TSP for Beginners who want to Become Millionaires (in under 10 min)
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- เผยแพร่เมื่อ 23 ก.ค. 2024
- If you want to retire a Thrift Savings Plan (TSP) Millionaire, follow these 3 rules. These simple rules may surprise you. Not only is retiring a millionaire achievable, it is easier than you may think! The TSP is the government equivalent to the private sector 401K retirement plan. So government employees, listen up!
// TOPICS
00:00 Intro
00:52 Retire a TSP Millionaire Rule #1
03:49 Retire a TSP Millionaire Rule #2
06:44 Retire a TSP Millionaire Rule #3
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Who wants to be a TSP Millionaire?
I do!👋🏾, can you do a video about the difference between military and civilian tsp? Or the pros and cons of rolling over tsp to an IRA?
I’ll add it to the list of content 👍🏼. Stay tuned!
I do
I absolutely do
Definitely a great goal to have 👏🏼
My TSP is close to $2M. I started in 1985. I put in 11% of my salary and the Gov put in 5%, so 16% went into the TSP.
Here is my suggestion, which varies somewhat from Melissa.
You can’t “start early”. You can only start now. Don’t worry if you didn’t start 10 years ago. That’s gone. Just start NOW if you haven’t already. Too many folks believe that if they didn’t “start early”, it’s too late to start. That’s Incorrect. It’s never too late.
Start with 5% to get the 5% match from the Gov. Whenever you get a step increase or a promotion, bump it up 1%. Do that until you max out your contributions, or until it hurts. Some pain now will pay dividends at retirement.
Drop everything into the C Fund. And leave it there. Don’t touch it. Don’t look at it. Just ignore it. Yes it WILL GO DOWN. But don’t freak out. When the markets go down, that is EXACTLY what you want. When the markets drop, that’s when you should be buying. So don’t do anything. It will go back up. And the value of your portfolio will increase dramatically if you just ignore it.
When you get within a few years from retirement, redistribute (i.e., diversify) to the other funds, most likely the L funds. That avoids a big hit when you’re close to retirement.
And that’s where I’m at now. I’m close to retirement, I’ve diversified my TSP portfolio but it’s still taking some hits. The question for me is whether to file for SS, and let the TSP bounce back, or delay SS until 70 and dip into the TSP now.
Great insights and close to $2M is amazing! From ‘starting now’ to ‘diversifying funds down the road,’ you have wise advice. Thanks for sharing your thoughts
Thank you for sharing
So smart👏
You do a wonderful job of explaining the TSP, and ways to invest!!! Thank you!
Thanks & Glad it helps!
Thank you Melissa. That was helpful!
Glad it helped!
Excellent video!
You explained this super well
Thanks! Glad to hear the breakdown outline worked. Hope you enjoyed
@Melissa Dragon . Would you recommend investing into a personal 401k also? I have been considering doing this. On top of the Tsp & ROTH IRA. Thanks.
It's great to see you are hoping to save more! While you are considering investing on top of the TSP, you may want to check in with a financial advisor or tax advisor since there are limits on how much you can save in IRAs outside of the TSP.
If you want to have a TSP account and Roth IRA elsewhere, it is important to know that the Internal Revenue Code (IRC) ESTABLISHES LIMITS on the dollar amount that you can contribute to eligible employer plans like the TSP AND to individual retirement accounts such as Roth IRAs. These limits may change from year to year. You can find the TSP contribution limits for the current year at www.tsp.gov.
You should also be aware that depending on your personal financial situation, contributing to the Roth TSP may affect your eligibility to contribute to a Roth IRA. Be sure to check with your IRA provider, financial advisor or tax advisor. They can provide more specific information about types of IRAs, limits, and rules that affect your particular situation.
Additionally, a good reference is here: www.tsp.gov/publications/oc91-16.pdf
Hope this helps!
If you are active military and didnt come in recently, there is no match cause you are considered on High 3 retirement. Lots of TH-camrs forget this
Thanks for sharing this update! Noted 👌🏼
You had the option to do so by switching to BRS but most over 10 years stuck with legacy
Let's create more Millionaires
100% Agree!!! Hoping this video shows how becoming a millionaire is possible by just starting to save early and letting your money work for you :) #MillionaireInTheMaking
On my way there!
They match 1$ for 1$ up to 3$ then 50€ for a 1$ for the next 2 $ if you trying to get the 5$
Just to clarify the matching is employee puts in 5% and the Feds match 4% and 1% is added to your TSP whether you put in or not but a free 4% is nothing to sneeze at.🤣 Also time goes so quickly so it seems that 10, 20, even 30 years is a long way off. Nope it goes in a blink of an eye because everyone is living life. Best advice I can give is as soon as one is allowed to join the tsp do so. Also contribute enough to get the full matching. The rest is up to you because personal finance is based on your individual circumstances.😊
I’m still 21-23 years away from retirement eligibility. I did 5% for years on a WG pay scale and now I do 10% on a GS scale.
Would you recommend a certain percentage of traditional and Roth?
To use the traditional or Roth account is difficult to evaluate. Save in taxes today, to pay in retirement? Do you have State taxes today? Does your State tax retirement income? Will you have a higher income in retirement than now?
If you are near the bottom of a tax bracket, you can use the traditional TSP to bring your income below that level. Then, contribute to the Roth.
@David - when considering Roth vs. Traditional, the big question is: be taxed now vs later?
Some factors include: (1) are you going to live in a income tax free state later (FL, TX, WA, etc)? (2) will you have higher income in retirement or now?
