Financial Management Element #42 Pg #193

Objectives State the Purpose for Financial Management Explain the Standard for Financial Management Describe the Thrift Savings Plan Describe the Blended Retirement System Describe the options of the Survivor Benefit Plan Discuss Sources Indirect Compensation List Resources

Purpose To inform the member of the financial resources available to help with transition Important to have financial affairs in order before leaving the military

Standard Financial Planning is key to managing a limited income after transition Members must develop a 12-month post separation budget Budget will be developed during the Financial Planning Seminar Many people are not familiar with filling out a budget and are not aware of where their money actually goes

Link to Worksheet https://kitsap.navylifepnw.com/support-programs/financial-management

Thrift Savings Plan Retirement/savings plan similar to a 401k Two types of contributions: Traditional: pre-tax Roth: after-tax How many of you contribute to TSP? Can contribute to both Traditional and Roth at the same time Traditional TSP—If you make traditional contributions, you defer paying taxes on your contributions and their earnings until you withdraw them. If you are a uniformed services member making tax-exempt contributions, your contributions will be tax-free; only your earnings will be subject to tax at withdrawal. Roth TSP—If you make Roth contributions, you pay taxes on your contributions as you are making them (unless you are making tax-exempt contributions from combat pay) and get your earnings taxfree at withdrawal, as long as you meet the requirements to qualify.

TSP Fund Options The Lifecycle Funds are designed for participants who may not have the time, experience, or interest to manage their TSP retirement savings The funds automatically adjust to reflect a reduced ability to tolerate risk as the need for income nears. The five L Funds are: • L 2050 • L 2040 • L 2030 • L 2020 • L Income

TSP Fund Options G Fund: short-term U.S. Treasury securities

Withdrawal Options Partial Withdrawal: You can take out $1,000 or more and leave the rest in your account until you decide to withdraw it at a later date. Full Withdrawal: • A single payment • A series of TSP monthly payments • A life annuity purchased for you by the TSP Withdrawal deadline. If you are separated from federal service or the uniformed services, you are required to make a withdrawal choice for your TSP account balance by April 1 of the year following the year you turn age 70½. However, if you are still employed at age 70½, your required withdrawals must begin by April 1 of the year following the year you separate from federal service or the uniformed services. If you do not withdraw (or begin withdrawing) your account by the required withdrawal deadline, your account balance will be forfeited to the TSP. You can reclaim your account; however, you will not receive earnings on your account from the time the account was forfeited.

Blended Retirement System The Blended Retirement System (BRS) is a modernized retirement plan for all new entrants into the Uniformed Services on or after Jan. 1, 2018, and eligible service members who opted into BRS. BRS Explained BRS

Survivor Benefit Plan A form of Life Insurance for retired pay Designed to protect survivors against the risks of: The members’ early death The survivor outliving the benefits Inflation Participants will pay a monthly premium based on the benefit level selected Full coverage is based on full retirement pay, meaning the spouse or elected dependents will receive 55% of the members retirement pay. Lesser coverage can be selected Spouse, children, former spouse, or other “insurable interest” (business partner or parent)

Indirect Compensation Medical Care Tricare Dental Federal Tax Advantage on BAH and BAS State/Local Tax advantage Military Pension SGLI Commissary and NEX discounts Education Programs Counseling and Assistance Programs Space “A” Travel Gym Membership

Resources Personal Financial Management specialists and subject matter experts at Fleet and Family Support Centers Various websites to further research these topics on your own: Militarypay.defense.gov/Calculators/RMC-Calculator Tsp.gov Militaryonesource.com Militarybenefits.info

FFSC Courses Home Buying Car Buying Retirement Planning Thrift Savings Plan (TSP) Career Status Bonus/REDUX Credit and Debt Management Consumer Awareness Identity Theft Million Dollar Sailor.

What is the Career Readiness Standard that must be met before a member separates? Develop and produce a 12-month post separation budget

What are the two types of post-separation withdrawals What are the two types of post-separation withdrawals? A partial withdrawal A full withdrawal

What are some types of indirect compensation? Medical Care Tricare Dental Federal Tax Advantage on BAH and BAS State/Local Tax advantage Military Pension SGLI Commissary and NEX discounts Education Programs Counseling and Assistance Programs Space “A” Travel Gym Membership

Summary Purpose for Financial Management Standard for Financial Management Thrift Savings Plan Blended Retirement System Survivor Benefit Plan Indirect Compensation Resources Where can you go to find more information on these topics?

Questions?