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Financial advice for retirement in the army.

black-trash-man · 2016-12-30T03:31:19+00:00

Hey brothers. I'm going to be joing the military soon and I was wondering can i get some advice on how to be financially secure for retirement....

black-trash-man

December 30, 2016

2 upvotes

/r/MGTOW

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Title	Financial advice for retirement in the army.
Author	black-trash-man
Upvotes	2
Comments	5
Date	December 30, 2016 3:31 AM UTC (9 years ago)
Subreddit	Posted in /r/MGTOW
Original Link	https://old.reddit.com/r/MGTOW/comments/5l18kf/financial_advice_for_retirement_in_the_army/
Archive Link	https://theredarchive.com/r/MGTOW/financial-advice-for-retirement-in-the-army.615107 https://theredarchive.com/post/615107

Comments

[–]DigitalScetis0 points1 point2 points 9 years ago (4 children) | Copy Link

[–][deleted] 0 points1 point2 points 9 years ago (3 children) | Copy Link

[–]DigitalScetis0 points1 point2 points 9 years ago (2 children) | Copy Link

Okay, now I have more to go on.

Depending on the service, depending on the grade, and your years in, they'll match you dollar for dollar. Now I know the Navy best, but I'm sure it's similar in every service, since they all use the TSP.

I believe the current rate is that they'll match you dollar for dollar for the first 3% of pay each pay period, and one dollar for every two for the next 2%. After that, they won't match.

There's a ceiling too. The maximum amount of money you can put in the TSP is $18,000...and that's not rank dependent. Even a vice admiral, making over six figures, is limited to $18,000/yr.

So let's say you are entering in as an E-1. The Navy chart says that a fresh recruit seaman out from Great Lakes is making about $1,566.90 gross.

This means that for every $47 you put in each month (3%), Sam will put in $47. So what you'll have put away for that month, if you decide to go 3%, is $94 (your $47, and Sam's $47).

Now, if on top of your $47, you put in another $31.34, Sam will put in $15.67 (remember, for the next 2%, Sam only contributes for every other dollar). So the total amount put away, if you decide to go for 5% of your month's pay, will be $141 (Your $78.34, and Sam's $61.66).

Now, you can put in more if you want, but Uncle Sam won't match you after the first 5%. So if you do how you want, and put in 30% of your pay into your Roth, 25% of your contribution isn't getting matched at all. They'll invest it for you, sure. But I would highly recommend against going over 5% for your Roth for a few reasons:

1) No matching funds after 5% kind of defeats the purpose of an IRA (or TSP, in your case). Part of the reason you throw money into an IRA, instead of in a bank or into investments, is the employer matching funds. Rule #1 of retirement accounts, unless you are getting 10 years out before retirement, contribute no more than your employer is willing to match. So no more that 5% (and I'd even stop at 3%, if it were me).

2) You can do everything they can do with that money, but the difference is, when they do it, they take a cut out of your yield. So when you put in your money, they'll put it in 30 year treasury bonds. That'll yield 3% when it matures. But you might get only part of what you could have gotten, had you just purchased the bonds yourself.

3) You seem young. You are going to want more liquidity if you have an option, since you don't know five years down the line if you are going to need a boatload of cash to get you out of a scrape, get in on an opportunity, deal with an emergency, or any of that. The problem with a Roth is that you can't get to it if you need it without paying a penalty. You can go to the bank and get a lot of good financial products that can offer you a modest return, plus liquidity (CDs, money markets). You can invest in bonds, however long you want, and if the worse comes to worst you can simply cash them in at face value, if they haven't matured. Stocks, especially the large, established blue chippers will pay you dividends, depending on how well the companies do.

4) A banker, a broker, or a financial planner would looooove to work with that $400/mo. (and more, once you gain ranks and bonuses). Go down to your bank or ask your friends who they are investing with. See if someone will help you invest that extra $400/mo., every month, and I can guarantee you they'll do better than that IRA will, more quickly, and with better liquidity.

So here's what I would do. You said you'd like to put away 40%?

3% in the TSP. 7% in a money market. 10% gov. bonds. 20% to my broker in civvy land USA.

[–][deleted] 0 points1 point2 points 9 years ago (1 child) | Copy Link

[–]DigitalScetis0 points1 point2 points 9 years ago (0 children) | Copy Link