Assuming no other retirement savings vehicle is available for the military retiree, the TSP is the obvious account of last resort to make up for the impact of an increased income tax on base pay and Social Security wages. In a tax-deferred, traditional TSP, the retiree knows how much he or she has in the account, but cannot always anticipate income tax liability. The amount that the retiree gets to keep is determined by the share that the government taxes at the time of withdrawal.
The impact of relying solely on a tax-deferred TSP is a clear risk for military retirees. One way to mitigate this risk to a tolerable level is to consider funding a Roth TSP. Additionally, many military retirees continue employment in the civilian sector upon retiring from active or reserve service, so they can also fund a Roth 401(k) through a civilian employer. Moreover, the civilian spouse of servicemember could contribute to a Roth IRA if employed or the married couple could fund a Roth IRA for the non-employed spouse. Most reserve component servicemembers have civilian employment, so they can also take advantage of Roth 401(k)s and IRAs. Servicemembers have no control over what the federal income tax rates may be in the future, the taxability of their retirement base pay or Social Security, but they can regain some control by taking advantage of Roth contributions.