Fort Jackson's Army Community Service Center held the first of a series of classes Aug. 13 covering Thrift Saving's Plan basics. The class, which will be held quarterly, explained a variety of TSP topics and offered personalized answers to retirement planning questions.
"We need to know the in's and out's of TSP," said Shawn Smith a personal financial readiness specialist at ACS. "A lot of times we are contributing to things but we really don't know the in's and out's of it."
Each Soldier and Department of Defense civilian employee is offered a TSP retirement product account as a benefit of federal service. It is important to understand the various products offered to be able to maximize the benefit for future use, both before and after retirement. It is also important to understand the changes that are occurring with these benefits.
TSP offers two products, a traditional account that is taken from pre-taxed dollars and a Roth account that is taken from taxed dollars. Both offer benefits of use depending on an account holders current life situations. Both offer a variety of funds that range from moderate to aggressive returns and losses.
"It's never too late to get started," Smith said. "The earlier you start the better."
Smith listed a series of examples of the amount of contributions Soldiers and civilians would need to make monthly in order to retire comfortably. The older in age a contributor is, the more of their pay they will need to contribute monthly to meet their retirement needs.
Starting Oct. 1, 2020, all newly-hired civilians and Soldiers will automatically contribute 5 percent of their pay to their TSP accounts, a change from the current 3 percent automatically contributed for those employed before the effective date of the change.
"Is that a good thing or a bad thing?" Smith asked. "It's going to start them off good."
The federal pay system offers Soldiers and civilians a matching bonus of 5 percent, so according to Smith the change will maximize the TSP benefit. He explained that while an account holder can reduce the amount of their retirement contribution, he said "it's like leaving money on the table."
Smith also explained fund diversity. By investing in a variety of TSP funds, an account holders portfolio can grow and survive a possible loss.
"Is it good to put all of your eggs in one basket?" Smith asked. "When we invest, we want to spread our money around into different funds.
Each available TSP fund is rated from the safest from possible losses but doesn't offer the largest return percentage, to the most aggressive fund that offer a very high return on investment money but will also encounter annual losses. Smith recommended diversifying an account to offer higher returns on investment funds that are able to survive a possible loss within another fund.
Throughout the class, Smith was able to provide personalized answers to the attendee's questions as well as explain more about the various funds, contributions, roll over options and "catch up" contributions.
He also explained that ACS has three available personal financial specialists. Each can schedule appointments to offer information and advice regarding a personal retirement account. Each appointment will be tailored to the person, their current financial status and the account holder's goals.
"The first thing I'm going to ask if you want to see me is if you have your TSP password," Smith said.
Each Soldier and civilian can access their TSP accounts online at www.tsp.gov. Here, investors can create a password, use various planning calculators and make changes to their accounts. Smith explained the page was a one-stop-shop for TSP account information.
For more information about TSP or to schedule an appointment with a personal financial specialist, contact ACS at 751-5256.
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