With just a decade left before your Federal Employee Retirement System (FERS) retirement, it might seem like you have plenty of time to get your finances in order. But the truth is, this is the perfect moment to ramp up your efforts. Focus on maximizing savings and aggressively reducing debt to set yourself up for a comfortable retirement.
Maximize Your Thrift Savings Plan (TSP) Contributions
Ensure you’re contributing enough to your TSP to secure your agency’s 5% match. In 2024, the TSP contribution limit has been raised to $23,000, with an additional Catch-Up Contribution limit of $7,500 for federal employees aged 50 and over. If you’re 50 or will turn 50 in 2024, you can make these Catch-Up Contributions alongside your regular contributions, even if your 50th birthday falls on December 31st, 2024.
Reduce Consumer Debt Aggressively
Bringing consumer debt into retirement can significantly deplete your savings, especially when you’re no longer earning a regular income. Credit card interest rates often surpass the average returns of the TSP and other investments. Create a budget that trims unnecessary expenses, and direct those savings toward paying down debt. If possible, make additional payments on your mortgage over the next decade.
Build an Emergency Fund
Unexpected expenses, from major home repairs to healthcare costs, can quickly derail your financial plans. An emergency fund provides a cash reserve for life’s surprises, protecting you from tapping into your traditional TSP, which would incur taxes on the full amount withdrawn. Avoid using high-interest credit cards that could push your monthly expenses beyond your income, threatening your financial stability.
Consider Long-Term Care (LTC) Insurance
Statistics show that nearly 70% of people turning 65 today will need some form of long-term care in the future. Without LTC insurance, these costs—whether for in-home care or a facility—will come out of your pocket. The younger you are when you purchase LTC insurance, the more favorable the rates. Waiting too long could result in higher costs or even being denied coverage altogether.
For personalized advice on fine-tuning your retirement strategy, consider working with an FRC® trained advisor who is well-versed in the complexities of federal benefits.
