Mid-Career Financial Planning for Female Federal Employees: Knowing Your Priorities

If you’re a woman who has been on the job with the federal government for a few years, you’re likely in pretty good shape. You have health insurance coverage through the Federal Employees Health Benefits (FEHBP) program. You might have access to Flexible Spending Accounts (FSAs) and Health Spending Accounts (HSAs).

Finally, through the Federal Employee Retirement System (FERS), regular contributions go into Social Security and the Federal Employees Retirement System’s Thrift Savings Plan, all set aside for when you leave your civil service job for good.

But this is the time to fine-tune your retirement strategies and consider enlisting the services of a Certified Financial PlannerTM. Taking those steps now can help ensure you have the resources to provide a great post-career quality of life.

Ramping Up the TSP Contributions

The good news is that you can take an important step to fund your retirement by increasing the contributions to your TSP. When first hired, your employer automatically deposited 1% of your basic pay earned per pay period into that TSP account. You might have also elected to increase TSP contributions. If you contribute up to 5% of your gross salary, your employer matches that amount.

It’s not too late to increase those mid-career TSP contributions as a federal woman employee. If you have yet to increase those contributions, it’s not too late to do so. The more you can direct to the plan, the faster it grows. Directing more to that TSP is essential if you’re in your 50s and moving closer to retirement. This would be the time to make catch-up contributions.

Navigating Career Gaps

As a woman, you’re more likely to leave the workforce — or reduce your hours — once the children come along. Here are the numbers:

• 24% of women leave their jobs during their first year of motherhood
• 17% remain on leave five years later
• 15% are still absent after a decade

On the other hand, you might be called upon to reduce your hours or leave your job on an extended, temporary basis to care for an aging relative. The challenge in either situation is that you can’t contribute to your TSP if you’re not working.

It’s possible to mitigate this impact by “going private.” In other words, you can open an IRA and contribute up to $7,000 annually (as of 2024).

Another possible issue is divorce. You might have taken time off to raise your children but couldn’t contribute to Social Security or the TSP. If you divorced your spouse once the children were on their own, you now have a lower TSP balance and fewer Social Security work credits.

Retirement planning for divorced federal employees includes catching up with your TSP contributions; reaching that 5% employer-matching limit can help.

An experienced CFP®, like someone with Serving Those Who Serve, is knowledgeable about these and other issues. That professional can work with you to develop the best solution.