Solid advice. More people need to hear this message of staying on top of TSP. Great way to squirrel away a good bit of money with a military or federal job. Thanks for sharing!
I made a couple mistakes; when in the military I did not use the TSP. When in civil service, I left everything going to G fund for a couple years. I was slow to contribute my max. One year I contributed my max early, which meant that about Oct the TSP contributions were stopped and I missed out on months of agency matches. It is so important to invest early in life-you literally cannot buy back the effect that time brings on compounding interest.
Six mistakes I made that left money on the table: 1. Not using the 50+ catch up as soon as I could to increase contributions above the cap by $6,500 per year and to lower my taxable income. They have since made this more automatic for Federal employees. 2. As a high salary employee, not adjusting my contributions and hitting the cap plus catch up limit before the end of the year and missing out on some agency matching. You always want to maximize agency matching over the calender year. 3. Using a percentage rather than a fixed contribution amount when nearing the cap. For example, when the cap was $19,500 plus $6,500 ($26,000 per year) with 26 pay periods per year, I corrected this by resetting my beginning of the year TSP contributions from a percentage (which could easily under shoot or over shoot the cap) to $1,000 per pay period, to hit the cap and maximize agency matching. Now the limit has inched up to $27,000, so you would divide $27,000 by 26. 4. After maximizing my contributions, not investing extra cash outside TSP. After 6 month cash cushion safety net, extra money could be put in a taxable investment account to grow and fight inflation. 5. Not understanding taxable accounts. I wrongly assumed that since I was investing taxed cash and not withdrawing, that I wouldn't owe taxes, but I got hit by a big end of the first year tax bill on qualified dividends. This tax lowers some once a fund is owned more than a year and it becomes a long term investment. 6. Not contributing to a Roth TSP account. The Roth yearly limit looked too low to me and I assumed I would be in a low tax bracket in retirement. However, both my wife and I will retire with large pensions and huge TSP/401k accounts and we will still be in a high tax bracket once we drawdown on those. A tax free withdrawal Roth account would have been nice.
Great advice...especially not taking a loan from TSP....and always increase your contributions every time you get a COLA. Put that away...you won't miss it, but will love it when you retire.
I can’t speak for anyone else but I actually took a loan out of my tsp and then used that money to invest and actually made more. Afterwards bought a house put the money back in tsp and still have money to do what I want. Tsp Loan was the best Kiev for me compared to a high interest loan that would have took years to pay back. What works for some might not work for many.
You will still have to pay taxes in retirement. Your SS is taxable above a certain amount, which most Feds will hit. Your FERS is taxable. Your matching is always traditional, so you have to pay taxes on that. Using Roth only shelters a portion of your retirement income from taxes.
I have committed a couple of them, but I have had significant time to continue contributions to get that money back. Being a dual status employee has significant advantages over being a straight up mil or govt. employee, if you handle your retirement correctly. My advice...because I used this option in my life, was to start retiring the day I had a career. Even though my retirement wasn't for another 20+ years.
Been maxing out for 4 years now. I hope to continue maxing out and getting my accumulation as high as possible before I get married. Thankfully not for a little while as I am still looking around.
So question: if you borrow through tsp, you can’t contribute and pay off your loan? You mentioned you had to stop contrituting to your tsp until you paid off the loan.
That's what I saw too. Agree with commentor. You can continue to contribute and get returns on your account. You lose the gains on the loan amount which makes sense.
You are correct that a state with no income tax would not tax your retirement TSP distributions. Also, there are a couple of states that have income tax, but have a special tax waiver for retired federal employees. Worth researching .
I have taken out a couple of loans and never stopped contributing... why did you have to stop? You don't have to stop... I just paid off a loan and was contributing max at the same time of course it leave less in your paycheck. I may or may not get a new loan but either way I will contribute max if I take out a loan.
Same. I’ve continued to make my contributions. Took the loan a year ago and have more than doubled the investment opportunity I put it towards. Hard to beat the low interest rates on a TSP loan. And it doesn’t affect your credit score. Not sure I see the downside here.
