If you are looking to build long-term financial security, starting early with saving, investing, and budgeting can make a world of difference. For military members, one of the most valuable and easy-to-use tools for retirement saving and investing is the Thrift Savings Plan (TSP). This account is similar to a 401(k) in the civilian world, but it is built specifically for federal employees and uniformed service members, to include National Guard and Reserve components.

In this article, we will cover what the TSP is, how it works, why it matters, and how you can make the most of it throughout your military career.

What Is the TSP?

The Thrift Savings Plan is a defined contribution retirement savings plan that allows military members to contribute a portion of their paycheck into a tax-advantaged investment account. It was established by Congress in 1986 and is overseen by the Federal Retirement Thrift Investment Board (FRTIB). The TSP is considered one of the lowest-cost retirement plans in the world, which makes it a smart option for service members looking to grow their savings over time.

Military members can contribute from their basic pay, special pay, incentive pay, or bonuses. Depending on when you joined and your retirement system selection, you may also be eligible for matching contributions.

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TSP and the Blended Retirement System (BRS)

In 2018, the Department of Defense released the Blended Retirement System (BRS), which combines a traditional pension with contributions to the TSP. Anyone who joined the military on or after January 1, 2018, is automatically enrolled in the BRS, while those who joined before that date may have had the option to opt in or keep the “Legacy/High-3” retirement plan.

Under BRS, service members automatically receive:

• Automatic 1% contribution of their basic pay to their TSP from the Department of Defense.
  
• Matching contributions up to an additional 4%, depending on how much the member contributes.
  • NOTE: The 4% matching contributions will begin at the start of your 25th month of service while the 1% automatic contribution begins after 60 days.
    

To maximize the matching contributions of the BRS, you need to contribute 5% of your own pay. Anything less than the 5% and you are missing out on free money from Uncle Sam.

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Traditional vs. Roth TSP Contributions

The TSP offers two types of contributions: Traditional and Roth. Understanding the difference is crucial to building a smart savings strategy.

• Traditional TSP: Contributions are made pre-tax, meaning they reduce your taxable income now. Taxes are paid later when you withdraw money in retirement.
  
• Roth TSP: Contributions are made after-tax, meaning you pay taxes up front but qualified withdrawals in retirement are tax-free.
  

Which option is better? That depends on your financial situation and where you expect your tax rate to be in retirement. Many younger service members, especially those in lower tax brackets or deployed in tax-exempt combat zones, may benefit from Roth contributions now, enjoying tax-free withdrawals later.

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TSP Investment Funds

The TSP offers five core investment funds and several lifecycle (L) funds:

1. G Fund – Government Securities Investment Fund.
   
2. F Fund – Fixed Income Index: Objective is to track the Bloomberg U.S. Aggregate Bond Index.
   
3. C Fund – Common Stock Index: Objective is to track the S&P 500 index.
   
4. S Fund – Small Cap Stock Index: Objective is to track the Dow Jones index.
   
5. I Fund – International Stock Index: Objective is to track the MSCI ACWI IMI ex USA ex CHINA ex Hong Kong.
   

In addition, Lifecycle (L) Funds automatically adjust the mix of these funds based on your expected retirement date, shifting from more aggressive (stocks) to more conservative (bonds) as you get closer to retirement.

For those unsure of where to start or who prefer a hands-off approach, L Funds are a great option.

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Contributions and Limits

Military members can contribute a significant amount to the TSP. As of 2025, the annual contribution limit is:

• $23,500 for regular contributions (across Traditional and Roth combined).
  
• An additional $7,500 in catch-up contributions if you’re age 50 or older.

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Why TSP Matters for Military Members

1. Low Fees: TSP has some of the lowest administrative fees in the investment world, it is just a few cents for every $1,000 invested. The fees vary based on the investment fund and range from 0.036% to 0.051%.
   
2. Tax Advantages: Both Traditional and Roth TSP accounts offer tax benefits.
   
3. Automatic and Matching Contributions: Under BRS, you’re getting extra money from the government just for saving for your future.
   
4. Portability: You can leave your money in the TSP after you leave the military, roll it over to another retirement account, or continue contributing if you transition to a federal civilian job.
   
5. Financial Independence: TSP is one of the best tools military members have for achieving long-term financial freedom and retiring comfortably.
   

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How to Get Started with TSP

Set up your TSP account, then complete the following:

1. Log in to MyPay or your TSP account to check your contributions and adjust them if needed.
   
2. Choose how much to contribute each month, at least 5% is recommended under BRS to take full advantage of the contribution match from Uncle Sam.
   
3. Decide between Traditional, Roth, or a combination.
   
4. Pick your investment fund(s) or opt for an L Fund if you prefer simplicity.
   
5. Reassess your strategy annually or when your goals change.
   

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Final Thoughts

For military members, the Thrift Savings Plan is more than just a retirement account, it’s a cornerstone of long-term financial wellness. Whether you’re just starting your military career or nearing retirement, understanding and taking full advantage of the TSP can set you up for a more secure and comfortable future.

The earlier you start contributing, the more your money can grow thanks to the power of compound interest. Even small contributions add up over time. So don’t wait.. Start today, and invest in your future.