If you haven't started saving for retirement, it's not too late — start contributing to the TSP now. And if you've been saving steadily, you'll definitely want to stay on track.
- Catching Up with Contributions
- Your TSP Asset Allocation
- Your Tax Treatment Options
- An Ongoing Process
If you're getting a late start on retirement savings, or if you haven't accumulated as much as you would like, the IRS gives you a chance to make up for some lost time with catch-up contributions. Be sure to take advantage of them if you can:
- You must be age 50 or older in the year in which you plan to make catch-up contributions.
- You must expect to contribute the maximum amount allowed of regular employee contributions for the year to the TSP or other eligible employer plan.
Visit Contribution Limits for current information on the IRS allowable limits.
The way in which you distribute your money among the TSP funds should reflect your time horizon (years until you will need your money in retirement) and your risk tolerance. At this stage of your career, your time horizon is shorter than when you first started working. This might be an appropriate time to revisit your asset allocation and determine if you need to scale back the amount of risk you are taking in your TSP account. That is, if you are heavily invested in the TSP stock funds or solely invested in the G Fund, you'll want to be sure that your allocation is appropriate, given other retirement resources you may have.
Keep in mind that diversification is still important. By spreading your investment across the different funds, you become less susceptible to dramatic losses that might be associated with having all of your money in a single asset.
Visit Investment Funds to learn about all of the TSP funds, their features, and past performance. The information there will help you to determine an asset allocation that best suits your needs at this stage of your career.
You have the option of making traditional (pre-tax) contributions and/or Roth (after-tax) contributions to your TSP account. For more information on these options, visit Tax Treatment of Your Contributions.
As you approach your mid-career working years, it's important to remember that retirement planning is an ongoing process. On a regular basis, you should:
- Review your investment experience and your TSP balance.
- Reassess your retirement income needs and your investment goals.
- Consider your risk tolerance and make any necessary changes to your asset allocation.
- If necessary, increase your TSP contributions.