TSP Worked Examples: Six Contribution and Growth Scenarios, Step by Step
Six TSP scenarios with the arithmetic shown: capturing the full match, high savings rates, catch-up contributions, Roth vs traditional, the cost of a partial match, and modeling raises.
Percentages and limits become real when you attach them to salaries and months. Below are six TSP scenarios worked step by step: a new employee capturing the full match, a high saver, a catch-up contributor, a Roth-versus-traditional comparison, the cost of a partial match, and a projection that includes raises. Each one shows the arithmetic plainly — contribution math first, then growth at a stated assumed return — so you can check every number by hand if you want. The growth figures use flat monthly contributions and a fixed annual return, which is a simplification: real markets zigzag and real salaries rise. Treat every output as an estimate built from stated assumptions, and run your own numbers in the TSP retirement calculator when the shape of the answer matters.
CHAPTER 01The Assumptions Behind Every Scenario
Growth examples use a 7% annual return compounded monthly (a monthly rate of about 0.5833%) unless a scenario says otherwise, and the standard future-value formula for level monthly contributions. That formula's factor for 30 years at 7% is roughly 1,220: a dollar contributed every month for 360 months becomes about $1,220. For 20 years it is about 521, and for 13 years at 6% about 235. Memorize those three factors and most TSP napkin math becomes possible.
Match math follows the FERS structure throughout: agency automatic 1% of basic pay, first 3% of employee deferrals matched dollar-for-dollar, next 2% matched at fifty cents on the dollar. Salaries and returns are illustrative and rounded — the point is the method, and a TSP retirement calculator reproduces each case with your own inputs in seconds.
CHAPTER 02Scenario 1: The New Employee Capturing the Full Match
Priya starts under FERS at a $60,000 salary and defers 5%. Employee contributions: $60,000 x 0.05 = $3,000 a year, or $250 a month. Agency contributions: automatic 1% = $600, plus match — first 3% ($1,800) matched dollar-for-dollar and the next 2% ($1,200) matched at half, adding $600 — for $2,400 of match. Agency total: $600 + $2,400 = $3,000, or $250 a month. Combined: $500 a month, which is exactly 10% of pay.
Projected growth at 7% for 30 years: $500 x 1,220 ≈ $610,000, against contributions of $180,000. Two observations follow. First, half of the monthly flow is agency money — skip the 5% election and the flow drops from $500 to $300, not $250. Second, roughly 70% of the projected balance is growth, which is why time in service and time in the market dominate every other input.
CHAPTER 03Scenario 2: The High Saver at 10%
Marcus earns $95,000 and defers 10%. Employee contributions: $9,500 a year ($791.67 a month). Agency contributions stay capped at 5% of pay — $4,750 a year ($395.83 a month) — because matching tops out when the employee reaches 5%. Combined flow: $1,187.50 a month, or 15% of salary. The extra 5% of deferral buys no additional match, only additional compounding.
Projected growth at 7% for 20 years: $1,187.50 x 521 ≈ $619,000, against contributions of about $285,000. The instructive comparison is with Scenario 1's $610,000: Marcus reaches a similar balance in twenty years that the 5% saver reaches in thirty, entirely because the deferral rate roughly doubled. Match captures the floor; deferral rate buys the timeline.
CHAPTER 04Scenario 3: Catching Up at 52
Dana, 52, maximizes 2025-style limits: $23,500 in deferrals plus the $7,500 catch-up, $31,000 total, or about $2,583 a month. She plans to retire at 65, so the horizon is 13 years. Growth at a more conservative 6% uses a 13-year factor of about 235 (at 6% compounded monthly, 156 months): $2,583 x 235 ≈ $608,000, against contributions of about $403,000.
Read that carefully: contributions carry most of the balance because the runway is short. Catch-up years are heavy-lift years, which is why the special catch-up window at ages 60–63 exists — under 2025 figures, $11,250 replaces the $7,500 standard catch-up in those years, pushing the ceiling to $34,750. The lesson is not despair about late starts; it is that late starts respond to contribution rate in a way early starts do not.
CHAPTER 05Scenario 4: Roth vs. Traditional, Same Dollars In
Two colleagues each direct $500 a month into the TSP for 25 years at an assumed 7%. Growth math is identical for both: $500 x 810 ≈ $405,000 at retirement, since fund returns do not care about tax treatment. The difference sits entirely in tax timing. The traditional contributor's $500 leaves pre-tax, so take-home pay drops by less than $500 today, and withdrawals are taxed later. The Roth contributor's $500 leaves after tax, costing the full amount now, with qualified withdrawals tax-free later.
The scenario's lesson is that the calculator cannot pick for you — both lines reach $405,000 under the same assumptions. The decision lives in tax rates: if your bracket now exceeds your bracket in retirement, traditional plausibly wins; the reverse favors Roth; and nobody knows either number with certainty. Splitting contributions is a legitimate hedge, and rebalancing the split as your career progresses is the practical answer most planners converge on.
