Which TSP plan?

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Q. I have six years in the Navy. I understand I can pay back/down those years for maximum retirement benefit. I’m 48 years old, have no savings and started this job to get on with planning for the future. I am a GS-7, step 1. I’m planning on contributing at least 5 percent a month of my pay, and I understand the Veterans Affairs Department will match 4 percent. I’d like to retire at 62ish.

Here is a copy of my latest leave and earnings statement:

———————————————————————-

Pay Period: 12-22                       Name: ALLEN, TROY J

Gross Pay                   1,586.40

Federal Tax Amt Withheld                179.76

Medicare Amt Withheld                    23.00

OASDI Tax Amt Withheld                   66.63

FEGLI Basic Deduction                     6.60

Retirement Ded                           12.69

Union Dues-1 Deduction                   17.00

TSP Gsf Emp Ded                          47.59

Net Pay                     1,233.13


What TSP plan I should go with?

A. Mike: If you’re not sure what else to do, you might want to consider using the TSP L Fund that most closely corresponds to your life expectancy.

Reg: Yes, you can make a deposit to get credit for your active-duty service and have it used to determine your total years of civilian service and in your annuity computation when you retire. You could do that and get an unreduced annuity at age 62. The formula used would be: .01 x your highest three consecutive years of average basic pay x your years and full months of service (combined actual and active-duty military for which you’ve made a deposit.)

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  1. 48 years old, no savings and wishing to retire at 62ish? You’re starting a bit late so I suggest you bump that 5% to 15-25+% or higher or as much as your budget and income allows. The amount or percentage of income you contribute is as important as which L fund you use. Consider the L2040 as a default starting point.

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