Thrift saving plans (TSPs) are retirement savings plans that are available to eligible federal employees and members of the uniformed services. They are similar to a 401(k) plan offered by many private employers. As a part of your federal employee benefits, you can invest your TSP in various funds. In this blog, our team of Federal Employee Benefit Coordinators will offer guidance on how you can maximize your federal employee TSP.
Do: Be Forward-Thinking With Your TSP Plan
When choosing your TSP fund, it’s worth noting that past success isn’t a guarantee of future performance. Just because a certain fund performed well in the past, there is no certainty that it will continue to do so in the future. When it comes to your federal employee benefits, the best thing you can do is invest in your future. So you should select a TSP fund based on your risk tolerance and objectives rather than a fund’s past success.
Don’t Put All of Your Money in the G Fund
The Government Securities Investment (G) Fund is one of the best federal employee benefits because it feels so secure. By investing in short-term Treasury bills, this fund is backed by the full faith and credit of the US government and is therefore considered to be a very safe investment. However, because the G Fund is so safe, it also has a lower rate of return than other TSP funds. This makes it vulnerable to inflation risk. For this reason, you should not invest all your money in the G Fund.
Don’t Use a TSP Lifecycle Fund
A TSP lifecycle fund is a fund that automatically shifts to a more conservative asset allocation as you approach your planned retirement date. While this may sound like a good idea, it is not the recommended use for federal employees’ TSP benefits. This is because lifecycle funds assume younger people can handle more risk than employees who are closer to retirement. But not everyone has the same risk tolerance. Some people may be comfortable with a more aggressive investment strategy, even if they are closer to retirement. If you use a TSP Lifecycle fund, you may end up with an asset allocation that is too conservative or aggressive for your needs.
Do: Meet With a Financial Advisor
A financial advisor can help you understand your federal employee TSP plan and make the best decisions for your unique situation. They can also offer guidance on how to allocate your TSP contributions across the different investment options.Our team of Federal Employee Benefit Coordinators can help you understand your options and make the best decision for your needs. Contact us today to learn more about how you can optimize your federal employee benefits.
Federal Employee Benefit Coordinators (“FEBC”) nor any of its representatives are in any way affiliated with the United States Government, The Federal Retirement Thrift Investment Board,or the Thrift Savings Plan. Services offered are not sanctioned by the United States Government or the Thrift Savings Plan.