What did you invest with your retirement loan that doubled your investment? You are taking tax-free money out of retirement to invest in something else that you’d have to pay taxes on? And that retirement fund grows less money over time. I had a traditional TSP so when I took the loan out, I repaid with after-tax earnings. Also keep in mind that I took a loan out for financial hardships and not to invest that money elsewhere. I’d love to hear your side on this topic. Do you always borrow to invest?
@@FIREPsyChat I never stop the tax free contributions (TSP traditional) when I take out a loan, but yes you do pay back the loan with taxed money so basically $790 a paycheck would got towards TSP tax free (if you max out) and then $200 would go towards paying off a loan with after tax money but $990 goes into TSP each paycheck and some of that money is the interest that you have to pay yourself to pay back your loan (you can also do TSP Roth but I currently need the tax savings so I do TSP traditional). Yes you loose some compounding benefits but there have been a couple of time where we took out a loan at the height of the market then paid back in after a pull back so I am unsure if we really lost money but it is hard to time the market so that is more luck and it is really hard to calculate your compounding interest you lost since the market is so unpredictable and if you get a loan you do have to pay yourself the interest so you at least make 2% back on the loan. My retirement is pension plus TSP so while you are taking out a loan you pay it back... so you put it back into your account before you retire. I also don't live for retirement because I think it is important to live now... however I am also very lucky because I can retire at 50 with full pension and full access to TSP. With those loans we have bought land that is available during retirement to build a home for now it is raw land so it sits... and we have also used a loan for a down payment on a second home that is currently a rental which generates some passive income, but more important the renters are paying off the mortgage and it is a house that can be used as our home in retirement that could be paid off with the sale of our current house we live in, or if we keep the mortgage can be paid with our pension so we can support ourselves with our pension without having to work but will probably still work just maybe not "fulltime". There isn't a "right" answer or solution but there are ways to use it to your advantage since you do pay it back and put it back into your TSP with interest, I just recommend that if you do you also continue with your contributions and if you can't do both then yes you need to adjust your spending habits so you can live within your means first-- you don't have to max out but at least 5% but I recommend 15%. I am not perfect and do have debt but my assets have greater value, so I don't stress too much on the debt for now as I will slowly pay it off. We live pretty much paycheck to paycheck since we contribute so much but TSP has some advantages but we will not rely solely on TSP during retirement it will be an added bonus, and of course the market needs to turn but I guess we will just buy low and build up for now :)
@@FIREPsyChat You must have done a hardship withdraw which is totally different than a TSP Loan. Taking a loan does not prevent you from making contributions. Taking a hardship withdraw does. Also the Interest that you "Pay" is paid back to your own TSP account. The interest does not go to the government it goes back to you. Not sure why they charge it in the first place since you are borrowing money from yourself.
I agree with swright and even more so if you intend to work a secondary career after the military. Then you would be looking at a 20 years til retirement and you should be in all stocks.
I can’t give you specific investment advice. I have to know your entire financial picture like your income, expenses, debt, and other circumstances. 5% is the minimum for the employer match if you’re with FERS or BRS. Make sure you understand what you’re investing before you invest. You can sign up for the coaching service on my website at firepsychat.com/coaching✌️
To get a good retirement, you should max out your contributions ASAP. If financially strapped, A good strategy early on is to up your contribution with every raise until you are maxed out.
The biggest TSP mistake is their awful new web site. You can't contact the TSP by phone, and the new site has no way to securely email them. Thus, your only way to contact the TSP is by postal mail, and they have not replied in December to a postal mail question I posed in August. The TSP always had poor customer service, but now they seem to have zero customer service.
What if you are over 50 when starting your new government job? Trying to decide what would be good for our age group and first time federal employee. (our military time was when they didn't have tsp plans)
It’s hard to answer that question without knowing your full financial picture. You can schedule a complimentary session with us by visiting firepsychat.com/coaching ✌️
US servicemembers on Legacy military retirement who retire with 20+ years are better off than BRS. Legacy who don't retire with 20 years would have been better off with BRS.
