Thread: Marine in need of advice on TSP investment... PLEASE HELP!

Hi again. I was wondering if any of you had advice or opinions on the fact that I am currently putting 22% of my base pay into the TSP? Isn't 15% the norm to invest for retirement? I started putting 22% about 4 years ago to help make up for all the years I did not invest.

I am also very curious to hear some of your opinions regarding military pensions versus the civilian sector. For instance, my best friend invests in his 401K and upon retirement, that will be his primary source of income. THEREFORE...if he doesn't invest, he will not receive a retirement. In my case, as long as I retire honorably, I should receive a nice pension check of about $2000.00 a month for the rest of my life. Is it not true that a civilian such as my friend would have to personally invest several hundred thousand dollars to get that kind of return over the span of 30 to 40 years, which hopefully how long I will live after I retire?

That being said, Sometime I wonder if I should reduce the 22% to 15% and invest the other 7% somewhere besides the TSP such as an IRA? I really don't see a need for that between the pension check and TSP, so for now I am thinking I will use that money to help pay cash for a house when I retire so I do not have a mortgage payment.

THOUGHTS? Thanks! By the way, I am having issue with a pop-blocker so I saw a private message from another Marine but was unable to view it. I will try again later.

Originally Posted by puckzilla

Hi again. I was wondering if any of you had advice or opinions on the fact that I am currently putting 22% of my base pay into the TSP? Isn't 15% the norm to invest for retirement? I started putting 22% about 4 years ago to help make up for all the years I did not invest.

Remember TSP is a 401g not a 401k most of the same rules apply-2012 limits $17,000, the 15% is for 401K and that was for limits on matching funds (it's now 25%)

Originally Posted by puckzilla

I am also very curious to hear some of your opinions regarding military pensions versus the civilian sector. For instance, my best friend invests in his 401K and upon retirement, that will be his primary source of income. THEREFORE...if he doesn't invest, he will not receive a retirement. In my case, as long as I retire honorably, I should receive a nice pension check of about $2000.00 a month for the rest of my life. Is it not true that a civilian such as my friend would have to personally invest several hundred thousand dollars to get that kind of return over the span of 30 to 40 years, which hopefully how long I will live after I retire?

There are many contributing factors to investing for a civilian to obtain the same level of return for a military person. But, to post the same information I've posted before. If a civilian wanted to retire at 40 and live until 90, they would have to purchase an annuity @ 40 for ~$1,000,000 to get about $2000/month.

Originally Posted by puckzilla

That being said, Sometime I wonder if I should reduce the 22% to 15% and invest the other 7% somewhere besides the TSP such as an IRA? I really don't see a need for that between the pension check and TSP, so for now I am thinking I will use that money to help pay cash for a house when I retire so I do not have a mortgage payment.

THOUGHTS? Thanks! By the way, I am having issue with a pop-blocker so I saw a private message from another Marine but was unable to view it. I will try again later.

Goals. Depending on how you shelter/invet monies now, rate of return, and avenues of investment will all contribute to outcome. If you are investing 22%, then keep doing it, but spread it around if you feel the need.

i agree with frixx i am a mil person of 32 years but hold a civilian technician job with the mil(ws-8) i get matching up to 5% in y civ job but mil just started tsp about 5 or better ago maybe with no matching. you have been putting 22% in now WHY CHANGE IT you have lived with it for awhile and ADAPTED OVERCOME if you drop to 15% definetly find something you can have taken out directly from you check and put it in a stock or cd or... your call. remember long term is USUALLY THE BEST short term if you havethe nads will get quick money but also will lose quick money. bottom line diversify if you can. i rely on my job. when i retire and once i hit 63 i will be collecting five retirements. my fed technician, my civ TSP, my mil(E-8 for now) my SS( yes i will get it) and my mil TSP. mind you all of these will start at different times of my life because of making sure i dont get screw on taxes and early withdrawal's but by time i get to 56 i can TAKE home as much then as now just using fed civ and fed technician. so best advice you ahve stared right BUT read read read and listen. set a goal!!!

