The Thrift Savings Plan (TSP) could seem like one of those government perks you know about but haven’t actually looked into if you’re getting close to retirement or are already retired. I understand. It doesn’t stand out. But if you work for the government, are retired, or are in the military, this strategy could quietly become one of your best ways to make money.
To be honest, most seniors I talk to either don’t know how much money TSP can make or aren’t aware how to utilize it effectively after 60. That’s a significant concern, especially now when every dollar counts more than ever.
It’s dangerous to rely only on Social Security because healthcare costs are going up, inflation is eating away at fixed wages, and people are living longer. Your TSP could be the thing that makes you feel financially secure in retirement instead of merely “getting by.”
The good news? You don’t have to change everything about your life to make it work. You only need to know how to use the levers in this strategy to make sensible contributions, take money out at the right time, and get the most out of what you’ve already earned.
If you’re 50, 60, or even 70 years old, this isn’t simply another piece about retirement. It’s time to stop leaving free money, tax breaks, and peace of mind on the table.
Let’s get to work on it.
TSP Basics — But Only What Seniors Actually Need to Know
I don’t want to spend your time going over what every other article says about the Thrift Savings Plan. You probably already know the basics: it’s a way for government employees and military personnel to save for retirement. So instead, let’s talk about the things that are important to you right now, especially if you’re 50 or older.
You should know this:
- The TSP is like a 401(k) for the federal government.You put money from your paycheck (pre-tax or Roth) into the account. If you’re still working, the government may match some of it. The money grows without being taxed.
- There are two kinds of accounts: Roth and Traditional. If you selected with the standard plan, you didn’t have to pay taxes on your contributions, but you did have to pay taxes on your withdrawals. If you picked Roth, you paid taxes on the money you put in up front, but you can take it out later without paying taxes.
- You don’t have to pick complicated investments. TSP has five main funds (G, F, C, S, and I) and Lifecycle (L) funds that automatically change according on when you want to retire. If you’re already retired or near to it, L Income or L 2030 can be your default
- Your TSP can stay where it is even after you retire. A lot of older people think they have to roll it over or take everything out when they retire, but that’s not true. You can leave it parked in TSP and take care of it like you always have.
So what does this mean?
Because many seniors either forget about their TSP or think it’s set in stone. But it can change. If you use it correctly, it might survive longer than your 80s and possibly help your spouse or heirs. If you don’t pay attention to it, it just sits there and does the bare minimum.
And that’s not what we want right now.
How Much Can You Really Contribute? (2025 Limits for Seniors)
A lot of folks miss this aspect, and it’s costing them thousands.
People who are 50 or older can put more money into their TSP than people who are younger. These aren’t simply little perks. These are great ways to improve your retirement savings, especially if you still have a few years of work left or possibly some freelancing income from federal contracts.
Let’s break it down for 2025:
- Limit on base contributions: $23,500
- Catch-up contribution for people over 50: +$7,500
- Thanks to the SECURE Act 2.0, there is now a new “super catch-up” for people ages 60 to 63.
If you’re between the ages of 60 and 63, you may save up to $42,250 in one year. That is a lot.
And no, this isn’t a tax trick. This is how you can lawfully save more money when you make the most money or when your costs go down (like when you don’t have kids at home or have paid off your mortgage).
A little reminder from the actual world:
A Reddit member expressed it this way:
“What catch-up means is that you can give up to $31,000 this year.” The new super catch-up makes it even higher. – Reddit TSP Thread
One more thing: You don’t have to fill out any additional paperwork to make catch-up contributions.
The algorithm automatically applies it based on your age.
“TSP got rid of the extra paperwork for catching up a few years ago.”- Talk on Reddit
There are no excuses—this is the simplest way to catch up if you think you’re behind on your retirement savings.
Most Seniors Aren’t Maxing Out—Here’s Why That’s a Problem
Let’s be honest: just because you can give $42,250 doesn’t imply most people are doing it.
Most of them aren’t even close, though.
