Ins, outs of TSP -- Secure future nest egg now

  • Published
  • By Senior Airman Ethan Morgan
  • 100th Air Refueling Wing Public Affairs
RAF MILDENHALL, England --  Whether saving for retirement or while serving during one enlistment in the Air Force, the Thrift Savings Plan is a safe way for Airmen to invest money.

The TSP is a long-term retirement and savings plan. Originally designed for Federal Employee's Retirement System employees, the plan later became available to service members and Civil Service Retirement System employees, and allows Airmen to build an investment portfolio while lowering their taxes each year they contribute.

"The importance of TSP is that it is federal employees 401k," said Nona Daugherty, 100th Force Support Squadron Airmen and Family Readiness Center personal finance program manager. "People really need to start investing by their early 20's. If they wait until they are in their 40s to 50s, then they will most likely end up having to work their entire life."

Contributions can be set up on Airmen's "MyPay" to go directly from each paycheck to the member's account with taxes deferred until post-retirement withdrawal. Members can also take advantage of the newly offered Roth program.

The Roth program allows contributors to pay taxes before it is put in their account. If the funds contributed remain in the Roth TSP for five years and members must be 59 and a half before they can withdraw their funds it will remain tax free.

"Neither the traditional TSP or the Roth TSP is better than the other," said Daugherty. "It comes down to each individual's preference on which works best for them; what tax bracket will they be in when they begin to withdraw the money, versus how much taxes will be saved if pocketing the money over the entire span of investing."

When these contributions are started the member's money will go directly into the G fund which is the safest of the six funds offered. The other funds offered by TSP are the F, C, S, I and L funds.

"Though the G fund is safe, I don't suggest people leaving their money in it, but instead moving it into one of the other funds that earn higher return rates, or at least until they are in there fifties," said Daugherty. "The best time to be risky with your investments is when you are young, it's not until you are older and getting closer to drawing on your money that you want to actually be overly cautious."

Airmen who do not wish to serve 20 years before leaving from the military can still use TSP while they are in the Air Force. After leaving the military, an Airman can roll their TSP over into another 401k plan in the private sector they choose.

To learn more about TSP and receive advice on how to invest their money, a one-on-one appointment can be made with an A&FRC personal finance consultant. To schedule an appointment call DSN 238-3406 or commercial 01638 543406.