How do you feel about your retirement plan? If you’re like many Americans, you don’t feel too confident about your ability to retire comfortably. According to a recent survey from the Employee Benefit Research Institute (EBRI), 33 percent of Americans don’t feel confident in their ability to retire. Only 23 percent of Americans say they are “very confident” in their retirement planning.1
Are you among that group who lacks confidence? The good news is there are steps you can take to boost your savings and improve your preparedness. Even if you are approaching retirement, it’s not too late for you to take action. As a government employee, you actually have options available that private sector workers may not be able to consider.
Below are a few tips to help you get your retirement planning back on track. You also may want to meet with a financial professional. They can help you analyze your strategy and identify areas for improvement.
Boost your TSP contributions.
Did you know you can contribute up to $19,000 to your thrift savings plan (TSP) in 2019? That limit increases to $25,000 if you’re age 50 or older.2 You also may receive matching contributions from your employer agency.
The TSP is one of the most powerful savings vehicles at your disposal. Your contributions come out of your check on a pre-tax basis, reducing your amount of current taxable income. Additionally, all growth in the account is tax deferred. That means you don’t pay taxes on growth until you take distributions from the account.
Look for ways to increase your contribution. Perhaps look at your budget and identify areas where you can cut spending so you can increase your savings. Even a moderate increase in contributions is better than nothing. Consider how much you can afford and identify ways to maximize your savings.
Review your allocation.
Once you contribute funds to your TSP, you can choose from a variety of investment options to build your allocation. The TSP offers five different funds, and each targets a different type of investment. Each fund has a different risk profile and different levels of growth potential.
You can also choose from lifestyle funds. These funds are pre-built allocations aligned with a certain target retirement date. For example, the L 2030 fund is designed for those retiring around 2030. The fund automatically becomes more conservative as you get closer to your retirement date. They could be a good option if you prefer a more hands-off approach to investing.
Now may be a good time to review your allocation and make sure it’s still a good fit for your goals and your risk tolerance. Growing your assets is important, but so too is minimizing risk. If you’re approaching retirement, a significant downturn in the market could put your retirement in jeopardy. A financial professional can help you determine if your allocation is appropriate for your goals.
Delay your annuity benefit.
As a government employee, you benefit from the three-part Federal Employee Retirement System (FERS). The TSP is one part. Social Security is another. The third and final component is the FERS annuity, which is paid in monthly installments when you retire.
Your annuity amount is based on the average salary of your three highest earning years and your length of service. You may not be able to control your average salary, but you can control how many years you work. The more service years you have under your belt, the higher your annuity payment will be. While it may be tempting to retire as soon as you’re eligible, you can significantly increase your retirement income by working as long as possible. Consider pushing back your retirement by a few years to improve your financial stability.
Ready to get your retirement strategy back on track? Let’s talk about it. Contact us today at Benefit Resource Partners. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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