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Late Career
TSP Talk - Thrift Savings Plan Talk

The Groundwork for Your Retirement            

Those within 10 years of their desired retirement age should now be tying up loose ends. If you're behind on your financial goals then explore your savings and investing options. Healthcare in retirement can be an overlooked and underestimated expense that you need get handled sooner than later to ensure the best options available and peace of mind.

Catching Up

As you near your retirement age you might find that you are on track to end up short of your financial goal. This could be due to a late start in your career, late start in your savings, or an unexpected life event. Two options for someone in this situation are to start saving more now or to plan for a lifestyle where you can retire for less.

If you plan to save more late in your career there are limits to the amount you can contribute to your TSP. The Elective Deferral limit is $19,000 per year. This is the total amount you can contribute from your paycheck for the year. The Annual Addition limit is $56,000 per year which is the max amount you can add to your TSP from all the sources (such as employer matching contributions).

For most, reaching the $19,000 Elective Deferral limit is already an aggressive savings plan. However, TSP allows Catch-up Contributions of up to an additional $6,000 per year for participants 50 years or older and who are on track to reach the Elective Deferral limit with their normal contributions. You must elect to add the catch-up contributions every new year by submitting for TSP-1-C/ TSP-U1-C to your payroll office or by visiting your agency or payroll website.

As a side note, reaching the Elective Deferral limit before the end of the year means missing out on the 5% match by your employer for the rest of the year. So be sure to have your contributions spread evenly for the year.

Healthcare: FEHB and Medicare

As a Federal employee you have the opportunity to enroll in the Federal Employees Health Benefits (FEHB) Program. FEHB provides the widest selection of health plans in the country. Unlike most health coverage offered in the private sector, those that qualify can keep FEHB into retirement where the government will continue to pay for 72% of your premiums.

Being able to take FEHB with you into retirement is especially helpful if you retire before you turn 65 and are eligible for Medicare. Typically if a newly retiree under 65 years old lost their health coverage they would enroll in an extension program such as COBRA which can be quite costly. Once you are eligible for Medicare you do not have to drop your FEHB plan even if you enroll into a Medicare plan.

There are four types of Medicare available you once eligible:

Medicare Part A covers hospital services and short-term inpatient costs as well as some home care services. This is free if you've paid Medicare for 10 years.

Medicare Part B covers Doctor office visits and outpatient services. The average cost for this is $135.5 per month.

Medicare Part C is Medicare Advantage which is wide selection of plans offered by private insurance companies that include what is covered in Medicare parts A and B along with additional vision, hearing, and dental benefits or prescription drug coverage. The cost varies widely but mostly have lower premiums with higher cost sharing.

Medicare Part D pays for prescription drugs and cost on averages $33.50 per month.

FEHB plans in comparison may cover healthcare that Medicare does not. FEHB covers emergency care outside of the U.S. which Medicare does not. Some FEHB plans also provide coverage for dental and vision care.

If you wish to continue your FEHB plan into retirement but still are eligible for Medicare then you should still enroll in Medicare part A since it has no premiums and therefore no extra cost to you. You should drop FEHB if a Medicare Advantage plan works better for your situation. So this will take some personal research including knowing when you need to enroll into your desired program.

If you are eligible for FEHB you may also apply for Long Term Care coverage under the Federal Long Term Care Insurance Program (FLTCIP). This is an important resource with long term care being the largest medical expense in retirement. The younger you enroll the cheaper it will be. You don't actually have to be enrolled in FEHB to enroll in FLTCIP, just eligible to.

To be eligible to carry your FEHB plan into retirement you have to be entitled to retire on an immediate retirement. If you leave your position on a deferred retirement you cannot keep FEHB. If you go out with a postponed retirement you can keep FEHB. You must also have had FEHB 5 years before retirement or enrolled as soon as you were eligible.

You can enroll for FEHB online usually through your agency or you can submit Form 2809 to your Human Resources Department. Newly eligible employees may enroll within 60 days.

You can enroll for Medicare when you turn 65. Retirees who are already receiving Social Security Benefits before they turn 65 will automatically be enrolled in Medicare part A and B, everyone else will have to enroll online.

There is a seven month window which you are able to apply for Medicare: Three months before the month you turn 65 to three months after the month you turn 65. Keep in mind that the enrollment process can take a few months.


Nearing retirement comes with the necessity to rebalance your TSP allocations to fit where you are in your financial goals. If you have the savings you were reaching for then lowering your risk and securing your money may be right for you. You still would like those savings to make money for you so eliminating risk by moving completely into the G-fund will also eliminate the option of adding comfort to your finances. The Lifecycle funds (L-funds) have workers nearing retirement in about 30% of the stock funds(C,S,I), 5% in bonds(F-fund), and the other 65% secured in the G-fund.

If you are not where you want to be with your savings you should remain a bit more aggressive, meaning having more money in the TSP stock funds. Increasing your stock holdings can boost your chances that your savings will last through your retirement years. But now that your means of living will soon be dependent on your savings you should consistently monitor your allocations and rebalance when things aren't working for you.

If you are a regular visitor to TSP Talk then you have an advantage. Educating yourself will be the key to leave your future self in the best situation possible.


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The Groundwork for Your Retirement


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