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Federal employees with TSPs: Avoid these common mistakes

Federal employees often rely on their Thrift Savings Plan (TSP) to help fund retirement. Those who use these accounts can increase their benefits by avoiding the following mistakes:

  • Failing to get the match. Federal agencies will generally match contributions at up to 5% of your income. Make the most of your benefits by contributing at least 5% to take advantage of this matching contribution.
  • Fearing risk. It is not uncommon for federal employees to put their TSP into the G fund, an index fund invested in United States government securities. The draw of this fund is the fact that it has the lowest volatility of the five offered index funds. Although this means less risk, it can also mean less reward. Diversifying investments can result in more gains.
  • Relying on only one account. Although TSP accounts serve as a valuable retirement tool, it is not wise to have this as your only savings plan. Consider IRAs and other accounts to help better ensure you have the funds you need when you decide to retire.
  • Setting it and forgetting it. It is wise to regularly review your retirement strategy for several reasons. Tax laws may change and trigger a need to adjust your plan or a major life event, like the birth or death of a family member, may result in the need to update beneficiaries listed on the accounts.

It is important to note that there is not one single solution for the perfect retirement plan. Each individual and family will have their own needs and should have a plan that takes these needs into account.

Federal employees can see their careful planning challenged in the event of an employee investigation. The investigation could result in termination, likely ending the ability to continue to contribute to the TSP. As a result, it is wise to take notification of a federal employment investigation seriously. An attorney experienced in federal employment legal matters can help.

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