Image: Sarah2/Shutterstock.com

By John Grobe

In a previous article on the “best day” to retire from the perspective of the Thrift Savings Plan we discussed how one could max out TSP contributions for the year, even if if not planning on retiring right at the end of the year.  That article made the assumption that a person has the resources to contribute fully to their TSP, especially in the later, usually higher paying, years of a career.

But “it ain’t necessarily so” that a federal employee approaching his/her retirement has the kind of money they need to be able to fully fund their Thrift Savings Plan (apologies to George and Ira Gershwin).  There are several reasons why one can find themselves in such a situation.


They might occupy a lower graded position; a position where setting aside the $19,500 elective deferral limit is unrealistic;
They might still have children that they are putting through college;
They might have a disabled spouse or child; or
They might have started their federal career with lots of debt that they need to pay off.

For someone who is short of the money they believe they need for retirement, there are two competing strategies: 1) work longer; or 2) plan to live on less.  Admittedly, neither choice is appealing.  One either has to work longer, thereby shortening their retirement, or live on less, thereby not being able to do some of the bucket list items they had planned on doing in retirement.

Here’s a question that could be asked if you face this onerous decision, “Which is more important to me (i.e., which will I have the most of), money or time?”  Well, in retirement there is an abundance of time, but no additional sources of money.  So, if a person: A) likes (or at least doesn’t hate) their job; and B) can expect to live for quite a while after retirement, they would consider working longer.  Someone like myself (I love what I do, and my family lives a long time) might be likely to consider this option.  For each additional year you work you will increase your CSRS or FERS pension, increase your Social Security benefit, and have the opportunity to set aside more in the Thrift Savings Plan.  Plus, there would be one less year of retirement to fund.

However, if a person doesn’t like their job and their family longevity is not what mine is, they might opt to take the money and run.  What good is money if you’re not around to spend it?  Someone like my wife (who had the boss from hell and whose family lives about a decade less than mine) might choose this path.  Another thing to consider is that, as one ages, they become less able to participate in some of the more strenuous retirement activities.

There is no “one size fits all” solution to the choice of working longer or spending less in retirement.  It’s best to take time now to consider what your choice would be as you near retirement age.

Federal Benefits and Retirement Dates

TSP: Don’t Burn Through it, but Don’t be Afraid to Spend It

Don’t Fumble Your Retirement at the Goal Line

OPF: Tweak Your Personnel Folder for Maximum Benefits

FERS and Social Security Take Some Stress Out of Planning to Spend Your TSP, IRAs

Lessons Learned Growing a TSP Balance Beyond $1M

TSP Investors Handbook, New 7th Edition