ABOARD USS KITTY HAWK AT SEA -- Senior Chief Torpedoman’s Mate (SW/AW) Ron Wood, from Sylacauga, Ala., informs Sailors about the benefits of the Thrift Savings Plan.
(U.S. Navy photo by Photographer’s Mate 2nd Class Justin Proulx)
Posted on 02/04/2005 8:30:02 PM PST by Libloather
Thrift Savings Plan makes saving, investing easier
Journalist Seaman David Beyea, USS Kitty Hawk public affairs
Posted 11/4/2002
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ABOARD USS KITTY HAWK AT SEA -- Senior Chief Torpedoman’s Mate (SW/AW) Ron Wood, from Sylacauga, Ala., informs Sailors about the benefits of the Thrift Savings Plan.
(U.S. Navy photo by Photographer’s Mate 2nd Class Justin Proulx)
ABOARD USS KITTY HAWK AT SEA -- Saving for retirement has become easier for Sailors on board USS Kitty Hawk (CV 63) with the Thrift Savings Plan.
According to the summary of the Thrift Savings Plan (TSP) for the uniformed services, compiled by the Federal Retirement Thrift Investment Board, TSP is a retirement savings and investment plan sponsored by the federal government. Created in 1986 by Congress, TSP was originally only available to civilian federal employees. TSP became available to uniformed service members on Oct. 30, 2000, when President Clinton signed the Floyd D. Spence National Defense Authorization Act for fiscal year 2001.
“The Thrift Savings Plan is the military’s version of a 401(k) retirement plan,” explained Chief Aviation Electronics Technician (AW) Vincent Riggs, Hawk’s command financial specialist. “It’s a tax-deferred savings plan to allow people to put something away and save.”
TSP is a “defined contribution” retirement plan. This means that the money received for retirement is based on how much you contribute to your account. This is different from the military’s regular retirement plan, through which members receive retirement pay after 20 years of service, explained Riggs.
“If you contribute to the Thrift Savings Plan and get out of the Navy before 20 years, that money is yours,” said Riggs.
That money could then be rolled into a 401(k), withdrawn early, or left in the TSP account to earn money, Riggs said.
The amount of money that goes into TSP is based on the percentage of pay a service member wishes to contribute to the account.
“The Navy will deduct up to 8 percent of your base pay and up to 100 percent of your incentive pay and bonuses,” explained Riggs.
When signing up for TSP, the member decides how his money is invested. “There are five different funds you can invest in. Anywhere from bonds to higher-risk investments in the stock market,” said Riggs.
The member decides what amount of his contribution goes into each of the five funds. If a fund is not chosen, the investment is placed in a G-fund, which consists of no-risk government bonds. “It’s all up to the service member,” said Riggs.
Another advantage to TSP is the ability to take a loan on your own money. “With the Thrift Savings program you can take a loan on your own money. You will pay interest on it. However, the money and interest you pay go back into your account,” explained Riggs.
TSP is a good idea for every Sailor, said Fireman Zorian Sorrels, an engineering yeoman. “When I get out of the Navy, I want a nice retirement plan, and the Thrift Savings plan is the way to go.”
Under TSP, if a 22 year-old Sailor invests $2,000 a year for six years, by the time he reaches age 65, he will have $1.34 million in his account, according to Riggs.
-USN-
The Thrift Savings Plan for Federal Employees
The Federal Employee Retirement System (FERS) uses a three tiered approach to retirement income: The FERS comprises Social Security, a defined benefit pension, and an individual savings plan called the Thrift Savings Plan (TSP). A number of the plans to reform Social Security include providing individuals with the opportunity to save and invest on their own. This 29-page paper by Laurel Beedon of PPI examines the TSP from a number of perspectives to determine whether the TSP is a viable model for an individual investment tier for Social Security. The paper begins by describing what Congress intended when it created the TSP, how the plan's administrative design and investment options reflect that intent. It goes on to discuss how employees have responded to the plan and what it offers. The paper concludes that the TSP provides some valuable information on how an individual, tax-favored, voluntary savings/investment account works when added to a program that includes Social Security and a pension. If, however, it is to be used as a model for reform of Social Security it must be remembered that the TSP represents 2.3 million workers, whereas Social Security represents 129 million. Thus, using the TSP as a model requires some caution.
Download or view The Thrift Savings Plan for Federal Employees in Portable Document Format. You will need Adobe Acrobat Reader to view the file. The file size is 197484 bytes; approximate download time with a 28.8 modem is 55 seconds.
Do they pay SS taxes too?
