Awesome Pay Changes For 2018!

Wish I was an Admiral in SF

I was blown away by two things today when my paycheck posted for the first time in 2018. First off there has been a 12% increase in the BAH of the Great Lakes Military housing area (NAVTRACEN, IL (IL092)) as well as a overall base pay increase of 2.4%. You can find the new 2018 Pay Table Here. This should get you thinking of how you want to contribute to your TSP to get the BRS match. If you want to maximize your match you will need to enter new values to make sure you don’t top out too early for the year. Keep in mind the new maximum is $18,500 for the 2018 year. Here is how I calculate my contributions for the year:

Step 1: Make a Spreadsheet of your pay and years in according to the new chart

Make sure you adjust for any pay bump that puts you in a new catagory:

 O-4 Base Pay Years In
Jan $5,900.70 5
Feb $5,900.70 5
Mar $5,900.70 5
Apr $5,900.70 5
May $5,900.70 5
Jun $6,238.50 6
Jul $6,238.50 6
Aug $6,238.50 6
Sep $6,238.50 6
Oct $6,238.50 6
Nov $6,238.50 6
Dec $6,238.50 6

Step 2: Divide out $18,500 for 12 months, you should get $1,541.67 then divide per month base pay

Base Pay TSP Deposit  % Contribution
Jan $5,900.70 $1,541.67 26.1%
Feb $5,900.70 $1,541.67 26.1%
Mar $5,900.70 $1,541.67 26.1%
Apr $5,900.70 $1,541.67 26.1%
May $5,900.70 $1,541.67 26.1%
Jun $6,238.50 $1,541.67 24.7%
Jul $6,238.50 $1,541.67 24.7%
Aug $6,238.50 $1,541.67 24.7%
Sep $6,238.50 $1,541.67 24.7%
Oct $6,238.50 $1,541.67 24.7%
Nov $6,238.50 $1,541.67 24.7%
Dec $6,238.50 $1,541.67 24.7%
Total $18,500.04

For the year I should put 25-26% of base into my TSP a month to hit the $18,500 max for the year by December. If we look at the matching 5% funds and compare them as a function of “Return on Investment” we get this chart:

Gov’t 5% Base Match My Deposit % “return”
Jan $295.04 $1,541.67 19.14%
Feb $295.04 $1,541.67 19.14%
Mar $295.04 $1,541.67 19.14%
Apr $295.04 $1,541.67 19.14%
May $295.04 $1,541.67 19.14%
Jun $311.93 $1,541.67 20.23%
Jul $311.93 $1,541.67 20.23%
Aug $311.93 $1,541.67 20.23%
Sep $311.93 $1,541.67 20.23%
Oct $311.93 $1,541.67 20.23%
Nov $311.93 $1,541.67 20.23%
Dec $311.93 $1,541.67 20.23%
Total $3,658.65 $18,500.04 19.78%

Now if you only put in 5% of base pay you are getting 100% ROI! The only catch is you got to wait till 59.5 to get this money. If you don’t contribute anything to TSP consider the tax loss of putting the same amount into a bank account or investment and paying capital gains taxes on top of paying income taxes on the money. I would take 20% ROI any day and keep it safe in G fund till I hit 59.5 years old.

-Derp

 

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