Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Take Charge of Your TSP

With all that's going on in the financial system these days, many federal employees are concerned about whether they can count on their Thrift Savings Plan funds to provide for a healthy percentage of their retirement savings. Some people view the TSP as a complex and risky place to save. They're not comfortable making important decisions about planning for retirement without help from their employer.

In fact, some folks seem to be under the impression that Social Security will provide for their retirement needs. Here's a reality check on that notion, courtesy of the Social Security Administration:

Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earner's income after retiring, and most financial advisers say retirees will need about 70 percent or more of pre-retirement earnings to live comfortably. To have a comfortable retirement, Americans need much more than just Social Security. They also need private pensions, savings and investments.

For newer civil servants covered by the Federal Employees Retirement System, Uncle Sam provides not only a basic pension benefit but also what amounts to a company-sponsored savings plan -- the TSP. In comparison to the average company retirement plan, these two elements constitute a very generous supplement to Social Security.

Last time I checked, the TSP had an almost 90 percent participation rate among FERS employees. One of the factors that contribute to that high rate is its simplicity. There are only five investment choices in the TSP, and to make things even simpler, the life-cycle funds take these five choices and diversify them automatically based on an employee's anticipated retirement date. Overall, that helps provide diversification, low administrative expenses and minimal risk.

Of course, even having just five investment choices can be daunting for some employees. But especially in times like these, it's important to understand what each fund invests in and their underlying risks.

Take Responsibility

If you're lucky, your agency offers a midcareer financial planning or retirement seminar. If not, you must take responsibility to educate yourself. Here's how to begin:

  • Go to the TSP Web site, where you'll find useful fact sheets about all the plan's options.
  • If you really want to limit the amount of investing knowledge you'll have to gain, look no further than the life-cycle funds, which are managed for you.
  • Use this handy calculator to determine how much you have to save, and project your retirement income.
  • If you're still confused, consider hiring a financial planner to help you figure out how much you have to save and how to do it.
  • There also are several Web sites to help you understand basic retirement planning. Here are a few to get you started: Your Retirement at, the Motley Fool's Retirement Plan Primer, MSN Money's Retirement and Wills section and Ric Edelman's Retirement Planning page.

I'm sorry to say it, but this is your responsibility. And if you have children who are about to graduate from college or recently began a career, it is your responsibility as parents to teach them that they need to save part of their income for their future retirement. That's the reality of the world we live in.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning live on Saturday mornings at 10 a.m. ET on or on WFED AM 1500 in the Washington metro area. This week's topic is "The Care-Giving and Nonfinancial Aspects of Long-Term Care," with guest Mary Lou McGuinness, director of care coordination at Long Term Care Partners. This week's hosts: Bob Leins, CPA, NITP, and Tammy Flanagan, senior benefits director, NITP.

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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