Gentlemen, thank you for your input. Ok...I will keep putting 22% into the account. As far as diversify, I was considering using the other 7% if I reduced it to 15% to put somewhere other than the TSP...but like I mentioned, it just doesn't seem necessary to me at this point in the game....I will hold fast with my TSP at 22% and nothing else. I should have roughly $100,000 in it when I retire. At that point, I think I can roll it over into an IRA and keep investing, or just let it sit until I reach old age. It seems to me that one's lifestyle at time of retirement is the biggest factor to take into consideration. Since I am single, with no great aspirations to acquire "things", I should be just fine. I just want enough money to live comfortably and fly to Thailand a couple of time a year on vacation. I don't want a new car or super-expensive home.....And I will keep reading....Thanks again!

Remember, love happens when you least expect it to - buy a queen size bed just in case.

Originally Posted by puckzilla

Gentlemen, thank you for your input. Ok...I will keep putting 22% into the account. As far as diversify, I was considering using the other 7% if I reduced it to 15% to put somewhere other than the TSP...but like I mentioned, it just doesn't seem necessary to me at this point in the game....I will hold fast with my TSP at 22% and nothing else. I should have roughly $100,000 in it when I retire. At that point, I think I can roll it over into an IRA and keep investing, or just let it sit until I reach old age. It seems to me that one's lifestyle at time of retirement is the biggest factor to take into consideration. Since I am single, with no great aspirations to acquire "things", I should be just fine. I just want enough money to live comfortably and fly to Thailand a couple of time a year on vacation. I don't want a new car or super-expensive home.....And I will keep reading....Thanks again!

Don't take this the wrong way, but savings should be toward your goal, not just a set amount.....22% is nice, but it must meet your goal. If you have something left over after meeting your budget, you can still invest. I recommend municipal funds to keep your liquid assets earning tax free interest. Try not to use it as a checking account, but it is an alternative for you.

PuckZilla,

The best benefit of your pension is that you will start receiving it upon retiring from the military. As Frixxxxx stated, retiring early (like 40 years old) is next to impossible via a 401(k) style package. However, the financial benefit of a well funded 401(k) retirement will dwarf the $2,000 pension. Your pension will be play money.

However, to get there you have to take a reasonable amount of risk. And, I cannot determine your sleepy time risk aversion. I would probably talk to a real financial adviser, but maybe I'll play one on this thread.

• You are somewhere around 36 years old - thus, you have at least 24 years till you can pull money from your TSP 401(k)
• You are investing 875/month, thus about $10,500/year
• You have about $45,500 in TSP assets
• You lost 1.3% of your assets in the 5.5% 'correction' we just went through after the election.
• This tells me you only have about 20% of your assets in the equities funds (C/S/I) - something probable based on the contribution/allocation question.

Unless you are market timing - which takes tons of experience and skill - or you are extremely risk adverse - which may be true - this allocation is extremely conservative. My guess is that your average annual return is 3%. At that rate you are basically keeping up with inflation. Your account will be worth about $700,000 at age 65 and provide you with about $13K till age 85 (we will use that age simply because Quicken defaults to it as age of death). This allocation is almost a savings account.

I would strongly recommend almost the opposite allocation. Have 20% - 40% in G/F and the rest in C/S/I. You can slide to the smaller allocation in G/F because of both your age and the fact that you will have a solid pension. A 20% G,F / 80% C,S,I mix will result in an annual return of about 8%. Your account will be worth about $1.5 Million at age 65 and provide you with about $48K till age 85. All numbers are inflation adjusted.

In my opinion I would use an IFT to get into the L2040 or move to an allocation with about 20% in the G/F. Had you done so in October 2007 - at the top of the market and thus the worst time to be in equities - and kept investing 22% your account would be higher than it is right now. Probably significantly. I know that sounds weird, but think of all the cheap shares of C/S/I you would have bought and added to your share balance and you can see why. As long as you don't get scared and sell at the bottom.

Maybe start using an IFT each month to move 10% more into C/S/I till you meet your sleeping point.

By the way, at your age Dave Ramsey would have you 100% in the 'C Fund' and just leave it at that.

Well I hope Dave Ramsey is right. My wife is currently holding 27,000 shares of an SPX index fund in her defined contribution plan and we ain't movin any time soon.

