We’re talking about investment vehicles you can use to work towards your biggest, farthest out goals like retirement…aka making work optional someday.
While there may appear to be an alarming number of investment options, certain types of accounts are geared towards helping you get to the golden years. Retirement vehicles for military members break down into three main categories worth understanding. Check it:
- The TSP. This is the employer-provided retirement plan for the military, like 401(k)s in the civilian sector. The TSP offers many benefits including both traditional and Roth options and contributions by the DoD once the new blended military retirement system kicks in at the beginning of 2018. Contributions are automatically taken from each paycheck so you move towards your goal without thinking too hard.
- IRAs. IRA stands for Individual Retirement Arrangements. When employer-provided plans aren’t enough, or if you just want to do something different, you can put together your own IRA. You get access to a huge world of investment choices (which can be a downside) and like the TSP, you get tax advantages that vary between traditional and Roth options.
- General investment accounts. You don’t have to stick with just retirement-specific investment vehicles. Set up a brokerage account to pursue any of your mid-to-long-term goals — one of which may be retirement.
There’s no one right approach to investing for retirement (though the TSP is a top contender for military members). You might choose retirement vehicles to help enforce long-term investing then add general investment accounts to mix it up.