[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]A recent report is indicating that military personnel that has just been moved into the TSP (Thrift Savings Plan) may need financial wellness training.
Those who joined the service on or after January 1st of 2018 are given a new retirement system in place of the previous 20-year pension system. The new system provides a reduced pension but has a lump-sum bonus and a matching funds initiative within the Thrift Savings Plan.
First Command Financial Services, Inc. has a white paper released in 2016 that implied that military personnel who did not save enough of their base pay and their entire lump sum bonus to invest in fund options within the TSP are in danger of getting monthly payments in retirement that would be incredibly less than the monthly payments that are from the previous pension system.
Scott Spiker, then CEO of the company, stated that acquiring actions that go against the desires of a society that breathes instant gratification and applying reliable financial decisions will be needed for success. The company also acknowledged that the new retirement program offers financial education to guide and encourage military members to be more active in working toward having a secure and stable retirement.
But a GAO (Government Accountability Office) report revealed that there is a need to put in an assessment that can be utilized to make sure that these lessons would be beneficial or helpful for military personnel to better their endeavor in preparing for their financial security.
The GAO reviewed the DOD’s execution with its new retirement program and its undertaking to train and prepare its military members to handle choices with their financial future and its health in mind.
The Government Accountability Office suggested a few things.
The Secretary of Defense should assess the outcomes of its evaluations of financial literacy training to identify where there are weaknesses in the financial knowledge of servicemen and women to update future training and education to strengthen these weaknesses.
The Secretary of Defense ought to provide information outlining key details regarding the lump-sum payment, along with some indication of its value, the potential good and bad financial impacts of taking the lump-sum payment option, and an explanation of how it was calculated.
The Secretary of Defense should collaborate with the Executive Direct of the Federal Retirement Thrift Investment Board to seek other ways for military members to get their starting password for their TSP account so that they will be able to access their TSP accounts as soon as possible.
The GAO state that some hurdles when it comes to being financially educated for service members are being able to comprehend the training due to how little many know of financial literacy and not knowing how to relate to long term objectives in regards to retirement because of short term life goals. This seems to be the same issue for American civilians, as well.
This past summer, the SEC (Securities and Exchange Commission) presented the Military Service Members’ Initiative which aims to assist with educating more military personnel and vets about finances that include saving, investing, investment fees, programs for retirement, and being more aware of what investment fraud may look like.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36049″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