I’ve talked to a lot of federal retirees and people who are about to retire, and the pattern is clear: they’re giving “what feels safe,” not “what’s possible.” That might have worked ten years ago, but things are different now. The prices have gone up. People are living longer. Costs of medical care? Very high.
This isn’t about feeling bad. It’s all about being aware. Because this is the truth:
One of the most common and expensive mistakes seniors make is not saving enough during their peak years (age 55–65).
What caused this gap:
- “I didn’t know I could put in that much.”
- “I thought I had to fill out a different form for catch-up.” (You don’t—TSP made it easier.)
- “I didn’t think it was worth it because I’m retiring soon.”
- “I didn’t know how much tax I would save.”
You might not think so, yet this way of thinking is more widespread than you realize.
“I hit my TSP limit for the first time at 59. “I wish I had started five years ago.” – r/ThriftSavingsPlan
What’s truly at stake?
Let’s add it up.
If you’re 60 years old and can put in $42,250 a year for just five years before you retire, and your account grows at 6%, you’ll have more than $240,000 by the time you’re 65.
That’s a big difference. That’s caring for a long time. That’s a gift. That’s being free.
Think about this: Are you giving based on what’s safe or what’s possible?
And if not now… when?
Are You Getting the Full Employer Match? Most Seniors Aren’t.
I always ask clients who are about to retire this question: “Are you getting every dollar of your employer match?”
Most people say yes. But when we look more closely, the truth is that they’re not.
Let me make things easy for you:
Here’s how the match works if you’re in the Federal Employees Retirement System (FERS):
- 1% automatic contribution, even if you don’t give anything
- The following 3% of your pay will be matched 100%.
- 50% match on the next 2%
Your company can pay you up to 5% of your base compensation.
But this is where a lot of older people go wrong:
They think that catch-up donations, such the extra $7,500 or $11,250, will also be matched.
No, they don’t.
- “Catch-up does NOT raise the 5% match limit.”— Reddit
Some people quit giving or cut back on it close to retirement to “save more money.”
But that’s leaving money on the table, because even a 1% lower contribution means a smaller match.
This is what it implies for you:
If you still work, even part-time for a government agency, you need to put at least 5% of your salary into the plan to earn the full match. That’s money you don’t have to pay back. That is a 100% sure return. And at this point in life, there isn’t an investment that comes close.
Action Step: Look at your TSP contributions and salary % in MyPay or EBIS.
If it’s less than 5%, raise it now. That match adds up, even for the last few years.
A Smarter TSP Investment Strategy for Seniors (No Guesswork Needed)
If you’re 55, 60, or already retired, you probably don’t care about getting high returns anymore. You want to protect what you’ve built, stay ahead of inflation, and make sure your money lasts without worrying about the next market drop.
At this point in your life, here’s how to think about investing in TSP.
1. Lifecycle (L) Funds vs. Custom Mix: What Makes Sense?
L Funds are the option that you may “set it and forget it.” As you become older, they automatically change the composition of your investments. At first, you have more equities, and later you have more bonds and solid assets.
If you’re 60 or older, you’re probably already in L 2030 or L Income.
Pros:
- No management needed
- Automatically lowers risk as you become older
Disadvantages:
- Might be overly conservative, especially if you have a long time till you retire.
- No power over certain fund percentages
You could wish to make your own combination of G, F, C, S, and I funds if you want your income to grow faster or if you already have emergency cash somewhere else. That’s what a lot of smart seniors do.
2. The “Bucket Strategy” (Used by Real Retirees)
Here’s a great way to organize your TSP money so you don’t have to worry about market timing all the time.
- The G Fund in Bucket 1 has enough money to cover 3 to 5 years of expenses (steady, no loss).
- Bucket 2: Long-term growth in C/S Funds
- Bucket 3: When the market is high, sell gains to refill the G Fund.
It’s easy.
You take money out of the G Fund when the market is bad. When the market is good? Rebalance and fill up. Don’t sell in a panic. Don’t make decisions based on how you feel.
What a Redditor thinks:
“I’ve been doing this since I retired.” I hardly ever glanced at my account throughout the recent downturn; it just works. – r/ThriftSavingsPlan
3. Don’t Make the Biggest Mistake: Sell During a Crash
If you only have L Funds or stocks and you need to take money out during a market slump, you will lose money.
