How to Invest in the Thrift Savings Plan

Investing in your future is important if you want to have a comfortable retirement. Most people know about choices such as mutual funds, stocks and bonds, Roth IRAs, traditional IRAs and 401(k) plans, but not as many people have heard of the Thrift Savings Plan. The Thrift Savings Plan is a retirement investment plan only available to government and military employees.

Figure out how much money you will need for retirement. There is no set formula, and you will need to discuss your options with a financial adviser. However, the general rule is that you would need approximately 80 percent of your annual current income, adjusted for inflation, for each year of retirement. Decide how much you can afford to put in the plan. At the very least, you should try to invest up to the dollar-for-dollar match given by your employer.

Look Into the Tax Benefits

Because you are not taxed on the money that you put into the Thrift Savings Plan until retirement, there may be years when it is beneficial to put more away into the plan that in other years, depending on your allowable deductions. Talk to a financial adviser and an accountant to figure out when the tax benefits would be worth diverting more of your paycheck into the Thrift Savings Plan.

Look into Lifecycle Funds. Also known as L Funds, this will help to diversify your portfolio and help you to get the most out of your money over the long haul. Do not withdraw the money early. Keep your money vested until you are 59 1/2 and you won’t be penalized. Penalties for early withdrawal are almost never worth it, so do everything you can to protect your investment.