Retirement Planning: 10 Years Out
If your FERS retirement date is 10 years away, it might seem like you have plenty of time to create a financial plan. However, that’s far from the case. Now is the time to focus on saving as much as possible and working to reduce your debt.
Maximize Your Thrift Savings Plan (TSP) Contributions
Ensure you’re contributing enough to your TSP to take advantage of the 5% agency match. For 2024, the contribution limit for TSP and similar retirement accounts has increased to $23,000, with an additional $7,500 allowed for catch-up contributions if you’re 50 or older. You can still make catch-up contributions if you turn 50 during the calendar year, even on December 31, 2024.
Reduce Consumer Debt as Much as Possible
Entering retirement with consumer debt can significantly deplete your savings. Credit card interest rates often surpass the average market returns of TSP and other investments. Build a budget that cuts unnecessary expenses and uses those savings to pay down debt. If possible, aim to make extra mortgage payments over the next 10 years to lessen your financial burden.
Start Building an Emergency Fund
Unexpected expenses, such as home repairs or healthcare costs, can strain your finances. An emergency fund ensures you have liquid cash when needed without relying on your TSP, which could result in 100% taxation on withdrawals. Using high-interest credit cards can further destabilize your financial situation, so prioritize establishing a robust emergency fund.
Consider Long-Term Care (LTC) Insurance
Research shows that nearly 70% of individuals turning 65 today will require some level of custodial care in the future. Without LTC insurance, these costs will be fully out-of-pocket, whether in a facility or at home. Purchasing LTC insurance earlier increases your chances of securing a better deal, while delaying can result in higher costs or even denial of coverage.
To get your retirement plan on track, consider working with an FRC trained advisor who specializes in federal benefits.