You should invest in the TSP whether your are BRS or Legacy. BRS get matching (SM invests 5% and military matches 5%) but their pension is 20% less than the Legacy SM. Legacy gets 50% of their base pay after 20 years of service, BRS gets 40% of their base pay (20% less). If a young Soldier in BRS invests well (doesn't take out loans, etc.) has the potential of doing better but they have to invest to do so.
I have only 1 yr in federal service and originally started my contribution to Traditional TSP. I have since switched contributions to Roth TSP. I am in the process of switching federal agencies. Would it be possible to rollover my Traditional TSP to a Charles Schwab Traditional IRA then convert to Roth IRA?
Nice video, a few points for consideration: 1) Enrollment. Auto-enrollment for military is 5% contributions as of 10/1/2020 (previously 3% under new BRS). Members receive 1% automatically regardless of contributions after 60 days of service. They don't start receiving any additional match to 5% until after 2 years of service. 2) Roth Option. Roth is not "tax free" as many people describe it...it is actually "tax first", but it is tax-free on the growth. I believe one of the big overlooked benefits of Roth though is that you can actually invest more each year. If you invest in traditional, it is pre-taxes. Whereas Roth is post taxes. So $1,000 invested in traditional is actually $1,000 + taxes in Roth. Then you get all the other added benefits of Roth...no RMD, tax-free withdrawals, etc. And I agree with you that tax brackets are only going to get worse in the future. I would consider Trad over Roth if your income is just into the 22% tax bracket. You will be able to save 10% by investing Trad and reducing your taxable income that is in the 22% bracket. 3) Fund Options. This one is hugely important for military if you joined prior to 2018. Prior to the change to the BRS, the default fund was the G fund. This was criminal! The government was/is taking a low interest loan from its own employees who think they are 'investing'. Now the default is an age-appropriate L Fund, but you should still learn and make your own choices. 4) Admin fees. The Board (FRTIB) unfortunately raised the admin fees on the basic TSP funds by 30% each year in 2021 & 2022 to help pay for the new changes and improved IT security. Terrible. The mutual fund changes are too expensive and they will now want more personal information (photo ID, etc). Not good at all. 5) Nice discussion on fund choices. I tend to do 70C/30S as long as I am a long term investor (over 10 years). 6) Thanks for sharing your TSP loan example. Borrowing from your retirement fund is bad news. 7) Increasing your contributions. You are investing by %, not $ amount, so as you receive raises you will be increasing your contributions automatically. If you can put more in, great.
2) Roth Option. To clarify you can *_effectively_* invest more with Roth TSP as $1k T-TSP is subject to tax at withdrawal while $1k R-TSP is not; Roth TSP is subject to RMD but can easily be transferred to Roth IRA which has no RMD. 3) G Fund as "criminal" is harsh overstatement unfair to Board's aim - new hires would balk at YTD's -15%, 2008 -37%, 2000-2003 double digit declines. Mutual Fund Window is expensive catastrophe that any sane financial investor would wisely to avoid.
I was just about to take a Loan out from my TSP but i see in your video that you said you can make NO MORE CONTRIBUTIONS ALLOWED while paying the loan back? Is this True? i don't see this anywhere on the TSP site?
@@briperez TSPbk04.PDF 08/2023 "If you are not able to *_contribute as much_* to the TSP because of the financial burden of your loan payments..." This YT is very misleading as he couldn't afford to contribute to TSP while paying his loan and bullet point "No Contributions Allowed" is objectively wrong. *ProBro300* confirms this with his reply about contributing to TSP while paying loan.
That’s a broad question. The general answer is you don’t lose unless you sell at a loss. Where do you see the market go 20-30 years from now? Take a look at the stock market and real estate historical returns.
As opposed to taking the TSP loan, would you have been better off taking a TSP withdrawal and in turn become more aggressive in investing in the S and I Fund in order to recoup the withdrawn money?
Bah! Foolish to contribute to Roth TSP/401(k) while at your highest tax bracket which is typically nearing retirement. Roth TSP/401(k) okay at 12% Federal Tax Bracket. More important to contribute as much as possible up to $30,000 after age 50.
My fellow employees tell me on a TSP loan the interest is paid back to self, I don't agree. What is the right answer. Does the interest go back to the borrowers TSP account?