Withdrawals from TSP come from all funds in equal amounts. That means that if you don’t rebalance, you’re selling from stock funds even when they’re not doing well.
This is why this method is important.
It’s not about going after enormous profits. It’s about making a system that functions even when things go wrong.
Action Step:
- Sign in to your TSP.
- Look at how your funds are divided up
- Check to see if you have enough in G or F to last 3 to 5 years.
If not, start rebalancing every month or every three months.
Post‑Retirement TSP Options: Withdrawals, Rollovers, and Annuities
Your TSP doesn’t go away when you retire, but you have to use it differently.
A lot of seniors get caught here. They either think they need to cash everything out or don’t completely comprehend how withdrawals work. That misunderstanding makes people make terrible choices, like paying more taxes or selling stock funds at the wrong time.
Let’s get that straight.
After you retire, what can you do with your TSP?
1. Leave it in TSP and take care of it like you always have.
- You still have the same choices for investments.
- You can start pulling money out when you need to.
- It maintains increasing without paying taxes (traditional) or with paying taxes (Roth).
2. Make a one-time withdrawal
- Not safe unless you have a good cause
- If you take out too much money in one year, you may have to pay a lot of taxes.
3. Set up payments in installments
- Every month, every three months, or every year
- Can be changed every year and is flexible
4. Get a TSP annuity
- Changes your balance into a stream of fixed income for life
- Provides stability but takes away flexibility
- Not usually preferred unless you require guaranteed income
5. Put it into an IRA or another plan.
- Gives you more ways to invest
- Gives you full control
- But they might lose the low fees and ease of use of TSP.
A detail that most people miss
When you take money out of your TSP, it always comes from all of your funds in equal amounts. If you have 60% C Fund and 40% G Fund, your withdrawal will automatically pull 60/40 until you rebalance first.
That means you have to move money around by hand before you take it out if you wish to solely use safe funds (like G) during a market slump.
If you’re retiring soon and still figuring out how to apply for Social Security alongside your TSP strategy, this guide on how to apply for Social Security can help you take the right steps at the right time.
New Rule: You can change your withdrawals four times a year.
You can now take up to four withdrawals from your TSP account each year while you are still working or after you leave. There is no longer a “one-and-done” regulation. That provides you freedom, so use it wisely.
Next Step: If you’re retired or about to retire, think about what you need: Do you want to be able to change your mind? Income you can count on? Growth? Then make a TSP withdrawal strategy that really helps with it; don’t simply guess.
Roth vs Traditional: Which One Makes Sense in Retirement?
This isn’t just about taxes; it’s also about the quality of life.
Even when they retire, a lot of seniors never think about whether they should be in a Traditional or Roth TSP again. That’s wrong. Your tax situation, your income demands, and even your intentions for your estate may have changed. And the way your TSP withdrawals are taxed can slowly chip away at your retirement money.
Let’s take it apart.
TSP in the past
- You gave money before taxes, which cut your taxable income at the time.
- When you take money out, you pay taxes.
- Works best when:
- You think your tax rate will be lower when you retire.
- You need the tax relief right now (assuming you’re still working part-time).
- You want to slowly spread out your revenue so that you don’t go above tax limits.
Roth TSP
- You gave money after taxes (no deduction up front).
- You don’t have to pay taxes on withdrawals, even on earnings.
- Works best when:
- You’re in the early stages of retirement and don’t have much money.
- You don’t want to have to take Required Minimum Distributions (RMDs), so you should roll over to a Roth IRA.
- You’re thinking about giving your heirs money without having to pay taxes on it.
One example from real life: A senior citizen retires at 62 and doesn’t get a pension until 65. She uses money from her Roth IRA to get by during that time so she doesn’t have to pay more taxes when Social Security starts. This is a good strategy to “fill in” years when taxes are low and get more out of your account.
Most individuals don’t know that you can’t move your current Traditional TSP balance to Roth inside the TSP.
You would have to roll it over to a Roth IRA, which would cause a tax event. Not usually a terrible thing, but it needs to be laid out well.
