TSP: Easy as 1-2-3

  • Published
  • By Airman 1st Class Joe McFadden
  • 1st Special Operations Wing Public Affairs
There are many acronyms associated with military life: OPSEC, AFSC, MRE, GPC, TDY, etc. It's often understandable for first-time service members or outside observers to get confused in the alphabet soup that can make up service members' conversations.

However, there's one acronym that few people can afford to ignore: TSP. According to the program's website, the Thrift Savings Plan has served as a retirement savings and investment plan for millions of service members and federal employees since its creation by Congress in 1986.

The program is comprised of differing investment funds so that people can choose different options that may yield a higher rate of return when they withdraw from it, without penalty, when they're 59-and-a-half years old. Their contributions can be invested into either a fixed lifecycle fund that is considers a person's length of time until retirement or into a selection of five different index investment funds that each vary on risk and volatility.

At first glance, starting the program may seem complicated, yet the process for Airmen to enroll in the plan is as easy as three mouse clicks on their myPay websites. But no matter how easy getting started or how complex the system may look, the question for Airmen is clear-cut: if you're not enrolled in TSP, what are you doing for your retirement?

Thelma Few, Hurlburt Field Airman & Family Readiness Center community readiness consultant, has been asking that same question of people on base for nearly 20 years. Despite many Airmen telling her they believe their retirement pay after 20 years of service will suffice, she insists they take a closer look if those checks will adequately cover their cost of living in the future.

"I don't think some people can see that far down the road," Ms. Few said. "I try to get it across to them that, believe it or not, they will be 59-and-a-half years old someday. They may think that's ancient, but they will get there, and they'll thank me."

Her sentiment about shedding light on other's financial futures is met when she gives money management briefings to first-term Airmen at the Commando Pride Airman Center. She said she doesn't always have to rely on cinnamon candy fireballs to keep her class awake while telling them about their possible earnings.

"If I just say 'invest in TSP,' that doesn't tell them anything," she said. "But when I show them what they invest and what they end up with, it creates a big 'wow!' impact."

Ms. Few's presentations about TSP highlight how compounded interest can increase a person's retirement income over time. For example, assume an individual puts $150 into a TSP account every month for 20 years. By the end of that time, their $36,000 would equal more than $63,000 based on an average 10-year rate of return and the least risk Government Securities fund.

Should they then choose to stop contributing to TSP and leave those funds to accumulate over another 20 years with the same rate, that individual's original investment would equal more than $182,000.

And if they split their investments in any of the other four TSP funds or contributed more money, their possible earnings could be much higher--certainly higher than a person who doesn't have any plan at all, Ms. Few said.

"I tell Airmen that they have the potential to be millionaires by doing this," Ms. Few said. "I don't expect an A1C to afford $150 a month on their pay, but try three or five percent of your base pay and increase it with each stripe until it measures out to $150 over your career. I'm a big believer in this program, because it's affordable for anyone to do."

As of Aug. 1, eligible civilian federal employees, including newly hired and certain rehires, will automatically have three percent of their base pay deposited into a TSP account unless they elect otherwise. However, the option for military personnel to enroll is solely up to the individual.

And faced with uncertain economic times at present or vague circumstances in the distant future, Ms. Few said it would be in their interests for Airmen to start thinking about their retirement now, either through TSP or visiting the A&FRC.

"We're here to help and answer any questions they might have," Ms. Few said. "It's a nice feeling for me when I see people down the road and they say they remember how much I helped them by taking the advice I gave them. But the earlier they start planning, the better off they will be."

For more information on TSP, visit the program's website at www.tsp.gov or visit Ms. Few and the team of consultants at the A&FRC.