The interest you paid to TSP loan is a forced increase contribution. The money goes from your paycheck to your TSP account, like robbing Peter to pay Paul. You are not making extra money per se by paying the interest to yourself.
I think you might be off on your calculations in the video. You said Federal Civilian Employee = Bi-weekly, Active Military Member = Monthly. Civilian Contribution = $134.20/bi-weekly Military Contribution = $134.20/monthly Wouldn't the Military monthly contribution be 2.166666x higher than the Civilian contribution, because it comes out monthly?
I've been with the usps for about 3 years. I've got 80 C fund ,10 s fund, 10 g fund. Invested in Roth Ira. 5% for tsp now and will increase when I pay off my car loan in a few months.... Feels overwhelming a bit... how am I doing??
I think you’re going somewhere. Remind yourself why you’re doing what you’re doing. Once you pay off your car, you’re gonna be open to more possibilities. I’m rooting for you!
Welcome! You can actually download the TSP app, log in, account details, and then click on contribution details. In there, it’ll tell you what your personal contributions are and your agency/employer matching. That’s if you’re in the Blended Retirement System or BRS.
If you borrowed money from your TSP this year, you probably saved or made 15% on your money. (By getting your money out of the nose dive, and theft of our investments).
Can we get a $10,000 TSP Loan Forgiveness, for those of us who earn less than $100,000 per year? Inflation is effecting our cost of living which makes paying back this loan a burden.
1. You don’t miss out on the interest paid to tsp account unlike credit card interest. Simply put you paying interest to yourself. 2. Unless you are leaving the money to your loved ones or have no other savings/property, no point being millionaires over the age of 60. I would rather spend my money when I am young and actually able to enjoy life. I have seen at least dozens if not more federal employees die within 2 years after retirement. I hope they lived their life to the fullest. It is as important to spend wisely as it is to save wisely.
How do you invest in your TSP? Get your FREE FIRE resources at www.firepsychat.com/contact!
Solid advice. More people need to hear this message of staying on top of TSP. Great way to squirrel away a good bit of money with a military or federal job. Thanks for sharing!
I made a couple mistakes; when in the military I did not use the TSP. When in civil service, I left everything going to G fund for a couple years. I was slow to contribute my max. One year I contributed my max early, which meant that about Oct the TSP contributions were stopped and I missed out on months of agency matches. It is so important to invest early in life-you literally cannot buy back the effect that time brings on compounding interest.
So true!
Great content. Definitely some mistake to avoid!! Thank you for pointing out.
Six mistakes I made that left money on the table: 1. Not using the 50+ catch up as soon as I could to increase contributions above the cap by $6,500 per year and to lower my taxable income. They have since made this more automatic for Federal employees. 2. As a high salary employee, not adjusting my contributions and hitting the cap plus catch up limit before the end of the year and missing out on some agency matching. You always want to maximize agency matching over the calender year. 3. Using a percentage rather than a fixed contribution amount when nearing the cap. For example, when the cap was $19,500 plus $6,500 ($26,000 per year) with 26 pay periods per year, I corrected this by resetting my beginning of the year TSP contributions from a percentage (which could easily under shoot or over shoot the cap) to $1,000 per pay period, to hit the cap and maximize agency matching. Now the limit has inched up to $27,000, so you would divide $27,000 by 26. 4. After maximizing my contributions, not investing extra cash outside TSP. After 6 month cash cushion safety net, extra money could be put in a taxable investment account to grow and fight inflation. 5. Not understanding taxable accounts. I wrongly assumed that since I was investing taxed cash and not withdrawing, that I wouldn't owe taxes, but I got hit by a big end of the first year tax bill on qualified dividends. This tax lowers some once a fund is owned more than a year and it becomes a long term investment. 6. Not contributing to a Roth TSP account. The Roth yearly limit looked too low to me and I assumed I would be in a low tax bracket in retirement. However, both my wife and I will retire with large pensions and huge TSP/401k accounts and we will still be in a high tax bracket once we drawdown on those. A tax free withdrawal Roth account would have been nice.
