In need of guidance

[law87]

Hello all,

I am 25, i feel like i am saving enough for TSP, I just need to know by certain age mark how much should be in my TSP account, granted that we all have different income, but i would like the majority average so i can work toward that goal.

I am very financial conscious so these things freaks me out, I dont want to be retire from the military job and working hard for another 20 years before i can retire. I also do understand that the concept "save as much as you can" but I would like to know that i am on the right track, sometime thinking your saving enough is different than what the reality present.


anyway thanks for all the input.

 

[jpcavin]

Hello all,

I am 25, i feel like i am saving enough for TSP, I just need to know by certain age mark how much should be in my TSP account, granted that we all have different income, but i would like the majority average so i can work toward that goal.

I am very financial conscious so these things freaks me out, I dont want to be retire from the military job and working hard for another 20 years before i can retire. I also do understand that the concept "save as much as you can" but I would like to know that i am on the right track, sometime thinking your saving enough is different than what the reality present.


anyway thanks for all the input.

My 2 cents....Investing is good. Being debt free by the time you retire is bliss! Shouldn't need much money to live comfortably.

 

[Birchtree]

If you continue to dollar cost average into your TSP on a disciplined basis and this means also during market weakness your TSP will take care of itself. Just keep the dollar cost averaging going no matter the market volatility. I would recommend a Roth IRA with an online company so you can begin to build a base that at some point will self-feed your gains - you must however buy individual stocks that pay dividends. Set it and forget it - in ten years you'll have a good start on financial freedom.

 

[law87]

Jpcavin, i like that idea also, i just bought a home last year hopefully i can pay that off sooner then 30 years, but quiet completely understand your POV

Birch, i will look into the dividends stock. To be honest, I dont know how to look for a good dividend paying stock . I am quiet interested in options trading as it is fast pace and seems more fun to me.

 

[law87]

Birch, i am considering Roth tsp as soon as it available to the general public but are you suggesting tsp and Roth Ira?

 

[jpcavin]

Birch, i am considering Roth tsp as soon as it available to the general public but are you suggesting tsp and Roth Ira?

Let me chime in again...I would definitely do Roth IRA and either Roth or regular TSP up to at least the matching %
Birch, what say you?

 

[RealMoneyIssues]

Let me chime in again...I would definitely do Roth IRA and either Roth or regular TSP up to at least the matching %
Birch, what say you?

Clarification, as military, we don't receive matching %

 

[tsptalk]

There are tons of retirement advice and calculators out there to help get some kind of target estimate:

Here's a couple...

http://www.calcxml.com/do/ret02

How Much Do I Need To Retire? | Frugal Dad

Retirement Calculator - How much to retire?

http://www.how-to-retire-happy.com/How-Much-Do-I-Need-to-Retire.html

 

[jpcavin]

Clarification, as military, we don't receive matching %

Ha, Ha. That's right. I forget that we still have young whipper snappers on this board! :laugh:

 

[MrJohnRoss]

A very rough rule of thumb is to multiply your annual income by 12 to get your savings goal. That means if you're currently making $50k, you should have $600k as your investment goal. Obviously as your income rises, your goal will rise as well. But this should give you a rough idea. Obviously there are many variables to everyone's financial situation, but this one is always easy to keep in mind.

Hope this helps,

JR

 

[Birchtree]

I wish the military would offer a defined contribution plan that is mobile for those that do 4 or 5 years and then get out. As it is now there is no benefit available only time lost. Why go with a TSP Roth - there isn't enough potential. TSP as a fiduciary is fine while you contribute doing your time in grade but with a Roth you want more flexability in choice. You just have to own individual stocks that pay a return that can be increased and reinvested. There is really no benefit to a TSP Roth IMHO. I hate to be a stinker but there just isn't a future in a TSP Roth.

 

[MrJohnRoss]

I wish the military would offer a defined contribution plan that is mobile for those that do 4 or 5 years and then get out. As it is now there is no benefit available only time lost. Why go with a TSP Roth - there isn't enough potential. TSP as a fiduciary is fine while you contribute doing your time in grade but with a Roth you want more flexability in choice. You just have to own individual stocks that pay a return that can be increased and reinvested. There is really no benefit to a TSP Roth IMHO. I hate to be a stinker but there just isn't a future in a TSP Roth.

