I established my Roth TSP as soon as I could after I joined the Army (for those non-federal employees, a TSP is a retirement account, the equivalent to a 401(k) or other IRA). I educated myself and immediately moved my allocations from the G Fund (extremely conservative) to the C and S Fund (aggressive). When the Department of Defense unrolled the Blended Retirement program in 2019, I enrolled immediately and have maxed out the matching program ever since. I was proud to see my retirement account increase--knowing that I was putting money aside now to support my family when I'm retired. I was very content with the wise advice, "set it and forget it."
BUT NOW- I am going against the grain--I LIQUIDATED ALL OF IT!
The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act allows anyone negatively affected by the Coronavirus (see requirements here) to withdraw up to $100,000 from his or her retirement account penalty-free. They will then pay the taxes on any taxable income throughout the next three calendar years. I took full advantage of this program.
I broke down my reasons for withdrawing my balance into two categories--market-driven and personal goals-driven. They are as follows:
*Important Note* Even though I withdrew all of my TSP, I am still putting a portion of my income into my TSP. That is because the Army matches up to 5%, and not investing that 5% means I would be leaving money on the table.
This strategy could benefit anyone, but it is not for everyone (not even the majority of people). The biggest reason I would tell someone not to withdraw their funds from their retirement account is if they did not have access to a safe, recession-resistant investment vehicle. That problem is solvable through education and leveraging partnerships. If you're feeling stuck, reach out and let's talk.
I know there is a better way to secure my financial future and support my family and many other families. For me, the decision aligned with my goals and my values. I urge anyone that is considering this tactic to research, reflect, and then take a leap of faith.
Bo Goebel is an US Army Infantry Officer and member of the ADPI Multifamily Mastermind. He is a Managing Member of Riverside Investment Group, a values-based investment team that specializes in commercial multifamily. Learn more on his LinkedIn profile or contact him at [email protected]
You can view Bo's original linkedIn article here