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Advice on how to prepare for life after government.

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Some recent news and information about retirement savings, in case you missed it:

Because April is Financial Literacy Month, the Thrift Savings Plan is pressing ahead to encourage workers at all levels of government to focus on preparing their finances for retirement. Employees who already are facing a two-year pay freeze can make minor changes that won't break their personal budgets.

For example, federal employees who have other financial responsibilities such as mortgage payments or education loans still can build their retirement savings with small contributions. TSP participants who save at least 5 percent of their basic pay are eligible for a 4 percent agency match and a 1 percent automatic agency contribution.

Workers also can make little changes in their day-to-day spending habits to see long-term savings benefits. Eliminating $7 worth of carry-out coffee each week and contributing that money to the TSP instead could yield $30,546 in savings after 30 years.

Government employees who consider saving for retirement a daunting task now have a helpful planning tool at their disposal. The Federal Ballpark E$timate calculator allows workers covered under the Civil Service Retirement System and the Federal Employees Retirement System to figure out how much to save to ensure a comfortable retirement.

According to the Office of Personnel Management, which manages the tool, the calculator can benefit federal employees with only a few years of government service, as well as those at later stages of their federal tenure. It does not provide an annuity estimate, however. OPM also offers guidance on completing required fields, such as service computation date and retirement age.

New Options

The TSP continues to see growth in its new investment fund, the L2050 Fund, according to data presented at the meeting. In March, the number of enrollees in the L 2050 Fund was nearly 23,000, up from 15,645 at the end of February.

The TSP on Jan. 31 opened the 2050 life-cycle fund, designed to move investors to less risky portfolios as they get closer to retirement. The fund invests higher percentages in domestic and foreign stocks -- C, S and I funds -- and lower percentages in government securities and bonds (G and F funds).

TSP Executive Director Greg Long said this week that the introduction of a Roth 401(k) option is on track for the second quarter of fiscal 2012. The option, which would allow employees to invest income that already has been taxed and therefore would not be taxed upon withdrawal, was slated to launch in January 2012. The TSP is delaying the rollout to allow federal payroll offices to adapt to the changes. "Roth is a major, major change to what we are doing here," Long said.

The TSP also continues to press ahead with modernization efforts. The TSP has announced several changes and upgrades during the past few years, from automatic enrollment to accounts for spouses of deceased federal workers or military personnel enrolled in the plan. But an IT snafu associated with the spousal beneficiary participant accounts in December 2010 has forced the TSP to collect more than $58 million in mistaken distributions to plan enrollees.

 

Kellie Lunney covers federal pay and benefits issues, the budget process and financial management. After starting her career in journalism at Government Executive in 2000, she returned in 2008 after four years at sister publication National Journal writing profiles of influential Washingtonians. In 2006, she received a fellowship at the Ohio State University through the Kiplinger Public Affairs in Journalism program, where she worked on a project that looked at rebuilding affordable housing in Mississippi after Hurricane Katrina. She has appeared on C-SPAN’s Washington Journal, NPR and Feature Story News, where she participated in a weekly radio roundtable on the 2008 presidential campaign. In the late 1990s, she worked at the Housing and Urban Development Department as a career employee. She is a graduate of Colgate University.

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