- May 26, 2024
- Posted by: legaleseblogger
- Category: Related News
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Current TSP Contribution
Currently, I contribute 25% of my base pay to my Thrift Savings Plan (TSP), which I find manageable. However, I am wondering if anyone in lower enlisted ranks is truly maximizing their TSP contributions. It seems like if I were to max out my contributions, I would have very little money left over. I would like to hear others’ thoughts on this.
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There’s a nice chart /u/AFmoneyguy wrote up
https://www.reddit.com/r/MilitaryFinance/comments/185isgd/max_tsp_2024_23000_get_full_5_brs_match/
It is possible especially if you live like a complete miser but for enjoyment of life I highly recommend not doing so lol. While saving and investing for retirement is good, it’s not worth missing out on life events and things you could be doing in your 20s, shit even going out and getting blasted with the boys once in a while is something that is excusable. 25% now is already going to pay dividends in your 60s. You can always invest more in the future but you can never turn back time.
https://www.troweprice.com/personal-investing/resources/insights/youre-age-35-50-or-60-how-much-should-you-have-by-now.html
Go by the chart and aim for that, you have a while to save for half your income by 30, even if you plan on staying in for 20 I would still follow that chart for recommendation on how much you want to save.
Its possible, but for most people it isn’t realistic. Me personally, I could max it out but I don’t want to have that much money not readily available until I’m 60. I invest about 80% of my checks(E-4), about 30% split between tsp and Roth IRA and than the other 50% into a taxable brokerage account. I will max out Roth IRA, but not tsp. I might put more into tsp, and less into TBA. This usually leaves me with $250 left over each check. I don’t have any bills, I don’t have car and don’t plan on getting one until I’m out. So its either used to pay credit cards, or whatever really. Savings, food, fun, etc… suffer now, enjoy later type of mindset.
It’s definitely possible, but I believe that most people nowadays just aren’t able to live more frugally/below their means.
To be honest, I tried maxing out my TSP as well, until I calculated how much I really needed for retirement.. I realized that I was severely over-contributing, in ways that I’m actually comprising my “present” life from my “future life”. It got to the level that I became extremely frugal.. I live way below my means and I don’t want anything fancy/significant in life. (I’m happy with 1 house, 1 everyday-car, 1 supercar and a happy family).
KNOW YOUR END GOAL.
After calculating the actual $ needed for retirement, I realized that I can let go of the gas pedal significantly.
I’m an extreme advocate to save as much as you can for retirement, but don’t forget your “present” self too. Go out with your buddies once in awhile. You’ll only be able to enjoy your junior enlisted life for a short stint.
If you’re in the dorms and can eat at the DFAC I recommend doing more. The most disposable income I ever had in my life was an E-4 in the dorms plus the key ingredient to investing is time so the earlier the better.
But make sure your have money for some fun and your own sanity.
Courtesy of /u/AFmoneyguy who posts these every year:
https://www.reddit.com/r/MilitaryFinance/s/YEDh8VDx5m
You are correct that it takes most of your base pay. The important thing is to start early even if it’s a small amount. You have years of contributions ahead of you and it’s important to start good habits now and let compound interest do its thing:
https://www.uidaho.edu/-/media/uidaho-responsive/files/financial-aid/forms/beams/infographics/pdfs/a-tale-of-two-savers.pdf?rev=6a20a46d5b0d4d628ca11fb07936b6a5
Sure if you max out you’ll be way ahead but if you contribute 25-35% + the 5% match you’ll still be loaded and ahead lol.
Save yourself some money to do things you want to do. Focus on promoting and then raise up that %. Sounds like youre doing great.
I did it for one year in Korea. It was early COVID so we were locked up anyways, plus the dfac was great. When I came back stateside I had to set it back to 10%.
Several months back there was a Marine E-4 that posted saying they were maxing their TSP contributions. It is extremely rare, but it *can* happen.
If it causes you to have nothing left over and you can’t enjoy your life, don’t worry about maxing it yet. Max it when you can live your life. That may be at the E-5 or E-6 grade. Maxing at those ranks is still very impressive. Most enlisted folks (probably officers too) don’t max no matter what their rank is.
I was putting in 60% base pay as an E-3 and E-4. It wasn’t quite the yearly TSP max, but it was damn close.
