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How Much Should I Have in My TSP to Retire in My 50s or 60s?

A Thrift Savings Plan (TSP) is a unique retirement savings vehicle available to federal government workers and members of the military, similar in many ways to the 401(k) retirement funds found in civilian life.

Based in Annapolis, Scarborough Capital Management has helped people with their TSPs for more than 30 years. One of the common questions we get from people in their 30s and 40s is: How much should I have in my TSP to retire in my 50s or 60s?

Here are some tips.


A TSP is a unique retirement plan. If you are a federal employee, contact Scarborough Capital Management to see how we can help.


Early in Your Career

There are many things you can do early in your career that can help set you up to retire when you want.

1. Decide how much to contribute.

TSP contributions are a percentage of your salary. The maximum contribution is currently $19,500.

Check to see whether you are eligible for a matching contribution from your employer. Matching contributions are free money added to your account. Some percentage matches depend on your years of service. The matches and percentages allowed may vary. Be sure to check the rules at your specific workplace.

Determining the right amount to save now is an important decision. Scarborough Capital Management can help you with this.

2. Determine what asset allocation works best for you.

When you begin saving for retirement, it’s important to research what investment options are available in your plan. Then spend some time to determine what percentage of your savings to allocate to each. Each type of asset has its own pros and cons.

It’s not a one-size-fits-all exercise. Your asset allocation should take how long you will have until retirement and your risk tolerance into consideration.

Some investments may be more stable in price. However, the annual return from those investments could also be quite low. Your money may be stable, but may prove to be too conservative if your retirement date is several decades away and you need to grow your account to meet your future retirement needs.

Other investments have the potential for higher returns. But they can fluctuate in value. If you have plenty of time to ride out any temporary downturns in your account balance, you may opt to take on more risk in the hopes of getting higher returns.

Because of this blend of positive and negative features, it is important to consider your goals, timeframes and tolerance for risk. Asset allocation is a process of combining assets in such a way as to achieve the least amount of risk for a given level of expected return. For this reason, talk with a financial advisor about your investment allocation. While you can surely find one-size-fits-all advice online, discussing your specific situation, concerns, needs and goals with a financial advisor can be a game-changer.

Scarborough Capital Management can help you with this.

3. Decide which TSP fund to invest in.

TSPs offer several different funds you can choose from. These funds are comprised of many different investments so they have a certain level of diversification built into them. Each has its own specific investing strategy, and each comes with its own risks and rewards. They are: 

  • The Government Securities Investment (G) Fund
  • The Fixed Income Index Investment (F) Fund
  • The Common Stock Index Investment (C) Fund
  • The Small Capitalization Stock Index (S) Fund
  • International Stock Index Investment (I) Fund
  • Life-cycle (L) Funds

The G and F funds are fixed-income (bond) funds. The C, S and I Funds are stock funds. The L Fund is a blend of each.

By spreading your investments across two or more of these funds, you may lower your overall portfolio risk even more. Each investor should know their own psychological tolerance for risk and invest accordingly.

Scarborough Capital Management can help you with this.

4. Decide whether to invest in a Traditional or Roth TSP.

Each fund is available as a Traditional TSP or a Roth TSP. Which one you choose has implications for your taxes, both now and in retirement.

In a Traditional TSP, your contributions occur pre-tax. You don’t pay taxes at the time of contribution, which can benefit your overall tax picture for the year. However, when you reach retirement and begin to withdraw your funds, the funds are taxed. You will be taxed on the withdrawals at your applicable income tax rate at that time.

In a Roth TSP, the contribution is made with after-tax dollars, meaning you have already paid taxes on this income. You receive no immediate tax reduction for contributing to a Roth. However, withdrawals from a Roth TSP in your retirement are not taxed as long as certain requirements are met.

Traditional and Roth accounts are not mutually exclusive; you can choose to invest in both if you wish.

Scarborough Capital Management can help you with this.


When you reach the mid-career stage, it’s time to review your plans for retirement. Are you on track for a comfortable retirement given your Social Security benefits, pension and TSP savings projections? If not, there’s still plenty of time to save.

This is when many people ask: How much should I have in my TSP to retire when I had planned?

You may be earning more now than you did earlier in your career. If so, it may be prudent to boost your TSP savings percentage – especially as many employers will match up to 5 percent of your income. Be sure to check the regulations to determine if this has any effect on your pension.

Review your asset allocation as well. Review the funds you’re invested in. Do you want to make any changes?

Review your asset allocations and investment at least once a year going forward.

Nearing Retirement

As you near retirement (a decade or so away from the planned date), estimate your retirement income. Get a statement from Social Security and your pension, and forecast your TSP withdrawals. Estimate what you will likely spend in retirement. Are the two aligned comfortably? Will you have enough to live on in the area you plan to retire in?

The answers to these questions will help you decide how much you should have in your TSP to retire as planned.

If not, it may be time to boost your TSP savings even more. People who are 50 and over can save an additional $6,500 per year, for a total of $26,000.

A decade before retirement, you’ll want to consider your asset allocation very carefully once again to ensure your risk is aligned to the portfolio and you are prepared to weather volatility in the market as your retirement date approaches.

Consider the balance between your Traditional and Roth investments as well. At this point, you know whether current tax savings or tax savings at retirement is likely to benefit you more.

At any point of your financial journey, contact a financial advisor if you have questions. Financial and retirement planning can be complex. But you don’t have to do it alone.


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