Thank you for taking the time to share your feedback! I hope everyone else reads this too
Excellent video. My wife is with the feds. Trying to understand TSP and your video is a great help.
Glad to help! I need to make another for 2023 🤔
Great advice...especially not taking a loan from TSP....and always increase your contributions every time you get a COLA. Put that away...you won't miss it, but will love it when you retire.
I can’t speak for anyone else but I actually took a loan out of my tsp and then used that money to invest and actually made more. Afterwards bought a house put the money back in tsp and still have money to do what I want. Tsp Loan was the best Kiev for me compared to a high interest loan that would have took years to pay back. What works for some might not work for many.
Did they charge you intrest? Thinking about taking a loan im trasitioning out the military but trying to get everything ready to move the family.
You will still have to pay taxes in retirement. Your SS is taxable above a certain amount, which most Feds will hit. Your FERS is taxable. Your matching is always traditional, so you have to pay taxes on that. Using Roth only shelters a portion of your retirement income from taxes.
Correct
6:40- you do not have to stop contributing to your TSP during the time that you are repaying a loan.
I ‘believe’ he meant that he didn’t have the funds to pay back the loan and do the TSP contributions and so he chose not to.
@@glasshalffull2930 The white board on right mistakenly claims: "No Contributions Allowed"
@@alrocky 👍
Currently up 20% on gain with 75% C, 15% S and 1% I Fund. But I’m in traditional TSP. Where would you suggest going from here?
I have committed a couple of them, but I have had significant time to continue contributions to get that money back. Being a dual status employee has significant advantages over being a straight up mil or govt. employee, if you handle your retirement correctly. My advice...because I used this option in my life, was to start retiring the day I had a career. Even though my retirement wasn't for another 20+ years.
Nice!
Your story sounds like mine, talking about your TSP. I finally got it back on track and its looking good !
Been maxing out for 4 years now. I hope to continue maxing out and getting my accumulation as high as possible before I get married. Thankfully not for a little while as I am still looking around.
Awesome! You can still max out when you get married your accumulation will be doubled!
So question: if you borrow through tsp, you can’t contribute and pay off your loan? You mentioned you had to stop contrituting to your tsp until you paid off the loan.
Info on screen at 6:40 is incorrect. You can contribute to TSP while paying off TSP loan.
That's what I saw too. Agree with commentor. You can continue to contribute and get returns on your account. You lose the gains on the loan amount which makes sense.
Great content! More people will find and appreciate your channel - keep it up!!
Thank you and will do!!!
Good stuff! Why would any federal employee opt out of getting 5% match of their salary every year? That's leaving all that free money on the table 😢
Moving/retiring to a state with no state/income tax would help too right? Or does it not matter since it’s federal tsp?
You are correct that a state with no income tax would not tax your retirement TSP distributions. Also, there are a couple of states that have income tax, but have a special tax waiver for retired federal employees. Worth researching .
Good video
Know that federal employees have mypay just like military members and can chance contributions on there as well instead of talking to HR
I have taken out a couple of loans and never stopped contributing... why did you have to stop? You don't have to stop... I just paid off a loan and was contributing max at the same time of course it leave less in your paycheck. I may or may not get a new loan but either way I will contribute max if I take out a loan.
Why take out a loan from your retirement to begin with?
Same. I’ve continued to make my contributions. Took the loan a year ago and have more than doubled the investment opportunity I put it towards. Hard to beat the low interest rates on a TSP loan. And it doesn’t affect your credit score. Not sure I see the downside here.
What did you invest with your retirement loan that doubled your investment? You are taking tax-free money out of retirement to invest in something else that you’d have to pay taxes on? And that retirement fund grows less money over time. I had a traditional TSP so when I took the loan out, I repaid with after-tax earnings. Also keep in mind that I took a loan out for financial hardships and not to invest that money elsewhere. I’d love to hear your side on this topic. Do you always borrow to invest?
