Page 55 - The Informed Fed--Hearn (edited 10.29.20)
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entire balance is distributed to the beneficiaries and charged as income
               for the year. This means that a surviving spouse may now be pushed into
               the  maximum  tax  bracket  that  year.  Finally,  many  employees  are
               depending on their TSP as their only supplement to Social Security and
               their pension. Virtually everyone who does this will be required to take a
               pay cut in retirement. Even with the matching funds, 5% savings is not
               enough to build a retirement income equal to their previous paycheck,
               especially if those investments rise and fall with the market. While most
               people know they should be saving more, very few do, and unmatched
               funds in the TSP are subject to the disappointments of the low-return /
               high-risk options.
                   Have  you  ever  wondered  how  much  you  should  put  away  for
               retirement?  The  answer  will  vary  according  to  individual  needs  in
               retirement. Generally, if we start before age 30 and invest 10% of every
               dollar we make until age 65, we will retire at an equal or better income
               than we are accustomed to. If we wait until after age 30 to start saving,
               we will need to put away 12-15% to reach that same goal. And if you are
               over 40, you may need to put away 15% or more to build a comfortable
               retirement income.

               A Real World Example

                   We  are  providing  the  following  example  courtesy  of  a  federal
               employee who shared his game plan with us. Every employee has unique
               circumstances, and of course yours may be different. This employee’s
               experience explains how he made the most of his TSP investments. He
               stayed  away  from  the  C,  S,  I  and  Lifecycle  funds  to  eliminate  any
               possibility of losing any of those hard-earned dollars. He was able to get
               a  predictable  and  positive  return  on  the  investment.  This  FERS
               employee always contributed 5% to the Thrift Savings Plan. Since the
               government matches his 5% with an additional 5%, he knows he has an
               immediate 100% return on investment. He kept his funds allocated to



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