In recent years, the Thrift Savings Plan (TSP), the military’s version of a civilian 401(k), has significantly increased active-duty participation rates. Implementing the Blended Retirement System, which includes automatic enrollment, has contributed to a rise in participation from under 40% to over 80%. While this is a positive development, a considerable number of service members need to take advantage of the TSP. A rough estimate places this number at around 300,000 individuals. Through conversations with non-participants in the TSP, several common themes have emerged as to why they choose not to utilize this saving plan. Below, we will examine these excuses and offer insight as to why they should not deter military personnel from using the TSP to secure the financial future for themselves and their families. The Thrift Savings Plan (TSP) is an excellent way to save for the future, both for yourself and your family. However, many military service members do not take advantage of this saving opportunity. In this article, we will address four common excuses for not participating in the TSP and why these excuses should not deter you from saving for your future. “I’m Getting Out Soon and Don’t Have Enough Time” Even if you only have a year or two remaining in the military, giving the TSP some thought is worthwhile, even if it seems you don’t have enough time to contribute significantly. Because you can never be sure of what lies ahead, you can wind up serving in the military longer than anticipated. You also have the choice of preserving your accrued TSP funds, rolling them over to your new employer’s plan, or moving them to an IRA even if you leave the military shortly. Regardless of your goals for the future in terms of your job, starting to save today, even if it’s only a little bit, can help you prepare for the future. “I Don’t Have Enough Money” If you do not have enough money to contribute to the TSP, it may be worth revisiting your spending plan to see if there is room for a small contribution. By visiting myPay and signing up for the TSP, you can begin saving for your future. The TSP is a great tool for cultivating a “pay yourself first” mindset, as contributions are deducted from your pay before it reaches your checking account. It helps you save money without the temptation to spend it. Even small contributions can add up over time, especially with future pay increases, so it is worth getting started as soon as possible. “Retirement, Are You Kidding Me?” Understandably, retirement may seem like a distant concern when facing more pressing issues daily. However, if you put off saving for the future, you are missing out on the power of compounding returnsâ€â€earning interest on your interest. Even small monthly contributions of $50 or $100 can add up to a six-figure retirement balance over time. Don’t neglect this opportunity to save for your future. “I’ve Got Military Retirement” While military retirement is undoubtedly a valuable benefit, offering a monthly pension that is not available to many civilian workers, it is essential to keep in mind that this pension only represents half of your basic pay. It does not include allowances or other forms of payment such as Basic Allowance for Housing (BAH) or Basic Allowance for Subsistence (BAS). As a result, you will likely need to supplement your military retirement with additional savings to sustain your desired standard of living in retirement. Furthermore, only a tiny percentage of those who serve in the military less than 20 are eligible for military retirement. Additionally, the new blended military retirement system requires service members to contribute at least 5% of their pay to the Thrift Savings Plan (TSP) to take advantage of the system. If any of these excuses sound familiar, we hope this information has helped address your concerns and encourage you to save for your future with the TSP.
Contact Information:
Email: [email protected]
Phone: 7705402211
Bio:
Mack Hales has spent the past 4 decades helping clients prepare for retirement and manage their finances successfully. He also works with strategies that help clients put away much more money for their retirement than they could in an IRA or even a 401k. We involve the client’s CPA and/or their tax attorney to be sure the programs meet the proper tax codes.Mack works with Federal Employees to help them establish the right path before and after retirement. The goal is to help the client retire worry-free with as much tax-free income as possible and no worries about money at risk of market loss during retirement.•Mack has resided in Gainesville, GA since 1983, so this is considered home. Mack is married to his wife of 51 years, has two boys and five grandchildren.
