If you are not taking full advantage of your retirement savings opportunity through the TSP, it’s time. Unfortunately many federal employees still are failing to take any, much less full, advantage of the TSP.

If you’re under the Federal Employees Retirement System, you get an automatic 1 percent of salary contribution from your agency, but to capture the matching contributions of up to another 4 percent, you must invest personally. Yet a tenth of FERS employees don’t invest at all, and even among those who do invest, about 20 percent invest less than the 5 percent level that would capture the maximum government contributions.


CSRS employees get no agency contributions but the TSP still offers tax-advantaged savings. But in their case, only about 65 percent of individuals have TSP accounts.

The figures don’t necessarily mean it has been the same employees not investing year to year, of course. People do move in and out of the program and sometimes situations arise that cause them to stop investing for a period.

However, once that time for investing is lost, along with the potential for growth (and government matching contributions, for FERS employees) it is lost forever.

Younger and lower paid employees generally are less likely to invest, and when they do invest, they on average invest less than older and higher paid employees.

That’s understandable but still a shame. Those younger employees are giving up some of the advantage of the many years of compound growth available to them. And lower paid employees are passing up an opportunity to improve on the less generous basic retirement benefit they will receive.

Clearly, some people simply cannot afford to invest personally in the TSP, at least not at high rates or at least not just now. In a 2017 survey by the TSP, six-tenths of investors not putting in at least 5 percent said the reason was that they just couldn’t afford to invest more (although some others said they are saving in other ways.) Maybe you can’t get there in the short run, but you can take steps toward it.

Every month that goes by that you don’t take full advantage of the TSP is another month of lost tax-favored savings and earnings—and if you’re in FERS, you are literally passing up free money.


See also, Understanding TSP Withdrawals

TSP Investors Handbook, New 6th Edition