You may have heard the saying, “50 is the new 40.” And though it may be true that you’re as young as you feel, when it comes to retirement planning, age 50 is age 50. If you haven’t saved enough in your Thrift Savings Plan (TSP) by your half-century birthday, you’re running the risk of outliving your money.
By Now You’re Probably Thinking, “I’ll Just Work Longer.”
Assuming you’ll be working to a ripe old age is not supported by the most recent statistics published by the OPM. For federal workers, the average government-wide retirement age is 61.8 years old while the average length of service at retirement is 24.9 years.
In fact, retiring around age 62 with at least 20 years of service has been the overall trend for federal employees thanks to the 10% FERS Annuity Bonus. Even with the 10% bonus, will your FERS annuity (pension), Social Security and TSP savings be enough to provide you with financial security over a 30-year retirement?
Start Maximizing Your TSP Contributions
Some experts say that, by age 50, you should have about four times your salary in your TSP. If you’re not contributing enough to your TSP to get the 5% agency match, you’re losing out on free money.
Age 50 is also when the IRS allows you to start making TSP Catch-Up Contributions to save even more for retirement. In 2023, the Catch-Up Contribution is $7,500 in addition to the $22,500 deferral limit set by the IRS.
“Combined with inflation, consumer debt can take a huge bite out of your retirement savings.”
Start Paying Off Your High-Interest Debt
The Federal Reserve Bank of New York reports that the total debt burden for people over 70 has gone up by 543% during the 20-year period between 1999 and 2019. Combined with inflation, consumer debt can take a huge bite out of your retirement savings. Start paying off your high-interest credit cards and personal loans first then think about paying down your mortgage, too.
Start Working On Your Retirement Plan
For federal workers, retirement planning requires a number of decisions:
- Choosing a retirement date and completing your retirement application
- Timing when to file for your Social Security benefits
- Choosing a FERS survivor benefit option that works for you
- Making sure you can continue FEHB coverage in retirement
- Plus decisions about life insurance, long-term care insurance, estate planning and more
You can try to navigate your complex federal benefits on your own. Or, you can connect with an FRC® trained advisor who can provide you with the latest information to help you make informed decisions.
