A survey conducted by the Federal Retirement Thrift Investment Board (FRTIB) unveiled intriguing perspectives among participants in the Thrift Savings Plan (TSP) within the Federal Employees Retirement System (FERS).
While approximately 59% of employed FERS workers express confidence in their retirement savings, only 48% of current TSP participants have calculated the income necessary for financial stability during retirement.
The crux of the matter is this: without determining the income needed to cover expenses across a 30-year retirement span, it’s impossible to gauge whether one’s savings will last.
Identifying the Top Three Risks to TSP Retirement Savings
During periods of extreme stock market volatility, anxiety often grips TSP participants, who perceive market fluctuations as the primary threat to their nest eggs. However, research from the Center for Retirement Research at Boston College indicates that individuals tend to overstate the significance of stock market volatility. The top three risks, in actuality, are as follows:
- Longevity
- Health
- Stock Market
Older adults on the brink of retirement frequently underestimate their own life expectancy, harboring pessimistic views about their survival prospects. Additionally, they often downplay the likelihood of health-related expenses, including the potential need for long-term care as they age.
Understanding the Cost of Living Longer
Planning for retirement until age 80 may prove insufficient if one lives beyond that milestone. Data from the Social Security Administration indicates that today’s 65-year-old men and women can expect to live until approximately 84 and 86.7 years, respectively. With medical advancements leading to increased life expectancy, it’s increasingly common for individuals to reach age 90 or beyond. This longevity comes with added financial burdens. It’s prudent to err on the side of caution by overestimating one’s life expectancy rather than risking outliving one’s savings.
Seeking Guidance for Lifelong Financial Security
To navigate these retirement challenges effectively, consider consulting with an FRC® trained advisor who possesses expertise in federal benefits. Such professionals can assist in devising a comprehensive plan tailored to ensure financial security throughout retirement.
