Posted on Dec 24, 2015
Do You Want to Know the Value of the TSP at Military Retirement and at Age 59 1/2?
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I figured many folks will appreciate the number crunching:
The Defense Department said service members enrolled in the revised TSP would initially receive matching contributions of 1 percent of his or her basic pay. They would be fully vested after two years of service and eligible for additional matching contributions of up to 5 percent after four years of service. The maximum annual contribution is $1500/month. I will provide an analysis of its worth upon the age of 59 1/2 later. One has to crunch the numbers to see the limitations and benefits of this program.
The funds 10 years average rate of returns are G 3.19%, F 4.89%, C 7.72%, S 9.44%, I 4.58%.
Some assumptions recruit is 18 and retires at 38. He/she contributes full amount of $1500/month and stops adding money to the TSP at 38 for retirement. 7.72% will be used. The military matches 5% of the investment This is a traditional IRA and is subject to tax upon withdrawal. From the age of 38-60, there will be no more contributions.
At 38 the value of the fund is $563,332
At 60 the value of the fund is $1,375,056
I want to note the C, S, I funds lost almost 40% in 2008. Most of the burden of funding the TSP falls on the SM.
The Defense Department said service members enrolled in the revised TSP would initially receive matching contributions of 1 percent of his or her basic pay. They would be fully vested after two years of service and eligible for additional matching contributions of up to 5 percent after four years of service. The maximum annual contribution is $1500/month. I will provide an analysis of its worth upon the age of 59 1/2 later. One has to crunch the numbers to see the limitations and benefits of this program.
The funds 10 years average rate of returns are G 3.19%, F 4.89%, C 7.72%, S 9.44%, I 4.58%.
Some assumptions recruit is 18 and retires at 38. He/she contributes full amount of $1500/month and stops adding money to the TSP at 38 for retirement. 7.72% will be used. The military matches 5% of the investment This is a traditional IRA and is subject to tax upon withdrawal. From the age of 38-60, there will be no more contributions.
At 38 the value of the fund is $563,332
At 60 the value of the fund is $1,375,056
I want to note the C, S, I funds lost almost 40% in 2008. Most of the burden of funding the TSP falls on the SM.
Posted in these groups: 
Retirement
TSP
Retirement TSP
Edited 9 y ago
Posted 9 y ago
Responses: 2
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An unrealistic assumption is an enlisted SM starts investing $1500/month starting on the fifth year of the career.
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That doesn't make any sense. If I put in $1500/month for 20 years, I'll have 360,000 even with no matching and no rate of return. Did you mean $1500/year?
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MCPO Roger Collins
Is there anyone that has retired at the age of 38 actually achieved that number? I will standby for all the answers in the affirmative.
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MCPO Roger Collins
No takers? I wonder why not. If TSP had been available when I was AD, I would have jumped all over it. Basically, the concept is what I used after retirement to accumulate most of the wealth that I have today. Any time some offers to match your savings, jump on it! However, I do believe the numbers cited in the original post are somewhat exaggerated and unrealistic.
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Maj Justin Walworth
I was fortunate enough to get both...TSP without match and an early retirement at 16 years. I saved 20% of my gross from college and it's the best decision ever. I think the biggest problem with the all TSP option is that the majority of Americans choose to spend rather than save. I survived the dot com bubble and recession without selling, but those were lonely times. A lot of people make poor financial decisions. Millions own an iPhone but only a small percentage will invest in companies like Apple. This is why we have a growing wealth gap...free will. It time we start teaching the next generation to invest or they're doomed to work themselves to death.
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Lt Col John Tringali
I see the problem as a bad 401K... Your Personal Rate of Return *Last 12 Months
– 0.14%
That's my TSP. Fortunately, I had a real retirement which had a rate of return equivalent of $2M over 20 years. Also, I'm drawing on it at 42 instead of 59 1/2. Time is also money.
– 0.14%
That's my TSP. Fortunately, I had a real retirement which had a rate of return equivalent of $2M over 20 years. Also, I'm drawing on it at 42 instead of 59 1/2. Time is also money.
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