Save Your Raise

By Ian Burgess, Command Financial Specialist

With the passing of another year, most people find it customary to make new promises towards their future. Most resolutions involve being healthier or getting out debt but all of them have one thing in common: they all eventually lapse.

This year can be different. On January 1st, all military personnel received a 3.5% pay raise. Since you previously did not rely on this money for your monthly budget, the best thing to do with it is save it for your future. And that is exactly the goal of this year's Military Saves Campaign. Visit www.militarysaves.org for information on saving and make the pledge to "Save Your Raise!"

The easiest way to save is to set up an allotment through myPay. It's good to set up an allotment to automatically save your money because it's hard to save once the money's already in your hand. But where do you put your money once you save it? The myPay website will allow you to save your money in a separate savings account or invest your money through the Thrift Savings Plan (TSP). Once you have enough saved in your emergency fund to take care of your monthly expenses for a few months, you should consider investing your money in TSP. It works exactly like a 401K, the best part is that you don't have to pay taxes on that money. Only 1 in 3 active duty personnel are currently investing in TSP but 86% of DOD civilians use this awesome investing tool. Maybe they know something we don't know?

You might think, "I can't afford to save money right now". But at this time in history, you can't afford to not save. Consider our yearly raises as a form of a government bailout. It's just up to you to figure out how to use it. You can buy more stuff each year, or you can save more money each year. I consider it my patriotic duty to save. If we average a 2.5% raise every year and you decide to save that raise every year, you will have $318,000. If you invest that money in TSP with an 8% yearly return, you'll have almost $1 million to supplement your pension in retirement.

Even if you're an E-1, you can start saving now. The 3.5% raise should work out to be $50 more a month. It doesn't sound like a lot of money but after 12 months, you'll have $600 saved in your TSP. After that first year, as an E-2 now, you'll get another raise that'll bring your total monthly saving to over $100 a month. Keep doing that every year and you'll be on the road toward a very comfortable retirement.

Every year in late February and early March, military bases around the world take part in the Military Saves Campaign. Whether you participate in the festivities or not, visit the Military Saves website and take the pledge to "Save Your Raise!"

Back To The Top

How Do I Move the Money Around in My TSP Account?

By Miriam Darden Settles, CFP, Federal Retirement Thrift Investment Board

Right now, the money in your TSP account is invested in one or more of the individual Funds (G, F, C, S, and I) and/or an L (Lifecycle) Fund. At some point, you may want to change how that money is distributed among those funds. You can tell us by completing an interfund transfer, or IFT.

An IFT allows you to redistribute all or part of your existing TSP account among the different TSP funds. An IFT does not affect the investment of future deposits into your TSP account. To direct new money coming into your account, you would have to do a different transaction, called a Contribution Allocation. For more information, go to the TSP website at www.tsp.gov.

Making your IFT decision
Before you decide how to redistribute the money that is already in your account, go to the TSP website where you'll find information about TSP fund options, risks, past performance, and expenses.

You can also refer to the July, August, and October issues of the Military Saves newsletter. You can find the newsletters at www.militarysaves.org. The TSP articles included in those issues address topics that will be helpful to you, such as "How Do I Compare the Different TSP Funds to Determine Which Ones Are Right for Me?"

Interfund Transfer Limits
You can make an IFT whenever you want, but there are some important limitations:

• Your first two IFTs of any calendar month may redistribute money in your account among any or all of the TSP funds, including moving your entire balance into the Government Securities Investment (G) Fund.
• Subsequent IFTs in the same calendar month can only move money into the G Fund.

If you have both a uniformed services account and a civilian account, these rules apply to each account separately. Be aware that your IFT counts in the calendar month we process it, not in the month you submit it.

How to make an IFT
There are several ways that you can make an IFT. The easiest and fastest options are to:

• Go to the Account Access section of the TSP website. You will need your account number (or User ID) and your 8-digit password.
• Call the ThriftLine. You will need your TSP account number and your 4-digit Personal Identification Number (PIN) to use the automated service or you can choose to have a participant service representative help you.

You can also request Form TSP-U-50, Investment Allocation, from your service. Complete this form and submit it to the TSP. This form is not available on the TSP website.

When do IFTs take effect?
IFTs made on the TSP website or the ThriftLine by 12 noon Eastern time are generally processed at the close of business on that day. Requests made after 12 noon Eastern time will ordinarily be processed at the close of business on the next business day.

An IFT made by submitting Form TSP-U-50, Investment Allocation, will generally take effect within 5 business days from the date the TSP receives the form.

You will receive a confirmation of your IFT in the mail. If you make your request on the TSP website, you will have the option of receiving your confirmation via e-mail.

Next Month: Why are Administrative Expenses So Important?

Back To The Top