In October 2021, a Coast Guard warrant officer hit a major milestone: He crossed the $1 million mark in his Thrift Saving Plan.

Since then, his TSP balance has been up and down because of the vicissitudes of the stock market, but that hasn’t deterred him. “My advice to anyone who is worried about the markets is just to ignore them and leave everything alone,” said Steve, who asked that his last name not be used.

“You’re planning for the long game, 40 years or so. Over that time period there will be many ups and downs.”

Steve, 44, has been investing in his TSP since it first became available to service members in late 2001, when he was an E-5.

“Time is the secret, really,” Steve said.

The Federal Retirement Thrift Investment Board couldn’t provide information on how many military members have reached the $1 million mark in their TSP accounts. But there likely aren’t many, since service members have only been able to contribute to TSP since 2001, and the vast majority of that time was without matching funds from the Defense Department.

When Steve hit the $1 million mark in October 2021, there were 98,523 TSP millionaires overall, but that includes all the federal workers in the TSP program, as well as military members. Those millionaires averaged 28 years of contributions. Steve hit the mark in his 20th full year in the plan.

“I don’t think you’ll find a lot of TSP millionaires on the military side, because it took a lot of work to get there,” he said.

There are likely few who, like him accumulated most of their balance while enlisted, with a few years as a CWO, without rolling any funds in from an IRA or outside 401k.

“Dollar-cost averaging will be the winner in the long run, or at least it has been for me,” he said.

Dollar-cost averaging means putting money into the investments on a regular basis over time, as you do with the TSP, the government’s equivalent of a 401k retirement plan. Let’s say you’re investing $100 a month. You buy more shares of stocks with that $100 when the price is low and fewer shares when the stock price is high.

But there are likely others who are millionaires because they’ve been piling up savings and investments outside the TSP, too. In addition to his TSP, Steve has about $200,000 in an IRA account, which he used to begin saving in 1995, before TSP became available.

The TSP landscape changed with the military’s Blended Retirement System, or BRS, in which DoD now matches up to 5% of TSP contributions. That means those contributing at least 5% of basic pay are, in essence, contributing 10% to their retirement. All those coming into the military as of Jan. 1, 2018, are automatically enrolled in BRS, as well as certain others who converted to BRS from the legacy retirement system before the 2018 deadline.

As of April, there were 1.1 million BRS participants in the TSP; with an average balance of $9,893, according to the TSP board. There were 1.3 million non-BRS military members with TSP accounts, with an average balance of $36,355. (Of those, 638,000 had left the service but still have accounts.)

“These kids coming in now, they have the match. They could have $2 million, $3 million, $4 million by the time they retire at age 50,” Steve said.

He’s in the legacy retirement system, which pays out more in retirement, but there is no government match to his TSP account. He’s done it all on his own.

As of October 2020 there’s a default 5% contribution rate for federal workers automatically enrolled in the TSP, including BRS members. If service members don’t want to contribute that much, they have to take action to decrease it. But decreasing contributions below 5% means you’re leaving money on the table — the free money coming with the 5% DoD match.

The vast majority of troops are getting that full match:

Troops contributing at least 5% to get the full TSP matchAs of April, 2022Increase over previous April
Active duty in BRS78.7%+8 percentage points
Ready Reserve in BRS70.9%+12 percentage points
Source: Federal Retirement Thrift Investment Board

‘I paid myself first’

Steve has long encouraged other service members to start investing early in their TSP. “I’m a big proponent of the TSP, to the point where the crew hates standing watch with me because they get four hours of TSP talk, whether they want it or not,” he said.

Each year in December, he increased his TSP contribution by whatever the pay raise was for the following calendar year. And when he got promoted, before the pay raise showed up in his paycheck, he bumped up his contribution by that amount.

“Ultimately the goal was to get as much in as I could, but to never feel it. So, I always made sure that I upped everything before my pay raise took effect, because once you get that money in your pocket, you don’t want to give it back.”

He also contributed as much of special pays and incentive pays that he could within the IRS limits. He’s gotten two reenlistment bonuses, and was able to put most of those into his TSP. “If service members can get those big bonuses into their TSP right off the bat, they’re just setting themselves up for success,” he said.

“I made sure during my entire career that I paid myself first, making that TSP contribution first, before anything else.”

Financial experts agree. “One of the best ways to save for retirement is saving over a long time, and to continue, even if you start small,” said Gerri Walsh, president of the FINRA Investor Education Foundation. “Start small and dream big, because as those contributions accumulate and compound and are matched, there are opportunities for growth.”

Dealing with volatility

Many people wonder, in this time of stock market craziness, whether they should take some action with their investments. “The most important thing is sometimes the hardest thing to do, and that is to step back, take a deep breath, and look rationally at what you have and what your balance sheet looks like for your family,” said Walsh.

“Use that to help guide your choices for working on your goals. … Taking the long-term view will help you ride market volatility from time to time. It can be really uncomfortable when the roller coaster is pointing down. But it’s very difficult to time the market,” she said. If you’re out of the market when it recovers, by the time you get back in, you may actually be purchasing the same basket of investments at a higher price.

For military members, who are decades away from leaving the work force, what happens year to year and month to month doesn’t really matter,” said JJ Montanaro, a certified financial planner who is relationship director in the Military Affairs Division at USAA. Rather than take any major actions now, he said, “use this as an opportunity to do a self-assessment.”

“It’s easy to be a bull and be aggressive when things are going well, as they have mostly for the last 14 years.

“If your portfolio isn’t allowing you to sleep at night these days, then maybe make an adjustment to your long-term strategy. But don’t take any action based on short-term news and market advice,” he said.

Steve’s personal strategy has been to invest in various funds in the TSP, but he’s stayed completely out of international funds, he said.

Another issue is that some military families are experiencing financial struggles in these difficult economic times, and may consider taking money out of the TSP.

But beware. Not only will it mean consequences to your retirement stash down the road, you’ll also have to pay taxes. There’s a way to make a hardship withdrawal from your TSP, but consider other options, such as a loan. You can’t put the money back into your TSP if you withdraw it, Walsh said. Taking a loan from your TSP is another possibility, allowing you to put the money back in as you repay the loan. But shop around for other options, she said. There may be a lower interest rate from a commercial lender. Or check with your military relief society to see if your particular financial situation might qualify for a no-interest loan.

It might make sense to adjust the amount you’re contributing. “If you’re contributing to your TSP at a high level, but your family is going into debt because of rising costs or other considerations —perhaps because a spouse has lost a job — that is the time to think about whether you can cut back on the amount you are contributing, while continuing to contribute,” Walsh said.

Key factor for family’s well-being

One aspect of his career definitely helped his family’s finances, though it didn’t come without sacrifice.

He has been in the same area for his entire career. That enabled his wife to continue to build her career in the federal government, and they’ve been paying down their mortgage balance for 20 years. Their son hasn’t had to change schools, and they’ve always lived in the same town.

“Ultimately there was a price to pay,” he said. “I’ve taken uncomfortable jobs, I’ve gone overseas. I’ve had four sea tours. … It’s a challenge. I’ve been fortunate being able to stay here. I know plenty of guys who wanted to stay and couldn’t because the detailer had other plans.”

But the real key to his success goes back to his parents. When he enlisted at the age of 18, they encouraged him to start saving to accumulate six months of salary, “in case something happens,” he said.

“Then it’s like a drug. I got addicted to saving.” He owes his parents for that advice and encouragement, he said. “What I owe them is, I’ll retire in four years, and I’ll go back to work if I want.

“Or I won’t work at all.”

Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.

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