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If You're In the Military, Just Do It (Fund Your IRA or TSP)

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I've discovered something over the years: If I wait until I have money to put it in my retirement account, I never do it. When I first opened an IRA (Individual Retirement Account) some 15 years ago, we barely had enough money to buy groceries. I think we started with $25 dollars a month, which seemed like a fortune, but we rapidly discovered that we could adjust our spending if it came out automatically. We raised it a little bit every year, until we were contributing the maximum amount to both IRAs every year.

Then came the fateful change. In 2007, we were looking at a challenging year. We knew that we would be moving twice within 10 months, and we were taking a big loss on a rental property. In order to remain solvent, I stopped the automatic contributions to our IRAs. "Just until we get settled," I thought. I should have known better. It has been nearly three years, and I never restarted those contributions. 

Until today.

Just a few minutes ago, I looked at our financial situation and thought, "We really should be contributing to our IRAs." I decided to start with just mine (as my husband is also saving in TSP) and logged into my account. I did the math ($5000 per year divided by 9 months remaining in 2010) and set it up to automatically transfer $555 each month. The number is daunting, and I wonder how we will manage, but we can always make a change if it gets too hard. From past experience, I know that we usually somehow manage to get by if the money comes out automatically.

And so, I challenge you. If you are not contributing to TSP (Thrift Savings Plan), set up a contribution today. (Even 1% will add up.) If you are already contributing to TSP, set up an IRA, and put something in it automatically. Chances are, you can manage the change, and you will be amazed at how the money adds up.

Kate Kashman is a military spouse, personal finance junkie, and author of The Paycheck Chronicles blog at She has four usually lovely daughters, two cats, and one husband. To read more from Kate at The Paycheck Chronicles, click here.

Read/Post Comments (10) | Recommend This Article (14)

Comments from our Foolish Readers

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  • Report this Comment On October 20, 2010, at 10:32 AM, notsoswift wrote:

    good advice for all!

  • Report this Comment On March 26, 2011, at 1:18 PM, pastreet wrote:

    Great points! Delaying investing in even small amounts can cost a great deal over time. A dollar invested today is worth much more than a few dollars invested years down the road.

  • Report this Comment On May 15, 2011, at 10:01 PM, BombDiver wrote:

    I have heard that Service members should first seek to maximize contributions to a Roth IRA to take advantage of the tax-free withdrawals. Whatever else you have left to invest can then go into TSP since those contributions lower your AGI. What are the foolish opinions?

  • Report this Comment On May 15, 2011, at 10:40 PM, rjmckeen wrote:

    I am a service member, and I started a Roth IRA the same year that I joine, 2008. I also started contributing to the TSP but have lowered the amount to 1% as I have found it is not as flexible as a Roth IRA. Maxing out the Roth has been a challenge until I deployed late last year and saw my expenses drop to zero.

    I have felt much satisfaction from putting leftover funds (after paying off debt) into commodities or a brokerage account. I would only recommend the TSP for someone who is not interested in being savvy or learning about how to take advantage of the stock market. Just my personal take!

    The bottom line is if you're debt free and investing wisely, you're winning! No matter the amount.

  • Report this Comment On August 11, 2011, at 9:27 AM, IronPriest wrote:

    I'm very new to the block. I've been investing in TSP for years now and have a small savings of about 25K saved up, which I'm proud of. I also have a Roth IRA but I put far less a month in. I feel like I'm doing alright however I can't get over the feeling I could be doing more. I looked at my quarter earnings and it was a disappointing $130 dollars...kind of lame right??? I'm usure if there is a better option out there for me other than TSP. I just bought my first stocks on my own and I'm anxious to see what happens.

  • Report this Comment On January 22, 2012, at 9:13 PM, mphillip29 wrote:

    I am working for the federal government as a civilian. I have been putting in 5% of my salary into the TSP since that is what the government will match. I am very happy with the TSP. You may not have quite the options that you do with a Roth IRA or traditional IRA, but the returns I have been getting have been overall very good. I highly suggest anyone that has access to the TSP to put in at least a little bit of money each pay check. I was only putting in $200 dollars a month into a Roth IRA since I did not think I would be able to afford more than that. Now I max out my Roth IRA. I can honestly say that it can be done and is not nearly as hard as I thought it would be. The money I have left over from my other expenses and these retirement accounts have been going into individual stocks. I know I am not getting the returns that some people are with their stocks, but I can honestly say that I am very pleased with how everything has gone.

  • Report this Comment On May 26, 2012, at 8:35 AM, Snidder wrote:

    I am truly on the fence about an IRA or a TSP. I have been in the service since 2002 and have really only relied on just getting my 20, but the recent drawdown has made me reconsider. I don't believe anything in my TSP would get matched by the government as I am not in an MOS that offers that incentive. I also enjoy researching and investing in stocks, but the TSP would be convienent and simple.

  • Report this Comment On February 03, 2013, at 11:31 AM, MUCM wrote:

    I max out both my Roth IRA and TSP yearly. I'm glad the TSP now has the Roth option. When I retire...I plan to retire period!

  • Report this Comment On December 06, 2013, at 11:35 AM, ImaNewFool wrote:

    I have a sizeable 401k built up w civilian employer while in Reserves. I am back on active duty and wondering if i should transfer the 401k into TSP.

    Any advise?

  • Report this Comment On January 09, 2014, at 9:45 AM, gageaa wrote:

    I've thought and researched a bit about TSP vs. other retirement accounts.

    Pros: TSP maintenance costs are lower than most 401k/fund costs. Investing in the TSP is convenient. There are 10 simple investment options. You can take loans from your TSP balance at a very low rate. You can invest more than in a Roth IRA.

    Cons: There is no dividend reinvestment. Your investment options are limited. You can't invest in the TSP anymore after you leave the military.

    These are just a few, but the TSP is a really good way to start and/or continue saving for retirement. Here's a YouTube video about the low expenses of the TSP:


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