If part of your retirement planning involves survivor income, you should also understand what happens to Social Security if your spouse passes away so you can plan accordingly.
Action Step: Check out how much money you plan to make in taxes over the next five to ten years. Are there times when a Roth plan could aid people with modest incomes? Should you split your withdrawals to keep your taxes low? This is the kind of thinking that saves people tens of thousands of dollars over time.
Should You Rollover Your TSP to an IRA?
At some time, you’re likely to ask: “Should I leave my money in TSP… or roll it into an IRA?”
There’s no one-size-fits-all answer. But what matters is understanding why you’d do it—because shifting your TSP is permanent. And it’s typically fueled by fear, uncertainty, or a sales pitch—not true planning.
So let’s walk through the trade-offs.
Why Some Seniors Keep Money in TSP:
- Ultra-low costs (TSP charges roughly 0.06%—way cheaper than other IRAs)
- Simple fund selections (excellent for folks who don’t want complexity)
- Access to the G Fund (exclusive to TSP, delivers stable value not accessible elsewhere)
- Easy to manage for those experienced with the system
If you like things to be simple and predictable and don’t want to deal with shopping for funds, having your money in TSP might be the best thing to do.
Why Others Choose to Rollover to an IRA:
- More control over assets (stocks, ETFs, bonds, REITs, dividend portfolios)
- Greater flexibility with withdrawals (you choose what funds to pull from, not proportionate like TSP)
- Ability to convert Traditional balances to Roth over time
- Easier to consolidate accounts in one place (particularly if you have several IRAs)
One smart use case: You roll part of your TSP to a Roth IRA during a low-income year, pay a controlled amount in taxes, and earn tax-free growth going ahead. A lot of older people adopt this method to lower their future RMDs.
The fundamental issue TSP doesn’t tell you: Inside TSP, all withdrawals come out proportionally from every fund. You can’t pick and choose.
So if you want to avoid selling stock funds during a weak year, an IRA allows you the flexibility to do that. TSP doesn’t.
Rule of Thumb:
- If you like structure and ultra-low prices → TSP is solid
- IRA might be better if you desire more freedom, control over your tax approach, and personalized investing.
- Don’t roll over just because a financial advisor tells you to
- Do it only if it matches with your actual retirement plan
Common TSP Mistakes Seniors Make (And How to Avoid Them)
If you have a good TSP balance, that’s a victory. But even a good account might lose money faster than you think, not because of market collapses but because of bad choices. These kinds of mistakes aren’t uncommon. They are the kinds of small mistakes that progressively eat away at your retirement.
Let’s look at the most important ones.
Mistake #1: Not putting enough money into your retirement account in your last years of work
A lot of older people stop giving money in their 50s or early 60s. The goal is to “play it safe” or “reduce cash flow pressure.” But now is frequently the perfect time to make the most of your catch-up and super catch-up contributions. You make more money, spend less, and have more time to develop your money.
Fix: Think of ages 50 to 63 as your TSP acceleration zone. Even putting up full contributions for 2–3 years can add six figures to your savings.
Mistake #2: Not rebalancing before you take money out
Keep in mind that TSP withdrawals take a percentage from all of your funds. Every withdrawal will impact both funds, even if the market is down, if you have 70% in equities and 30% in G Fund.
Fix: Before you take money out, move it to the G or F Fund. Plan to have enough money to cover your expenses for one to two years in safe assets.
Mistake #3: Thinking that annuities are “safe”
After you retire, TSP lets you buy annuities. Some people think this means they’ll have money for the rest of their lives, and that’s true, but they won’t be able to change their plans. Once you annuitize, you can’t get to the principle, change your assets, or leave the money to your heirs.
If you require guaranteed monthly income and don’t mind locking up the money, only use annuities. Structured withdrawals may provide you greater freedom, though.
Mistake #4: Not paying attention to Roth strategy windows
You might have a low-tax window after you retire but before you start getting Social Security or RMDs. That’s a great opportunity to undertake partial Roth conversions or take money out of your Traditional TSP at cheaper rates. A lot of folks don’t get this at all.