I had plenty of money to pay off student loans, travel, car payment, insurance, and otherwise have fun.
* Public transportation, bicycle, cheap-reliable car
* DFAC
* Barracks or roommates with cheap rent/save some BAH
* No eating out
* No simping, drizzle drizzle
* No Camaro
It’s possible, but less than 0.1% will come close.
Single? Gonna be hard unless you have a high BAH and live with roommates.
25% is appropriate given how many costs the Navy covers for you that you won’t have in retirement. You should be saving somewhere between $12-15k a year.
Maxing is doable, but unrealistic (and not required) for an E-4.
I’m an E5 and I max it. I also picked a duty station that gets extra income like COLA and I get language pay so here’s my advice if I didn’t have those luxuries. For now contribute as much as you can without compromising the present life. Sign up about 18 months prior to your ETS date to go somewhere where they have to pay you BAH or COLA like a joint base or overseas Germany and Belgium. Another option is try to use the new directive to your advantage and speed through ranks (while it might bother your leadership, your future is better for it). Go to the promo board and make points for SGT then 7 months later go to it again and pick up SSG. At that rank you’ll have BAH.
I contribute 25% and I’ll be maxing out in two months as an E-5 but it get COLA and BAH,BAS and OHA that’s how I’m able to max at leases my ROTH 401k next goal is to max ROTH IRA
I speedrun E5 and then max it, took me 2 years. Also even at E4 I put in 60% of my base pay into tsp which is almost max but not quite there and then just live off my bah + bas. Its doable.
It might not even be possible depending on your situation. The AF caps Roth TSP contributions at 60% for active duty members, which requires at least 6yrs TIS as an E-4 to be able to contribute that much. But you *could* get away with a mix of traditional and Roth to do it (due to the tax savings of Traditional).
Also possible other branches might allow more than 60% Roth.
Possible, but like most people said not really recommended. Me and my wife are upping ours in 3 months to 60% and I’ll only be getting like $600 every 2 weeks, but were fortunate and only doing that because we are dual mil E4s and in a higher BAH location so the extra bah covers a lot
I did it as an E5 for multiple years. I was on a ship and had roommates.
I put 100% and would max it out by the time October came around I believe. It made those holiday paychecks seem fat.
Increase your contribution % every January 1st and year you receive a raise due to TIS. That way, you continue to live off your previous salary and avoid lifestyle creep.
Totally realistic, and I did it (I was married tho). One of my students, E2 airman, is maxing TSP right now. However, it is not for everyone.
I always tell my students to try have a fun and meaningful weekend without spending money (or very little money). For example, our local park services had a “star party” one Sat. night. Astronomers set up telescopes for you to watch moon and stars, and talk about them. It was so much fun. Couple of my students looked up tide table, checked out tide pools during low tide, and googled all the creatures they saw. Our local library had “bird show” that had a man talked to us about birds. He kept 1 falcon, 1 owl, and 2 parrots. My son started learning chess, we go to local chess tournaments to play and hang out with other people. BLM had fossil hunting tours that we enjoyed so much. There are so many fun free events.
You’re better off putting 5% into the TSP each month and then instead of an additional 20% into the TSP, go ahead and max out your ROTH IRA each year.
It’s hard to max it out tbh. I tried doing it as a lance and it was rough because you pretty much don’t have a life. First time I maxed it out was when I commissioned
I got pretty close last year as a single E6. I also max out an IRA every year. I don’t really go on vacations but I still go out to eat and go out to the bars. I don’t feel like Im so frugal that I can’t do anything.
A lot of it depends on where you’re stationed obviously. Being able to pocket some of your bah is pretty huge.
I’m probably going to get roasted for saying this but honestly if you have no intention of staying in (or getting another federal job), the TSP is kind of a waste of time and ONLY worth it if you get the 5% match, i was in the military for 6 years and got out with like 13k in my TSP that did help with my move/transition a lot, but I’m at a company now that contributes $5 per hour worked to your company 401k and I’m at like 5k now after about 6 months of working, if you do insist on investing the 400 a month, I’d do 5% to your TSP (if you get matched contributions from the govt) and put the rest into your own brokerage account
If you can rest well knowing with promotion and TIS increases you’ll get to reduce the amount you contribute. Great job! 👏
Mathematically impossible with the 60% max they put on your base.