Thrift Savings Plan: Investing in Your Financial Future

Posted on April 17, 2013 by | Leave a comment

By Stacy Livingstone-Hoyte

Just a few decades ago many working Americans retired with the benefits of a pension plan and held a steadfast confidence in the viability of the nation’s social security system and other entitlement programs.

Today, the opposite is true; the burden of funding one’s retirement lies predominantly with individuals and overall confidence about retirement readiness remains at historic lows.  This can add an additional stressor in life but a little advanced planning can help put things in perspective.

The Thrift Savings Plan (TSP) for uniformed service members and federal civilian employees serves as one means to overcoming the burden and uncertainly of what lies ahead for our economic futures.

Here are a few things to consider about the Federal Thrift Savings Plan:

1.  Enrollment and contribution selection
TSP uniformed service participants are afforded a very simple enrollment process using the respective service’s automated system (https://mypay.dfas.mil). Check with your agency payroll department to determine how to enroll in the TSP.

TSP participants can make traditional (pre-tax) or Roth (after tax) contributions to their account. Pre-taxed contributions lower the amount of income subject to federal taxes. After tax contributions will lower the amount of take home pay and provide no tax deductions.   The decision about which contribution option is best is fundamentally a tax decision/question – Where will the greater advantage lie? Deferring to pay taxes on TSP contributions and earnings until withdrawal conditions are met? (traditional) Or dealing with the tax burden at today’s tax rates (Roth)?  Consider this: can you make reasonable projections about your future tax rates in retirement? Many people project lower income and therefore reduced tax rates in retirement.  However, If you project higher tax rates in retirement, then Roth contributions may provide the best benefit as you would pay a lower current tax rate. Do you prefer to have less of your contributions siphoned off to pay taxes and instead promote account growth? Then, traditional contributions may be more financially appealing. Finally, consider having a mix of both pre-tax and after tax contributions as an opportunity to diversify your retirement holdings and reap the benefits of both options. Speaking with a tax advisor, qualified financial services representative or military financial counselor can help sort out the details. Additionally, the TSP contribution calculator (www.tsp.gov) is also available as a reference tool.

2.  Fund Selection
Cost, diversification and access are some of the foremost issues that every investor must address when considering the investment options best suited for their goals.  Cost is where the TSP shines with an overall expense ratio that is far less expensive than private 401k plans. Enjoying greater investment returns because of lower expenses is the prized pursuit of every serious investor.

Furthermore, the simplicity of fund selection among TSP’s well diversified investment options (five core funds and five lifecycle funds) reduces the complexity of fund selection in our highly sophisticated marketplace. TSP funds provides access to the US equity and bond markets (C,S, and F Fund), provides exposure to global markets (I fund) and also offers the security of US treasuries specially designed and only offered to TSP account holders (G fund). Investors can opt to create their desired investment mix from these five core funds (G, F, C,S , I funds) or  select a predetermined and professionally designed asset allocation mix by using a lifecycle or target date fund which rebalances automatically (the “set it and forget it” approach).

3.  So why bother placing your hard earned dollars in the TSP?
While I recognize that retirement planning cannot be done in a vacuum because of competing priorities (limited paychecks, seemingly unlimited wants vs. needs, living expenses, debt payments and other life goals) -  increased life spans and less reliance on government programs are just a few of the prevailing factors that make retirement planning today an urgency.  Simply put – TSP is a direct investment in your financial future over which you can have a great degree of control.  Time is your greatest ally when planning for your financial future, so start today if you would like to enjoy the fruits of your labor for many years to come.

4.  First things first; back to basics.
Before you commit dollars to a retirement fund, ensure that you have spent time creating or reviewing your current spending plan, eliminate high interest rate debt and maintain a safety net of liquid funds for financial emergencies (at least three months worth of living expenses and debt payments). Doing this will ensure that you are not saddled with overwhelming debt, lack savings and truly have the wherewithal to save for retirement.

About the author:
Stacy Livingstone-Hoyte, AFC™ has served at the Fleet & Family Support Center, Millington, TN as a Financial Counselor since Nov 2009. She conducts one-on-one sessions, Command training, group workshops and other efforts designed to meet the “Mission Readiness” goal of the U.S. Armed Forces.  Her extensive contributions to our blog include tips for year round financial stability: It’s time to start budgeting for the holidays! Get Your Financial Bearing by Setting a Budget   Declare Financial Independence in 2013

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Navy Chaplains: A Community Dedicated to Building a Sense of Belonging and Fellowship

Posted on April 8, 2013 by | Leave a comment

Predictability, Relationships and Meaning are Principles of Stress Control and Resilience. Chapels are familiar gathering places for many military kids and they can provide a safe place to meet others faced with the similar challenges of household moves and deployed parents. Navy Chaplains are a great family resource because they understand the stressors of military life and know how important community is to building a stronger and more resilient Navy.                                                                                                     (NavyNavStress.com Note)

By Cmdr. William E. Middleton, a Navy chaplain
Military kids serve alongside their uniformed parents and our role as chaplains includes addressing their needs as well.  Our shore based chapels often function as a community center where child focused activities include religious education, rites of baptism and communion, and sacraments from various religious traditions. Chaplains also offer chapel space for Scouting programs, home school groups, Vacation Bible School programs and other community organizations in installations around the world.  For newly transferred families, a military chapel can be a place to start building that important sense of belonging, of community and fellowship.

