How to Make Your TSP Last

These are two things that federal employees have within their control to help make their TSP accounts last throughout retirement.

Here are 3 of the most commonly feared things:

  • Public speaking
  • Heights
  • Going to the dentist

But for retirees, this next thing is often at the top of the list: Running out of money.

Scary stuff. But that nightmare doesn’t have to be your reality if you do these 2 things.

The Two Biggest Variables

In life, there are only so many things that are truly in our control and this is especially true for retirement. We can’t directly control taxes, inflation, interest rates, or the stock market. But, to avoid running out of money, here are the two things you can control:

  • How much money you take out every year/month
  • How you invest your money (TSP or other investments)

And these two things are all you need to have a great retirement.

Let’s Take it Out!

So how much money can you take out of your TSP every year in retirement without having to worry about running out?

If you google this question ,you’ll get 1,001 opinions, however, many of these strategies don’t actually work in practice or are just too complicated to apply on a regular basis, so whatever strategy you pick, make sure it is simple enough for you to apply over the long term.

Here is one of my favorite strategies.

The 4% Rule

If you want a more in depth explanation of the 4% rule then check out this article, but I’ll give you the summarized version here.

The 4% rule says that if you withdraw 4% of all your investments (TSP, IRAs, etc) the first year of retirement, then take the same amount every year after that (but increase for inflation every year), then the odds of you running out of money are very low.

Here is an example to show you what this actually means:

  • If you start with $500k at retirement (in your TSP, IRAs, etc), you would be able to withdraw $20,000 (4% of 500k) the first year.
  • The second year, if there was inflation of 5%, then you would be able to withdraw $21,000 (5% more than 20k).
  • For every year after that ,you take the previous year’s withdrawal amount and increase it by whatever inflation was for that year.

If someone follows the 4% rule, then the odds of that person running out of money are very small.

But How Should You Invest?

But the 4% rule only works if you are investing your money in the right away.

For example, if you are 100% invested in the G fund in retirement then things will not go well. The G Fund is great for money that you need soon but terrible for money you want to last for 20-30 years.

Most people need a balanced approach. They need some safe short-term money to make sure they can enjoy/spend their money and some aggressive long-term money to make sure they never run out.

Again, there are many ways to structure, this but the Bucket System tends to work really well in the real world. For details, see TSP Investment Strategy for Retirement.


Making sure you have a great retirement comes down to this: Control what you can and ignore everything else. If you can’t control it, don’t let it bother you too much.

There are going to be recessions and global crises for the rest of time, but if you focus on what you are doing with your money then you will have a great retirement.

About the Author

Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.