Spekkio
He bowls overhand.
There's a Roth TSP option. You can withdraw contributions without penalty, although you'll have to make monthly payments to replenish. It's essentially a loan to yourself with interest also paid to yourself.
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PSA - things I should have done....
- Thread starter drgndrvr
- Start date
You can't make individual contributions to your TSP after you've separated, but you can roll your civilian retirement funds over into your TSP. So it's totally feasible for someone to decide that TSP would be their "main" retirement fund and roll their 401ks in as they change companies over the progression of a career. I know you cannot roll a Roth IRA over to TSP, but I'm not sure if you can roll a Traditional IRA over or not.
When people here are saying "max your TSP," that is what they are saying. However, you're right, it's difficult to do as an ENS and certainly as a JG with student debt. However, if you keep your lifestyle in check, inflate your spending less than your pay raises, it's certainly do-able, particularly if you do traditional TSP and are getting the tax benefit. The way I look at it is I max everything I can Roth First: my Roth IRA, my wife's Roth IRA, and my Roth TSP, and when I can't stretch the dollar anymore, I go to traditional TSP because some of that was money that would have gone into today's taxes anyway, so I might as well use it as a loan from the government to grow my wealth.
What's awesome is, once you hit the max and have learned to live without it, every pay raise after that is just so much sweeter as you actually have to "reduce" your % going into TSP.
Particularly now with COVID and not much to spend on coupled with the liberty restrictions at my current duty station, I've been crushing what % of my income is going to investments this year. That's been about the only plus side of this whole pandemic in my personal situation.
You mention Roth TSP and traditional TSP, are you married to military so two TSP? I think I’ll be fine between TSP and my Roth IRA but just curious what you meant by that. And are you worried about going above the Roth IRA income threshold? I haven’t found a good game plan for that and $137k single/ $203k married doesn’t seem hard to surpass if becoming civilian pilot after if not promoted to 0-4
Not dual mil. My wife has had various jobs depending on our duty stations - everything from working for a corporate insurance company, to a dance instructor, to modeling, and now she's a part time (mayyyybe 12 hours a week) remote executive assistant basically doing admin work for the head accountant at a firm. I doubt she's brought in more than 25k in any year.
I'm saying max everything that you can Roth first while your income is relatively low:
For me that's my Roth IRA, my wife's Roth IRA (so 12k a year with those two accounts) and then I put as much as I can into my Roth TSP as I can, and when I can't budget anymore into it, I do the traditional TSP to top it off because I know at least some of what I'm putting into that would otherwise just go to taxes (I'd have to take a look at it, but I think my current situation is that for every $1 I put into traditional TSP I only lose 84 cents of pay as you're getting a present day tax deduction; when I first joined and was from a high tax state it was more along the lines of 60 cents of pay lost for every dollar I put in, so even more beneficial). Using that method, I was able to hit the max each year by the time I was a junior LT if I recall.
I realize I am the exception and not the rule, but yes, I am saving a very high % of my income. I recognize this is not doable for all or most, but I do my best to prioritize Roth.
As far as going being too high in the income brackets, I'm not there yet, I should be able to do more traditional TSP in order to reduce my income level. Keep in mind that for tax purposes, BAH and other "allowances" do not count.
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You're more aware of this than I was, so good on you thinking ahead. This was a surprise to me when I got married as a senior O-4. For lack of planning on my part, I just put stuff into a Traditional IRA and kept putting stuff into my Traditional TSP. Roth TSP wasn't a thing for me until about my last year before I retired.
If you want to "max your TSP" as an average ENS or JG with student debt find out how much of your paycheck per month you can afford to go to the TSP. So, budget yourself. How much do you actually spend on groceries, drinks at Seville, and that sort of thing? Those are flexible. You can restrict your spending in that area if you want to. I am not saying to live like a monk if it makes you miserable but figure out what works best for you. Then take whatever isn't gobbled up by student loans, car loans, or rent (i.e. things you must pay monthly) and fund it in the TSP. Those payments are concrete.
Or, work backwards. 19.5k/Yearly Paycheck = percentage paycheck to max TSP. Then figure out your budget from there. Don't forget about the matching contribution!
DanMa made a great point of avoiding lifestyle creep by rolling pay bumps automatically into the TSP, IRAs, or investments. Just keep living like you are now. If you want you could replan your budget a bit but if you never see the money in your bank account it's hard to spend it frivolously.
Whatever you do just as long as it works best for you. Everyone has a different situation and some are worse off some are better off.
Or, work backwards. 19.5k/Yearly Paycheck = percentage paycheck to max TSP. Then figure out your budget from there. Don't forget about the matching contribution!
DanMa made a great point of avoiding lifestyle creep by rolling pay bumps automatically into the TSP, IRAs, or investments. Just keep living like you are now. If you want you could replan your budget a bit but if you never see the money in your bank account it's hard to spend it frivolously.
Whatever you do just as long as it works best for you. Everyone has a different situation and some are worse off some are better off.
The flip side of this is as you move along in your career, when some of your squadron mates host house parties and squadron functions, you're gonna see some of them live in some really nice digs! Big houses, big yards, lots of stuff, live on a gold course or waterfront... All that is fine and to each their own, just understand it'll be tempting.
You don't have to live like a hermit and you don't have to live like royalty, just find whatever happy medium works for you.
And when it's your turn to organize a hail & farewell or an offsite safety standdown or whatever, there are tons of nice bars, bowling alleys, movie theaters, MWR boat rentals, you name it. Don't worry about entertaining the whole wardroom in your shotgun shack in an average neighborhood.
Thanks. What has been successful for me has been to take a majority of any given raise and put it in some sort of savings/investing vehicle and use the remaining amount to improve my quality of life.
Yes. Go on vacations. Travel. Just don't spend everything you earn. Give compound interest it's due and statistically, you'll be fine.
The best advice I can think of? Don't marry someone who doesn't want to work. Too many of my friends supported a dependapottomus through their JO and shore tours and are now paying child support and alimony to someone who left them because they were bored.
This seemed like the thread where many discussed investments. Thought some might be interested in this article from the WSJ on how digital currency could have an impact on monetary policy.
Digital Currencies Pave Way for Deeply Negative Interest Rates
If people can’t hoard physical money, it becomes much easier to cut rates far below zero
www.wsj.com
Digital Currencies Pave Way for Deeply Negative Interest Rates
If people can’t hoard physical money, it becomes much easier to cut rates far below zero
Digital Currencies Pave Way for Deeply Negative Interest Rates
If people can’t hoard physical money, it becomes much easier to cut interest rates far below zero.
www.wsj.com
A real concern. Too many people, especially young folk, support a cashless society without having a clue what it means to the bigger picture. You don't need cryptos for this to negatively impact Americans. Eliminating cash and relying on credit cards and other forms of digital payments like Venmo is all it takes. Sweden will be the first country to eliminate cash in 2023. We need to watch that carefully.This seemed like the thread where many discussed investments. Thought some might be interested in this article from the WSJ on how digital currency could have an impact on monetary policy.
Digital Currencies Pave Way for Deeply Negative Interest Rates
If people can’t hoard physical money, it becomes much easier to cut rates far below zero
Digital Currencies Pave Way for Deeply Negative Interest Rates
If people can’t hoard physical money, it becomes much easier to cut interest rates far below zero.