USS Enterprise (CVN 65)
The Shuttle Newsletter Edition
“We are Legend”
October 9, 2012 Issue
Thrift Savings Plan: Financial Planning for the Future Story by Mass Communication Specialist 3rd Class (SW) Britney Epps USS ENTERPRISE, At Sea (NNS) – Sailors aboard aircraft carrier USS Enterprise (CVN 65) each have a way of saving money. Some of these methods are provided via the Navy and are designed to help service members prepare for retirement. One of these methods, the Thrift Savings Plan, is introduced to all new Sailors at the beginning of their careers. Despite this early introduction, not all Sailors are clear on the structure and benefits of the program. Essentially, TSP is a retirement savings plan similar to the 401(k) plans offered to those in the civilian sector. This plan entails automatic payroll deductions, tax treatments for contributions and a variety of withdrawal options. “I believe it gives all Sailors a convenient method to set aside money for retirement before it gets into their checking account to be spent on other things,” said Senior Chief Electronics Technician Anthony Burton, Enterprise’s command financial specialist. “It also gets them into investing for retirement. Investing is kind of like working out, it is hard to start, but once you start seeing the returns, you feel a lot better about it and want to continue.” Participating in TSP is easy. Once you enroll, an account is created in your name and you become a participant. “(The money you contribute) is invested in the stock market, the bond market, or both (depending on which funds you are investing in),” said Burton. “It will follow those markets, but remember that you only lose money if you sell the stocks while they are down. There is still risk involved and past performance is not a guarantee of what will happen in the future.” Contributions and sign up can be established by filling out a simple form (TSP-U-1, uniformed services) either hard copy or electronically through MyPay. When your account is completed, TSP will mail you a welcome package with your account number, TSP information, instructions, a web password for internet access to your account and a personal identification number (PIN). When first enrolling all contributions are deposited into the Government Securities Investment (G) Fund. The G Fund is a short-term fund invested in U.S. Treasury Securities. It gives members an opportunity to earn rates with
no risk of loss. There are several additional funds members can allocate their monies to as well. These funds include the Lifecycle Fund (L) designated to members who may not have time, experience or interest in managing their retirement savings, the Fixed Income Index Fund (F), the Common Stock Index Fund (C), the Small Capitalization Stock Index Fund (S) and the International Stock Index Investment Fund (I). Each of these funds has associated benefits and risks. Sailors are advised to look at each closely and seek advice prior to choosing the fund that best suits them. According to Burton, when thinking about making investments you should consider how you want to invest your money and the TSP investments available to you. “Realize that when you retire, there are multiple options you have with TSP,” said Burton. “First, you can leave it where it is but make no more contributions to it. Second, you can transfer it to an IRA (either traditional or Roth depending on which accounts you have at the time) that you open at a bank or investment firm of your choice. Third, if your new company allows you to, you could transfer it to the retirement plan associated with that company. Remember these options are available whether you retire from the Navy or get out after four years.” Two tax treatment options for TSP are traditional (deductions are made before taxes are withheld) and Roth (deductions are made after taxes), however, both can be elected. After you determine your contributions, file a contribution allocation to tell TSP how to invest the money you put into your account in the future. Although Sailors can choose to invest their money in any of several funds, some funds may be risky and will require time and attention to ensure they get the best savings possible. Burton also points out that TSP is a savings option and, while important, should not be a Sailor’s first priority. “Pay yourself first,” said Burton. “Whether it is putting aside 3-6 months of living expenses for a rainy day, investing in your children’s college fund, or investing for your retirement, you must ensure that you are looking ahead to the future and setting yourself up for success.”