I had the opportunity last week to open a financial education seminar at the Bangor Theater.  It was presented by the education division of the National Association of Securities Dealers, who made the same presentation onboard Naval Air Station Whidbey Island. 

The information was great and I hope that many of you took advantage of this free training.  Few things are more valuable than your financial future and security.  As I’ve written before, there are a lot of choices available to you with which to plan and manage your finances.  Numerous choices exist both in method and in organization and institutions willing to assist you.

Though you have a lot of choices, I want to use today’s column to highlight a unique benefit available to military members and government civilians alike:  the Thrift Savings Plan, better known as TSP.

TSP is a defined contribution plan meaning that retirement income you receive from your TSP account depends on how much you contribute during your working years and earnings on the contributions. 

In contrast, the military retirement system (as well as the civilian FERS and CSRS systems) is a defined benefit program.  Retired pay is based on years of service and rank (or salary, if civilian) at the time of retirement.

The TSP offers similar savings and tax benefits offered by many private corporations through “401(k)” plans.  Additionally, your contribution is made before taxes are withheld on your pay and your savings grow tax free until you take money from the TSP account, otherwise known as tax deferred.  Contributions such as combat pay earned in a tax-free zone are known as tax exempt.

You’re free to make any size contribution from 1 to 100 percent of your basic pay up to $15,000 which is the 2006 limit imposed by the IRS.  You can also contribute up to 100 percent of other pays within any IRS limits.

TSP offers participants a choice of funds in which to put their contributions.  Unlike the private sector, the variety isn’t a dizzying array of names and numbers and acronyms accompanied by incomprehensible brochures and sales pitches. 

There are just a few choices from which to choose, depending on the level of risk to which you want to expose your savings.  The growth of your savings depends on the funds in which you place your contributions and the activity of financial markets; specific information can be found on TSP’s Web site.

The Federal Retirement Thrift Investment Board administers the TSP and contracts with the U.S. Department of Agriculture’s National Finance Center (NFC) to serve as TSP’s record keeper. Very small (relative to private sector investment agencies) administrative costs are assessed to members’ accounts based on your individual account’s growth.  Those costs vary; specific information can be found on TSP’s Web site.

Remember that you have resources.  Navy and Marine Corps Relief Society can help you budget, plan for your financial future, and set financial priorities and goals.  Your command financial specialist can also assist.  Your financial institution may have programs that fit your needs, as do some large insurance companies.  For more detailed information on the Thrift Savings Plan, see the TSP Web site at http://www.tsp.gov{{PERIOD}}

Don’t be a spend thrift; be a thrift saver:  pay yourself first.  Make sure that, while you’re busy serving the nation, you remember to take care of yourself and your family—now and in the future.