How $100 Can Become $100,000

By Beth Perry, Federal Retirement Thrift Investment Board

April is Financial Literacy Month, the perfect time to reevaluate your spending habits. Can saving $100 today mean having $100,000 in the future? It can if you use time to your advantage. The Thrift Savings Plan (TSP), a low-cost retirement plan for military and Federal civilian employees, helps you do that.

Thousands of military members younger than 35 already have $100,000 or more in their TSP accounts. Start now, and even a little can mean a lot.

How $100 can become $100,000.
Time is your biggest ally when it comes to the growth of your savings. Let’s say your basic pay is $2,000 per month, and you save 5 percent of your pay in your TSP account. That’s about $100 each month. If you leave the military after 10 years, you could have more than $17,300.* Even if you never add more money, that $17,300 could grow to almost $100,000 in 25 years.*

And consider this: If you contribute 10 percent of your pay the same way, you could have almost $200,000.* Can’t afford $100? Every dollar makes a difference. Plus, you can contribute incentive, special, and bonus pay. To start or increase your contributions, sign into myPay and choose the “Traditional TSP and Roth TSP” option.

Our Roth option could work for you.
“Roth” means you pay taxes on the money you save before it goes into your TSP account. So you pay no income taxes when you take it out, and your earnings can also be tax-free if certain conditions are met.** And any combat zone pay you receive is always tax-free. If you contribute it to our Roth option (and meet certain conditions**), that money can grow tax-free as well.

You can take us with you.
Your TSP account is yours to keep whether you’re with the uniformed services for two years or 20. Plus, if you take a Federal job after the military, you can keep contributing to the TSP. Even if you don’t take a Federal job, you can manage your investments at low cost while your savings grow.

Managing your account.
Remember, use myPay to change your TSP contributions—not the TSP website. If you’d like to change the funds you invest in, log into My Account at tsp.gov and choose “Contribution Allocations” or “Interfund Transfers” on the left. To reset your password, call us at 1-877-968-3778 and choose option three.

Ready to save? Here’s how:

  1. Sign into myPay. Click “Traditional TSP and Roth TSP.”
  2. Decide whether to make Roth or traditional contributions.
  3. Choose how much you’d like to save (10 percent, for example).
  4. Click “Save” at the bottom of the screen.

* Figures are based on the L 2050 Fund’s projected long-term returns. Returns are not guaranteed and may be substantially less.

** Roth earnings are paid tax-free if 1) you have reached age 59½ or have a permanent disability and 2) five years have passed since the year of your first Roth contribution.

 


 

Tip of the Day

  • Written by Guest Blogger | March 1, 2014

    Are you ready to set your #savings goal and make a plan to achieve it? Take the Military Saves Pledge today http://ow.ly/C7sGZ

Saver Stories View all »

Involving Kids in Family Finances

Written by | April 19, 2019

 

One of the best lessons we can share with our kids is about money. By middle school, kids should have a good understanding of how money works as well as the importance of saving.

Read more...

Making Saving Automatic Leads to Personal Success

Written by Lila Quintiliani | May 27, 2020

Ryan’s savings journey started when he was an active duty airman. Frequent deployments and temporary duty assignments gave him the opportunity to save. By the time he transitioned out of active duty, he had built up a healthy rainy-day fund and had started to aggressively save for retirement.

Read more...

Building a Six-Figure Savings While Enjoying Life

Written by Jackie Toops | November 13, 2020

Does the idea of saving up hundreds of thousands of dollars seem impossible? How about doing it while still living an enjoyable lifestyle?

For military spouse Martina and her husband, an E-5 in the Navy, accumulating a six-figure savings has become a reality. One might think that in order to save this much, it would take a great deal of sacrificing and forgoing a certain quality of life, but Martina and her husband would disagree. “Over the past few years (about five), we've managed to save almost $120,000 while mostly living on one income. We've learned so much about easy ways to save money and live a good life,” shares Martina.

Read more...