Being in the Military holds several benefits besides the monthly pay and allowances that you receive.Â If you are serious about savings, investing and participation in the Thrift Savings Plan gives you a chance to save for your eventual retirement.Â It gives you a chance to save a little automatically every payday.
But what happens when your military career draws to a close?Â When you leave the military, what will be happening to your TSP savings plan?Â You need to have a plan of what to do with the money that will be there when you are done with military service.Â If you stay informed then the money will continue to work for you in the future.Â There are three basic options of what to do with your TSP or Thrift Savings Plan money:
Withdraw It: This is listed first and for the majority of people it is counterproductive. If you take your money out and put it in say, a checking account, you will be responsible for taxes on it.Â That is if you are under fifty-nine and a half years of age.Â Â The better option for most people is to let their money ride and continue to grow. Leave it Sitting in the TSP Plan:Â This is another option, perhaps not the best one but itâ€™s better than taking it out and putting it in a checking account.Â If you let the TSP sit, the government will continue to hold it for you, but you wonâ€™t be able to put any money in it or add to it.Â At age seventy and a half years old, if you havenâ€™t withdrawn all of it then the government takes and converts it automatically into an income annuity for life.
Take it with You.Â This option gives you the greatest flexibility. And more importantly it preserves tax benefits.Â You can roll the money over into a retirement account, such as a traditional IRA account. Many institutions that offer the traditional IRA have free services that can give you professional financial advice on the best steps to perform in this process.
Turn TSP Funds Into Guaranteed Income: You can also put your TSP account into a thrift savings plan. This will provide you with an annuity from the plan.Â The second option is to roll over the money into an income guaranteed annuity.Â Â A personal annuity can at times provide you with additional methods of structuring and controlling your income. Look closely at rates of payout, and compare private insurer rates to find the best deal.
Obtain Professional Financial Counseling.Â While a savvy investor can literally handle all the details themselves, it is a good idea to seek professional help.Â Even if you have succeeded in anticipating all the ins and outs of financial management, its is good to get a â€œfinancial checkupâ€ from time to time, just to be sure.Â Sometimes it can be the simple things that a person operating on their own overlooks, and itâ€™s the simple things that can hurt you the most.