Even though you enjoy one of the best retirement systems in the country, federal employees still need to plan carefully for retirement just like everyone else. In fact, you should definitely avoid assuming that because you can potentially draw income from three different sources, that you’re completely “set up”! As you look toward the future, determining your income needs is crucial to planning a stable retirement.
A single blog post can’t answer that question for everyone, but we can certainly get you asking some important questions and point you in the right direction. Everyone’s retirement income needs are different, but addressing these three questions will help you narrow your focus:
- Consider your current needs, such as housing, utilities, food, etc
- Ask yourself how you want to spend your retirement years; do you hope to pursue a certain hobby? What about travel? Are you planning to move somewhere else or purchase a vacation home?
- Consider unexpected expenses. Health problems can trigger a need for nursing care or extra medications. Emergencies can make last-minute travel necessary, or trigger the need for home repairs. Will your budget accommodate the unexpected, or do you have a way to cover these expenses?
Now, after gaining perspective on a potential budget, you can work backward from there. Calculate your expected annuity payments, TSP withdrawals, and Social Security benefits. Do those add up to match or exceed your budget? If not, you have a few options…
- Work longer, so that you can save more money in your TSP before retirement
- Bump up your current TSP savings rate but retire at the same time you had planned
- Consider whether you can reduce your anticipated budget and make it match your projected retirement income
- Investigate ways to generate additional retirement income
Need help estimating your potential retirement income, or deciding what to do next? That’s why we’re here! Give us a call and we’ll help you run the numbers and decide what your next steps should be.
