It’s almost time for the holiday season. That means planning for parties, gifts, and possibly even time away from work. Soon it will be 2019, which means a fresh start to review your goals and set new resolutions.
You may want to take this time to review your retirement strategy. If you’re a government employee, that likely includes a review of your thrift savings plan (TSP). The TSP is a popular and effective vehicle for accumulating retirement assets, primarily because it offers tax-deferred growth and agency matching contributions.
Below are a few questions to ask about your thrift savings plan and your retirement strategy in general. If you haven’t reviewed your strategy in some time, now may be the right time to do so. A financial professional can also help you look at your strategy with fresh eyes and identify areas for change.
How much should you contribute?
In 2019, you can contribute up to $19,000 to your TSP. If you’re age 50 or older, that amount increases to $25,000.1 Of course, it might be difficult or simple unfeasible to contribute that kind of money on an annual basis.
However, any increase in your contributions is helpful, especially if it will increase your matching contribution. The federal government matches your contributions up to 4 percent of your salary. They also contribute an automatic 1 percent. That means if you contribute 4 percent, you’ll get an additional 5 percent from your agency or service. Consider increasing your contribution at least enough to get the full agency match.2
Are you allocated the right way for your goals and risk tolerance?
Do you feel like you’re becoming more conservative over time? That’s natural. After all, you’ve worked hard to accumulate retirement assets. You probably don’t want to see those assets decline due to market loss.
On the other hand, you’ll probably need some level of growth to fund a long retirement. Growth and risk often go together. If you rush to more conservative assets to avoid risk, you may miss out on growth opportunities.
Your TSP offers several different investment options so you can align your allocation with your goals and risk tolerance. The plan also offers life cycle funds that are targeted toward a future retirement date. Those funds automatically become more conservative as you approach retirement.
The beginning of the year is a good time to visit with your financial professional and review your allocation. You may need to make some adjustments so your strategy fits your needs.
What other risks exist in your strategy?
Your TSP isn’t the only component in your retirement strategy. You may have an IRA or other assets. You could have a pension or other potential sources of income.
Your plan also may be vulnerable to risk. Take a look at your protection strategy to see if there are any gaps. Are you protected against long-term disability? If you’re approaching retirement, have you considered how you might pay for future long-term care costs? Again, a financial professional can help you answer these questions and develop a strategy.
Ready for your year-end review? Let’s talk about it. Contact us today at Benefit Resource Partners. We can help you analyze your needs and develop a strategy. 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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