Strategic

At minimum, you should contribute at least 5% of your salary to capture the full agency match — the government's automatic 1% plus dollar-for-dollar matching on the next 3% of your salary, and 50 cents on the dollar for the next 1%. Beyond that, maxing out your TSP (up to $24,500 in 2026, or $32,000 if age 50+) depends on your overall financial situation, other savings goals, and whether you have high-interest debt. The TSP offers extremely low fees and excellent tax benefits, making it one of the best places to save for retirement.

Traditional TSP contributions reduce your taxable income now but are taxed when withdrawn. Roth TSP contributions are made with after-tax dollars but grow and can be withdrawn tax-free in retirement. Generally, Roth makes more sense if you expect to be in a higher tax bracket in retirement, or if you're early in your career with lower current income. Traditional makes sense if you're in a high tax bracket now and expect lower income in retirement. Many federal employees benefit from a mix of both — we can model your specific situation to determine the optimal split.

The TSP has incredibly low expense ratios and offers unique benefits like the G Fund. However, an IRA rollover provides more investment options, greater withdrawal flexibility, and potentially better estate planning features. If you separate from service in the year you turn 55 or older, the TSP also allows penalty-free withdrawals before age 59½. Whether to keep your TSP or roll it to an IRA depends on your investment preferences, withdrawal needs, and overall estate planning goals. There's no one-size-fits-all answer — we evaluate your specific situation to make the right recommendation.

TSP offers four main withdrawal options: (1) Single payment of your entire balance, (2) Monthly installments based on your choice of amount or life expectancy, (3) Purchase of a TSP life annuity for guaranteed monthly income, or (4) A combination of these options. Each has different tax and income implications. Monthly installments offer flexibility but no income guarantee. Life annuities provide guaranteed income but no access to principal. Most retirees benefit from a strategic combination, often keeping some TSP funds for growth while taking systematic withdrawals coordinated with FERS and Social Security.

L Funds (Lifecycle Funds) are professionally managed portfolios that automatically adjust their allocation to become more conservative as you approach retirement. Each L Fund has a target retirement year (like L 2030, L 2040, etc.) and rebalances quarterly. They're designed as a simple, set-it-and-forget-it option. L Funds work well for hands-off investors who want automatic rebalancing, but they may not account for your specific situation — like whether you have a FERS pension, other savings, or a risk tolerance that differs from the average. We can evaluate whether an L Fund suits your needs or if a custom allocation makes more sense.