TSP Millionaires

[berline]

OK. Forgive me for making it a big deal.

Your $ amounts make me chuckle a bit as when i retired in 96 as an E-7 it was about $1600 per month. Cost of Living increases have made it higher since. I think it is still a good deal. Even if 2% times base pay.

PO

Agreed that it can be a good deal, but mainly for the guys that don't do a full 20. I mean, ~$40k matching over the course of 20 years is peanuts...and that's a good deal, for the USG, not the service member.

 

[Boghie]

Good deal? It's horrible? $0% after 20 years instead of the now, 50%. They're only matching up to 5%. That would average, for an enlisted guy:
Years 1-5: $1,250/Yr
Years 6-10: $1,750/Yr
Years 11-15: $2,250/Yr
Years 16-20: $2,750/Yr

That's only $40k over your 20 year career that they've contributed on your behalf...I need that to double 4 times over again to be better than the extra 10% retirement for the rest of my life.

40% @ 20Yrs: 24k
50% @ 20Yrs: 30k

That extra $6k/Yr comes out to a quarter mil provided I can live another 40 years after retirement.

Man, our retirement is so embarrassing when you lay it out on paper. $30k/Yr after serving for 20 years...

Berline,

To get the 5% match the individual would also commit 5% - which is now 10% of income. But that really is not 10% out of your net, it will be more like 3% or 4% eh... So, not so bad... Also, remember that many expenses are paid wholly or in part by the military (food, housing, medical) so even the initial salary is not so bad...

Most would recommend the individual commit 10% of salary to retirement (really about 7% net). That brings the contribution to 15%. But, let us use your numbers:

Starting Savings at 18: $0
Retirement Age: 65
Starting Age: 18
Withdrawl till: 85
Annual Yield: 8%
Inflation: 3%
Annual Contribution: $2,500 (ie, 10% of gross salary)

That leaves you with a nest egg $1,400,000 at age 65.

for an annual income of about $30,000/year from TSP
Plus you still get $24,000/year from your pension
And you get medical benefits among others.

Also, remember, your TSP is your money - not a promise by today's politicians to be honored by future politicians.

Also, the assets in TSP are transferable. So, let us say you 'retire' from the military at age 40. You will have about $180K that can be moved in your next IRA or 401(k) and you will be getting your pension of $24,000 from that point onward and you will still be getting medical benefits. Personally, I would strongly suspect that the projected individual would be in a position at age 50 where he/she could contribute more than $3,250 toward his/her retirement so the final TSP nest egg is most likely much larger than the above number. You will do great in this deal.

I would take this deal in a heart beat. Starting early is the key, and the projected system seems to get things moving.

 

[k0nkuzh0n]

Berline,

To get the 5% match the individual would also commit 5% - which is now 10% of income. But that really is not 10% out of your net, it will be more like 3% or 4% eh... So, not so bad... Also, remember that many expenses are paid wholly or in part by the military (food, housing, medical) so even the initial salary is not so bad...

Most would recommend the individual commit 10% of salary to retirement (really about 7% net). That brings the contribution to 15%. But, let us use your numbers:

Never count your own retirement contributions when trying to compare benefits. It isn't a benefit to be obligated to pay into something.

 

[tsptalk]

Millionaire feds need to watch proposed tax changes. So do you

Millionaire feds need to watch proposed tax changes. So do you

...tax expert Robert Leins cited the millions-among-us-column, and said feds should keep an eye on plans to cap the amount of money people can have and invest in 401ks and other retirement plans, like the TSP. Leins said the Obama administration’s budget proposes “a rule that would limit any NEW contributions to retirement accounts once the total account balance across all retirement accounts reaches $3.4 million.” If the account balance fell below that level, under the proposal, individuals could again make tax-deferred contributions until they hit the $3.4 million mark.

 

[Cactus]

Not that I would ever have to worry about that. Still, it would be a nice problem to have wouldn't it?

 

[Boghie]

Never count your own retirement contributions when trying to compare benefits. It isn't a benefit to be obligated to pay into something.

k0nkuzh0n,

I know civilian pensions are 'invested' in the G Fund - and they are promissory notes from today's politicians to be paid out by politicians in 20 or 30 years into the future. Investments in the G Fund are not investments. And, those investments are really just a line item in the budget - there is no actual 'lockbox'.

So, while you are correct that my 5% (which actually costs me 3%) is not really a benefit the 5% match definitely is. As is the tax benefit. As is the ability to let me invest as I see fit. What is the benefit of two Alpo cans at retirement. Look at your civilian pension - almost 15% of your gross salary goes into that pig. If your TSP ain't beating the annual withdraw capacity of that pig than something is definitely wrong. Just imagine if you could have invested those pension assets in C/S/I over the decades. But nope, you will get another Social Security check if the future politician doesn't cut it (whether through taxation [Clinton taxing Social Security] or gaming the G Fund interest).

I have offered in the past my entire Social Security benefit and my entire pension for the simple pleasure of not having to pay ANYTHING into them from this point onwards. That offer still stands.

 

[weatherweenie]

I have my work cut out to get to $1 million in the next seven years. The last four months have not been helping me reach that goal.

Not that I would ever have to worry about that. Still, it would be a nice problem to have wouldn't it?