What You Need to Know about Thrift Savings Plan

Thrift Savings Plan (TSP) is a saving and investment account for your retirement; it is sponsored by the Department of Defense (DoD). It’s a government’s version of a 401k. This account will help you in saving money towards your retirement.

Easy Steps To Register For My Thrift Savings Plan(TSP)

You log on to MyPay account( the government payroll system). Then you Turn On the retirement savings.

• Select TSP on Main Menu
• Choose what percentage of your monthly income, incentive pay, and bonuses you want to save and invest.
• Choose between Roth vs. Traditional 
• Wait for your account number and password. This will be sent to your mailbox.
• Login to TSP.gov to select how you will invest your savings. 
• The minimum you can save and invest is 1% from your monthly income into your TSP.

Roth vs. Traditional

When registering your account, you’ll need to choose between the Roth and the Traditional version. The Roth allows after-tax contributions, while the Traditional allows Pre-tax contributions. 

Types of Thrift Saving Plan (TSP)

 There are five individual funds and lifecycle funds you can choose from. All these funds offer different investments plan, with each having its risks and return. The TSP funds are:

• G Fund – Government Securities Investment Fund: short-term U.S. Treasury securities
• F Fund – Fixed Income Index Investment Fund: matches the performance of the Bloomberg Barclay’s U.S. Aggregate Bond Index
• C Fund – Common Stock Index Fund: matches the performance of the S&P 500 Index
• S Fund – Small Cap Stock Index Investment Fund: matches the performance of the Dow Jones U.S. Completion Total Stock Market Index
• I Fund – International Stock Index Investment Fund: match the performance of the MSCI EAFE (Europe, Australasia, Far East) Index
• L Funds – Lifecycle Funds: are professionally chosen plan, to meet the investment objectives of the client.

Guides On How to Pick Investments

• Get Schooled Up – The various investments with their risks and benefits are listed on TSP.gov website. Learning more about the different investments plan will come handy when its time for decision making.
• Set Your Goals – What and when you want to achieve your plan and dreams
• Pull the Trigger – You can change your selection plan if it's not yielding the results you desire, though it is advised not to do this frequently. 
• Don’t Set It and Forget It – Don’t pick an investment plan just to let it slide down the drain. Always review your funds every six months or at least once a year to make any needed change.

Thrift Savings Plan (TSP) Mistakes to Avoid

Your retirement solely depends on the total amount of money you were able to save when you were active. Common mistakes you must avoid.

• Not Investing During Your Rainy Days
• It is advisable to save money towards t=your retirement when you still active and can work. The only way to do this i by saving part of your income through a TSP. If you dont intend working until your last breath it is good you start saving today.
• Not Picking Your Investments
• If you fail to choose an investment plan after signing up for TSP, they will select one for you. All the money you allocated from your paycheck will be divided into two.
• Signed up before February 14, 2019, all money went into the G Fund.
• Signed up after February 14, 2019, all the money goes into the Lifecycle Fund closest to when you will turn 62.

Your invest plan remains this way until you log in to your account to make any changes. The default investment plans of TSP may not be the best option for you. it is very important to choose an investment plan that's best for you. 

Not Increasing It

As your income increases, it is advisable you also increase your retirement savings. Doing these guarantees you a quality life after retirement.

Forgetting About It

It is very important to review and adjust your investment plan every six months. If you are not reviewing or adjusting your account then its a mistake. You should not forget about your TSP so you will be able to monitor and check for errors in your account. 

Withdrawing or Borrowing Money

It is a very grave mistake to borrow money from your TSP when you know you can't pay back. When you borrow money from your TSP is just like you are already depriving yourself the quality life after retirement even before you retire.