TSPs in Retirement seems like a pretty silly topic since the whole purpose of the Thrift Savings Plan is to give you money in retirement. Unfortunately, many federal employees do not understand the differences between saving for retirement and distributions through retirement. In this episode, we will cover key points to maximize your TSP into retirement.
Welcome to Financial Planning 4 Feds. We are dedicated to educating federal employees on how to maximize value from their government benefits by developing and executing a financial plan.
In this episode we will go over:
– The accumulation and distribution phases of your TSP
– How your TSP affects your needs and wants
– Is a rollover your best option?
0:00 Intro
1:37 Your TSP is only a tool
2:12 Understanding accumulation and distribution phases
3:51 The power of your pension
5:20 Technical aspects of your TSP in retirement
7:59 Should you manage your TSP in retirement
Federal employees and their spouses are invited to complimentary educational workshops covering their federal benefits. For details, visit:
Federal Benefit Resources:
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The Thrift Savings Plan, or TSP, is a retirement savings plan for federal employees and members of the uniformed services. It offers participants an opportunity to consistently save a portion of their income for retirement, with the potential for investment growth over time. However, once retirement rolls around, it’s important to know what steps to take to ensure that your TSP continues to work for you. Here are some tips on managing your TSP in retirement:
1. Consider leaving your funds in the TSP. Unlike many employer-sponsored retirement plans, the TSP allows participants to keep their money in the plan after retirement. This can be advantageous because the TSP offers low fees and access to a range of diverse investment options. Withdrawing your funds and moving them to another account could result in higher fees and limited investment options.
2. Choose the right withdrawal option. When you retire, you must choose how you will receive your TSP funds. You can take a lump sum payment, set up installment payments, receive monthly payments for a specific length of time, or choose a life annuity. Each option has different tax implications and can affect your retirement income. Consider working with a financial advisor to determine the best option for your individual needs.
3. Utilize the TSP’s investment funds wisely. In retirement, it’s important to ensure that your investments are still aligned with your long-term goals. The TSP offers a range of investment options, including target-date funds, lifecycle funds, and individual funds that invest in specific asset classes. Consider diversifying your investments to manage risk and maximize potential returns.
4. Keep an eye on fees. The TSP is known for having low fees compared to other retirement savings plans, but it’s still important to monitor any fees associated with your account. Be aware of any administrative fees, investment fees, or distribution fees that may impact your balance over time.
5. Review your TSP regularly. As with any retirement savings plan, it’s important to periodically review your TSP to ensure that it’s still aligned with your needs and goals. Consider adjusting your investment allocation, contribution amount, or withdrawal option as needed. Staying actively involved in your TSP can help you make smarter decisions and achieve your retirement goals.
In conclusion, the TSP can be a valuable tool for federal employees and members of the uniformed services in retirement. By following these tips and working with a financial advisor, you can ensure that your TSP continues to work for you and provide the retirement income you need.
My wife and I will be retiring by the end of the 2022. We are looking to downsize our home and wanting to purchase a new home. I will be receiving a post office annuity and social security supplemental(obviously until 62). I also have about $500k in my TSP. I wanted to just take a scheduled set amount out of my TSP every month. While applying for a mortgage. Can the scheduled monthly TSP payments be recognized as a defined benefit and used in calculating my monthly income? I don't see myself purchasing a Met life annuity. Thanks in advance for any help or suggestions you may have on this issue. Keep up the great work educating us federal employees..
Can you discuss how to initiate the rule of 55 with your tsp
If I transfer into, say, a Vanguard IRA can I set up automatic monthly withdrawals like you can with the TSP?
Not on the subject of TSP
Great video Ed. I am also a retired Marine. Question about my military TSP account. Seems I have three "colors" of money there: traditional, roth, and combat-zone tax exempt. I understand the traditional and the Roth, but what about the combat-zone tax exempt? I have heard, but cannot confirm, that if I were to roll this account to another brokerage, they would allocate the traditional to a traditional IRA, Roth to a Roth IRA, but the combat-zone tax exempt money would come back to me in a hard check? What's the scoop on combat-zone tax exempt money in the TSP? Thanks!!
Interesting timing. My TSP funds just hit my Vanguard account this morning, really a year too late but I'm doing quite well. I pulled my money out at just the right time before the pandemic but could have made a lot of money had I had the added flexibility if it were in my Vanguard account. A point you didn't make is that with the TSP you have to make a decision before noon for something that won't settle until the market closes. With the volatility this time last year, I had a hard time pulling the trigger knowing I was going to be "naked" for 4 hours whereas I could have made market trades on ETFs with my current account. I was also able to double up on some opportunity stocks in a Roth I opened now that I'm working part time in retirement, could have killed it if my TSP was in my IRA. At any rate, great video.
Tsp was quick and great got tsp loan direct deposited.
Semper Fi. If you pick a few leaves off the bush, it will continue to grow. When you cut branches off, it will soon wither and die. Make your money last. Thank you for this video and information. Look forward to your future videos.
It does not take anything NEAR a month to get a TSP distribution…this is ABSOLUTELY not true. Makes me wonder if you are just trying to get people who don't know better to roll over their TSP into funds you get commissions for.