A watershed moment has arrived for the Thrift Savings Plan (TSP), serving as a stark financial barometer for the federal workforce. For the first time in recent memory, the TSP’s cash flow has turned negative, meaning the total money leaving the plan via withdrawals and loans now exceeds the new contributions entering it. As reported by FEDweek and supported by data from the Federal Retirement Thrift Investment Board (FRTIB), this shift is not merely an administrative statistic—it is a flashing warning light regarding the financial pressure facing federal employees and retirees.
📉 The Data: A Tipping Point in Cash Flow
The transition to negative cash flow is driven by a collision of demographic shifts and economic realities. It signals that the “Great Federal Exit” is underway, but it also highlights a growing reliance on retirement funds for immediate survival.
Sound Data: The 2025 Trend According to recent participant activity reports from the FRTIB, the net flow of funds has dipped into negative territory multiple times in 2025.
- Negative Net Flow: In early 2025, data indicated a net flow deficit of approximately -$656 million year-to-date in certain months.
- The Retirement Wave: The primary driver is the volume of post-separation withdrawals. As the “deferred resignation” wave hits and baby boomers retire, billions are moving out of the TSP to pay for living expenses or are being transferred to private IRAs.
- Economic Stress Indicators: There has been a notable uptick in General Purpose Loans and Hardship Withdrawals. In October 2025 alone, the TSP processed 35% more loans and 15% more withdrawals compared to the same period in 2024. This suggests active employees are increasingly raiding their nest eggs to cover immediate bills—a trend exacerbated by recent government shutdowns and persistent inflation.
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⚠️ The Danger of Following the Herd
The shift to negative cash flow highlights a critical transition that every federal employee must eventually make: moving from an “accumulation mindset” (saving money) to a “distribution mindset” (spending money safely). However, the data suggests many are making this transition under duress or without a strategic plan.
- The Loan Trap: With loan disbursements rising, many employees are borrowing from their future to pay for their present. While a TSP loan offers a low interest rate, the real cost is the lost compound growth. Borrowing during a market rally means missing out on gains that can never be recovered.
- The “Bleed” to High-Fee IRAs: A significant portion of outflows comes from retirees transferring funds to private IRAs. While IRAs offer more investment choices, they often come with significantly higher management fees than the TSP’s ultra-low expense ratios. Leaving the safety of the TSP without a clear value-add strategy often results in a transfer of wealth from you to a financial firm.
🛡️ Stop the Leak: Strategic Planning with Experts
Whether you are an active employee tempted by a loan or a retiree planning your withdrawals, you need a strategy that protects your long-term security rather than simply depleting your assets.
This is where Internal Benefit Advisors provides essential guidance. We help you reverse the negative trend in your own account by ensuring every dollar leaving your TSP has a purpose.
Here is how we help you manage your cash flow:
- Loan Alternative Analysis: Before you tap your TSP for a loan, we help you explore liquidity options that don’t cannibalize your retirement growth.
- Sustainable Withdrawal Rates: For retirees, we calculate a safe withdrawal rate based on your unique spending needs and pension income, ensuring you don’t become part of the statistic of those who outlive their savings.
- TSP vs. IRA Assessment: We provide an unbiased comparison of keeping your money in the TSP versus moving it. If you move it, it should be for a specific strategic reason—like Roth conversions or specific tax planning—not just because you retired.
- “Hardship” Recovery: If you took a hardship withdrawal during the recent economic strain, we help you structure a “catch-up” contribution plan to refill your bucket before retirement.
The TSP’s cash flow may be negative, but yours doesn’t have to be.
Take the definitive step to protect your nest egg. Contact Internal Benefit Advisors today for a comprehensive TSP review.
References
- FEDweek. “TSP Cash Flow Turns Negative as Withdrawals, Loans Outpace New Investments.”
- Federal Retirement Thrift Investment Board (FRTIB). Monthly Participant Activity Reports (2025).
