WHEN IS THE BEST TIME TO BEGIN PLANNING FOR FEDERAL RETIREMENT?

Federal Benefit Advisory

When is the best time for a federal employee to begin planning or even thinking about retiring?  In four words: “On Your First Day”. I suppose anyone can argue this is too soon, but I can also argue that time is of essence and will pass all too quickly, so with the passing of time, benefits could be reducing.

From your first day, TSP contributions and personal budgets may be in conflict. After all, the new boat, that vacation a bigger house is always calling.  Over the past 30 years, the federal employee we encounter with a high TSP balance, is one with a frugal home budget, makes large even maximum contributions and once they reach age 50, are making Catch Up contributions. But savings and keeping expenses low is only part of the story, the other side of this coin is to manage daily the personal budget, watch credit card statement to make sure they are aligned with your agreement of expenditures, and, this is a big and, manage your TSP. 

How does one manage their TSP, doesn’t TSP say, plunk your money down and don’t worry, it will magically grow?  This is partly true, just as a stopped watch is accurate twice each day.  Watch the market (DOW, S&P, NASDAQ), become answer of the influences on theses indexes, understand how this can have a positive or negative effect on your TSP balances and intime, your retirement.

If your review your TSP statement once a year, at any time you might see a positive return on your C Fund. Perhaps a very good return, that looks good, great, stupendous right?  But what if months before your C Fund had been higher, much higher? It means the C Fund could be in a nosedive. As a matter of fact, this phenomenon is accruing right now: 

  • The TSP C Fund had a 1-year return of 25.53% on December 3, 2021
  • February 11, 2022, 16.81% 1 year return.
  • In 70 days, the 1-year return for the C Fund has fallen 8.72%.

“Well, I am not concerned, it’s only on paper!”  I do not know who came up with that line, but it is not only on paper, but it also represents real dollars and cents.  If you bank account were hacked of $1000.00, would it be appropriate to say, it is only on paper? Manage your life savings, daily. It is hard work when you begin, it becomes habit, and you will know if you are losing or gaining.

To protect yourself against a loss, set a dollar limit for loss. What ever dollar amount is comfortable, such as a $1000.00 loss or $2000.00 loss or any amount, but once you reach this self-imposed limit, move to a ascending fund or the G Fund for asset protection.

If this is of concern to you and you would like to learn more, please reach out to us at info@federalbenefitadvisory.com, we will send you a video on Self-Management of your TSP.

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