TSP and retirement planning: it’s never too late to start

by Airman Christopher R. Morales
JBER Public Affairs

1/15/2015 - JOINT BASE ELMENDORF-RICHARDSON, Alaska -- The start of a new year is a good reminder to keep tabs on saving for retirement; it's never too late to start.

The military provides the Thrift Savings Plan to help. This option should not be overlooked because never having to work again is real retirement.

The Thrift Savings Plan is a retirement plan for military members to invest their money; money intended to support you after age 60.

Once a TSP account is made, the money is automatically moved to the Government Securities Investment Fund (G Fund). This fund is less likely to grow because the interest rates are a little lower than the usual increase for inflation.

According to tsp.gov, the G-Fund invests in the government and is run by the Federal Retirement Thrift Investment Board.

"The G fund is already set up for being older, because it'll never change," said Bob Hill, financial advisor for JBER. "I call it the grandfather fund, meaning it's for old people."

Once you sign up for a TSP account, it's time to choose how you want your money invested, to maximize your retirement potential.

The TSP offers many different paths of investments to better utilize money while being held for your retirement; these paths are the various funds.

According to the TSP website, other investment fund options are available: fixed income, common stock, small cap stock, international stock and lifestyle. These funds vary in terms of economic aggressiveness.

For more information about each investment fund, visit tiny.cc/lbt4rx.

Any savings plan is intended to provide more money later; it does not mean putting as much money in as possible right now, but saving a little at a time for a higher sum in the end.

The main difference between the Roth TSP and traditional TSP is when taxes are paid. Roth TSP taxes your money before it goes to the fund; when you withdraw the fund there is no deduction.

Traditional TSP taxes the withdrawal at the end and offers more options for withdrawing money before the target retirement date, such as if you choose to use the money to buy a home.

"When do you want to pay taxes, today or when you're 60? That's it in a nutshell," Hill said. "I would say 90 percent of the people say now."

"The traditional TSP is delaying your taxes, [until] someday; who knows when that day will come," Hill said.

The reason people want to pay their taxes now, and choose a Roth TSP, is because taxes increase over time, Hill said.

Dollar amount payments in a Roth TSP are no longer available as of Jan. 1. Roth TSP will use a percentage of pay, similar to traditional TSP.

Money travels like a drop of water in the ocean of economy, and the only way to keep track of your dollar is to make a plan.

A plan is all one needs to set oneself right this year and years to come.

Make a plan for a better future; start next year debt-free by living under budget and by saving.

For individual financial advice visit the JBER-Elmendorf Military and Family Support Center in the Log Cabin, or call 552- 4943; or Army Community Service located in Building 600, room A117, or call 384-7509 to schedule an appointment.