Should You Keep Your Money Locked Up in Government Investments?

The Thrift Savings Plan is one of three investment tools the federal government offers you to help smooth your own road to retirement.

But is it your only option?

If we turn to statistics, it’s evident that the TSP remains popular in the federal workforce. According to FierceGovernment, roughly 375,000 federal workers have set aside between $250,000 and $499,999 in their TSP accounts.

And more than 1.4 million workers invested between $50,000 and $249,999, according to the article. That’s a lot of money; and it gives us some evidence that federal workers believe the TSP is a smart investment.

We don’t deny the TSP can be a great place to get started investing. The government matches your contributions. The plans are relatively safe and not usually subject to extreme volatility, according to past performance.

But TSP regulations contain some glaring restrictions: They limit how much money you can withdraw and when you can withdraw. In addition, you can only invest your money in a small number of funds.

While the popularity of the funds is evident, mostly due to the fact that you were likely automatically enrolled in the plan, there are other statistics that paint a not-so-rosy picture.

In 2012, nearly 50 percent of federal workers who retired or separated from employment in 2012 withdrew their entire TSP balance account. That amounted to $10 billion.

“There’s a good chunk of our participants that are firing us and one of the reasons for it is a desire for more investment flexibility,” TSP Executive Director Greg Long said, according to The Washington Post.

Which brings us back to the question we raised earlier. Is the TSP the only place you can invest your additional income? Despite what the government says and automatically decides for you, the answer, of course, is no.

There are a wealth of investment products that you can choose from that involve rolling your TSP money into other alternatives that will be more flexible than the TSP.

We have helped thousands of federal employees move an average of $25 million to $30 million annually from the TSP into other options. We’ve done this to help them close the retirement gap.

We’ll guide you through this process with our no-cost review of your federal benefits and retirement options. There are other options out there: You are not limited to what the federal government offers you.