The plan the feds don't want the rest of us working stiffs to have.
Bump...
My husband has the TSP through his job and we loooooove it!!
A few years ago, we lost a little money, but we had our money spread into 2 different funds, one high risk and one lower risk. We are able to change the amounts in the funds, to go to higher risk or lower risk, middle risk, etc.
We were also able to borrow money from it in an emergency and we are now paying ourselves back---doubt if SS would have that benefit, but I would love my 2 twenty something children to have the same option we have.
By which time it will be with $50.00
My husband also pays Social Security taxes---
Thank you for the info.
Is it true that Congresscritters also have a thrift savings plan? And if so, do they still pay SS as well?
We also have a Thrift Savings Plan through my husbands work, the trusty post office...and also borrowed from it once in an emergency...but it was so easy, and when we were paying it back, it did not seem like another bill, as it was going right back into our account....
My husband says, thank God, we took out that Thrift Savings plan....he just mailed in his papers to the post office to retire, and applied for his Social Security...we were able to retire at age 62, and will be able to live as we wish, thanks to our really nice nest egg, provided by our Thrift Savings Plan...
It's a decent investment program, because the money is deducted from your paycheck before taxes are paid. The employee can choose a combination of funds (from safe government bonds to high risk foreign investments) in which to place the money. You can also juggle money between funds. You receive periodic updates on the progress of your funds, and you can also track your funds on the website of the TSP.
I'm retired, so I can't put any additional money in those accounts. But I have the choice of keeping them there for years until by law I have to start withdrawing the money, or rolling the funds over into a private IRA. While working, I had the option of borrowing from the funds (which I never did, because I wanted to build up equity.)
The only downside was that during the period several years ago when the stock market tanked, the rate of return was very low. My stock fund lost money. You could, in theory, lose the entire amount in a risky fund. The return on the safe government bond fund was miniscule for quite a few years.
Some of my coworkers bounced money back and forth between the funds, making the best decision they could at the time, then later discovered that their fund lost money. That's a risk you take.
I personally feel that many Americans wouldn't be capable of privately managing their funds.
Yes - I heard a Congresscritter mention it this morning on Fox News.
And if so, do they still pay SS as well?
I'm not sure. But this is straight from the AARP -
The Federal Employee Retirement System (FERS) uses a three tiered approach to retirement income: The FERS comprises Social Security, a defined benefit pension, and an individual savings plan called the Thrift Savings Plan (TSP).
You described what happened to us with our TSP ---we had some money in the high risk and lost a little money, but we also had some in two of the lower risk---actually we put the least amount in the high risk, so we are okay.
What you said about some people not being able to handle it--some people can't drive well, either, but they get a license.
I think if this became a nationwide OPTION, the schools should add this to their economics or social studies classes. Also, the govt. would have to have counselors on call to help people with questions.
I don't think it would be fair to deny millions of people like my children, who I know would invest wisely, the opportunity. Remember, it would be OPTIONAL so anyone who is scared, wouldn't have to.
I am a Postal retiree and give thanks every day for the TSP. I contributed-probably-$30,000 over 13 years and now have $145,000 in an IRA and going up!!! Only good thing GOV has ever done. Phony rise in stock market fed my TSP-doubt I could see that rise today and FED GOV never dreamed it either. Pure luck!!!
Ahh, thank you. It seems that they do pay into SS too. For a while I was under the false impression that the Congresscritters do not personally assist the rest of us with the tax burden caused by SS.
I have heard the Congresscritters referring to "their" plan, and I think that the Reps. have indicated it is the same, if not very similar to the TSP.
I don't know if they pay Social Security or not--
My husband works for the post office and I know that for years, he DIDN'T pay into Social Security, just his postal retirement plan, but that changed a while back. That was when we enrolled in the TSP.
I was kind of blase about the SS changes until I heard someone liken it to TSP. Since then, I have been telling everyone how much I like ours.
The bottom line is, it is OUR MONEY, and I find it totally political to have the dems out there saying that we don't have the wherewithal to manage our own TSP funds.
In 2000, 2001, 2002 millions of people lost half of their retirement accounts by relying on the advice of lifelong professional investment managers on Wall Street. Don't think that average Americans are any less astute than the Wall Street gurus. They aren't. The markets don't make sense.
Thank you again, and agreed! Being in the private sector, I don't have a TSP, but I hear you.
Hopefully they'll be more competent counselors than those at the IRS!
In 200 years of stock market history that has never happened. I'm not saying it couldn't. Read: "Stocks for the Long Run" by Jeremy Seigel.
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