Thrift Savings Plan Basics & Why You Should Participate (Podcast 001)

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Thrift Savings Plan Basics - Military Wallet PodcastThe TSP is a great way to save for retirement!
The Thrift Savings Plan is the government retirement plan equivalent to a civilian 401k plan. In this podcast and article, we discuss the benefits of investing for your retirement using the TSP, the advantages and disadvantages of using the TSP, and how you can proactively manage your investments to reach financial independence.

The Military Wallet Podcast on iTunesMilitary members and many government employees have access to pension plans, which are fast becoming hard to find in the civilian sector. But even if you qualify for a pension plan, will it be enough to finance your retirement, or will you need additional savings and investments? The answer, as you have probably guessed, is that most people will likely need more money to fund a lifestyle that is equivalent to their current way of life. That’s where other retirement plans come into play. The most notable among these for military members and government employees are the Thrift Savings Plan, and IRAs.

Thrift Savings Plan Basics - Military Wallet Podcast
The TSP is a great way to save for retirement!

The Thrift Savings Plan and IRAs are both great options for investors, and I’m going to walk you through the basics of these plans, along with our guest, Robert Shaye, an active Duty Coast Guard member, and a recent MBA graduate from UC Berkeley Haas. Robert shares some excellent information about the TSP, investing, and how you can accomplish your retirement goals.

Covered in this episode are topics including:

  • Why you should save for retirement.
  • How Robert helped a friend put over $450,000 back in her pocket by making some small changes to her retirement account.
  • The differences between the Thrift Savings Plan and IRAs.
  • The difference between Roth and Traditional Retirement accounts.
  • Why the Roth IRA and Roth Thrift Savings Plan options are often the best choice for military members.
  • Thrift Savings Plan contribution limits.
  • Roth IRA and Traditional IRA contribution limits.
  • How to open your Thrift Savings Plan account.
  • Where you can open a Roth IRA.
  • How to get started investing, even if you don’t know how or where to get started.
  • Investment options within the Thrift Savings Plan, and how they differ from IRAs and other investment accounts.
  • The importance of investment management fees, and how they will impact your investments over time.
  • The pros and cons of Life-Cycle, or Target Date Funds.
  • Why it’s important to keep your money invested in stocks, even when the markets aren’t doing well.
  • Pros and Cons of transferring funds in or out of the TSP.
  • Strategies for Guard Members or Reservists who are also Federal Employees and are eligible for both versions of the Thrift Savings Plan, the civilian and Uniformed Services.
  • Strategies for investing in the TSP when you have tax-exempt combat pay (this can have a huge impact!).
  • Why you might want to open a TSP with a minimum of $500, even if you don’t plan on making the TSP your primary retirement account (this strategy can literally put thousands of dollars back in your pocket due to the low fees the TSP charges!).

Summary:

The Thrift Savings Plan is fairly easy to understand and even easier to start. It’s never too late, or too early, to begin investing. And the TSP is a great way to start saving for your retirement. You can get started through your MyPay account if you are in the military, or contact your finance unit for assistance.

More to come: The Thrift Savings Plan is fairly basic as far as retirement and investment accounts go. But as basic as it is, there are some advanced strategies you can use to supercharge your retirement plan. We will be sure to address some of these topics in future podcast episodes.

Note: This is our first episode. We plan on making this a weekly event. We will be on iTunes, Stitcher Radio, and other outlets soon. Thanks!

Questions or comments? Drop us a line in the comments section and we will be sure to get back with you!

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About Ryan Guina

Ryan Guina is the founder and editor of The Military Wallet. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

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  1. Elizabeth Melton says

    One item that is not addressed in detail is the low expenses associated with the various TSP Funds. The Thrift Savings Plan has some of the lowest fees in the industry. In most investors (TSP Participants) cases, the low fees offset the limited options to invest in.

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