Out of over three million federal employees who are utilizing the Thrift Savings Plan, less than 700,000, or 19%, are taking advantage of the Roth TSP. Additionally, the average balance in an employee’s Roth TSP is drastically lower than the average Traditional TSP balance.i Today, we would like to cover a few reasons why federal employees are neglecting to take advantage of the Roth TSP option.
Why Aren’t Federal Employees Utilizing the Roth TSP?
Retirement Wisdom for Millennials
Over the past couple of months, we have offered some retirement information for the millions of Americans who are retiring or preparing to retire. Today, we would like to take a slightly different path and offer a little retirement wisdom for a younger generation, the Millennials. Like the older generations, Millennials have a lot to plan for and think through when it comes to retirement. The good news is, unlike their older coworkers, Millennials have significantly more time to begin thinking through their options and educating themselves on how to create the retirement of their dreams.
Social Security Earnings Test
The Social Security earnings test is an important aspect to consider as one plans for federal retirement. Social Security states that those individuals who have earned at least 40 credits may be eligible for a benefit. However, before choosing to work after retirement, it is important to determine if a retiree may be subject to the Social Security Earnings Test.
What is the Federal Flexible Spending Account?
Federal employees concerned with paying for medical expenses and lowering their tax bills may consider a Flexible Spending Account (FSA). Many federal employees are eligible to enroll in the federal government’s flexible spending program. Contributions to an FSA are pre-tax, which allows a federal employee the ability to pay medical expenses with pre-tax money and lower the amount of income subject to tax. To be eligible to participate in the Federal Flexible Spending Account Program (FSAFEDS), federal employees must work for an executive branch agency or an agency that offers the Federal Flexible Benefits Plan (FedFlex).
Retirement Direction for Generation X
Retirement planning needs to be adapted to fit the objectives of the individual. A one-size-fits-all approach is rarely the best technique and certainly not when it comes to planning for one’s future. Today, we will cover some topics that will help direct Generation Xers in beginning to plan for retirement.
Examining the TSP as an Income Stream
Living as a federal retiree requires a shift in types of income. A federal salary is replaced with a federal pension, Social Security (for some), and any savings—which for many federal employees will be their Thrift Savings Plan (TSP). When it comes to federal income tax, a FERS pension is generally taxable and Social Security may be taxable. So how does the TSP compare to the first two income streams? Is there any control over the tax paid on TSP money? To answer these questions, we must first examine the TSP to consider its tax status.
When should I make a deposit for my military time?
Military service is time served by an individual in an army or militia. This may be by choice or by involuntary draft. If you are currently a federal employee and have military service, you may be able to receive retirement eligibility and annuity computation for your years of military service. While some military service receives retirement credit, this is not guaranteed for all service. The rules are different for CSRS and FERS employees and will be unpacked below.
Retirement Guidance for Baby Boomers
No matter your age, the concept of retirement brings with it dreams of replacing your working years with a new life stage. Whatever your vision is for retirement, everyone shares one similar goal: working to ensure you have the income you need to support the life you desire. Of course, everyone’s financial life and goals are different, so the specific strategies you need to implement to create the retirement income you will need depends on your unique factors.
Each generation has its own needs and timeline. As you look toward your own retirement, these key retirement guidance tips can help keep you on track.
Managing the TSP – How to Handle Risk
From personal life to the weather, one never knows exactly what tomorrow will hold. The best of plans cannot account for every eventuality and new development that a new day brings. Learning to cope with the unknown elements of life is not an easy task and requires careful consideration.
When it comes to retirement preparation, there are certain elements that not even the best planner can predict: social upheaval, market swings, economic downturns, and global pandemics to name just a few. While these massive events cannot be fully predicted they can be prepared for—at least in part. In today’s blog, let’s look at what part of your future you can control and the steps to bring confidence to your retirement plan by managing the TSP.
Five Things Life Insurance Should Do For Federal Retirees
Discussions on life insurance can bring out a wide range of opinions. Some people may have had bad experiences with a particular life-insurance agent or company. For those who embrace the philosophy of any number of radio personalities, life insurance itself may be a dirty word. In contrast to those staunchly opposed to life insurance, others have benefited from having a policy in place in a time of need. Some examples may include: the death of a spouse, loss of income, or unexpected major expense. Many employers, including the federal government, offer some form of group-life insurance as part of their compensation plan. So, what should life insurance do for you? Let’s unpack five specific things life insurance should do for federal retirees.
