"Two of the hardest things to do is save when you’re young and spend when you’re old." Don't blow through your TSP in retirement, but don't be afraid to spend some of it either. Image: Licvin/Shutterstock.com

John Grobe

A couple of months ago, we used a song by Frankie Valli and the Four Seasons to make a point.  In this article, we’ll do it again with the song “Let’s Hang On to What We’ve Got.”  That might have been a good idea for saving the relationship about which the Four Seasons were singing, but it’s not such a good idea when it comes to retirement and your Thrift Savings Plan.

There is a reason why we have been setting aside money in our TSP (and hopefully, in other savings instruments like IRAs); that reason is so that we can spend it later on when we need to do so. Our TSP balance can be used to supplement the retirement income we receive from our FERS or CSRS pension and from our Social Security. We might need TSP money to make ends meet, or we might want it for funding retirement activities such as travel. And we’re never going to get help or enjoyment from those savings unless we actually spend them.


One financial maxim (credited to Anonymous) is “Two of the hardest things to do is save when you’re young and spend when you’re old.” We can probably all testify to the first part of this adage; and we should be prepared to confront the second part once we become “old” and start spending our nest egg. I’m not suggesting that you spend feverishly and empty out your entire TSP in the early years of retirement. Rather, I’m encouraging you to monitor your spending and use it effectively in retirement.

A major difficulty in managing our TSP (and our retirement in general) is the fact that we: 1) don’t know how long we are going to live; and 2) don’t know how long we will continue to have good health. It’s safe to assume that we will slow down as we get old. I, for one, am less vigorous and in somewhat poorer health today in my 70s than I was when I left federal service in my 50s. People are likely to spend less money as they age. A theory called the “Spender’s Slope” posits that, beginning at a certain age, our spending will reduce until it becomes 70% to 80% of what it was in the early years of retirement.

Many financial advisors suggest using the “4% Rule” in spending down sources of income like the TSP and IRAs. This would have you taking 4% of the value of your TSP your first year of retirement and increasing it by the rate of inflation each successive year. Following such a strategy would give a great likelihood of your still having money in the account at the end of your life. If you were to couple the 4% Rule with the Spender’s Slope, you could withdraw more money in the early, active, years of your retirement and withdraw less once you slow down.

Don’t hang on to what you’ve got; spend it judiciously for your support and enjoyment in your retirement years. Don’t let the fear of running out of money keep you from enjoying the results of your years of saving.

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How Will You Use Your TSP When You Retire?

FERS Retirement Guide 2022