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Retirement Calculator Added to FedSmith.com to Aid TSP Investors

Monday, February 16, 2004

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All of us hope to retire at some time. But many federal employees, especially those under the FERS system, will not be able to retire unless they plan ahead and invest enough money in the federal TSP program to enable them to have a comfortable retirement.

If you are like most investors, you don't have a good idea of how much you need to be investing in order to have a good retirement nest egg.

FedSmith.com certainly can't tell you how much you will need to live on. Some financial advisors will tell you that, as a general rule, you will spend about the same amount in retirement as you do while you are fully employed. Whether that general rule applies to you, only you can decide.

We can make it easier for you to decide how much you need to be saving toward retirement though. As a new service to our readers, the FedSmith.com site now offers a "retirement calculator."

This handy tool will assist you in your financial planning. Just enter how much your currently have in your TSP funds, the estimated return rate you anticipate you will receive in your TSP investments, the amount of your annual contributions to the TSP, and the number of years you have left before you want to retire.

The program will let you consider different scenarios. For example, if you have $10,000 in the TSP and 20 years before retirement, how much will you have in your TSP accounts if you invest $1000 per year and assume a return rate of 7%?

If you don't like the answer you see, try investing $2000 per year and see if the answer is closer to the amount you think you will need to invest. You can also try different scenarios with the TSP rate of return. For example, the G fund is a conservative, safe investment. It's rate of return is lower than other funds because it is so safe. If you assume a 4% rate of return, you will see how much you will have saved after a 20 year period (using the example above).

But, if you want to be a more aggressive investor, see what happens if you decide to put more of your money into the several stock funds instead of the G fund and you assume an annual rate of return of 7%. This figure is obviously quite a bit higher. It may influence how you invest your TSP funds.

Use our new retirement calculator in conjunction with our TSP charts. Using the historical rates of return for the various TSP funds may give you a starting point of what you might expect from these funds in future years.

The link to the TSP funds and our new retirement calculator are both on the left hand side of the page.

And, as our lawyer says, "This calculator will give you a rough estimate of the amount of money that may be available to you when you leave government. It depends solely on the values that you put into it. It simply does the math. It also does not replace the need for working with an investment advisor. You should not assume your calculations will be accurate or reliable predictors of the future returns of any fund in the TSP."

We hope you enjoy this new service and welcome your comments and suggestions.

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© 2009 FedSmith Inc. All Rights Reserved.