What is a Thrift Savings Plan (TSP)?
The TSP is a defined contribution plan to help federal employees save for the future. These employees must be in the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). The retirement income you get from your TSP account depends on how much you (and your agency or service, if eligible) put into your account during your working years and the earnings accumulated over that time.
You’re signed up for the TSP when you start your job as a federal employee. Like many 401(k) plans in the private sector, it’s eligible for agency matching contributions of up to 5%.
As with several 401(k)s, TSPs offer both traditional and Roth options. There’s a wide range of TSP funds in which to invest, each offers different rates of return and risk levels.
Let us help you navigate your various options.
Why use a TSP?
Contributing 5% to the TSP is a wise financial decision because the money will be matched. Contributions beyond that might be better invested elsewhere for the federal employee’s future.
TSPs have very low administrative costs. It’s a reasonable investment option and a good asset to have. But, it doesn’t offer you all the options like an outside account will so this needs to be considered.
Your Investment Choices
The TSP offers 6 different funds in which federal employees can invest. These include:
- G Fund is a government securities investment. It focuses on preserving your money and generating returns above those of short-term U.S. Treasury securities. The fund offers the lowest volatility. You can also earn interest income without losing your principal investment.
- F Fund is a fixed income index investment fund invested in government, corporate, and mortgage-backed bonds. It aims to match the performance of Bloomberg Barclays U.S. Aggregate Bond Index. This fund offers low to moderate risk.
- C Fund is a common stock index fund comprised of several Fortune 500 companies to match the Standard and Poor’s 500 (S&P 500) Index. It offers moderate risk.
- S Fund is a small-cap stock index fund that invests in companies that aren’t in the C Fund, posing a higher risk. It matches the performance of the Dow Jones U.S. Completion Total Stock Market Index.
- I Fund is an international stock index fund comprised of stocks from more than 20 developed countries. It’s more volatile than the C Fund and aims to match the performance of the MSCI EAFE (Europe, Australasia, Far East) Index.
- Lifecycle Fund (L Fund) is a retirement-timeline fund. As you approach your target retirement age, it shifts from aggressive to moderate to conservative.
Maximize Your TSP
Our passion is helping federal employees like you maximize their TSP and other federal benefits to reach their investment and retirement goals. The more you learn about your retirement investment options now, the more prepared you’ll be when retirement finally arrives.
At My Guaranteed Income, we can help you maximize your TSP and outside investments so they work together. When it comes to federal benefits, one size doesn’t fit all.
Every client is a top priority—from planning to execution to follow-up. We take an in-depth, yet simple, approach to helping you develop a strategy to address your personal goals and financial objectives.
We’re excited to show you how amazing retirement can be!