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Your Thrift Savings Plan account is an important part of your retirement income plan.  As with most retirement accounts, a lot of the responsibility for success will be on you and how much time, energy, and of course money that you put in to making it successful.  This article will provide some suggestions on what you can do on a yearly basis to put yourself in the best position to succeed.

Check Your Contribution Percentage

                Did you enroll in the TSP as a private just out of basic training or in your first year of civil service?  Chances are you elected to defer a small percentage of your pay into the TSP when you first started, and if you haven’t checked it since then, you still are!  Checking and increasing your contribution percentage as your income increases can help magnify the amount you are putting towards retirement yearly.

• If you are a Blended Retirement System participant or a FERS employee you should be deferring at least 5% in order to take advantage of the agency matching contributions.
• Try to make small increases on a yearly basis or when you get a pay raise.
• Pay attention to the contribution limits; they usually increase each year and in 2019, they are $19,000 for those under 50 and $25,000 for those 50 and over.  If you are a BRS or FERS, make sure you don’t hit the limit too early in the year and lose out on some matching contributions. 

Choose Roth or Traditional Contributions

                TSP contributions can be either pre-tax (Traditional) or post-tax (Roth).  The one that is right for you will really depend on your own tax situation.  Those in a higher tax bracket now may benefit from making traditional contributions and lowering their tax liability now.  Those in lower tax brackets may not get as much benefit from a traditional contribution and instead choose the Roth option.

• Check this every year, as your personal tax situation as well as the tax laws tend to change, which may make either the traditional or the Roth more advantageous for you.
• If you are a service member receiving tax-exempt income you should strongly consider contributing to a Roth account to enjoy triple the tax benefits.
• It does not have to be one or the other.  You can contribute to both Roth and traditional accounts in the same year; however, the total limit still remains $19,000 ($25,000 for those 50 and over).

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Check Your Allocations

                Checking up on your contributions is step one, step two is checking what your money is invested in.  For this step, you will need to log into your account at TSP.gov.  You do not want to be the investor that spent thirty years investing money into only the G Fund.

• Choosing your allocation should not be a random exercise.  Your allocation should be based on a plan for investing in your retirement.  That plan can evolve over time.  Someone in their twenties should not be investing the same as someone two years away from retirement. 
• You can also make this a little easier on yourself and invest in the Lifecycle Fund that corresponds to your retirement age.  The Lifecycle Fund is a professionally managed mix of all five TSP funds, that is adjusted to be more conservative as you get closer to retirement.  I do find that the Lifecycle Fund can tend to be a little too conservative for me, so while the majority of my allocation is in the Lifecycle Fund, I do allocate some to the I and S Funds.  Find your right mix and check on it at least annually to ensure it is still aligned with your risk tolerance and retirement goals.  Bottom line, you can and should pick the allocation that is right for you.

Be a proactive participant in your TSP, by performing regular check-ups and paying attention to both how much you are investing and what you are investing in, you can put yourself in the best position to afford the retirement you want, have earned, and deserve.