@@FIREPsyChat I never stop the tax free contributions (TSP traditional) when I take out a loan, but yes you do pay back the loan with taxed money so basically $790 a paycheck would got towards TSP tax free (if you max out) and then $200 would go towards paying off a loan with after tax money but $990 goes into TSP each paycheck and some of that money is the interest that you have to pay yourself to pay back your loan (you can also do TSP Roth but I currently need the tax savings so I do TSP traditional). Yes you loose some compounding benefits but there have been a couple of time where we took out a loan at the height of the market then paid back in after a pull back so I am unsure if we really lost money but it is hard to time the market so that is more luck and it is really hard to calculate your compounding interest you lost since the market is so unpredictable and if you get a loan you do have to pay yourself the interest so you at least make 2% back on the loan. My retirement is pension plus TSP so while you are taking out a loan you pay it back... so you put it back into your account before you retire. I also don't live for retirement because I think it is important to live now... however I am also very lucky because I can retire at 50 with full pension and full access to TSP. With those loans we have bought land that is available during retirement to build a home for now it is raw land so it sits... and we have also used a loan for a down payment on a second home that is currently a rental which generates some passive income, but more important the renters are paying off the mortgage and it is a house that can be used as our home in retirement that could be paid off with the sale of our current house we live in, or if we keep the mortgage can be paid with our pension so we can support ourselves with our pension without having to work but will probably still work just maybe not "fulltime". There isn't a "right" answer or solution but there are ways to use it to your advantage since you do pay it back and put it back into your TSP with interest, I just recommend that if you do you also continue with your contributions and if you can't do both then yes you need to adjust your spending habits so you can live within your means first-- you don't have to max out but at least 5% but I recommend 15%. I am not perfect and do have debt but my assets have greater value, so I don't stress too much on the debt for now as I will slowly pay it off. We live pretty much paycheck to paycheck since we contribute so much but TSP has some advantages but we will not rely solely on TSP during retirement it will be an added bonus, and of course the market needs to turn but I guess we will just buy low and build up for now :)
@@FIREPsyChat You must have done a hardship withdraw which is totally different than a TSP Loan. Taking a loan does not prevent you from making contributions. Taking a hardship withdraw does. Also the Interest that you "Pay" is paid back to your own TSP account. The interest does not go to the government it goes back to you. Not sure why they charge it in the first place since you are borrowing money from yourself.
How does G:5%, F:10%, C:70%, S:15% sound?? I'm a 34 years old service member, 10 years away from hitting 20 years of service.
No! For the love of God no. At your age, you should be all C or c an s.
I agree with swright and even more so if you intend to work a secondary career after the military. Then you would be looking at a 20 years til retirement and you should be in all stocks.
what is a good percentage for TSP? 5% or what do you recommend?
Also I plan on only doing C fund what do you think?
I can’t give you specific investment advice. I have to know your entire financial picture like your income, expenses, debt, and other circumstances. 5% is the minimum for the employer match if you’re with FERS or BRS. Make sure you understand what you’re investing before you invest. You can sign up for the coaching service on my website at firepsychat.com/coaching✌️
10% is a must because you get double by the end when you retire
They match up to 5% correct?
To get a good retirement, you should max out your contributions ASAP. If financially strapped, A good strategy early on is to up your contribution with every raise until you are maxed out.
The biggest TSP mistake is their awful new web site. You can't contact the TSP by phone, and the new site has no way to securely email them. Thus, your only way to contact the TSP is by postal mail, and they have not replied in December to a postal mail question I posed in August. The TSP always had poor customer service, but now they seem to have zero customer service.
I haven’t had to deal with them much but I agree that the website can use some improvement
What if you are over 50 when starting your new government job? Trying to decide what would be good for our age group and first time federal employee. (our military time was when they didn't have tsp plans)
It’s hard to answer that question without knowing your full financial picture. You can schedule a complimentary session with us by visiting firepsychat.com/coaching ✌️
What about those who missed out on the BRS switch and do not get the match?
You still have the TSP just not the match
Are you asking specifically on how to prioritize your retirement if you don't receive the match?
US servicemembers on Legacy military retirement who retire with 20+ years are better off than BRS. Legacy who don't retire with 20 years would have been better off with BRS.
You should invest in the TSP whether your are BRS or Legacy.
BRS get matching (SM invests 5% and military matches 5%) but their pension is 20% less than the Legacy SM.
