Subbotina Anna/Shutterstock.com

How Your Retirement Nest Egg Adds Up

Calculating just how much you’ll have to live on.

I like to think of the Thrift Savings Plan as the icing on the cake of the Federal Employees Retirement System. For many federal retirees, the TSP will play the starring role in a financially comfortable retirement.

Since 1987, federal employees have been able to use the TSP to save a portion of their salaries for their future retirement on a tax-deferred basis. (And since 2012, they can invest after-tax dollars that grow tax-free in the Roth TSP). For those under FERS, the TSP includes agency automatic and matching contributions that provide a total of 5 percent of an employee’s basic pay in additional savings as long as the employee contributes 5 percent of his or her salary. The TSP was designed as one of three parts of the FERS retirement plan, along with Social Security and the basic FERS retirement benefit.

All federal employees who are serving under permanent appointments have coverage under FERS or the Civil Service Retirement System and can contribute to the TSP. More than 88 percent of FERS employees participate in the TSP, and more than 60 percent of CSRS employees do. (But they don’t receive agency matching contributions.) The TSP also is available to active-duty members of the military services, and the House recently passed legislation that would overhaul the military retirement system and provide service members with the matching contributions civilian employees get.

Benefits

So if you’re a FERS employee, how much can you expect out of your retirement benefits and savings? Let’s start with (relatively) easy part. It’s not too difficult to figure out how much your Social Security benefit will be after you retire. The Social Security Administration offers My Social Security accounts where you can:

  • Keep track of your earnings and verify them every year.
  • Get an estimate of your future benefits if you are still working.
  • Get a letter with proof of your benefits if you currently receive them.
  • Manage your benefits.
  • Change your address.
  • Start or change your direct deposit.

If you haven’t set up your Social Security account yet, it’s a good idea to do so. For one thing, this will prevent someone else from setting up an account in your name and claiming the benefit you’ve earned by stealing your identity. Here’s more information about identity protection and Social Security.

To find out how much your FERS retirement benefit will be, contact your human resources office and request an estimate. In some cases, you’ll be directed to an online electronic system, such as MyPay or the Employee Benefits Information System (EBIS). Some agencies are now using a powerful tool called FHR Navigator, which links payroll and personnel information and provides employees up-to-date details on retirement benefits as well as insurance coverage.

If you know when you’re eligible for retirement (and when you’re likely to retire), you should be able to determine how much of your pre-retirement salary will be replaced by your basic government pension benefit.

Investments

When it comes to the TSP, it’s a little more complicated to determine how much income you’ll derive from your investments. You need to start by deciding what role the TSP will play in your retirement. Will you need a steady source of monthly income to supplement your FERS retirement benefit and Social Security? Do you want control over how much of your funds you take out at different times during your retirement? This flexibility will allow you to withdraw less while you are working part-time before you fully retire and take larger payments if you decide to delay taking Social Security.

The TSP has a user-friendly retirement income calculator to help you estimate how much retirement income you will receive on a monthly basis from your account.

It’s possible that your government pension and Social Security will provide enough income to meet your monthly expenses. If so, you may wish to delay the use of your TSP until your later years in the event of health care expenses--or to help your children and grandchildren or a favorite charity with their financial needs. Just remember, when you delay withdrawals from the TSP, you take the risk that you might subject yourself to a severe tax penalty if you don’t take the required distributions that must begin by a specific deadline after your separation from federal service.

If you would like to know more about retirement planning at any stage of your career, it helps to attend a pre-retirement or mid-career planning seminar. Many agencies offer one- to three-day classes for employees to learn about their retirement benefits. Most of these classes will also include basic information on tax, financial and estate planning.

Sometimes the seminar also will include assistance for employees looking into a second career and sessions covering life after retirement considerations. I conduct such seminars through the National Institute of Transition Planning.

If you don’t have access to a pre-retirement seminars at your agency, you can attend a series of retirement planning webinars. I’ve partnered with certified financial planner Micah Shilanski on a 12-month series of webinars called the FERS Route to Retirement. It starts with a three-part course called “FERS: Three Irreversible Mistakes.”

(Image via Subbotina Anna/Shutterstock.com)

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.