Do you feel behind on your TSP retirement savings? Let’s go over the top five common mistakes people make with their Thrift Savings Plan.

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⏰ Table of Contents ⏰
0:00 TSP Misallocation
5:12 TSP Fund Performances
9:44 TSP Savings Rate
12:36 TSP Catch-up Contributions
13:52 TSP Contribution Rate
15:17 TSP Calculator

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Top 5 Mistakes Why Your TSP is NOT Growing

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services. It is one of the most popular retirement savings plans in the United States, offering a range of investment options and tax advantages. However, despite its benefits, many TSP participants struggle to see their accounts grow as quickly as they had hoped. If you find that your TSP is not growing as fast as you would like, here are the top 5 mistakes that may be holding you back.

1. Not Contributing Enough
One of the most common reasons why TSP accounts fail to grow is simply not contributing enough. Many participants contribute only the minimum required to take advantage of employer matching contributions, but this may not be enough to build a substantial retirement fund. To see your TSP grow, consider increasing your contributions to the maximum allowed by the plan or at least to a level that is more in line with your retirement goals.

2. Choosing the Wrong Allocation
Another common mistake is choosing the wrong allocation of funds within the TSP. The TSP offers a range of investment options, including various stock and bond funds. If you are too conservative in your investment choices, your account may not grow as quickly as you would like. On the other hand, if you are too aggressive, you may be taking on more risk than you are comfortable with. It’s important to review and adjust your investment allocation regularly to ensure that it aligns with your risk tolerance and investment goals.

3. Neglecting the Roth TSP Option
Many TSP participants may not be taking advantage of the Roth TSP option, which allows contributions to be made on an after-tax basis. While traditional TSP contributions are tax-deferred, meaning that taxes are paid upon withdrawal, Roth TSP contributions are made with after-tax dollars and can be withdrawn tax-free in retirement. If you expect to be in a higher tax bracket in retirement or would prefer tax-free withdrawals, neglecting the Roth TSP option could be holding back the growth of your account.

4. Failing to Rebalance
Over time, the performance of different investment options within the TSP can cause your allocation to shift away from your target. Failing to rebalance your TSP account can lead to an outdated and unaligned portfolio. Regularly reviewing and rebalancing your TSP account can help to maintain the appropriate level of risk and ensure that your investments are in line with your long-term goals.

5. Ignoring the Impact of Fees
Finally, ignoring the impact of fees can also hinder the growth of your TSP account. While the TSP is known for its low fees, even small differences in fees can have a significant impact on your account over time. It’s important to pay attention to the fees associated with the investment options in your TSP and consider low-cost options whenever possible.

In conclusion, the TSP is a valuable retirement savings and investment plan, but there are common mistakes that can hold back the growth of your account. By avoiding these mistakes and taking proactive steps to optimize your TSP, you can ensure that your account grows as quickly as possible, helping to secure your financial future in retirement.