If you're a federal employee or a government-adjacent professional — such as a contractor in the private sector or someone working in the nonprofit space — you’ve likely spent time thinking about your retirement savings lately. With political uncertainty, market volatility, and ongoing changes to federal benefits, the retirement landscape can feel unpredictable. You might be wondering:
How do I protect my retirement savings from market downturns?
Is my Thrift Savings Plan (TSP) enough to meet my long-term goals?
What other options do I have to take control of my retirement future?
The good news is you have options, and you don’t have to navigate them alone.
At EViE Financial, we specialize in helping federal employees and government contractors make informed financial decisions. Whether you’re planning for the long term or adjusting your strategy due to economic shifts, having a solid plan in place can provide clarity and control.
The Current Economic Climate & What It Means for Your Retirement
The financial world is shifting rapidly, and those changes can directly impact your retirement savings. Federal employees and contractors face unique concerns, including:
Market volatility affecting the balance of their TSP accounts
Rising inflation reducing purchasing power in retirement
Policy and regulatory changes that could impact federal benefits and withdrawal rules
The potential for job changes that thwart retirement plans or pension estimates
Here’s how each may impact retirement more specifically.
Market Volatility & Retirement Savings
Market swings can directly affect the value of your retirement accounts, including the Thrift Savings Plan (TSP). If you’ve logged into your account in the past year and noticed a significant dip, you’re not alone.
When stock and bond markets fluctuate, the funds in your TSP — particularly the C Fund (S&P 500 stocks), S Fund (small-cap stocks), and I Fund (international stocks) — are affected. While market downturns are normal, retirees or those nearing retirement have less time to recover from losses before they start withdrawing funds.
For those still in their working years, market dips present buying opportunities, but only if you have the right asset-allocation strategy. Without proper diversification, a single downturn could significantly impact your long-term savings.
Rising Inflation & Its Impact on Purchasing Power
Inflation may be one of the biggest financial threats to long-term retirement planning. Even if you have substantial savings in your TSP or another retirement account, those dollars may not go as far in the future as they do today.
Consider this:
If inflation averages 3% per year, something that costs $50,000 today could cost over $90,000 in 25 years.
Retirees on a fixed income may see their purchasing power decline if their investments aren’t keeping pace with inflation.
For federal employees, inflation impacts both the TSP and the FERS pension system. While the FERS pension does have a Cost of Living Adjustment (COLA), the increase may not fully match inflation, especially in high-cost areas.
Policy & Regulatory Changes Affecting Federal Benefits
Unlike private-sector workers who manage their own 401(k) plans, federal employees depend on government policies to determine their benefits. Political shifts can directly influence:
TSP withdrawal rules – Changes could affect when and how you can withdraw funds in retirement.
FERS pension adjustments – Discussions around funding and cost-of-living adjustments can impact your future pension.
Tax policy shifts – Adjustments to tax brackets or retirement contribution limits may alter your savings strategy.
For example, past government shutdowns have delayed agency contributions to retirement accounts and created uncertainty for those relying on pensions. Additionally, proposals to increase TSP withdrawal restrictions or adjust tax policies could change the retirement landscape for federal workers.
By understanding these challenges, federal employees can take proactive steps to protect their retirement savings and help ensure their financial security — no matter what happens in the broader economy.
While these factors may feel overwhelming, proactive planning is key. Instead of waiting to see how things unfold, taking steps now to safeguard your retirement savings can put you in a stronger position for the future.
Understanding the TSP: Pros & Cons
One of the most important decisions federal employees face is how to best use their TSP savings and whether it makes sense to explore other retirement investment options.
The Thrift Savings Plan (TSP) is a government-sponsored retirement plan designed for federal employees and uniformed service members. It functions similarly to a 401(k), allowing workers to contribute pre-tax (or Roth) dollars to their retirement.
Benefits of the TSP
Employer Matching: If you’re a FERS employee, your agency matches contributions up to 5%, which is essentially free money.
Low Fees: The TSP’s investment options have some of the lowest fees in the industry, helping you keep more of your earnings.
