When it comes to daily and annual expenditures, you can save thousands of dollars and it only takes a little effort. Image: NAN728/Shutterstock.com
By: Abraham GrungoldThere are approximately 6.9 million active TSP (Thrift Saving Plan) participants. They are active employees and retired employees who make up this TSP population. There are many types of participants who are anxious to see their account grow and hopefully one day they will reach their financial goal such as becoming a TSP millionaire.
It is important for federal employees to maximize their contributions to the TSP. For active federal employees, $23,000 is the maximum amount of annual contribution for those employees who under 50 years of age. Those employees over 50 years of age can contribute $30,500 per year. Also, it is equally important for federal retirees to have their TSP last during their retirement years.
I have known many people who contributed to the max over 20 years and never became a TSP millionaire because they only invested in the G Fund. I have many clients who are high wage earners and are not contributing even 5 percent of their salary to the TSP, because they spend too much on other areas.
With the rising cost of day-to-day expenses and inflation, being on a budget maybe something for federal retirees to consider.
Regardless which type of federal classification you fall into, the amount of spending can be problematic for those trying to contribute to the maximum for their TSP and also living on a budget in retirement.
When it comes to daily and annual expenditures, you can save thousands of dollars and it only takes a little effort.
Careful monitoring and management can make a significant difference in financial health, for both active employees and retirees. Here are some practical suggestions:
1. Life Insurance: Evaluating the actual need for life insurance is crucial. It can be expensive; how much do you really need and when should you consider letting go. It’s often recommended to reassess your coverage as you age and your financial obligations change. Sometimes, letting go of unnecessary or redundant policies can free up significant funds.
2. Dining Expenses: Eating out can indeed add up quickly. You can easily spend hundreds of dollars eating out while running errands and socializing with friends. Budgeting for dining expenses and perhaps limiting the frequency of restaurant meals can help manage this cost. Cooking at home or opting for more affordable dining options can also make a difference.
3. Medical Expenses: Shopping around for prescription medication and considering generic brands can significantly reduce healthcare costs. Additionally, exploring options like mail-order pharmacies or prescription discount programs can further lower expenses.
4. Travel Costs: Different websites have different prices for the same flights, hotels and rental cars. Being diligent in researching and comparing prices for travel expenses like flights, hotels, and rental cars can lead to substantial savings. Utilizing travel rewards programs or booking during off-peak seasons can also help stretch your travel budget.
5. Spousal Communication: Talk to each other before making large expenditures. Open communication about finances between spouses is vital for making informed decisions and avoiding unnecessary expenditures. Discussing major purchases beforehand ensures both partners are on the same page and can help prevent financial strain.
By closely monitoring and effectively managing these areas, individuals can better align their spending with their retirement goals and maximize contributions to retirement savings plans like the Thrift Savings Plan (TSP) and enjoy your retirement years. Proper Planning Prevents Poor Performance.
Abraham Grungold is a retired federal employee with 36 years of federal service – including with the USPS Inspector General, the VA Inspector General, the US Dept of Justice, and the US Dept of Labor. Through his company AG Financial Services he helps federal employees with their TSP and federal retirement planning and decisions. Mr. Grungold has written over 50 articles regarding the TSP and FERS retirement and been a guest on several podcasts with the Federal News Radio and Government Executive Magazine.
OPM Advises Agencies on Conducting RIFs During Shutdown
Updated Shutdown Contingency Plans Show Range of Impacts
Use Shutdown as Justification for More RIFs, OMB Tells Agencies
Unions Win a Round in Court Disputes over Anti-Representation Orders
Deferred Resignation Periods End for Many; Overall 12% Drop
Senate Bill Would Override Trump Orders against Unions
TSP Adds Detail to Upcoming Roth Conversion Feature
See also,
Legal: How to Challenge a Federal Reduction in Force (RIF) in 2025
How to Handle Taxes Owed on TSP Roth Conversions? Use a Ladder
The Best Ages for Federal Employees to Retire
Best States to Retire for Federal Retirees: 2025
Retention Standing, ‘Bump and Retreat’ and More: Report Outlines RIF Process