Fix: Talk to a tax consultant about your “tax sweet spot” years. You can save more money on taxes than you could make in the stock market.
Mistake #5: Not getting advice soon enough
Many people believe they will “figure it out later.” But retirement isn’t a test and error; you usually don’t get a second chance. And even tiny choices, like when to take money, how much, and from which fund, can have long-lasting impacts.
Fix: Don’t guess if you’re not sure. Talk to someone who knows a lot about TSP, not just investments in general.
Spend ten minutes today logging in, looking over your allocation, and checking your contribution rate. A modest change now could save you from making a large error later.
Is Your TSP Retirement-Ready? A Quick Senior Checklist
You might simply need a simple yes/no list to figure out where you stand.
This is it. No fluff—just the most important questions that can make or break your TSP game when you retire. Be honest and go through this now. Even finding one or two weak points could save you a lot of stress in the future.
Help and Match
- Do I need to give at least 5% to earn the full employer match?
- If I’m 50 or older or 60–63, have I reached the maximum amount I can contribute to my catch-up or super catch-up this year?
- Did I give more during the years when I made the most money?
Plan for the Fund
- Do I know exactly which TSP funds I have money in?
- Have I checked to see if L Funds still meet my needs and risk level?
- Do I have enough money in my G or F Fund to cover my bills for 3 to 5 years so I don’t have to sell when the market goes down?
Ready to Withdraw
- Have I made a plan for when to withdraw money, like every month, every year, or when the market is good?
- Am I rebalancing before I take money out so I don’t have to sell riskier funds?
- Do I know the TSP proportional withdrawal rule and have I made plans that take it into account?
Tax Plan
- Have I thought about whether a Roth or Traditional strategy still makes sense for me depending on my income?
- Am I using any years after I retire when my income is low to do Roth conversions or planned withdrawals?
- Have I thought about how my spouse or heirs will be taxed on TSP if I pass it on?
Help from Outside
- Have I talked to a fiduciary advisor who knows a lot about the TSP system?
- Do I have a strategy for Required Minimum Distributions (RMDs) that start when I’m 73?
What did you do?
- If you checked 10 or more boxes, your TSP is likely to be in good shape.
- Don’t worry if you checked less than 7, but do something. Most problems can be fixed with a few smart steps now.
Final Thoughts: Your TSP Can Still Work Harder for You
Here’s the fact that most retirement publications won’t state out loud: You may be doing everything “right” on paper and still not get any actual money, freedom, or peace of mind.
This instruction was not about theory; it was about leverage.
You still have leverage, even in your 60s or 70s.
Most individuals never get the most out of their TSP. They either play it too safe, put off making decisions, or use the default settings. But your situation isn’t the same as everyone else’s; it’s unique. It should be better.
So, here’s what I think you should do:
- Don’t put off making decisions because they make you feel bad.
- When things are changing, don’t just “set it and forget it.”
- And don’t think it’s too late to change your strategy.
It’s not true, though.
Every little thing you do from here on out can add up, whether it’s changing your allocations, filling in contribution gaps, lowering your taxes, or just planning your withdrawals better.
You’ve already done the hard part: working, saving, and being there.
Now let your TSP come through for you.
With so many seniors depending on multiple income sources, it’s important to stay informed—especially now that Social Security customer service is facing delays and many retirees are struggling to get timely support.
Disclaimer
The information provided in this article is for educational and informational purposes only and is not intended as financial, tax, or investment advice. While we strive to provide accurate and up-to-date content, individual financial situations vary. Before making any decisions regarding your Thrift Savings Plan or retirement strategy, consult with a licensed financial advisor or tax professional.
What To Do Next
If this guide helped you think differently about your TSP, don’t keep it to yourself—share it with someone you care about.
And if you want more real-talk retirement insights (not the usual recycled advice), keep visiting FameTribute.com. We publish smart, practical retirement content designed for people who want to make the most of what they’ve earned.
Have a question, story, or insight of your own? Drop a comment or send us a message—we’d love to hear how you’re navigating retirement with purpose.
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