Military and Mid-Career? It’s Never Too Late to Start Saving

By Kisha A. Taylor, Writer/Editor, Federal Retirement Thrift Investment Board 

At some point in your military career you may have heard about the Thrift Savings Plan (TSP) and some of its advantages, but perhaps saving for retirement wasn’t a priority. Then one day, you realize you’re closer to retirement age than you thought and discover that you won’t have enough saved to live comfortably once you leave the workforce. You may wonder what your choices are and if it’s too late to begin planning for retirement. Don’t panic! There’s still time to accumulate money in your TSP account.

Start Now

If you believe you’re behind on saving for retirement, signing up for the TSP is one of the best things you can do to secure your financial future. As a service member, you’re not automatically enrolled in the TSP, so you’ll need to sign up.  Just log into myPay, select the “Thrift Savings Plan” option, and choose your contribution type: traditional (pre-tax), Roth (after-tax), or both. Then choose the amount you want to contribute from each type of pay you receive (basic, incentive, special, and/or bonus). If you don’t have access to myPay, you can complete Form TSP-U-1, Election Form, and return it to your finance office.

Make a Choice

You can contribute a percentage of your basic pay to your TSP account—10%, for example—then increase your contributions as you get pay raises and promotions. Even small amounts can add up to big savings over time.

Already signed up for the TSP? Find ways to make the most of your contributions. If you’re age 50 or older, you can make catch-up contributions once you’ve reached the maximum Internal Revenue Code’s (IRC) elective deferral limit

In addition to how much you contribute, your investment mix is an important factor affecting the savings in your TSP account. At this stage in your career, be sure you have a balance of risk versus reward. Choosing our Lifecycle (L) Funds could give you an optimal mix of our five core funds based on when you’ll need to start receiving income from your savings. Use this chart to see which L Fund might be best for you:

Fund                      Consider If You…

L 2040                Were born 1973 – 1982 or plan to need your savings from 2035 – 2044

L 2030                Were born 1963 – 1972 or plan to need your savings from 2025 – 2034

L 2020                Were born 1954 ­– 1962 or plan to need your savings from 2016 – 2024

To choose how the money coming into your account is invested, make a contribution allocation by visiting tsp.gov.

Keep Us With You

If you decide to leave military service before you’re eligible for a military pension, you can keep your TSP account, even if you find other employment. Plus, if you take a Federal job, 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.

Act Today: Time is of the Essence

If you’re a late saver, don’t procrastinate further—you may still have time to build your retirement savings. Log into myPay today to increase your TSP contributions. The older you are when you start saving for retirement, the harder it will be. It may require some sacrifice, but remember, it’s never too late to start saving.

 

 

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...

When You Start Small, Saving is Easy

Written by Lila Quintiliani | August 12, 2019

When Attiyya first got married, she and her Marine husband had just graduated from college and were focused on paying off student loan debt. They had both attended private schools and had sizeable loans. Then three months after the wedding, the couple found out they were pregnant with their first child.

The first year of their marriage, says Attiyya, was a balancing act between paying down debt and saving for the future.

Read more...

Setting a Goal Leads to Success

Written by Super User | May 24, 2019

Growing up, Marisa’s dad had always talked about saving first, but she said she didn’t really internalize it until much later. “I was drifting along with no plan, carrying a little bit of revolving debt, saving some money here and there, but without a real plan for it.”

Read more...