Why the TSP Match Is Too Valuable to Leave on the Table

Hi Friends, Mike Lanway here with AllAboutFERS.com

If you’re a FERS employee and you’ve been wondering whether contributing to the Thrift Savings Plan (TSP) is really worth it—let me be absolutely clear: yes, it is. Not just because of what you put in, but because of what your agency is willing to contribute on your behalf.

This might be one of the most overlooked parts of the FERS package—and for some federal employees, it ends up being worth hundreds of thousands of dollars by the time they retire.

Let’s walk through why this matters, and what it could mean for your retirement.

The TSP Match: Free Money, but Not Without Action

Here’s how the TSP agency match works under FERS:

• 1% Automatic Contribution: Even if you contribute nothing, your agency will still put in an amount equal to 1% of your pay. 
• Up to 4% Matching: If you contribute at least 5%, your agency will match it with an amount up to 4%. So together with the automatic 1%, that’s a total of 5% contributed on your behalf—every pay period. 
  

The catch? You have to contribute 5% to get the full match. If you’re only putting in 3%, you’re leaving money behind. And that adds up fast.

What This Match Looks Like in Real Life

Over the years, I’ve seen employees retire with $200,000, $300,000, $500,000 or more in their TSP—and a significant chunk of that came from agency matching.

Let me say it again: these are folks who simply built their budget around a consistent 5% TSP contribution. They didn’t max it out. They just met the match.

Now imagine compounding those contributions over 25 or 30 years. That’s not just retirement income—that’s financial freedom that you earned without any extra work, just by budgeting a little smarter.

Reworking Your Budget to Capture the Full Match

If you’re not contributing at least 5% right now, I get it. Life is expensive. Budgets are tight. But this is worth sitting down and reworking the numbers.

Ask yourself:

• Where could I trim or adjust to find 5%?
• What small shift now could create a huge payoff later?
  

Think of this match like a 100% guaranteed return on investment. You won’t find that in the stock market.

One Last Thing to Consider

Every dollar you don’t contribute—up to 5%—is a dollar your agency won’t match. And that means less compounding growth, less cushion, and possibly less peace of mind later on.

Your TSP isn’t just a savings plan. It’s a retirement partner. And your agency wants to be part of that partnership. But you’ve got to show up and do your part.

Take the Next Step

If you’re wondering how all this fits into your overall career and retirement picture, we’ve created tools to help you. At AllAboutFERS.com, we’ll walk you through how the TSP, your annuity, Social Security, and your budget all fit together in one integrated plan.

You’re not in this alone. Let’s make sure you’re getting everything you’ve earned.

Take care,
Mike Lanway