While our religious services and programs are very important to our service members and their families, the chapel provides a familiar and safe place for kids to connect with other military kids.  As chaplainSailor and family for Chaplain Posts we know how important maintaining contact can be and we help families keep in touch through the United Through Reading.  The program invites all deploying service members to record themselves reading stories to their children and then a DVD is mailed home to the family. Chaplains facilitate this program on ships at sea and coordinate with USO’s around the world, even down range, to maintain this important connection between parent and child.

As chaplains we don’t work alone. If a battalion chaplain is deployed, he or she can reach back to our regimental chaplain for assistance to help a family or child in crisis or a ship’s squadron chaplain can reach back to the shore-based ministry center for help. By connecting families with local resources like the Navy Ombudsmen or Marine Corps Family Readiness Officers, our chaplains serve service members by helping families at home navigate the daily demands of military family life.  Knowing their families are cared for, our deployed Sailors and Marines can focus on the job at hand.

Coming home can be nearly as unsettling as leaving. Preparing the service member for a reunion with their children is another important role for chaplains. Return and Reunion discussions assist service members in preparing for the dramatic transition from the tension and stress of deployments and combat to the routines of family life.  Since chaplains deploy with the units and have served families at home, they understand the challenges of both sides in the reintegration process and can offer guidance to ease the family’s transition.

Finally, the Chaplains Religious Enrichment Development Operation (CREDO) program, the flagship program of the Navy Chaplain Corps, has offered Family Enrichment Retreats and Marriage Enrichment Retreats since 1971.  These specialized retreats are free for service members and families and are designed to build stronger military families, taking into account the unique challenges of deployment and frequent moves during a military career.  These include unique father-son and mother-daughter retreats. CREDO is currently expanding with more sites and facilitators around the globe, including the new site in Naval District Washington that I oversee. To learn more about our retreats, visit http://www.chaplaincare.navy.mil to identify the closest CREDO center in your area. Almost every site also has a Facebook page you can use to register for retreats.

Navy chaplains have answered the call to serve since the beginning of America’s military. They continue to inspire hope, resiliency and foster a sense of community for today’s military members and their families.

About the Author: Cmdr. William E. Middleton, a Navy chaplain is the current CREDO Director for Naval District Washington. He has served in the Navy Chaplain Corps for 18 years. Middleton deployed to Iraq as an individual augmentee in 2008 with the Iraqi Assistance Group, Task Force Tusken.

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Posted in Resilience, Resources, Uncategorized

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Navy Chaplains: Support for Sailors and Families in Uncertain Times

Predictability and Controllability are Principles of Stress Control and Resilience.  We may not know what to expect in these uncertain times, but we can rely on the support of our Navy Chaplains.
                                                                                                    (NavyNavStress.com Note)

In these times of economic uncertainty so much can seem out of our control. From delayed deployments, to extended time at sea, to overseas orders on indefinite hold, to potential furloughs which can impact your child’s schooling and day care routine, it’s important to know who you can count on for support.

Chaplains offer a message of hope to you and your families, and we remain committed to supporting you with dignity, respect, and compassion. We are grateful for the trust you give us – and we regard it as sacred.

When you feel you have nowhere to turn during a personal crisis, or when you’re concerned about command involvement or an impact on your career– you are not alone.

Your chaplain is available 24/7 to provide you confidential support and a safe place to talk, without fear or reservation. Chaplains serve as your advocate to help you get the support you need to overcome the challenges we all face together. 

I encourage you to reach out to your command chaplain today. Don’t know who your nearest chaplain is? Not near a Navy or Marine Corps installation? Call Navy 311 to request chaplain support in your area: 1-855-NAVY-311.

Watch the video – Chaplain support is available 24/7.RADM Tidd

Blog Post by Rear Admiral Mark L. Tidd, Chief of Navy Chaplains

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Posted on March 13, 2013 by in Resources, Uncategorized

Get Your Financial Bearing by Setting a Budget

Posted on March 1, 2013 by | 1 Comment

Our incomes represent one of the most powerful resources at our disposal. How we manage our finances defines the direction of our lives, and the quality of our work and home experience.

Financial stress is a leading stressor in personal relationships. It can also harm your career.  Financial problems are the number one cause of security clearance headaches.  So it stands to reason that our finances need to be thoughtfully managed.

Budgeting is simply a planned system for allocating your income towards living expenses, debt payments, savings and investments.

Each New Year gives us an opportunity to refocus.   If your goal in 2013 includes prioritizing your finances into a healthy positive resource, there is no better way to start than from the ground up with a budget or spending plan.

Crafting a budget or spending plan that is in true alignment with realistic goals, expectations and what we earn will help us to:

  •  Live within our incomes
  • Realize personal goals
  • Maintain a good credit history
  • Get more for our money
  • Reduce financial stress and arguments
  • Achieve financial competence and confidence
  •  Keep our job and security clearance in tact

Although this list is not exhaustive, it speaks to the issues that are at the heart of financial readiness.

