How Much Should You Contribute To Your TSP?

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When you consider the Thrift Savings Plan’s (TSP) low fees, diversified funds, and generous government match, contributing is a no-brainer for most Federal employees. However, the question of “how much” to contribute is far more complicated. This question is difficult to answer because it depends on many variables, such as what age you begin to save for retirement when you plan on retiring, your retirement goals, and existing and future resources, to name a few. It is this complexity that usually makes working with a qualified financial planner the preferred path to take, but if you are not ready to work with a financial planner and would like to start contributing to your TSP, here are a few rules of thumb that apply to most savers.


  • First things first, build/maintain your emergency fund.
  • Contribute at least enough to get the match.
  • The rule of thumb is 10-15% (5-10% with full match) of gross salary.
  • Your ideal savings rate may vary depending on various factors, including when you plan to retire, your retirement lifestyle, when you started saving, and how much you’ve already saved.

Build And Maintain Your Emergency Fund

I know, I know, many of you are asking, “what does an emergency fund have to do with saving for retirement? The answer is a lot. A significant unexpected expense can set your financial progress back substantially, especially if you have to withdraw funds from your TSP. Hence, before you start contributing to your TSP, ensure you have at least three to six months’ worth of non-discretionary living expenses set aside. This well-funded emergency account will help you avoid needing to access your retirement account early and the accompanying penalties that apply to early withdrawals.

Contribute At Least Enough for The Match

Assuming you have already established your emergency fund, you should contribute at least enough to get the full match, which is 5%. Here is the breakdown: Your agency will automatically contribute 1% to your TSP and a 100% match of the first 3% you contribute, followed by a 50% match of the next 2% you contribute. For a total maximum match of 5% of your salary!

Save 10-15% of Your Gross Salary

A good rule of thumb is contributing between 10-15% of your gross income to your TSP (including your agency match).  This savings rate assumes that you start to save for retirement before age 32 and save until age 67. You can be on the lower end of the range if you begin in your early 20s, or you should aim to save more if you’re starting in your late 30s. When including your agency match, if you begin contributing to your TSP before age 32, you will only have to contribute between 5-10% to fall within the recommended savings rate.

More Is Not Always Better

Although the common retirement savings mantra is “more is better,” I disagree. Retirement is not a finish line, and we shouldn’t treat it as such. Saving for any goal, whether retirement or a large purchase, requires sacrifice, and you shouldn’t sacrifice your resources today without a clear why. The truth is that financial planning is meant to help you live the best version of your life today, as well as in retirement. This is why great care and planning are required to ensure your actions are aligned with your life goals.

For example, you may want to travel more while you are younger, so you make the informed decision to live on less in retirement to enjoy your years of good health today. In that case, saving more than 10% of your gross income for retirement might be unnecessary and counterproductive. There are many variables to consider when thinking about the ideal amount for retirement and saving more is not always the best choice.

Final Thoughts

Although there is no one size fits all retirement savings rate, contributing between 10-15% of your gross income (5-10% with your agency match) is a reasonable ballpark estimate for how much you should save. Remember that the earlier you start contributing to your TSP, the less you’ll need to contribute overall. If you are not confident in creating your retirement plan or would like a custom financial plan, consult with a qualified financial planner.

Need Help Determining If You’re Saving Enough For Retirement?

Are you on track to have your dream retirement? If you’re 10 or more years away from retirement, save time and headaches with our FERS retirement check-up. If you don’t want a full financial plan right now, this is a quick and convenient way to find out if you’re saving enough to meet your retirement goals.

Published by Jose Armenta, MsBA, CFP®, ChFC®, EA

Jose Armenta is a CERTIFIED FINANCIAL PLANNER™ professional who specializes in helping federal employees get the most out of their federal benefits. Jose’s experience serving federal employees has provided him with valuable insight into federal employees' unique financial planning needs.

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