It might seem hard to do in today’s stock market roller coaster, but it is possible for federal employees to double the return on their investment dollars. For Federal Employees’ Retirement System (FERS) employees, investing in the Thrift Savings Plan (TSP) can be a huge boost to retirement income, and you don’t have to spend a dime to participate.
FERS employees already get a one percent agency match without contributing anything to the TSP. That’s great, but there is so much more to be had once employees start contributing their own money into the program. Beyond that first one percent, the agency will match contributions dollar for dollar up to three percent of the money put into the account. The contributor puts in three percent, and a total of seven percent goes into retirement savings. So far so good, but let’s not stop there.
When an additional two percent is placed into the TSP, the agency will match the contribution 50 cents on the dollar. Once that’s done, investors will have essentially earned a 100 percent return on five percent of their income. Even under the best of circumstances, the stock market cannot provide you with a comparable rate of return.
Any additional amount above the ten percent total contribution gained through investing activities within the TSP funds is simply icing on the cake.
What’s your favorite TSP allocation?