Last week we discussed what was necessary to fill out a spending plan. So how do we go about preparing a spending plan? The right tools and resources at our disposal and start the process with a visit to last week’s posting Declare Your Financial Independence in 2013.

Additionally service members can reaffirm their commitment to personal financial prudence by taking the Saver’s Pledge @ www.militarysaves.org

Find your motivation, keep the course and reap the benefits of financial success!

Websites for Consumers

Consumer Protection
Consumer Financial Protection Bureau: www.cfpb.gov
Better Business Bureau: www.bbb.org
Federal Trade Commission: www.ftc.gov

Financial Information and Counseling
Navy Fleet and Family Support: www.ffsp.navy.mil
Navy-Marine Corps Relief Society: www.nmcrs.org
Military OneSource website: www.militaryonesource.com
Consumer Credit counseling: www.nfcc.org
FINRA Investor Education Foundation: www.saveandinvest.org 

Credit Reporting
Credit Reporting Agencies: www.experian.com, www.transunion.com,  www.equifax.com
Free annual credit report: www.annualcreditreport.com  

Online Budgeting Tools
www.fpanet.org/ToolsResources

About the author:
Stacy Livingstone-Hoyte, AFC™ has served at the Fleet & Family Support Center, Millington, TN as a Financial Counselor since Nov 2009. She conducts one-on-one sessions, Command training, group workshops and other efforts designed to meet the “Mission Readiness” goal of the U.S. Armed Forces. Prior to government service she worked as a Financial Services Representative for several brokerage and insurance firms. As a military spouse, Ms Livingstone-Hoyte knows firsthand of the financial challenges and opportunities that face Military families across the globe. To that end, she embraces a steadfast belief that financial success can be simple, just not easy.

 

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Posted in Financial Fitness, Resilience, Resources

Declare Financial Independence in 2013

Posted on March 1, 2013 by | 2 Comments

We all have money worries now and then.  But there are ways you and your family can live within your budget and still provide for the future. Financial independence is within your reach if you learn how to make your money work for you.  The first step may be just learning the language, knowing where you are right now and taking advantage of available resources.

The Navy’s 2013 Financial Planning Worksheet is a good practical tool that will help you get started.  Here’s a few of the financial terms that will help you fill it out the worksheet.

  •  Net Worth: Simply put, this is the value of everything you own (assets) less all that you owe (liabilities). Use conservative numbers unless there is a recent appraisal. The resultant figure should be evaluated annually and a worthwhile personal goal is to determine how to increase one’s net worth.
  •  Income: Identify both your gross and net income. Your gross income will be the sum of all compensation. Your net monthly income is your gross income less taxes due.
  •  Living Expenses: Estimate what it costs to live on a monthly basis.  It is important to account for non-recurring items such as holiday spending, birthdays, travel, etc. To do so, start with an annual estimate, then divide by 12 to produce a monthly figure. By doing this you create a way to save for non-recurring monthly expenses in advance so that when the event occurs you already have the savings to put toward that item. A general recommendation is that monthly living expenses should not exceed seventy percent (70%) of net monthly income.
  •  Savings and Investments: Compute what percentage of your monthly net income is used to consistently meet your goals. At least ten percent (10%) of net monthly income should be saved – more depending on lifestyle goals and choices.
  •  Debt Payments: Total your monthly minimum debt payments for credit cards, car loans (non-mortgage items), etc. Dividing this number by your monthly net income will help determine your debt-to-income ratio. Generally, no more than twenty percent (20%) of monthly net income should be attributed to monthly debt payments (not including mortgage). Of course, less debt is better.
  •  Power Payments: You can easily create a practical plan to eliminate all of your debts using the snowball method. With this system, you can choose the option that best fits your goals and abilities. Paying off debts with the highest interest rate is usually the most mathematically advantageous way of eliminating debt. However, paying off the smallest balance first can provide a significant sense of mental and emotional satisfaction and long term motivation. Visit www.powerpay.org and compute your own “debt be gone” plan!

Financial fitness is part of building resilience, mission readiness and happier relationships. As Uniformed service members you have access to free personal financial management resources year round. Speak with your Command Financial Specialist today about becoming financially fit or visit Navy Fleet and Family Support: www.ffsp.navy.mil to start planning your independence.

Next week we’ll look at starting the year out right by setting a budget.

About the author:
Stacy Livingstone-Hoyte, AFC™ has served at the Fleet & Family Support Center, Millington, TN as a Financial Counselor since Nov 2009. She conducts one-on-one sessions, Command training, group workshops and other efforts designed to meet the “Mission Readiness” goal of the U.S. Armed Forces. Prior to government service she worked as a Financial Services Representative for several brokerage and insurance firms. As a military spouse, Ms Livingstone-Hoyte knows firsthand of the financial challenges and opportunities that face Military families across the globe. To that end, she embraces a steadfast belief that financial success can be simple, just not easy.

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Posted in Financial Fitness, Resilience, Resources, Uncategorized