Tax-Advantaged Growth: You can choose between Traditional (pre-tax) and Roth (after-tax) contributions, giving you flexibility in managing future tax liabilities.
Limitations of the TSP
Limited Investment Choices: The TSP offers only five core funds (G, F, C, S, I) and lifecycle funds, limiting diversification opportunities.
Rigid Withdrawal Rules: After leaving federal service, TSP withdrawals are subject to certain restrictions, which may limit flexibility in retirement.
No Personalized Investment Management: Unlike a managed IRA or financial advisory services, TSP investments are largely self-directed, meaning federal employees are responsible for managing their own allocations. There is also minimal opportunity to personalize your investment strategy or align those investments with your values, making it hard to balance your financial objectives and your personal preferences.
However, for many, the TSP is an excellent foundation for retirement savings, but it may not be the only investment vehicle you want to rely on for long-term wealth building.
Exploring Retirement Investment Options Beyond the TSP
If you’re looking for greater investment flexibility, more control over your money, and additional tax benefits, it may be worth considering other retirement options beyond the TSP.
Option 1: Individual Retirement Accounts (IRAs)
An IRA (Individual Retirement Account) can complement your TSP by offering:
A wider range of investments — Unlike the TSP, IRAs allow you to invest in individual stocks, bonds, ETFs, mutual funds, real estate, and more.
More control over asset allocation — Instead of being limited to five core funds, you can customize your investments based on your risk tolerance and goals.
Roth IRA conversions — If you expect to be in a higher tax bracket in retirement, converting TSP funds to a Roth IRA could provide tax-free withdrawals in the future.
IRAs come in two main types:
Traditional IRA: Contributions may be tax-deductible, and withdrawals in retirement are taxed as ordinary income.
Roth IRA: Contributions are made with after-tax dollars, but qualified withdrawals are tax-free in retirement.
Option 2: Brokerage Accounts
For federal employees looking to invest beyond retirement-specific accounts, a brokerage account allows unlimited contributions and flexibility in investment choices.
No early withdrawal penalties (unlike the TSP and IRAs)
Access to dividend-paying stocks, ETFs, and alternative investments
Capital gains tax advantages when investments are held long-term
While a brokerage account doesn’t offer tax-deferred growth like the TSP or IRA, it does provide full liquidity, meaning you can access funds at any time without penalty.
Option 3: Employer-Sponsored 401(k) or 403(b) Plans
If you leave government service and transition to a private-sector or nonprofit role, you may gain access to a 401(k) (private sector) or a 403(b) (nonprofits and educational institutions). These accounts function similarly to the TSP but often provide:
More investment choices than the TSP’s limited fund options
Potential for higher employer-match programs
The ability to roll over previous TSP funds for continued tax-deferred growth
Understanding how these options interact with your TSP savings can help you make informed decisions about where to allocate your retirement funds.
Why Financial Planning Matters Now More Than Ever
While the TSP is a great starting point, it isn’t a comprehensive retirement strategy on its own. A strong financial plan should include:
✔ Investment diversification: Balancing risk across multiple asset classes to protect against market fluctuations.
✔ Tax efficiency: Using a mix of pre-tax and Roth savings for tax diversification in retirement.
✔ Distribution planning: Structuring distributions strategically to maximize income while minimizing taxes and penalties.
Many federal employees don’t realize they have more control over their retirement funds than they think. With the right planning, you can build a strategy that aligns with your lifestyle, long-term goals, and financial security.
How EViE Financial Can Help
At EViE Financial, we specialize in helping federal employees and government-adjacent professionals navigate their retirement options.
Whether you’re:
Planning your TSP allocation
Exploring IRA options for more flexibility
Looking for a custom retirement plan that fits your long-term needs
…we’re here to help you make informed, confident financial decisions.
If you’re ready to take control of your retirement, let’s have a conversation.
Your retirement should be on your terms, not dictated by market swings or government uncertainty. Let’s build a financial plan that works for you.
Final Thoughts
Federal employees and government contractors deserve a financial strategy that works in any economic environment. By exploring investment options beyond the TSP, understanding tax-efficient strategies, and working with a trusted financial expert, you can create a retirement plan that provides both security and flexibility.
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