Neglected Military TSP; Still Plenty of Time to Invest?

[maui21ice]

I spent 4 years active duty in the military, and am currently in the reserves. I had never contributed to or even opened a TSP account while I was in the military. Now with a federal civilian job I'm all gung-ho about it. I'm only 27 years old, with a very promising 30 more years of employment to go I believe.

My question is, "did I shoot myself in the foot not contributing from age 23-26 while in the military, or won't it make that much of a difference as long as my contributions (+agency matching contributions now) from here on out til retirement are consistant?"

[dppecorajr]

Over the years it will make a huge difference in how much your TSP would have grown just because of compounding alone. The question, did you shoot yourself in the foot? Not really. It would have been great to have been contributing over the years especially with this years breakout returns. But your still young enough where you will be more than fine in the long run. Especially since you seem to be in the extreme minority regarding people who actually pay attention to their TSP.

Remember, you get up to $17,500. Take advantage now while your young instead of trying to catch up later. Using the advice people post on this board and being smart about your money, there will not be any reason to worry about your personal fiscal situation come time to retire.

Good luck!

[crondanet5]

The second part of your question is would you have invested your TSP account in those 4 years wisely or stuck in the G Fund? You're on the best site for the TSP program, watch the leaders and place your IFTs according to your risk tolerance. Think of it this way: if you end up with only $170,000 in your account that would equal 15 years of $1,000 a month withdrawals. Add more than that and your retirement years look better and better.

[Navig8tor]

..."did I shoot myself in the foot not contributing from age 23-26 while in the military, or won't it make that much of a difference as long as my contributions (+agency matching contributions now) from here on out til retirement are consistent?"

Did you shoot yourself in the foot by not investing in the TSP during four years of active duty? If you're talking strictly lower enlisted or junior officer time with no overseas deployments to combat designated zones...probably not. In all honestly, unless you were a single-living-in-the barracks-three-hots-and-a-cot-on-the-base-and-didn't-own-a-car kinda guy, you really wouldn't have been able to contribute a great deal of money with earnings coming from the lower end of the pay scale. Even if you fully funded a ROTH IRA at $5500/yr it would have cost you $458/month. Look at it this way: Had you invested $5500 for four years and earned 10% each year, you'd be sitting on $38,000...or about the price of decent new car. At $200/month and 10% earnings you wouldn't even hit $15K in four years.

On the other hand, yeah, you should have started putting SOME money away. I tell my folks when they are just starting off, "Drop $100/month into your investments...you won't even miss it." Typical response I get, "$100 is a LOT OF MONEY nd I'm 18 years old...why should I care what happens when I'm 65?"

My situation: I didn't start investing until I was at the 18-year mark in the military. I'm at the 28-year mark now. I kick myself in the butt every day for not listening to my dad who told me to start at Day #1. I waited until the bills were paid, the kids are almost grown and I was at the top of the food chain. Since I'm fully funding my TSP account, a ROTH IRA and a third taxable account, I've amassed a pretty good chunk of change. If I stay on my current contribution pace and annual return percentage, I'll hit my 7-digit number in 5 years, or 3 years after I retire from the military. Had I listened to my Old Man...I'd have hit that number several years ago and I wouldn't be investing 50% of my salary right now. However, hindsight is 20-20 and there's more than one way to skin a cat.

You're still young enough that worrying over what you didn't invest the previous four years isn't even worth fretting over. You get into a bind when you don't start until you're in your 40's and 50's. The important thing is that you recognized the fact that it's time to get started. Get it going now and put in what you can afford to put in while not forgetting to LIVE YOUR LIFE. 30 years from now you'll look back and be much happier with your financial planning while you're heading out to buy that lake-front property in your retirement years.

Stay safe behind the walls!!

1/*

[maui21ice]

That sounds good and I know it's mainly a lesson learned for the future and something I can pass on to others. I was always good with saving money and not blowing it on things while in the dorms on Active Duty. (Yes I was junior enlisted and no deployments). Instead I just left the money in my bank savings account instead which like you said, I could have earned more $$ in TSP.

Overall, I'm glad that I got into civilian federal employment so soon after my Separation and dove into these funds as early as possible. I've started a separate aggressive Roth IRA through USAA as well with monthly contributions so hopefully that and the TSP together will take off over the next...30 years of my employment here.

[crondanet5]

Consider establishing an "after tax" investment program so you can leave your ROTH and TSP/401k programs untouched until you must begin making withdrawals or pay a hefty penalty for not doing so. There are fascinating investment avenues to try, and the returns can be excellent. And the fact it is after tax dollars means you can access the money immediately, or re-invest for further gains. Good luck with your career and make your retirement/investment contributions the first thing you take out of your paychecks.

[maui21ice]

Yes that's one thing I really jumped onto this year. Retirement funds. I did not get my Federal job and my TSP account opened until just October, but I had a Roth IRA opened with my bank that I contribute $50 to automatically the middle of the month. I wanted to mix it up a bit and make the IRA through USAA a roth one, and then my TSP is a Traditional Account.

[bgbearnavy]

I served for 25 years, and NEVER had any money for the TSP... If they even had that option while I was in... But, I do have my PENSION!!!! Cha-ching and a VA Disability rating of 70% to boot...

[DR650SE]

So I've been in the Reserves for 13 years. I just recently started contributing the TSP at age 33. I plan to stay in until the reserves forcibly removes me, or I can no longer be an asset to the army. However, since I haven't been contributing the TSP for my first 12 years, I missed the ability to contribute over 3 deployments. It's a lesson I learned and try to pass on to every new soldier I get now days.

With my 13 years I have 11 good years for retirement. Reason being I took a contract overseas to Iraq for 13 months and missed the requirements to have those as good years. The second year was close and I'm kicking myself for not paying more attention to my drills/points that year. At least when I worked as a contractor, they had automatically enrolled me in their 401K for a small portion and I saved a little that way. That I plan to roll over to my civilian TSP soon. It's about $7K, so nothing huge.

On top of that I at least have a 10% VA disability rating. It wasn't until I became a fed employee that I started reading about the TSP and getting interested in it.

Now I'm also contributing 5% of my reserve drill pay to the TSP, and hopefully that will increase when I get deployed.

I was always intimidated with financial stuff because I knew so little about it. Still do really but less intimidated.

However I was always fairly financially responsible. Never went into unnecessary debt. I have no credit card debt. And in 3-4 years will have my student loans paid off, and car paid. Only debts I have are student loans, car, and house. Never missed a payment or lived outside my means. But soon I plan to do some investing outside the TSP as soon as I learn more about it. Maybe through USAA. This place has been great and I'm glad I found it and plan to ask tons of questions!