I agree with Birch. Fully fund your individual Roth IRA before putting a penny in the Roth TSP. Then teach yourself how to manage it properly. It'll be well worth it.

The Roth TSP may make sense if you have an income too high to contribute to an individual Roth. But you'll still be limited by the IRS maximum for defined contribution plans for both your regular and Roth TSP.

 

[law87]

thanks all for the advice, i will look into roth ira a little more.

 

[Boghie]

LAW87,

I, personally, use the 'Retirement Calculator' in Quicken Premier. It is just one of the many, many reasons to purchase that product. The 'Investment Performance' report is an amazing tool as well - as is the 'Debt Reduction Planner'.

You also don't want to look at the actual assets required in dollars for a number fourty years in the future. Inflation (which will also affect how much you contribute and hopefully how much growth you attain) will bloat those numbers tremendously. An inflation adjusted number is more realistic for someone fourty years in the past - meaning now.

What I would do is look at the salaries a 50 year old makes in your field (whether military or civilian) and place that in the retirement calculators as a goal. Those tools will tell you what you have to invest. And, at your age highly emphasize equities (C/S/I in our choices) which will give you (inflation adjusted):

C: 7.5%
S: 8.6%
I: 8.0%

Cash will earn you an amazing 0.1% while our bond fund will give you 3.3% (inflation adjusted).​

At 25, assuming 30K salary, contributing 10%, no match, no savings, an inflation adjustment of 3.1%, and increasing contributions with inflation just keeping your money in the C Fund will most likely provide: $2,114K in todays money, $46,000 a year from age 65 through 100. By the way, in non inflation adjusted mullah you are talking about pulling out $156K in your golden first year of retirement - see how wierd that look:cheesy:.

Also, be aware, you will not be able to really access any funds in any 401(k) or any IRA before age 60. Also, your pension will most likely not be available till age 60 or so. Finally, pensions can be jiggered by politicians on the public side and affected by reality on the private side. I much concur with BT. Folks are scared of 401(k)s because of the volatility. What they should be concerned of is pensions with odd ball calculations that can be changed without your consent and which are not vested till you work forever for an entity and attain a retirement age (again based on the whims of someone other than you).

Happy hunting...

 

[law87]

LAW87,

I, personally, use the 'Retirement Calculator' in Quicken Premier. It is just one of the many, many reasons to purchase that product. The 'Investment Performance' report is an amazing tool as well - as is the 'Debt Reduction Planner'.

You also don't want to look at the actual assets required in dollars for a number fourty years in the future. Inflation (which will also affect how much you contribute and hopefully how much growth you attain) will bloat those numbers tremendously. An inflation adjusted number is more realistic for someone fourty years in the past - meaning now.

What I would do is look at the salaries a 50 year old makes in your field (whether military or civilian) and place that in the retirement calculators as a goal. Those tools will tell you what you have to invest. And, at your age highly emphasize equities (C/S/I in our choices) which will give you (inflation adjusted):

C: 7.5%
S: 8.6%
I: 8.0%

Cash will earn you an amazing 0.1% while our bond fund will give you 3.3% (inflation adjusted).​

At 25, assuming 30K salary, contributing 10%, no match, no savings, an inflation adjustment of 3.1%, and increasing contributions with inflation just keeping your money in the C Fund will most likely provide: $2,114K in todays money, $46,000 a year from age 65 through 100. By the way, in non inflation adjusted mullah you are talking about pulling out $156K in your golden first year of retirement - see how wierd that look:cheesy:.

Also, be aware, you will not be able to really access any funds in any 401(k) or any IRA before age 60. Also, your pension will most likely not be available till age 60 or so. Finally, pensions can be jiggered by politicians on the public side and affected by reality on the private side. I much concur with BT. Folks are scared of 401(k)s because of the volatility. What they should be concerned of is pensions with odd ball calculations that can be changed without your consent and which are not vested till you work forever for an entity and attain a retirement age (again based on the whims of someone other than you).

Happy hunting...

thanks boghie