Did you know that a quarter of all Americans have no retirement savings? Whether this is due to lack of savings or not receiving benefits from their work, it is important that you have a savings plan for after you leave your job.
If you work for the federal government, you may be wondering if you have access to unique savings plan options. The Thrift Savings Plan is a great place to start if you want federal benefits.
What is the Thrift Savings Plan?
The Thrift Savings Plan, or TSP, is similar to a 401(k) plan that may be an option in other workplaces. It is a contribution plan that the government will match up to five percent of your income if you are a civilian.
This is a defined contribution plan, which means that each employee has their own account that they invest with.
Savings Plan Options
You may be wondering about your savings plan options for the Thrift Savings Plan. The good news is, they are very similar to the models of IRAs, which you will find in other types of workplaces.
A TSP with deferred tax means that the money goes into your account before it is taxed. Then, when you want to remove it, it will be taxed according to the rate at the time.
Similar to a Roth IRA, a Roth TSP puts money into the account that is already taxed. You may end up saving money in the future if you have a lower tax rate now.
Benefits of TSP
The Thrift Savings Plan has many benefits, especially for women and health in retirement. You and your spouse will be taken care of in your retirement years with these federal benefits.
One of the huge perks of the Thrift Savings Plan is hands-off contributions. Once you sign up for the plan, you will get a certain amount taken out of your paycheck that is automatically deposited into your retirement account.
It also has lower management fees than many other retirement account vendors. This will allow you to save some money and put even more towards your actual account balance.
How to Invest Your Savings Plan
When you put the money into your account, you will still need to invest it in portfolios or mutual funds. This is the only way that it will start to grow exponentially over time.
You also need to be aware of contribution limits. The TSP contribution limits are identical to 401(k) limits and are subject to change every year.
Consider the Thrift Savings Plan Today
If you are a federal employee, you should not have to worry about having enough money when retirement comes. With this guide, you can use the Thrift Savings Plan to ensure that you are well taken care of in your golden years.
Want to learn more about ways that you can invest and save smart for the future? Check out our site for more tips and tricks on meeting your financial goals.