Power-up the TSP

In 2001 military members finally got access to the Federal Government's Thrift Savings Plan (http://www.tsp.gov). Until that time, military members could only save money tax deferred through traditional individual retirement accounts. A cursory review of any personal finance books or magazine articles will uncover a long list of the advantages to the individual of deferring taxes on current income and allowing gains in these accounts to also grow. The taxes are paid later, after years of compounded growth, and in years when regular income is controlled by the individual. This often allows him or her to pay less in taxes, while enjoying much larger returns on the investment.

Here's a simple example. 2 lieutenants begin saving for their future. One invests $1,000 in his TSP, and the other invests $1,000 in a taxable account. Both enjoy a 12% growth rate. At age 60 the newly retired officers compare notes. The Lt with the taxable account boasts that he has amassed $26,437 on his small investment. The TSP investor smiles because he knows that his account now has $74,180 in it. While he understands that he'll pay taxes on his withdrawls, his gains are so great that he doesn't mind at all.

(Assumptions: 38 years, 12% interest, no additional contributions, 25% tax bracket. See http://fincalc.com/inv_07_o.asp for the calculator.)

Top 10 List

I've been researching personal financial planning for more than 20 years, and have been an active investor since my first days in the military. As I approach retirement-eligibility I have been suprised to see a lack of consolidated information regarding military retirement choices and recommendations.

So, I'm launching this blog to catalogue my discoveries and share them with others.

Here are my specific questions:

1. What is a military retirement worth? (What would an annuity cost that would throw off the income that a taxable military retirement does?)
2. How much life insurance would you need to offset the benefit of the Survivor Benefit Plan(SBP)? Is the SBP the best way to insure income for my spouse?
3. Should I roll my Thrift Savings Account plan into a traditional IRA? If so, how should I allocate my proceeds?
4. What are my retirement benefits? What does the VA have to offer?
5. How much will my health care benefits cost? How much freedom of choice will I have?
6. Will I be able to keep my dental care coverage? What about my family?
7. Where will my children be able to attend college and be charged as "in-state" residents?
8. Where can I live so that my military retirement income is tax-free?
9. What will my cost of living be in retirement? How can I make up the difference?
10. What life insurance programs will I be eligible for? Other than SBP, how much do I need?

I think that this list should be enough to get me started. In addition, I hope to add topics on issues that I have learned along the way, such as TSP choices, Roth IRA's, whether military members should purchase real estate or just rent properties, buying automobiles, and living overseas, something I have personally done. I thing that this blog could be very helpful for many people.