Boghie....wow, it sounds like you really know what you are talking about....I am 40 years old, by the way. I guess you are pretty accurate on what you stated...about 20% is in C/S/I, and the rest in G and F. I did not know I could do IFT until I got on this website! I know that sounds pathetic, but better late than never, I guess. So, I will think about what you said....do an IFT to the L2040 or at least a significant amount to C/S/I. In 2040 I would be 68 years old. I would like to be a millionaire at some point before then so I can live like a fat cat when I am that age. I wish I could talk to some of you guys in person!

Originally Posted by Boghie

PuckZilla,

The best benefit of your pension is that you will start receiving it upon retiring from the military. As Frixxxxx stated, retiring early (like 40 years old) is next to impossible via a 401(k) style package. However, the financial benefit of a well funded 401(k) retirement will dwarf the $2,000 pension. Your pension will be play money.

However, to get there you have to take a reasonable amount of risk. And, I cannot determine your sleepy time risk aversion. I would probably talk to a real financial adviser, but maybe I'll play one on this thread.

• You are somewhere around 36 years old - thus, you have at least 24 years till you can pull money from your TSP 401(k)
• You are investing 875/month, thus about $10,500/year
• You have about $45,500 in TSP assets
• You lost 1.3% of your assets in the 5.5% 'correction' we just went through after the election.
• This tells me you only have about 20% of your assets in the equities funds (C/S/I) - something probable based on the contribution/allocation question.

Unless you are market timing - which takes tons of experience and skill - or you are extremely risk adverse - which may be true - this allocation is extremely conservative. My guess is that your average annual return is 3%. At that rate you are basically keeping up with inflation. Your account will be worth about $700,000 at age 65 and provide you with about $13K till age 85 (we will use that age simply because Quicken defaults to it as age of death). This allocation is almost a savings account.

I would strongly recommend almost the opposite allocation. Have 20% - 40% in G/F and the rest in C/S/I. You can slide to the smaller allocation in G/F because of both your age and the fact that you will have a solid pension. A 20% G,F / 80% C,S,I mix will result in an annual return of about 8%. Your account will be worth about $1.5 Million at age 65 and provide you with about $48K till age 85. All numbers are inflation adjusted.

In my opinion I would use an IFT to get into the L2040 or move to an allocation with about 20% in the G/F. Had you done so in October 2007 - at the top of the market and thus the worst time to be in equities - and kept investing 22% your account would be higher than it is right now. Probably significantly. I know that sounds weird, but think of all the cheap shares of C/S/I you would have bought and added to your share balance and you can see why. As long as you don't get scared and sell at the bottom.

Maybe start using an IFT each month to move 10% more into C/S/I till you meet your sleeping point.

By the way, at your age Dave Ramsey would have you 100% in the 'C Fund' and just leave it at that.

Boghie...by the way, I do not know what you mean by "sleeping point"??? Also....2 months ago I changed my monthly allocations (Not an IFT because I did not know about that at the time) to be as follows:

G: 10 percent
F: 30 percent
C, S, I: 20 percent each

I did so because I am trying to be more aggressive since I cannot touch this money for 20 years, anyhow.

Also, when you said I would have $700,000, how did you arrive at that figure? I plan to stop investing the $875 per month once I retire in about 4 years. It will be around $100,000 at the time of retirement. Are you saying that would turn into $700,000 over 20 years or I would need to roll it over into an IRA and keep investing?

I hope everyone on here had a Happy Thanksgiving!

'sleeping point' is a way to describe risk tolerance. it is the amount of money you have in the game where you can't sleep at night watching it disappear during a market dump. it is different for everyone.

for example, birchtree dozes with a smile on his face when the market drops dreaming of all the shares he can buy on sale, sometimes he even giggles in his sleep, i can hear it way out here. others can only avoid the tossing and turning when they are 100% cash (G), it makes them feel good earning 1.5% per year because that way inflation only erodes their purchasing power by twice that.

if you start posting conspiracy theories about how the whole stock market hates you and only you and then go home and kick the dog, you have found your sleeping point.

bohgie is good at the numbers, do a search and you will find all kinds of nuggets of wisdom regarding risk allocations and taxes.

happy investing, just keep plowing in the contributions and go slow until you identify your target.