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Airmen can invest expendable funds to acquire $1 million

By setting aside a small portion of pay, an average enlisted Airman who serves 20 years and promotes from E-1 to E-7 will have more than $200,000 at the time of retirement, and almost $1 million in another 20 years.

By setting aside a small portion of pay, an average enlisted Airman who serves 20 years and promotes from E-1 to E-7 will have more than $200,000 at the time of retirement, and almost $1 million in another 20 years.

VANDENBERG AIR FORCE BASE, Calif. -- What Airman wouldn't want $1 million in 40 years?

When invested in a Thrift Savings Plan, money accrues that will help lower loan rates, help with home buying and even create collateral to purchase a car.

An Airman who invests 10 percent of income into a Thrift Savings Plan will have reached that $1 million mark in 40 years, according to Jimmy Camacho, community readiness consultant here.

Mr. Camacho has been a financial consultant for 7 years but only started his TSP as a civilian, after 24 of active duty military service.

"If I would have started at the beginning of my military career, it would have made the difference of hundreds of thousands of dollars for my retirement," he said.

People who begin investing early in life have to invest a considerably less amount than someone who starts investing, for example in Mr. Camacho's case, after 24 years of active duty military service, to reach the same financial goal.

"Airmen have the power of time and that means that they have to invest a lot less," Mr. Camacho said. "It's all simple math--there is even a TSP calculator on the official TSP website www.tsp.gov/calc/PAB_intro.html that will show you how your investment will work for you over the years."

However, for someone to invest money, they need to know how much expendable income they have.

"Knowing your debt ratio is essential," Mr. Camacho said. Debt ratio is the amount of money left over after the bills are paid along with other necessary living items.

"You figure out what you're buying that you don't need and that is your expendable income," Mr. Camacho said.

After expendable income is figured, an allotment takes the money out of the account automatically, the same way the money is deducted for the monthly contributions to the Montgomery GI Bill.

"If you did nothing else in your life, continue to invest the $100 you were putting into the G.I. Bill and put it into your TSP," Mr. Camacho said. "You are already used to not having in your bank account, and you'll walk away with over $73,000 in 19 years."

80 percent of Airmen don't have an investment plan and don't realize what doors their investment will open, according to community readiness consultants here. Not only will the investment give them a cushion for their retirement, but they will also have collateral for future loans.

"Having that amount of money in the bank shows creditors financial stability and independence," Mr. Camacho said. "It will afford you better rates on college loans as well as car and home buying options."

Not only does this early investment set Airman on the right track to healthy habits of saving, but it can also help in stressful situations.

An Airman came to the Airman and Family Readiness Center desperate for money during a family emergency, Mr. Camacho said.

"She had exhausted all of her loan options and didn't realize that she had almost $7,000 in assets which she could borrow against in her TSP," he said.

Like most 401K plans, the TSP allows the investor to take out a loan out against the savings, while accepting tax penalties from accessing the funds before the funds reach maturity.

"You can even cash out your TSP if you get out in 4 years, which would take out a huge chunk of cash, or you can leave it alone and it will continue to grow," Mr. Camacho said.

Financial gurus who are not in need of a base financial consultant can easily go right to the myPay Web site and allot money towards a TSP.

"It was so easy that I almost don't remember how I set it up exactly," Airman 1st Class Sarah Mitchell, 614th Space Intelligence Squadron Collection Analyst, said. "I saw a button for it on myPay and decided to allot a percentage of my paycheck."

Also, for those who feel they may need a bit more that what a financial consultant can provide, classes are available through the Airman and Family Readiness Center on financial basics, investing and TSP. A schedule for these classes can be found at www.phpids.com.

For more information on how to accumulate $1 million in 40 years, visit the official TSP web site at www.tsp.gov.