A Simple 3-Step Plan for Helping Family Without Cutting Into Your Pension

August 15, 2025

For many federal retirees, helping family is simply part of life.

Covering a grandchild’s tuition. Helping an adult child with rent. Pitching in for an unexpected medical bill.

It feels right in the moment.

But over time, even modest support can quietly erode your pension income or force you to draw down your TSP faster than you planned.

The good news is you don’t have to choose between generosity and financial security.

With a little structure, you can do both.

The Risk Few Retirees Think About

When you’re on a fixed income — part pension, part TSP withdrawals — every extra $200, $300, or $500 a month you give away has a ripple effect.

It can:

  • Push you into a higher tax bracket if you tap Traditional TSP funds

  • Reduce compounding growth if you withdraw from investments too early

  • Leave less margin for inflation or unexpected expenses

The danger isn’t the occasional gift.

It’s the pattern of support that becomes permanent without a plan.

The 3-Step Plan for Sustainable Generosity

1. Set a “Family Support Budget” Before You Give

Decide how much you can comfortably help each year without affecting your retirement plan.

Treat it like any other budget category — travel, hobbies, or home maintenance.

Example: $250 a month over 20 years equals $60,000 — not counting lost growth if it comes from investments.

2. Use the Right Source for the Right Kind of Help

  • One-time help: Use cash savings, not TSP withdrawals.

  • Recurring help: Create a separate “family fund” account you replenish gradually.

  • Avoid: Pulling from retirement accounts in a down market, which locks in losses and increases tax risk.

3. Set Timeframes and Communicate Clearly

Decide if the help is for 3 months, 6 months, or until a specific goal is reached.

Let your family know the plan upfront so expectations stay realistic.

Even a short written note can make these boundaries easier for everyone.

Helping family can be one of the most rewarding uses of your retirement income.

But by setting limits, choosing the right funding source, and being clear about timeframes, you can protect both your loved ones and your own long-term security.

Your retirement should fund joy — for you and the people you care about — without putting your future at risk.

—FWR