After a long career in the military many Servicemembers face civilian life without being prepared. But there are options, if a individual plans ahead for their retirement. The Federal government makes available to all Active Duty Servicemembers a government sponsored investment and retirement savings plan called the Thrift Savings plan. If you are interested in more short term type of savings plans, other plans such as Savings Bonds may be more what you are needing.
All participants in the TSP program have an automatic 1% percent matching amount, which is added to the amount that your agency, or your branch of the service matches. This is a lucrative savings benefit plan, but it is for long-term retirement type benefits. This is not a short-term benefit by any means. This is a plan that was extended by the DoD Authorization act of 2001, and opened up to all members of the Armed Forces at that time. Many private companies offer investment and stock plans for their employees. It is similar in many respects to a typical 401 (k) type savings plan, and the income that you realize at your time of retirement will depend on the type and amount of contributions you have made to your TSP during your working years. Amounts vary, but even a small contribution can mount up. For example, if you put in $10 dollars twice a month for ten years, and your service matches at 100 percent (up to three percent of your base pay) at the end of 25 years, assuming interest rates are about 7 percent, you will have around $35, 000 dollars. If you want to have something that is backed by the United States government, and wanting something that will invest for the long term, then the Thrift Savings Plan is an excellent choice for your investment dollars. As with most types of retirement savings plans, there are penalties for early withdrawals, but if you are willing to contribute on a regular basis to the plan then the income you will realize upon your retirement will be considerable. It is worth your while to consider the benefits of the Thrift Savings Plan. Retirement may seem a long time off, but it can catch up to you fast, and the Thrift Savings Plan is a good way to hedge against the day when you do retire.
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You can tribute up to 100 percent of your base pay, but you are limited by the IRS to only contribute up to $15,500 each year. One of the advantages of the Thrift savings plan is an agency contribution amount. What this means, is that each of the five services, in addition to the civilian federal agencies that support the Thrift Savings plan programs, work to have a matching fund contribution.