Legacy gets 50% of their base pay after 20 years of service, BRS gets 40% of their base pay (20% less).
If a young Soldier in BRS invests well (doesn't take out loans, etc.) has the potential of doing better but they have to invest to do so.
Good stuff, thanks!
You’re welcome!
I wish i had TSP when I joined the military in 1986!
I have only 1 yr in federal service and originally started my contribution to Traditional TSP. I have since switched contributions to Roth TSP. I am in the process of switching federal agencies. Would it be possible to rollover my Traditional TSP to a Charles Schwab Traditional IRA then convert to Roth IRA?
Yes it is possible but you can’t do it until you leave the job. Keep in mind every time you make a conversion you’ll owe taxes that year
With the complete disaster TSP has become since June 1st, I am getting out and putting into IRA with Schwab. I regret not doing this 2 months ago..
Why not invest into both? Or are you saying you’re leaving your job soon
Why would you leave the free money on the table?
Its easy to say specially if you have a family
Nice video, a few points for consideration:
1) Enrollment. Auto-enrollment for military is 5% contributions as of 10/1/2020 (previously 3% under new BRS). Members receive 1% automatically regardless of contributions after 60 days of service. They don't start receiving any additional match to 5% until after 2 years of service.
2) Roth Option. Roth is not "tax free" as many people describe it...it is actually "tax first", but it is tax-free on the growth. I believe one of the big overlooked benefits of Roth though is that you can actually invest more each year. If you invest in traditional, it is pre-taxes. Whereas Roth is post taxes. So $1,000 invested in traditional is actually $1,000 + taxes in Roth. Then you get all the other added benefits of Roth...no RMD, tax-free withdrawals, etc. And I agree with you that tax brackets are only going to get worse in the future. I would consider Trad over Roth if your income is just into the 22% tax bracket. You will be able to save 10% by investing Trad and reducing your taxable income that is in the 22% bracket.
3) Fund Options. This one is hugely important for military if you joined prior to 2018. Prior to the change to the BRS, the default fund was the G fund. This was criminal! The government was/is taking a low interest loan from its own employees who think they are 'investing'. Now the default is an age-appropriate L Fund, but you should still learn and make your own choices.
4) Admin fees. The Board (FRTIB) unfortunately raised the admin fees on the basic TSP funds by 30% each year in 2021 & 2022 to help pay for the new changes and improved IT security. Terrible. The mutual fund changes are too expensive and they will now want more personal information (photo ID, etc). Not good at all.
5) Nice discussion on fund choices. I tend to do 70C/30S as long as I am a long term investor (over 10 years).
6) Thanks for sharing your TSP loan example. Borrowing from your retirement fund is bad news.
7) Increasing your contributions. You are investing by %, not $ amount, so as you receive raises you will be increasing your contributions automatically. If you can put more in, great.
Awesome feedback thank you so much!
2) Roth Option. To clarify you can *_effectively_* invest more with Roth TSP as $1k T-TSP is subject to tax at withdrawal while $1k R-TSP is not; Roth TSP is subject to RMD but can easily be transferred to Roth IRA which has no RMD.
3) G Fund as "criminal" is harsh overstatement unfair to Board's aim - new hires would balk at YTD's -15%, 2008 -37%, 2000-2003 double digit declines.
Mutual Fund Window is expensive catastrophe that any sane financial investor would wisely to avoid.
I was just about to take a Loan out from my TSP but i see in your video that you said you can make NO MORE CONTRIBUTIONS ALLOWED while paying the loan back? Is this True? i don't see this anywhere on the TSP site?
You can contribute to TSP while you have a loan. What is Time Stamp where does he say otherwise?
6:38
Yea I took a loan out and I am still able to keep contributing.
@@briperez TSPbk04.PDF 08/2023 "If you are not able to *_contribute as much_* to the TSP because of the financial burden of your loan payments..." This YT is very misleading as he couldn't afford to contribute to TSP while paying his loan and bullet point "No Contributions Allowed" is objectively wrong. *ProBro300* confirms this with his reply about contributing to TSP while paying loan.
