BLUF: Use this free calculator to figure out what your Roth TSP will be worth based on your own information. It takes factors into account that simple compound interest calculators don’t (taxes, Active Duty vs Reservist, increasing basic pay based on rate/years of service, time from EAS until you withdraw, etc.).
A person similar to one of your high school friends enlists at 18. He plans on doing one enlistment in the military and then getting out. While at boot camp, someone convinces him he should contribute to a Roth TSP. The details are tough to understand, but after graduation, he logs onto his account one Friday afternoon. Using MyPay and TSP.gov, he sets his account up to contribute 10% of his basic pay to the C Fund in less than 5 minutes. He heads out for the night with his friends, and largely forgets about the TSP altogether.
Our friend is always thinking about getting out and telling friends and family he’s going to do it. In the meantime, one enlistment turns into two, he starts a family, and deployments start to blur into one another. For the remainder of his career, he doesn’t think much about investing, retirement, or even finances at all.
Time continues to pass, and before our friend realizes it, he hits his 20 years. Happy to be out of the military and on to his next career at only 38, he doesn’t put another dime into the TSP – or any other retirement account. He knows in the back of his head that he should probably start saving more aggressively for retirement, but his kids, house, and car seem to suck up all of his money. Also, the stock market seems to always be going up and down, making it too risky to put any money in since he’s not “good with finances”.
When he hits 60, he realizes that if he’s going to retire in the next five years, he needs to get his act together. To see what he has so far towards retirement, he logs into the TSP, hoping for a hundred thousand or so. That said, he’s afraid it might be lower because even when he was an E-7, he was only contributing a couple hundred bucks per month.
What’s the number in his account?
$2.2 Million. Tax free.
What Will Yours be Worth?
To make it easy to figure out what your TSP could be worth when you want to start withdrawing, use this free tool.
There are always reasons not to contribute to your TSP. Understand that not contributing is one of the most costly mistakes you can make. Our hope is that the story above and seeing how much yours will be worth gives you a reason to start. It’s worth it. The TSP is hands down the easiest way to become a millionaire. You can do it by contributing a few hundred a month that you never missed because it is automatically deducted. That’s it. You don’t have to work on wall street or even be remotely interested in investing to be a multimillionaire.
What would you rather worry about? What to do with $2.2 million or having a few hundred dollars extra per month?
If you want to get out…
You don’t have to do 20 to have a lot of money in your TSP. Play around with the calculator, just make sure you adjust how many years are in between when you EAS and when you’ll withdraw from the TSP.