Part 2 of the BRS Series: Staying in for 26 years, Maxing Out TSP

chart-bsr

In this scenario I stay in for 26 years and make O-6 at 17 years and continue to work till I am 56. At the age of 57 I retire at 26 years to get a new pension of $5,480.12 a month which is 52% of base pay of my top 36 months averaged out. Now we assume some pretty drastic things here. First being in the Navy for 26 years and hitting every promotion on schedule. We also assume  a healthy consistent but not impossible 4.1% return on TSP every year. We also always put in the max of $18k in TSP every year and matching starts in the year 2018. We also assume I never touch the money for a TSP loan.

Age TSP w/ Match TSP
57 $1,013,035.94 $851,256.97
58 $1,054,570.41 $886,158.50
59 $1,097,807.80 $922,491.00
60 $1,142,817.92 $960,313.13

The first year of retirement looks good. I got $1,013,035.94 in TSP, I am a member of the two comma club and on top of that I get my $5,480.12 a month pension. Lets compare it to how things would of been with my old Cliff Vested plan. I would be taking in a larger pension of $6,850.16 a month (65% of top 36 month base pay), but I would only have a meager $851,256.97 in TSP. Over a year I would have $16,440.37 more pension than the new BRS plan. This is more than handsomely made up for with $145,338.60 more money in TSP due to compounding TSP match with BSR.

Old Pension New Pension Cumulative Yr Loss TSP Difference BRS Bonus Age
$6,850.16 $5,480.12 $16,440.37 $161,778.97 $145,338.60 57
$6,850.16 $5,480.12 $32,880.74 $168,411.91 $135,531.17 58
$6,850.16 $5,480.12 $49,321.12 $175,316.80 $125,995.68 59
$6,850.16 $5,480.12 $65,761.49 $182,504.79 $116,743.30 60

I choose 26 years of AD because that is the limit of the match. The government will not match 5% after your 26th year. You can find all of the data here if you want to play around with it. I am siding with BSR myself because it is the only way to get in on contributing more than $18,000 a year into TSP. This becomes very significant in the last 9 years as a captain:

Years in Base Pay 5% Match Yearly TSP Add Match % for TSP Total TSP
4 $5,287.00 $0.00 $18,000.00 0.00% $18,000.00
5 $5,643.90 $0.00 $18,000.00 0.00% $18,000.00
6 $5,967.00 $3,580.20 $18,000.00 19.89% $21,580.20
7 $5,967.00 $3,580.20 $18,000.00 19.89% $21,580.20
8 $6,313.80 $3,788.28 $18,000.00 21.05% $21,788.28
9 $6,313.80 $3,788.28 $18,000.00 21.05% $21,788.28
10 $7,110.30 $4,266.18 $18,000.00 23.70% $22,266.18
11 $7,110.30 $4,266.18 $18,000.00 23.70% $22,266.18
12 $7,356.00 $4,413.60 $18,000.00 24.52% $22,413.60
13 $7,356.00 $4,413.60 $18,000.00 24.52% $22,413.60
14 $7,673.10 $4,603.86 $18,000.00 25.58% $22,603.86
15 $7,673.10 $4,603.86 $18,000.00 25.58% $22,603.86
16 $8,158.50 $4,895.10 $18,000.00 27.20% $22,895.10
17 $8,937.00 $5,362.20 $18,000.00 29.79% $23,362.20
18 $9,392.70 $5,635.62 $18,000.00 31.31% $23,635.62
19 $9,392.70 $5,635.62 $18,000.00 31.31% $23,635.62
20 $9,847.80 $5,908.68 $18,000.00 32.83% $23,908.68
21 $9,847.80 $5,908.68 $18,000.00 32.83% $23,908.68
22 $10,106.70 $6,064.02 $18,000.00 33.69% $24,064.02
23 $10,106.70 $6,064.02 $18,000.00 33.69% $24,064.02
24 $10,369.20 $6,221.52 $18,000.00 34.56% $24,221.52
25 $10,369.20 $6,221.52 $18,000.00 34.56% $24,221.52
26 $10,877.70 $6,526.62 $18,000.00 36.26% $24,526.62

As you can see the match becomes more than 30% of your TSP contribution. Now if you don’t contribute anything into TSP this may not be the plan for you.

-Derp

2 Responses to Part 2 of the BRS Series: Staying in for 26 years, Maxing Out TSP

  1. Derp,

    Are you sure we can go over the 18,000 mark. I was under the impression our total still has to be $18,000 or less including the matched funds. That’s how 401Ks usually work

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