- Federal Retirement Thrift Investment Board (FRTIB). Thrift Savings Fund Statistics.
- Internal Benefit Advisors. Retrieved from https://internalbenefitadvisors.com
Medicare Costs Climb in 2026: New Premiums and Deductibles Confirmed
The Centers for Medicare & Medicaid Services (CMS) has officially released the 2026 premiums, deductibles, and coinsurance amounts for Medicare Part A and Part B. As reported by FEDweek, beneficiaries will face a significant jump in costs next year, with the standard Part B premium rising by nearly 10%. For retirees living on fixed incomes, this increase will consume a substantial portion of the upcoming Social Security Cost-of-Living Adjustment (COLA), making precise financial planning more essential than ever.
The Numbers: What You Will Pay in 2026
The new figures represent a notable increase over 2025, driven by projected price changes and higher utilization of healthcare services. Here is the definitive data for your 2026 budget:
- Part B Standard Premium: The monthly premium will rise to $202.90, an increase of $17.90 from the 2025 rate of $185.00. This 9.7% hike is the largest single-year increase since 2022.
- Part B Deductible: The annual deductible for all Part B beneficiaries will increase to $283, up $26 from the previous year.
- Part A Inpatient Deductible: For hospital admissions, the deductible will jump to $1,736, an increase of $60.
- Part A Coinsurance: For hospital stays lasting 61-90 days, the daily coinsurance will rise to $434. For lifetime reserve days, it increases to $868 per day.
The “Hidden” Tax: 2026 IRMAA Brackets
For higher-income retirees, the standard premium is only the starting point. The Income-Related Monthly Adjustment Amount (IRMAA) surcharges will also apply if your modified adjusted gross income (MAGI) from two years prior (2024 tax return) exceeds certain thresholds.
- The Threshold: Surcharges begin for individuals with a MAGI over $109,000 and married couples filing jointly over $218,000.
- The Impact: Beneficiaries in these higher brackets will pay total monthly Part B premiums ranging from $284.10 to as high as $689.90 per person.
- Part D Surcharges: High earners will also pay an extra $14.50 to $91.00 per month on top of their drug plan premium.
This data highlights a critical financial squeeze: while the 2026 Social Security COLA is set at 2.8% (an average increase of about $56/month), the $17.90 hike in the Part B premium will immediately absorb roughly 32% of that raise for the average retiree.
Strategic Planning is Your Best Defense
Rising Medicare costs are a mandatory expense for most retirees, but they do not have to derail your financial security. For federal retirees specifically, the interplay between Medicare, FEHB, and these new costs requires a strategic review.
Internal Benefit Advisors specializes in helping you navigate this complex landscape. We provide the expert guidance needed to ensure your healthcare coverage remains both comprehensive and cost-effective.
Here is how we help you manage these 2026 changes:
- FEHB & Medicare Integration: We analyze whether joining Medicare Part B is cost-effective for you, comparing the new $202.90 premium against the potential savings in your specific FEHB plan (such as waived deductibles or copays).
- IRMAA Appeals: If you have experienced a life-changing event (such as retirement, divorce, or loss of income) since 2024, we can guide you through the process of appealing your IRMAA surcharge to potentially save thousands in premiums.
- Holistic Retirement Review: We look at your total retirement picture—pension, Social Security, and investments—to ensure rising healthcare costs don’t erode your long-term purchasing power.
The costs of healthcare are rising, but your plan can be stronger.
Take the definitive step to secure your healthcare budget. Contact Internal Benefit Advisors today for a comprehensive Medicare and benefits review.
References
- FEDweek. “Medicare Announces Increases in Premiums, Deductibles for 2026.”
- Centers for Medicare & Medicaid Services (CMS). (2025). Fact Sheet: 2026 Medicare Parts A & B Premiums and Deductibles.
- Social Security Administration. (2025). 2026 Cost-of-Living Adjustment (COLA) Information.
- Internal Benefit Advisors. Retrieved from https://internalbenefitadvisors.com
