There was some point not too long ago when you said “TS what?!”. Maybe you are still there! Today I’m going to break down what that TSP jargon is all about.
What is a TSP?
TSP is short for Thrift Savings Plan. If you have heard of an IRA retirement plan, this is the same idea. The TSP a government sponsored IRA.
This isn’t the pension or blended retirement plan for 20+ years of service in the military, but an extra benefit that you can use to build your retirement later in life by opening a TSP account and investing money within it.
A TSP is open to all federal employees, not just military members.
So… it’s a Retirement plan?
Yes! But all retirement plans in the end are tax labels given to some investments. These aren’t magic accounts that guarantee anything. Here special tax protection is given for the retirement minding regular investments.
The investments that you can put in your TSP are mutual funds. These funds are groups of stocks and/or bonds grouped together that you are buying shares of. When these stocks go up, the fund goes up and your invested amount goes up!
What’s so great about a TSP?
Basically, rock bottom fees!
A TSP allows you to choose from 6 fund types.
|G Fund||F Fund*||C Fund*||S Fund*||I Fund*||L Funds**|
If you look at the fees charged in each fund they run from 0.038% to 0.039%, To give you a comparison a “rock bottom” fee in the public sector funds are .24% with many running between 0.75- 1.50%.
What else should I know?
Best part of a TSP is that like a Roth IRA, you can withdraw the principle at any time* (please consult a tax advisor about your tax responsibilities when doing this).
If you spend 15 years adding $800 into your TSP ($400 each pay period), you will have around $144,000 in principle in the TSP that COULD be taken out if you need it.
To wrap it up.
The TSP has the lowest fees you’ll find anywhere for investing. This is quite the benefit for government and military families. You can learn even more about the TSP here.
Start your journey to wealth!
with the emergency fund worksheet. This worksheet will walk you thought just how much of an emgerency fund your military family needs.