Armed Forces | Freeman Capital

The changes in your retirement that you

might be missing.

The military estimates that the net present value of its pension at retirement is around $200,000 for an enlisted soldier and $700,000 for an officer.

All-in-One TSP & Your Retirement - The Good News

Starting Sep 15, 2019, the TSP will become, shall we say, more typical and normal, allowing similar flexibility as any other 401K. 

Before this change, the TSP only allowed 2 withdrawals – the first when separated (retired) and the second was the final one where you had to withdraw your balance. 

Now you can take multiple post-separation withdrawals, up to one every 30 days. You can even take partial withdrawals while receiving monthly installment payments for income.

If you’re separated or retired, you’ll be able to take monthly, quarterly, or annual payments. Previously, you were only given a monthly payment option.

How much will I get when I retire?

At 20 years most retirees will receive 50% of their base pay which would equal the following amounts:

E-7 Monthly:


E-7 Annually:


 O-5 Monthly:


Will your money be taxed?

Yes, a veteran’s military retirement pay is subject to federal income tax. The amount of federal tax deducted from a veteran’s retirement pay each month is based on the number of exemptions indicated on the veteran’s W-4 after retirement.

This year most military retirees got a 2.8 percent increase to their retired pay starting on Jan 1, 2019. What a better time to structure your life with a strong foundation with an IRA and here’s the way.

Traditional and Roth IRAs

You can contribute up to $5,500 per year to a Roth IRA or make a non-deductible contribution to an IRA in addition to your TSP. The investment accounts are independent of the military and carry some great tax benefits. But more on the limits and tax benefits later.

If you’re married, your spouse can also contribute to his or her own IRA (and employer-sponsored retirement accounts, if offered). If he or she doesn’t work, you can contribute up to $5,500 per year to a Spousal IRA in his or her name.

Taxable Brokerage Accounts

You can invest additional money in a taxable brokerage account and get the most flexibility because there’s no penalty for withdrawing money before a certain age. Most importantly, you can count on no limit to how much you can invest each year. Be careful on who and how you choose.

You could manage your own investments, but it’s not easy to find reliable information or try to become Warren Buffet overnight. You have to think about your career, family, and lifestyle. Make sure that whatever you choose, you take these six things into consideration:

  1. Reasonable fees
  2. Reasonable allocation 
  3. Your PCS 
  4. Your debt and other responsibilities
  5. Technology
  6. Roboadvisors – They offer something in between the DIY and the one-size-fits-all approach. You still have to provide the answers to the calculators, but they can do a lot of the heavy lifting on your behalf.
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