How Much Will Your TSP Be Worth At Retirement?
TSP Online Calculators
The Thrift Savings Plan has some great online calculators to help you make informed decisions regarding your retirement balances inside the plan.
We’ll go through an overview of the TSP initially, and then talk through some of the more popular calculators online and how they work.
DISCLAIMER: The calculators are for informational purposes only and not meant to be the sole factor in determining retirement savings needs.
What’s the TSP?
The Thrift Savings Plan (TSP) is a tax-deferred retirement savings plan designed for federal employees and uniformed service members.
This defined contribution plan was first established by Congress in 1986.
It behaves like a private sector 401(k) plan.
The plan allows federal employees to save a percentage of their salary each pay-period.
How Do TSP Contributions Work?
TSP contributions are deducted from your paycheck each pay-period.
If you recently started working, enrollment is automatic.
Contributions will start at 5% of your salary.
You can work with your agency’s payroll to start, change or stop TSP contributions at any time.
Contributors to the TSP receive matching amounts from their respective agency.
The current matching percentage is the first 3% matches dollar for dollar.
The next 2% matches at 50 cents per dollar.
Contributions above 5% are not matched.
For 2021, the max contribution amount is $19,500 annually, or $26,000 annually if over age 50.
TSP contributions can be made with either Traditional (pre-tax) or Roth (post-tax) dollars.
TSP Calculator: How Much Will My Savings Grow?
Have you ever wondered how much your TSP balance will grow by the time you retire?
TSP’s website has a great estimator tool you can use to narrow down that amount.
Your inputs include:
- Your retirement system (FERS, CSRS, Uniformed Services, etc)
- Your existing balance and/or future contributions
- Your pay period and contributions
- Annual pay increases
- Expected rate of return
The results will show your estimated TSP balance at retirement.
Although it won’t be 100% accurate, this a great planning tool to help give you an idea of how much you might have to draw from when you hit your golden years.
TSP Calculator: How Much Can You Contribute To The TSP?
The IRS determines the maximum amount you can contribute to plans like the TSP each year.
This is referred to as the IRS elective deferral limit.
After reaching age 50, you’re also entitled to what are called “catch-up contributions.”
Like we said previously, for 2021, the max contribution amount is $19,500 annually, or $26,000 annually if over age 50.
Knowing this information, you can determine how much you might want to deduct each pay period to max out your contributions.
It’s a good idea to make sure you don’t miss out on any agency matching contributions.
The inputs on TSP’s website include:
- The year you’re contributing towards
- If you’ve reached age 50
- Any dollar amounts already contributed for the year
The results will show the amount you’ll want to contribute for each remaining pay period if you’d like to maximize your contributions.
Other Calculators on TSP’s Website
The other available calculators to you include…
Contribution Comparison Calculator: estimates how your paycheck is affected between Traditional or Roth TSP contribution amounts.
Annuity Payment Calculator: estimates the amounts you would receive if purchasing a life annuity using your TSP account balance.
Estimate Loan Payments: estimates the amount your loan payment would be if you borrowed from your TSP account balance.
As we said previously, the TSP is one leg, of the 3-legged stool of retirement for many federal employees.
The other two include your FERS or CSRS pension and Social Security amounts.
It’s important to take all these income sources into consideration as you look at your upcoming retirement.
Our financial professionals can help you build a retirement income plan today.
Schedule your complimentary federal benefits review and retirement analysis here with a licensed insurance professional.
For additional information, you can also contact your friends at GPIS by calling 866-201-7829 or by sending an e-mail to email@example.com.
-Sam Wiss, RICP
By responding to this offer, you may be contacted by a licensed insurance and financial professional regarding life insurance and/or annuity products. Not affiliated with, or endorsed by, the federal government or any government agency. This information is being provided only as a general source of information and is not intended to be the primary basis for financial decisions. It should not be construed as advice designed to meet the needs of an individual situation.
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