What is the average TSP balance at retirement?
Average TSP account balances for Uniformed Service Members reached almost $30,000 by the end of 2019, while balances for new 'Blended Retirement System' (BRS) participants reached close to $7,000 in just two years since the BRS became operational.
How much should I have in my TSP at 30? This is how much Fidelity recommends that Americans have saved at all ages: Before you are 30, you should have saved the equivalent of your salary. At 40, you need to have three times your salary saved up. At 50, you should have six times your salary saved up.
| Was | Average contribution rate | average balance |
|---|---|---|
| 20-29 | 7% | $10,500 |
| 30-39 | 8% | $38,400 |
| 40-49 | 8% | $93,400 |
| 50-59 | 10% | $160,000 |
The number of Thrift Savings Plan participants with accounts totaling over $1 million has dropped significantly since December 2021. TSP millionaires now comprise about 1.7% of all accounts, compared with about 3% last year.
On the opposite side of the volatility spectrum, the S Fund (small cap U.S. stocks) has the largest annualized standard deviation: 21.44% as of this writing, and is therefore the riskiest.
Answer: More! I frequently state that there is no such thing as too much money in the Thrift Savings Plan. If you want your TSP balance to be able to generate an inflation-indexed annual income of $10,000, most financial planners will suggest that you have a $250,000 balance at the time you retire.
1. Leave Money in the TSP. You can leave the money in your Thrift Savings Plan account until April 1st of the year after you turn 70 ½. After that, you must start taking distributions.
- Weigh Your Options. ...
- Contribute as Much as Possible. ...
- Consider the Roth Option. ...
- Don't Withdraw Early. ...
- Invest According to Your Situation. ...
- Monitor Your Investments.
One suggestion is to have saved five or six times your annual salary by age 50 in order to retire in your mid-60s. For example, if you make $60,000 a year, that would mean having $300,000 to $360,000 in your retirement account. It's important to understand that this is a broad, ballpark, recommended figure.
As of December 31, 2020, the S Fund outperformed the C Fund over the last 1, 3, 5, 15 and 20 year periods. The C Fund outperformed by a small amount over the last 10 years. Despite the S Fund's historical record of outperforming C, TSP participants invest three times as much in the C Fund as the S Fund.
How much is TSP taxed when withdrawn?
So the answer is that $850 of your withdrawal is considered taxable income. If you were still working and this were an in-service financial hardship withdrawal, this money would also be subject to the 10% early withdrawal penalty tax unless you were covered by an exception.
For July 2022, the TSP Fund with the best return was the S Fund with a return of 10.32%. The C Fund was not far behind with a return of 9.22%. The I Fund had a return of 5.15%. So far in 2022, the G Fund still has the best performance with a positive return of 1.41%.
The G Fund is invested in short-term U.S. Treasury securities specially issued to the TSP. Payment of principal and interest is guaranteed by the U.S. government. Thus, there is no “credit risk.”
“For TSP Fund investors, we currently recommend shifting investments from the C, S, and I stock funds into the G bond fund,” he says.
In periods of falling interest rates, the F Fund will experience gains from the resulting rise in bond prices. So in the long run, you may expect F Fund returns to exceed those of the G Fund; however, you should also expect greater price volatility (up and down movements).
Experts say to have at least seven times your salary saved at age 55. That means if you make $55,000 a year, you should have at least $385,000 saved for retirement.
But, generally speaking, most experts agree that you will need 70-80% of your pre-retirement income to maintain your standard of living in retirement. This means that if you earned $50,000 per year ($4,167 a month) before retiring, you would need approximately $35,000-$40,000 per year in retirement.
How much does the average 70-year-old have in savings? According to data from the Federal Reserve, the average amount of retirement savings for 65- to 74-year-olds is just north of $426,000.
And while most states tax TSP distributions as well, these 12 don't: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming, Illinois, Mississippi and Pennsylvania.
Most federal employees and their spouses will face Social Security taxation. ent of a Social Security dollar. In effect, the withdrawal from the TSP triggers two taxes—the tax on the TSP dollar and a tax on your Social Security that you wouldn't have had to pay otherwise.
Should I transfer my TSP to an IRA?
In short, even if the recommendation is sound, any financial professional who recommends you move money from the TSP into an IRA could benefit financially from that move.
- Just start saving in your TSP account. ...
- Take advantage of the TSP match… ...
- … ...
- Choose your TSP funds wisely. ...
- Don't make unnecessary TSP fund changes. ...
- Avoid TSP loans and in-service withdrawals. ...
- The Bottom Line.
...
Vanguard Average 401(k) Balances by Age.
| Age | Average 401(k) Balance | Median 401(k) Balance |
|---|---|---|
| <25 | $6,264 | $1,786 |
| 25-34 | $37,211 | $14,068 |
| 35-44 | $97,020 | $36,117 |
| 45-54 | $179,200 | $61,530 |
For July 2022, the TSP Fund with the best return was the S Fund with a return of 10.32%. The C Fund was not far behind with a return of 9.22%. The I Fund had a return of 5.15%. So far in 2022, the G Fund still has the best performance with a positive return of 1.41%.
If you qualify for federal match funds, you should contribute to your TSP at least up to this limit (3% of your salary). Beyond this, it can make sense to have a Roth IRA alongside your Roth TSP: No rules prevent you from contributing to both. Ideally, you could max out both accounts to boost your retirement savings.
