Want to improve how ready you are to retire? USPS Compensation and Benefits suggests employees use the Thrift Savings Plan (TSP) and the power of compounding.
The TSP is similar to a 401(k) plan and provides retirement income in addition to the Federal Employees Retirement System or Civil Service Retirement System annuity, which employees receive when retiring from the Postal Service.
Even small TSP investments can become larger, if you leave them there over time and let the interest compound and grow.
Here’s how it works. Money saved in your TSP earns interest, which becomes investment earnings. When you leave the investment in your TSP, you also earn interest on your interest, or earnings on your earnings. That’s the power of compounding.
For example: A 20-year-old employee who saves $1,000 a year for 11 years in a row, then stops but leaves it there to earn 7 percent interest, will have $168,514 at age 65. A 20-year-old employee who saves $1,000 a year for 45 years, also earning 7 percent interest, will have $285,750 at age 65.
A 30-year-old employee who starts saving $1,000 a year for 35 years, also earning 7 percent will have only $147,913 at age 65. Even though the older employee has put in more money for more years than the 20-year-old who stopped investing, the investment has less time to earn compound interest.
It’s easy to participate. To learn more visit the TSP site.
You will have to pay out more in taxes at retirement on your income at a time when you need your money the most. Cost of living and inflation will eat you alive. The petty pension puts us just above poverty level. The Unions should have negotiated for a better pension since they failed to get us any significant rate increases.
TSP is a RIP OFF! It lowers your Social Security monthly amount when you retire at 62 since the amount you contribute is deducted from your annual salary per year. And YOU WILL HAVE TO PAY TAXES ON YOUR TSP since it was not taxed when you contributed it.
come on early out !
I’m ready to be bought out.