The only way to answer this question confidently is to run your own numbers. Not someone else’s rule of thumb. Not a random article’s claim. Yours. Image: pogonici/Shutterstock.com
For many federal employees approaching retirement, hitting the $1 million mark in their Thrift Savings Plan (TSP) feels like the ultimate benchmark. After years of diligent saving, careful investing, and watching your balance steadily grow, it’s natural to wonder: Is $1 million enough for me to retire comfortably?
The answer? It depends.
Let’s walk through how to break down this question and figure out what your $1 million TSP actually means in the context of your personal retirement picture.
There’s No One-Size-Fits-All Number
Let’s bust the myth upfront: there is no magic retirement number that works for everyone. Some federal employees may retire securely with $400,000 in their TSP, while others may feel anxious even with $2 million.
Your retirement lifestyle, spending habits, health, debt, and other income sources will determine whether your $1 million TSP gets the job done. So rather than chasing a mythical target, let’s talk about how to analyze whether your number works for your life.
Building the Retirement Income Foundation
As a federal employee retiree, you’ve got something most private sector workers don’t: a pension. Under the FERS (Federal Employees Retirement System), you’ll receive a monthly pension check for life. On top of that, you’ll also likely receive Social Security and possibly the FERS Special Retirement Supplement if you retire before age 62.
Together, these fixed income sources provide the foundation for your retirement income. So before diving into whether your TSP is enough, make sure you have clear estimates of:
Let’s say, for example, your net monthly pension is $2,000 and your net Social Security benefit is $2,200. That’s $4,200 in monthly fixed income.
Turning Your TSP Into Income: The 4% Rule
Now let’s get to the TSP. The key question is: how do you convert your $1 million balance into monthly retirement income?
A commonly used guideline is the 4% rule. It’s a rule of thumb that suggests you can safely withdraw 4% of your retirement portfolio in your first year of retirement, and adjust that amount each year for inflation. The idea is that this withdrawal strategy should sustain a 30-year retirement with a high probability of success.
So, what’s 4% of $1 million?
$40,000 per year, or roughly $3,333 per month before taxes.
But remember: for most federal employees, the bulk of their TSP is in the Traditional (pre-tax) TSP, meaning your withdrawals will be taxed.
Let’s assume a 20% effective tax rate. That $40,000 per year becomes about $32,000 after taxes, or $2,667 per month.
What’s Your Total Retirement Income?
Let’s add it all together:
FERS pension (net): $2,000/month
Social Security (net): $2,200/month
TSP withdrawals (net): $2,667/month
Total Retirement Income: $6,867/month
Now ask yourself: is $6,867 per month enough?
To answer that, look at your current net pay—not your gross salary, but your take-home pay after taxes, TSP contributions, FEHB premiums, and other deductions. That’s the amount you’re living on today.
If your current net pay is $6,000/month, you’re looking at a potential pay raise in retirement. But if your lifestyle requires more than $7,000/month, you may need to consider saving more, reducing expenses, or adjusting your retirement age.
The Key Variables: What Could Affect Your Needs?
Even if the math looks solid today, there are a few wildcards that could dramatically shift your retirement picture:
1. Inflation
Over a 30-year retirement, inflation can erode your purchasing power. While the 4% rule accounts for inflation, rising costs—especially for healthcare—can put pressure on your budget
2. Healthcare
FEHB provides excellent coverage in retirement, but don’t forget about Medicare premiums, long-term care needs, or out-of-pocket costs. These can add up.
3. Longevity
Living longer is a blessing—but it requires your money to last longer, too. A 65-year-old today has a high probability of living into their 80s or 90s.
Comparing Real Numbers: The Net Pay Exercise
Here’s a simple way to assess whether your TSP and other income sources are enough:
Pull your most recent leave and earnings statement.
Find your net pay (after taxes and deductions).
Multiply your biweekly net pay by 26 to get your annual net pay.
Divide by 12 to get your monthly take-home pay.
Compare that to your estimated retirement net income.
If your retirement net income is higher than your current net pay, you may be in great shape. If it’s significantly lower, it’s time to reassess.
So, Is a $1 Million TSP Enough?
Here’s the bottom line: $1 million is a strong number—but it’s not a guarantee.
The real question is: what does your retirement cost? If your lifestyle is modest, you have minimal debt, and your pension and Social Security are solid, $1 million in your TSP may be more than enough. But if you’re planning expensive travel, want to support adult children, or expect high medical costs, you may need more.
The only way to answer this question confidently is to run your own numbers. Not someone else’s rule of thumb. Not a random article’s claim. Yours.
Final Thoughts
A million-dollar TSP is a huge achievement. But don’t stop there. Take the next step by:
Then, and only then, will you know whether your $1 million TSP is enough for you.
And if the answer is no? You’ve still got time to course-correct—whether by working longer, saving more, or adjusting your plans. Retirement success isn’t about hitting a magic number. It’s about building a plan that fits your life.
Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.
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