“It’s never too late if you start now!” – While it might be too late for you to wind up with millions in your TSP account at retirement – it’s never too late for you to make an improvement to the size of your portfolio and improve your retirement outlook. It’s worth at least increasing your contribution rate to see what effect it has on your day to day budget.

In a recent article we looked at two employees who started saving in their TSP at different times. One of them saved nothing for the first ten years of his federal career, while the other began saving immediately and kept it up for 30 years.

Both employees started out with a salary of $60,000 that increased by a rate of 1% per year. The first employee didn’t contribute to the TSP at all in the first ten years of federal service and then contributed 5% of salary (enough to secure the entire government match) from there on out – ending with almost $256,000 at retirement. The second employee began contributing 5% of salary from the beginning and continued at that rate throughout a full federal career – and that balance was almost $457,000 at retirement.

I used the TSP calculator How Much Will My Savings Grow? and assumed a 5% rate of return on their TSP investments.

What would their balances have looked like at the end of 30 years if they had both began setting aside 10%, rather than 5% after their tenth year of service? Employee 1 would now have almost $358,000; an additional $102,000. Employee 2 would now have a little over $578,000; an additional $121,000. Imagine if they could have contributed up to the maximum amount!

If you’re currently putting in less than the maximum contribution ($18,000 per year for those who have not yet reached their 50th year of birth), it’s worth going to your agency’s payroll interface (e.g., employee express, etc.) to increase your contribution. Then wait a few pay periods and see what effect this increase in contributions had on your family budget. If your budget still works for you, go back to your agency’s payroll interface and increase your contributions again. Repeat this until your increased contributions put the squeeze on your budget. You may not yet be contributing the full amount allowed – but you will be contributing more that you did before and you’ll be getting closer to your retirement goals. You will be improving; and that’s what counts.

You might want to take a look at your budget and make some changes to your budget categories, moving more money into TSP contributions. Ask yourself the question: “Of the three biggest savings goals (children’s education, buying a home, saving for retirement), which one won’t a bank give me a loan for?”

Remember, it’s never too late if you start now – not too late for an improvement, that is!