Greed and Your TSP

What role does greed play in investing for the future? How much is enough? And what risks should you accept or avoid to achieve your financial objectives? So, how much is enough? It’s a simple question but a tricky answer. Enough varies on who asks, who is asked, and what the subject is. Is it your children, potato snacks, suits in the closet, or retirement savings? It’s also a moving objective. If we’re talking about when you’ll be able to retire, it depends on age and money, which can change as you do. Probably will.

At 25, a million-dollar nest fund may be a feasible ambition. That may change by the time you’re 50 or 60. Perhaps you’ve been through a massive recession or two. Or watched inflation soar. Like, right now. Nobody is getting younger. However, the world and economy are changing daily, from fuel and infant formula to the possibility of an escalating conflict in Europe. So far, it has not always been for the better. So we approached a recently retired fed for his ideas. After a lengthy career, he just retired from the government and is a long-term TSP investor who achieved $1,000,000 plus by meticulous and consistent investment. Here’s what he had to say.

How much TSP is enough?

Nearly four million federal employees use the Thrift Savings Plan (TSP), and there are more than 100k TSP billionaires. So, how much TSP funds are required for a comfortable retirement? How much money does someone need to retire comfortably? It’s determined by various factors unique to each individual’s personal and financial circumstances. The values in the two scenarios below are approximations, and federal and state taxes may differ.

Single Person

After 30 years of federal employment and reaching 62, you have a $30,000 annuity, a $20,000 SSA benefit, and $500,000 in your TSP, which you may withdraw at 4% for the next 25 years, for a total of $20,000 each year. Your annual salary is $70,000, which means around $55,000 after taxes. Will this level of income be sufficient to support your lifestyle?

Do you have additional questions about your Thrift Savings Plan? Book a call with Federal Retirement Benefits Expert, Todd Carmack here: Book A Call.

Married Couple

Let’s apply it to a married couple where both are 62, and one spouse is a federal employee. We assume they have $1 million in TSP and joint retirement savings.

One spouse has a $30,000 annuity and a $20,000 SSA, while the other has a $20,000 SSA. They’re withdrawing 4% of their $1,000,000 over the course of 25 years, or $40,000 yearly. Their annual total is $110,000, meaning that after taxes, they earn around $85,000. Will this level of income allow you to maintain your lifestyle?

Before retirement, federal employees should maximize their contributions and invest actively to obtain the desired retirement income, as well as establish a strategy for unanticipated life occurrences. Many government employees believe that $2 million is enough for them in retirement. But is it really?

Life may toss you some unexpected curve balls. Here are a few examples of unanticipated incidents that might occur during retirement:

• Inflation and increasing prices for everything
• Mortgage for a vacation home or second home.
• Medical and pharmaceutical needs
• College education for grandchildren
• Nursing home or long-term care facility

In retirement, you should follow a conservative approach and regularly monitor your costs. TSP investors must continue to invest actively to plan for these unanticipated situations and to develop their TSP while making withdrawals.

Federal employees should have a retirement contingency plan to deal with unexpected scenarios. The key to these senior life events is to save as much as possible in your TSP.

For specific questions or help with your retirement, book a call with Federal Retirement Benefits Expert, Todd Carmack here: Book A Call.

Contact Information:
Email: [email protected]
Phone: 6232511574

Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.

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