The Thrift Savings Plan and Good Finances

  • Published
  • By Senior Airman Sean D. Smith
  • Minot Air Force Base Public Affairs
MINOT AIR FORCE BASE, N.D. --  Saving for retirement is one of the cornerstones of a responsible approach to personal finance, and it's never too early to start. In fact, the benefits of starting early are profound when factored into the long-term effects of compound interest. Just a few years of delay early in life can make a difference of hundreds of thousands of dollars down the line.

The Thrift Savings Plan offered to government employees boasts the same services and performances as target retirement accounts and plans offered by commercial brokerage services, but with much lower expense ratios.

The Airman and Family Readiness Center will offer a TSP Overview class during wingman week that will aim to give an evenhanded summary of how the TSP can be used to build wealth.

"In the overview, we discuss ways to protect ourselves from risk," said Cheryl Vedvig, 5th Force Support Squadron community readiness consultant. "We talk about the five TSP funds, we talk about the risks, returns and rewards of investing."

The overview will explain what expense ratios are, and why it's so important to have competitive ones.

"We'll cover the five basic funds, then we're going to talk about the life cycle fund," Vedvig said. "You've got choices between the bond funds, which are less risk, and the stock funds, and we'll go into detail on what's right in different situations."

She explained that saving can be a difficult habit to form, but it's the first step toward building a financial cushion that can dramatically increase quality of life.

"With retirement saving, the key is to make the contributions automatic, because it's much more difficult to consciously make that decision on a regular basis," Vedvig said. "Once it's become habitual to save 10 or 15 percent of total pay, people no longer miss that money, and their futures become more secure as time goes by without them having to lift a finger."

With interest rates at all-time lows, money in the bank is actually losing value as inflation occurs.

"To get a meaningful return, savings have to be invested," Vedvig said. "Everyone has a different level of risk tolerance, but there are different investment solutions, and the TSP offers something for everyone."