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2023 TSP Contribution Limits: How Much Should YOU Contribute
Planning for your retirement is an essential aspect of financial management, and one of the most popular retirement savings options for federal employees is the Thrift Savings Plan (TSP). It is a tax-advantaged retirement savings and investment plan that allows individuals to save and invest for their future. As the year 2023 approaches, it is important to be aware of the TSP contribution limits and determine how much you should contribute to maximize your retirement savings.
The TSP contribution limits are set by the Internal Revenue Service (IRS) and are subject to change each year based on inflation. For the year 2023, the contribution limit for employees under the age of 50 is $20,500. This means that you can contribute a maximum of $20,500 to your TSP account in 2023. For employees aged 50 and older, the catch-up contribution limit is an additional $6,500, allowing a total contribution of $27,000 for those individuals.
Now that you know the TSP contribution limits for 2023, how much should you actually contribute? The answer to this question depends on several factors, including your financial situation, retirement goals, and other investment options available to you.
Firstly, consider your budget and financial obligations. It is important to have a clear understanding of your income and expenses before determining how much you can contribute to your TSP account. Review your monthly budget and identify any areas where you can make adjustments to allocate more funds towards your retirement savings. It is generally recommended to contribute at least enough to take full advantage of any employer matching contributions, as this is essentially free money and can significantly boost your savings.
Next, think about your retirement goals and how much income you will need once you retire. Evaluate your current lifestyle and estimate the expenses you will have in retirement, such as housing, healthcare, and other daily living costs. Consider factors such as inflation and potential changes in your lifestyle to ensure that you are saving an adequate amount for a comfortable retirement.
Additionally, assess your other investment options and their potential returns. While the TSP offers competitive investment choices, it is important to diversify your investments for a well-rounded retirement portfolio. Explore other retirement savings options, such as Individual Retirement Accounts (IRAs) or taxable investment accounts, and compare their potential returns and tax advantages. This will help you make an informed decision on how much to contribute to your TSP account versus other investment avenues.
Remember that contributing the maximum allowed is not mandatory or suitable for everyone. While it may be beneficial in terms of maximizing your retirement savings, it may also constrain your current cash flow and restrict your ability to meet other financial goals. Balancing your current needs and future retirement goals is crucial when determining your TSP contribution amount.
In conclusion, as the year 2023 approaches, understanding the TSP contribution limits and assessing your financial situation and retirement goals will help you determine how much you should contribute to your TSP account. Consider your budget, retirement expenses, other investment options, and strive for a balance that suits your needs. Consult with a financial advisor to ensure you are making the most informed decisions about your retirement savings.
Excellent video but if you can add some data charts on the whiteboard. Data makes more sense than talking. I would highly recommend putting the data Model.
How do u feel about putting 5 pct get the match put the rest in a outside IRA THAT pays a duvidend so u are getting free money on top of tsp ,by the way i sid very well doujg what u suggested but could i have done better???
Thank you for the information. If I contribute the max to TSP this year, do I need to update the new maximum amount next year (or the plan would adjust that for me)?
Thank you so much for this great information.
Does the secure act changes apply to the tsp or is it only for 401k?
Hi Dallen, I'm looking to max out my TSP, prior to transitioning from Active Duty, in July 2023, to the private sector. After I've maxed out my TSP by July 2023, can I contribute to my new employer's 401K retirement plan, for the remainder of the year? Appreciate any information you may have to offer.
Videos are great, but add some charts and whiteboard illustrations while you talk. I think it would enhance your points.
So, age 50 and up can contribute up to 30K by just altering the percentage or dollar amount, AND it appears this has no negative impact on employer matching, right?
Increase your tsp contributions by 50% of your pay raises until you max it out.
Question for you hope this is new. I saw the scenario on using sick leave or annual for being sick just before retirement. But I am retiring on 11-17-2023 and am not using any annual leave so i can get the big pay out. But i have about 4 calculated sick leave months to add to my years. I will need to take time off every so often. How much money will i loose from using sick leave bringing it to only 3 months of time added to my retirement. I am retiring do to burnout 39 years in the same job. I need the time off. But was wondering what will loosing just one month of sick leave cost me? Thank you mike
Hello, I will start my new position with Federal emp, How can i contact you? I need same advise from you
I always increase now so it doesn't seem like a pay "cut" in the next calendar year.
Just put all of your cola's into the TSP.
My take home pay never seems to be a raise because the money goes to my TSP instead. In 2022, I contributed $27k. I guess in 2023, I guess I will contribute $30k. I plan to retire in 2-3 years.
If you have two separate TSP accounts, and combine them together, does the transfer move all the “shares” or buy shares at the current price? Would it be wise for the market to turn around before combining them? For example a military TSP (retired) and federal TSP.
I have a limited amount of money at the end of each month to save with. I currently save 5% to get the full TSP match. I have an HDHP with an HSA, should I put any further retirement savings into the HSA (where it can be invested in TD Ameritrade funds), TSP, IRA or something else?
$866.00 x 26