primary goal of TSP is to provide you with a retirement income and tax-deferred benefits.

FERS, or Federal Employee Retirement System, introduces retirement package in three different parts in addition to Basic Annuity and Social Security and TSP is one of them. While planning for TSP, many people make some common mistakes. This article will include some common mistakes you can avoid in TSP.

Furthermore, TSP is a matter of financial security in retirement for federal employees. Still, many people are unable to make the most out of it. You are not able to maximize your TSP benefits because you may make some mistakes. Therefore, you need to avoid the following TSP pitfalls for their ultimate benefits. You can call a federal consultant if you have any doubt regarding TSP. They will also help you with FEGLI life insurance after retirement.

You don’t contribute at least 5%

Are you contributing at least 5 percent of your income to your thrift saving plan? If you do so, it will help you maximize the matching contributions from the agency. After all, you should know that the automatic enrolment percentage for TSPs increased to 5% from 3% of your federal pay on 1 October 2020. Hence, if you register for the plan with the default option, you will be at 5 percent. Feel free to call a federal consultant to know the latest contributing percentage. A professional will also help you by calculating federal retirement pay.

Moreover, if you contribute a lower percentage to your TSP, you will need to increase it to 5%. However, it is good to contribute more than this percentage. You can consult about it from your federal consultant.

Are you 100% invested in the G Fund?

Many federal professionals consider it safe to go with Government Investment or G Fund. This fund invests in short-term U.S. Treasury securities because it is specially designed for the TSP. For this reason, you can be assured about the principal and interest payments as they are guaranteed by the federal government. After all, when the stock market gets volatile, the G Fund becomes a safe option.

Here, you need to note that it is not good to invest all your money into this fund. By doing so, you are putting your money at an inflation risk. Therefore, it is good to split your money between two or more funds and invest further. Moreover, you can call a federal professional to learn about investing. They will also help you with FEGLI life insurance after retirement.

You consider a Lifecycle Fund as the best fit

Lifecycle funds allow younger federal professionals to take care of risks compared to older federal employees. After all, TSP Lifecycle funds are made using five different TSP funds. These funds automatically get shifted to a more conservative asset allocation when you reach your desired retirement date. In order to learn more about how this fund works, contact a federal consultant. They will also help you by calculating federal retirement pay.

Furthermore, you may think of going with a Lifecycle fund because of its autopilot feature. But you need to know that an autopilot system also needs a pilot for safe operations what happens in an airplane. Thus, it is crucial to take professional help to use TSP Lifecycle funds.

You choose your TSP fund based on the past performance

Do you choose your TSP fund based on past performance? You should know that if a fund is performing well now, then it is not necessary that it will perform in the same way in the future. So, you should consult a federal consultant for this. They will help you with FEGLI life insurance after retirement.

You take loans from your TSP

It is not good to take a loan from your TSP. You save money in TSP for your retirement, not for paying loans. So, if you don’t pay your loan in your job duration and get retired, you will need to pay the outstanding loan from your TSP within 90 days. To learn more about it, call a federal professional. They will also help you by calculating federal retirement pay. That’s all.


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