For me, I am unsure where I will retire so I put in 50/50. This way, depending on where I am later in life, I have options to pull money out from the account that will be most beneficial. The way I did it was my contribution was into Roth and the government/employer match was in traditional. Important note is historically, taxes trend up, so I’d prefer to pay taxes now and have a tax free account to get money from later.
@Roger - great insight! Good points 👍🏼
@ *DS* "Would you recommend a certain percentage of traditional and Roth?" When in relatively low tax bracket favor contributing to Roth TSP. When in relatively high tax bracket favor contributing to traditional TSP. 50/50 split every year is not ideal. Contribute at much as your income and budget allows striving to reach 19,500 as soon as possible.
Milissa I currently just moved 25k in my c fund account what do I do from there do I allocate 100% from there sorry just new to all of this
Thanks for reaching out! The percent allocation will depend on how risky you want to be. What may help is a video I did where I share how I invest in the TSP. The link is: th-cam.com/video/PR1GntXAShg/w-d-xo.html.
Hope this helps!
Calvin, if you have access to TSP, go to contribution allocation and allocate percentage (%) to your options. If I were you (you do not have to go with me); allocate 50% to C Fund and 50% to S Fund. You can perform two allocations ONLY in a month.
I want my civilian TSP to flourish
Be 100% in the C fund.
Hello melisa
I have a question does it make any sense to put more than the employer match?
Yes it makes ton of sense to contribute more than 5% of income toward TSP. As rule you should contribute at least 10% of salary, make saving for retirement a priority and as much as your salary and budget allows.
@@alrocky yes boss Thanks.
Al Rocky definitely makes a great point.
Depending on your budget, if you are able to contribute more than 5% for retirement, it can be a great option. Some people use surplus in budget for other expenses, while some people choose to prioritize saving. Ultimately up to you which you prefer. For me, I aim to maximize the amount I can save for retirement (which has some tax advantages too).
@@MelissaDargan Thanks Melissa you Rock sisterr.. I have a question for what percent on c and s funds. 50/50 is good ? I also have the freedom 2045 index funds on top of TSP I don’t know is it wise or not having additional funds outside of TSP. Thank you again I appreciated 🙏
@@alrocky let’s say I putting down 10 percent on TSP and do u think it’s a good idea to have an other account in fidelity on top of TSP. Or do u think u should maximize TSP first before moving an outside account. Love to hear your thoughts on this. Thanks
I work for USPS and I contribute 5% but USPS puts in 5%.. I have about 16 years left , I started once I made regular.. so question is 5% enough?
Good question. First - great job contributing and earning that agency match 👏🏼 .
For your question about “is 5% enough”? The answer is it depends on how much you think you will need when you retire. Some people want to save $250k by the time they retire and they have pension and other income sources. Other people may fully rely on the TSP account to fund their retirement, in which case they may need more than $250k to reach their goals. It will help to calculate the annual cost in retirement x the number of years you think you will live. Remember people tend to live longer these days!
Ex) Annual living expenses in retirement = $40k. Estimate years in retirement = 25 years (assume retire at 65 and live until 90). Equation is $40k X 25 = $1 million
After you have that number (how much you think you need in retirement), then you should work backwards to save that much by 62 (or the age you plan to retire). So then the question is - would saving 10% of your salary a year get you to your goal amount?
Hope that helps! This question is a good one and I’ll add it as a topic for a future video.
@ *J R* congratulations on making regular. Contributing only 5% is likely *_not_* enough so endeavor to increase to at least 10% and as much as your budget and income allows.
J 16 years is a lot of time! Yes you can be a millionaire in 16 years! How? (1) Frugal living - should you buy a new car and be indebted or a used reliable car that can take you from point A to point B. Should you eat out or cook? (2) Once you budgeted your money - save to TSP what you can afford! If you can afford 15% of your gross pay or higher - this will get you to millions! (3) Invest in C Fund or S Fund only! Both Funds has the highest return on investment over the years (decades).
anyone here a tsp millionaire? I’m curious if people actually have done it
Great Question and would love to hear from any TSP millionaires!
Fun fact, recently, Fedweek published "TSP Millionaire Count Crosses 100,000 Mark!" Article - www.fedweek.com/fedweek/tsp-millionaire-count-crosses-100000-mark/
There are over 100,000 of them! Hoping one watches this TH-cam channel 🙏. Let us know!
In 5-7 years! I am a retired military 24 years of active service! TSP started in the Uniform Services in 2002. The matching started only in Jan 2020. I was fortunate to get a GS job while still on terminal leave. My GS job is the one that can get me to a million or more!
Yeah, you can’t day trade with your TSP , you only have 2 moves per calendar month
I am not going against you, but day trading is gambling to me! NEVER indulge in day trading! I studied where the C Fund is invested to - Fortune 500 companies. So I researched what Fortune 500 companies and found out that these companies contributes 67% of the USA GDP. I went over 100 years of the US economy, stock market ands the performance of Fortune 500 companies and found out that over 100 years now their return on investment (ROI) NEVER went down below 10% (0.10 cent to a dollar profit). Large Market Capitalization (Large cap) - which are the Fortune 500o companies are the to US companies that have a market value of $10 Billion and above. I only put my money to C Fund and S Fund (these are all USA companies). Inflation to me is a normal phenomenon - I don't panic high inflation, just like recessions - they are temporary in nature. For long-term investment C Fund is the way to go!
How to retire a TSP millionaire, vote Republican ✌️