CHAPTER 06Scenario 5: The Missed Match
Elena earns $50,000 and defers 3%. Employee contributions: $1,500 a year. Agency: automatic 1% ($500) plus a dollar-for-dollar match on her 3% ($1,500) = $2,000. Combined: $3,500, or 7% of pay. Compare her colleague at 5%: employee $2,500, agency $2,500, combined $5,000 — 10% of pay. The gap between them is $1,500 a year of agency money that Elena never collects, roughly $125 a month.
Projected over 30 years at 7%, that missing $125 monthly compounds to $125 x 1,220 ≈ $152,000 of balance she will not have. Her own extra 2% deferral would add another chunk on top — but the agency's $152,000 is the pure cost of the gap, money available for nothing except a payroll election. This is the most expensive silent mistake in the federal benefits system, and it is reversible this pay period.
CHAPTER 07Scenario 6: Modeling Raises Instead of Flat Pay
Flat-contribution math understates real careers. Take Scenario 1's saver but add 3% annual raises, holding the contribution at 10% of a rising salary. Contributions start at $500 a month and grow with pay, reaching roughly $1,178 a month in year 30 (since 1.03 to the 29th power is about 2.36). Total contributions rise to roughly $285,000 rather than $180,000.
A simple growing-annuity estimate at 7% lands near $845,000 — call it $840,000–$850,000 depending on rounding — versus about $610,000 for the flat version. Nearly 40% more balance, purely from modeling raises. The takeaway for using any TSP retirement calculator: check whether it supports salary growth, because a flat-pay projection is systematically conservative. Neither number is a forecast; both are honest under their stated assumptions.
CHAPTER 08Reading the Six Together
Seen together, the six scenarios form a career arc. The new employee's match is a foundation worth more than any fund choice; the 10% saver shows how deferral rate compresses timelines; the catch-up contributor demonstrates that late starts respond to dollars rather than return assumptions; the Roth-versus-traditional pair resolves into a tax question the growth math cannot answer; the missed match quantifies the system's one unforgivable leak; and the raises scenario warns that flat-pay projections are systematically shy.
The common thread is that every number moved when a controllable input moved — the election percentage, the catch-up filing, the tax split, the timing of the first full contribution. Markets will do what markets do. A TSP retirement calculator turns each controllable into a projected consequence, and reviewing that projection each January is how a career of small elections becomes a retirement number you actually want.
🔑 Key takeaways
- Convert percentages to dollars before projecting: at $60,000, a 5% election plus full match means $500 a month, half of it agency money.
- Handy compounding factors at 7% monthly: about 1,220 over 30 years, 521 over 20, and 235 over 13 years at 6%.
- The match sets the floor and the deferral rate buys the timeline — a 10% saver reaches in 20 years what a 5% saver reaches in 30.
- Catch-up years do the heavy lifting: late starts respond to contribution rate far more than to return assumptions.
- Roth and traditional grow identically under the same assumptions; only your tax timing decides between them.
- A 3% gap in the match compounds to roughly $150,000 over a 30-year career — the cheapest money you will ever leave behind.
- Modeling 3% annual raises raises 30-year projections by roughly 40% over flat-pay math; check whether your calculator supports it.
❓ Frequently asked questions
Are these growth numbers guaranteed?
No. They are outputs of a fixed assumed return applied to level contributions — useful for comparing scenarios, useless as promises. Markets move in sequences, not averages, which is why the guide recommends running conservative, middle, and optimistic cases.
Why use 7% as the assumed return?
It is a common planning figure for stock-heavy mixes, deliberately hedged rather than precise. Conservative mixes plausibly earn less; aggressive mixes more. The number matters less than stating it — an unstated assumption is the dishonest kind.
Do the match percentages apply to uniformed service members?
The Blended Retirement System uses the same 1% automatic plus matching structure, with military-specific wrinkles such as vesting timing and continuation pay. The 5% full-match target holds as the planning default.
How do I translate an annual limit into per-paycheck amounts?
Divide by your number of pay periods — $23,500 over 26 pays is about $904 per pay. Spreading it evenly keeps matching active all year under most payroll practices; front-loading can pause the match depending on your agency's true-up handling.
What if I already have a balance from a previous plan?
Add it as the starting balance and let it compound — a $40,000 rollover growing at 7% for 20 years becomes roughly $155,000 before any new contributions. Any decent TSP retirement calculator has a current-balance field for exactly this.
Which scenario applies if I split Roth and traditional?
Scenario 4's growth math applies unchanged to the combined balance. Track the two tax buckets separately for withdrawal planning, but for projection purposes the split is a tax decision, not a growth decision.
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