Colorado Springs Military Newspaper Group

Schriever Sentinel

TSP presents smart-choice retirement options

By Scott Prater

Schriever Sentinel

In an effort to raise awareness and increase participation, financial advisors at Airman and Family Readiness Centers Air Force-wide are encouraging Airmen to enroll in the Thrift Savings Plan.

“The TSP is really a smart choice for Airmen of all ages,” said Christina Stump, Schriever community readiness consultant and a certified financial counselor. “Many people don’t realize how quickly retirement hits, and this program has so many options that it proves extremely beneficial for those who hope to retire with financial security.”

One of the best advantages of the TSP for both military members and government civilians is that it’s relatively inexpensive when compared to private retirement plans.

“The average defined contribution or 401(K) plan expenses were $9.30 for every $1,000 invested, just in maintenance fees,” Ms. Stump said. “With TSP, participants pay only 28 cents for every $1000 invested, in other words, a fraction of the cost of comparable plans.”

Participants also aren’t pigeonholed into one-fund-fits-all investments either. The TSP provides participants a multitude of options to the amount of risk they wish to take with their contributions.

“The TSP provides six different types of funds for contributors to choose from, from high-growth, high-risk funds to more secure, minimal-risk funds,” Ms. Stump said. “Contributions are also taken out of member’s pay on a pre-tax basis. So, participants will notice less of an impact to take-home pay.”

Ms. Stump often hears Air Force members argue that they are not interested in the TSP because they don’t plan on staying in the Air Force for 20 years or more. But that, she says, is where the program presents more options and can prove increasingly beneficial.

“The TSP is transferable to another employer’s 401 K plan, or into a traditional Individual Retirement Account,” she said. “Participant’s can also leave their investments in the TSP and let them grow through time, but they can only contribute if they are working for the federal government. And participants can always withdraw their contributions. They’ll pay a penalty, but they’ll keep the right to use the funds however they wish. Conversion to a Roth IRA is also possible, but contributions are taxable.”

A new investment vehicle in the program is becoming popular. Called the Lifecycle fund, TSP managers allocate a participant’s contributions into a variety of investments, then continually adjust amounts from high-risk to lower risk investments depending on the member’s retirement horizon. Someone who will be retiring in less than 10 years will want more invested in low-risk funds, whereas someone who will retire in 30 years has more opportunity to pursue growth via high-risk funds. The Lifecycle fund allows members to set their contributions and let the TSP adjust on its own as they get closer to retirement.

“I only started contributing to my TSP three years ago,” said. Master Sgt. Cassandra Bushyeager, 50th Force Support Squadron. “But, it’s so easy to do and the amount that is taken out of your paycheck is minimal, so it’s not like you’re missing a lot of money. So far, I’m happy with what I’ve accrued. I only wish I had decided to start investing in the program sooner.”

Ms. Stump notes that it’s never too early to begin planning for retirement.

“TSP contributors aren’t throwing money into something that restricts their spending,” she said. “Program options allow participants to take out loans, such as first-time homebuyers, or individuals that are facing financial hardships. The easiest part is how to sign up, service members can enroll through the Defense Finance and Accounting Services MyPay website. All they have to do is elect a percentage of their base pay that they would like to contribute.”

Air Force members and government civilians who want to learn more can visit the TSP website at www.tsp.gov or call the Airman and Family Readiness Center on base at 567-3920.

To Top