With the possibility of a housing and stock market crash, will I lose the money I’ve been investing in my TSP?
That’s a broad question. The general answer is you don’t lose unless you sell at a loss. Where do you see the market go 20-30 years from now? Take a look at the stock market and real estate historical returns.
thanks
How many Federal Employees or Military make 75k? I wish!
Lots. Gs 12 and above.
What's wrong with moving TSP into G fund until market is doing better, then move back to C,S etc?
Why time the market if you’re not withdrawing until age 60? Why not buy C and S funds at a discount?
As opposed to taking the TSP loan, would you have been better off taking a TSP withdrawal and in turn become more aggressive in investing in the S and I Fund in order to recoup the withdrawn money?
Not likely as in-service withdrawal is subject to ordinary income tax plus 10% early withdrawal penalty so $1,000 on his $10k.
You can only contribute 7k to 8k to Roth IRA
choose roth under nearly any circumstances. tax free earnings compounded will beat the traditional under every imaginable scenario
Bah! Foolish to contribute to Roth TSP/401(k) while at your highest tax bracket which is typically nearing retirement. Roth TSP/401(k) okay at 12% Federal Tax Bracket. More important to contribute as much as possible up to $30,000 after age 50.
How do I cash out now. Only vested 5k and ever filled taxes since 2007 so why pay now? Trump never pay taxes
Wonder if he will pay taxes while in prison next year?
take a hardship next time, you wont have to pay it back 😉
My dude. The investments grow tax free whether its traditional or Roth.
My fellow employees tell me on a TSP loan the interest is paid back to self, I don't agree. What is the right answer. Does the interest go back to the borrowers TSP account?
The interest you paid to TSP loan is a forced increase contribution. The money goes from your paycheck to your TSP account, like robbing Peter to pay Paul. You are not making extra money per se by paying the interest to yourself.
I think you might be off on your calculations in the video. You said Federal Civilian Employee = Bi-weekly, Active Military Member = Monthly.
Civilian Contribution = $134.20/bi-weekly
Military Contribution = $134.20/monthly
Wouldn't the Military monthly contribution be 2.166666x higher than the Civilian contribution, because it comes out monthly?
Military members are paid twice a month. Usually the 1st and 15th.
I've been with the usps for about 3 years. I've got 80 C fund ,10 s fund, 10 g fund. Invested in Roth Ira.
5% for tsp now and will increase when I pay off my car loan in a few months....
Feels overwhelming a bit... how am I doing??
I think you’re going somewhere. Remind yourself why you’re doing what you’re doing. Once you pay off your car, you’re gonna be open to more possibilities. I’m rooting for you!
New to your channel. Im a reservist how will know if their matching my contribution
thanks
Welcome! You can actually download the TSP app, log in, account details, and then click on contribution details. In there, it’ll tell you what your personal contributions are and your agency/employer matching. That’s if you’re in the Blended Retirement System or BRS.
If you borrowed money from your TSP this year, you probably saved or made 15% on your money. (By getting your money out of the nose dive, and theft of our investments).
Wow so if you have a 5 year loan on your tsp, you can’t contribute to TSP and miss out on employers matching it.
That is not true. You can contribute to TSP and receive 5% match while repaying loan.
How do people survive? They need this advice?
gangnam style?? jk jk
Can we get a $10,000 TSP Loan Forgiveness, for those of us who earn less than $100,000 per year? Inflation is effecting our cost of living which makes paying back this loan a burden.
you are borrowing that money from yourself so if you don't pay it back you are losing that $10K for your future retirement.
Just saying people, make sure you invest at least 3% or more from the start!!!!! You never know how long you end up trapped in hole of hell usps lol.
Or how about invest that money in something with a 50% return instead.. lol
1. You don’t miss out on the interest paid to tsp account unlike credit card interest. Simply put you paying interest to yourself.
2. Unless you are leaving the money to your loved ones or have no other savings/property, no point being millionaires over the age of 60. I would rather spend my money when I am young and actually able to enjoy life. I have seen at least dozens if not more federal employees die within 2 years after retirement. I hope they lived their life to the fullest. It is as important to spend wisely as it is to save wisely.