Hello everyone, I am shipping off to Navy boot camp here in September and have been doing a lot of research/mulling over the possibilities of retiring early in the military. I am very determined to be aggressive with contributing to my retirement accounts and living a frugal lifestyle due to the fact that I’ll have my basic needs met while I’m in.
With that being said, in my research of looking over the possibilities of retiring early there appears to be struggle, in which, you have an adequate amount of money in your TSP/Roth TSP to retire early, however, you are too young to withdraw your earnings without incurring penalties.
This led me to think about a different strategy involving maxing out my Roth IRA, only contributing to the TSP for the 5% match and then contributing a large portion of my paycheck towards a taxable brokerage (fidelity) and building a “retirement” fund that way in order not to be subject to the age regulations in the traditional/roth tsp.
I’m currently 19 and signed for 6 years. My plan would be to hopefully save 50% or more of my paycheck towards maxing my Roth IRA each year, contributing to TSP for 5% match, and contributing the leftovers towards the taxable brokerage. The reason I ask if this is a dumb idea is because I know it goes against the grain of traditional way of investing for retirement in fed/military work.
(Which is to contribute way more to your Roth/traditional tsp)
If I do make the military a career I would get out after my first enlistment, go to college with GI bill and hopefully live with parents so I could pocket the BAH and heavily bulk up my savings, and then commission as an officer through ROTC or OCS as the pension is so much more valuable. I would continue to be frugal and aggressive in investing. Retire at like 42/43 and live off pension/built up taxable brokerage/disability and then tap into Roth IRA at 59.5.
Conversely I could hate the military and never want to go back and this whole line of thought would be nullified.
Sorry for long post I just have a lot running through my head.
Is this a stupid idea/line of thought?
byu/Sneezing-Narwhal inMilitaryFinance
Posted by Sneezing-Narwhal
2 Comments
There are a variety of ways to withdraw early from the TSP if necessary. These include Roth Conversion Ladder, transferring Roth TSP to an IRA and withdrawing contributions only, Substantially Equal Periodic Payments, and more.
Maxing your IRA before your TSP is a very common strategy.
1. Match 5%
2. Max a non tsp roth IRA
3. You’re young; start a brokerage and add money into index funds for life expenses