If you’re a woman who has been on the job with the federal government for a few years, you’re likely in pretty good shape. You have health insurance coverage through the Federal Employees Health Benefits (FEHBP) program. You might have access to Flexible Spending Accounts (FSAs) and Health Spending Accounts (HSAs).
Finally, through the Federal Employee Retirement System (FERS), regular contributions go into Social Security and the Federal Employees Retirement System’s Thrift Savings Plan, all set aside for when you leave your civil service job for good.
But this is the time to fine-tune your retirement strategies and consider enlisting the services of a Certified Financial PlannerTM. Taking those steps now can help ensure you have the resources to provide a great post-career quality of life.
Ramping Up the TSP Contributions
The good news is that you can take an important step to fund your retirement by increasing the contributions to your TSP. When first hired, your employer automatically deposited 1% of your basic pay earned per pay period into that TSP account. You might have also elected to increase TSP contributions. If you contribute up to 5% of your gross salary, your employer matches that amount.
It’s not too late to increase those mid-career TSP contributions as a federal woman employee. If you have yet to increase those contributions, it’s not too late to do so. The more you can direct to the plan, the faster it grows. Directing more to that TSP is essential if you’re in your 50s and moving closer to retirement. This would be the time to make catch-up contributions.
Navigating Career Gaps
As a woman, you’re more likely to leave the workforce – or reduce your hours – once the children come along. Here are the numbers:
On the other hand, you might be called upon to reduce your hours or leave your job on an extended, temporary basis to care for an aging relative. The challenge in either situation is that you can’t contribute to your TSP if you’re not working.
It’s possible to mitigate this impact by “going private.” In other words, you can open an IRA and contribute up to $7,000 annually (as of 2024).
Another possible issue is divorce. You might have taken time off to raise your children but couldn’t contribute to Social Security or the TSP. If you divorced your spouse once the children were on their own, you now have a lower TSP balance and fewer Social Security work credits.
Retirement planning for divorced federal employees includes catching up with your TSP contributions; reaching that 5% employer-matching limit can help.
An experienced CFP®, like someone with Serving Those Who Serve, is knowledgeable about these and other issues. That professional can work with you to develop the best solution.
But What About Current Expenses?
At this point, you might be thinking: “How can I possibly increase my TSP contributions? I’m already juggling a bunch of expenses, like the mortgage and saving for the kids’ futures, not to mention making sure those kids have food, clothing, and shelter.”
It is possible to balance current expenses. For example, you could set up a 529 plan for college savings and grow your contributions tax-free while they’re in the account. Withdrawals are tax-free if they’re directed to qualified education expenses.
Again, this is where having a qualified CFP® on your side is handy. That individual can advise you on issues like setting up college funds, and mortgage payoffs.
Mid-Career: The Right Time to Focus on Retirement
Your focus now is on kids, housing, college, and career advancement. Retirement strategies should also be included in that focus.
A CFP® can provide ideal assistance in your retirement strategies and help in many areas like the following:
A Federal-Focused financial planning company like Serving Those Who Serve has spent decades helping federal government employees build their resources to support all life stages. Because 66% of our staff consists of women, we understand the issues faced by federal female employees. We also have the solutions to get you on a solid financial footing.
Reach out to the team at STWS to learn more about how we can shape your current and retirement financial strategies. Either email us or visit our website for information.
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
The FedLife Podcast is your in-depth, biweekly deep dive into the world of federal benefits and retirement planning. Hosted by federal benefits expert Ed Zurndorfer and Dan Sipe of Serving Those Who Serve, each 30-minute episode unpacks the complexities of FERS and CSRS retirement, FEHB and Medicare, survivor benefits, tax planning, and more. Designed for federal employees and retirees who want more than just the basics, FedLife goes beyond the headlines to explore the rules, nuances, and strategies that can make a meaningful difference in your retirement. Remember: it’s your Fed life, make it a great one.
The Fed15 Podcast is your weekly 15(ish)-minute briefing on federal benefits and financial planning, built specifically for federal employees and retirees. Hosted by Dan Sipe and Katelyn Murray of Serving Those Who Serve, each episode delivers clear, actionable guidance on topics like FERS and CSRS retirement, TSP strategies, FEHB, survivor benefits, tax planning, and more! Whether you’re five years from retirement or already there, The Fed15 helps you cut through the noise, avoid costly mistakes, and make confident decisions about your federal benefits.
