I’m an O1-E 6 years in. And I currently contribute 20% plus the 5% match (25%) total. Am I not contributing enough? I saw the pay chart to max out the TSP for 2024 and it said like 37%.
I’m also throwing some money in mutual funds toward a house, and the rest I put into a HYSA and pull it out to go on vacations/do fun stuff, emergency fund etc.
(Debt free and net about $1800-2100 a month after deductions and budget expenses)
I’m sure I can afford to throw more at the TSP instead of having it grow in a HYSA.
Am I not investing enough into TSP???
byu/No-Landscape1438 inMilitaryFinance
Posted by No-Landscape1438
8 Comments
What are your retirement goals? Are you on track with them? If so, you are contributing enough. It is not necessary to max out the TSP to be able to retire.
Do 20% plus max your IRA and you’ll be doing golden.
Just do a budget to check yourself, it’s easy to lose surprising amounts of money stupid places if you aren’t tracking it. If you can bump up retirement contributions, do it; otherwise I’d keep building your emergency fund until it’s at a place you’re happy with. Then shift to increasing retirement savings. Fortunately, your income is gonna explode over the next few years as you make O2E and O3E (I’m an O2E and it’s great). It will be way easier to max your TSP, a Roth IRA, and live/save for other things. You’ve already got a great start if you’re debt free and contributing 20% to TSP.
It’s possible you are contributing too much. Look, if the general rule of thumb is 15%….and you’re at 25%, I think you’re not only good, you may be missing out on things in between now and retirement age of say 65. I “retired” out at 38….now I’m bridging the gap between 38 and 59.5(age you can withdraw). That’s about 20 years where I can’t touch those dollars. So, about year 15 i stopped contributing to tsp, invested heavily into a taxable account. I had a healthy down payment on a house, and now between dividends, pension and VA, I can easily navigate to traditional retirement age. By the time I get there, my investments will have grown substantially more than I need. All I’m saying is, do not dismiss the power of your potential pension. There is an actual net asset value of it.
As an O-1E, your RMC calculator says you make roughly $120k a year civilian equivalent salary before special pays. 15% of that is $18,000.
Are you contributing $18k or more?
Keep the power of compounding in mind. As you plug away you earn more and more. You could earn as much in the last five years as you did in the first 20 due to the power of compounding
I’d keep that for tsp and focus on maxing a Roth IRA with fidelity or sofi or something
Officer Pension, Disability & TSP seems like a solid retirement.