Planning for a federal retirement brings unique challenges, especially when most retirement advice targets private-sector employees without pensions like the FERS annuity. Federal employees have different benchmarks for savings, making it important to focus on guidelines tailored to your needs.
By Age 50, Aim for 4 Times Your Salary in Your TSP
While you might hear that private-sector employees should save six times their pre-retirement income by age 50, federal workers can aim for around four times their annual salary. This recommendation reflects the added income security of the FERS pension. If you’re not there yet, there’s still time to make progress—especially with the option to begin catch-up contributions once you turn 50.
Maximize Your TSP Agency Match
If you’re not taking advantage of your agency match, you’re leaving free money on the table. Federal agencies match up to the first 5% of your TSP contributions: the first 3% is matched dollar-for-dollar, while the next 2% is matched at 50 cents on the dollar. Coupled with compound interest, these matching contributions can significantly boost your retirement savings over time.
Note: Once you reach the TSP contribution limit for the year, any additional contributions automatically “spill over” as catch-up contributions.
TSP Catch-Up Contributions for Age 50+
Upon reaching age 50 (or during the calendar year you turn 50), you can make catch-up contributions to your TSP in addition to your regular contributions. In 2024, the IRS set the catch-up contribution limit at $7,500, on top of the standard $23,000 TSP contribution limit. Once you hit the regular limit, any further contributions will spill over to count as catch-up contributions, and you’ll continue to receive agency matching contributions on up to 5% of your salary.
Enhanced Catch-Up Contributions for Ages 60–63 Starting in 2025
The Secure Act 2.0 will increase catch-up contributions for TSP participants who turn 60, 61, 62, or 63 within a calendar year. Beginning January 1, 2025, eligible participants can contribute the greater of either $10,000 or 50% more than the standard catch-up limit. These amounts will adjust with inflation after 2025, providing a substantial opportunity to bolster retirement savings in the final working years.
For more tailored retirement planning, consider consulting an FRC® advisor.
