Small Ways to Increase Your Overall TSP Savings
Small Ways to Increase Your Overall TSP Savings
Are you dreaming of early retirement? If so, it might be time to think about increasing your overall Thrift Savings Plan (TSP) savings. To receive the government match, most federal employees designate 5% from their paychecks in their TSP. That’s a great baseline but if your situation can afford to increase the amount, you can make your money work for you even faster. Federal Educators share how to make this plan a reality with simple ways that federal employees can make the most of their benefits.
The IRS established maximum annual TSP contributions and other retirement plans at $20,500 for 2022. Anyone 50 years and older can save an additional $6,500 in catch-up contributions for a total of $27,000. It may seem like a no-brainer but increasing your TSP savings depends on how much you save in the first place. The more money saved, the more you can take advantage of compounding, an ongoing process where your investment earnings generate their own earnings. A 5% savings is nowhere near the maximum annual TSP contributions but should you choose to increase or even double your TSP savings, this modest change can make a big difference over time. While we know that everyone’s situations are different, here are some small ways that you can audit your current lifestyle so you can increase TSP amounts.
While working, try to take advantage of the flexibility to free up or earn extra money. Four small ways to increase your TSP amounts include cutting costs and unnecessary spending from your budget, comparing lower insurance rates every six months, taking advantage of lower mortgage rates by refinancing your home, and considering a longer career to build up your bank.
How can you determine whether to max out your TSP savings? There are a couple of factors when deciding if this is a luxury or a necessity. Many federal employees use the TSP’s Federal Ballpark E$timate retirement tool to calculate but these numbers do not always provide real-time accuracy. For more comprehensive planning, the Federal Educators team can provide your family with resources and tools tailored to your journey. Call the Tampa office at (813) 755-7037 or request a free benefits analysis today.