Prepare for a worry-free future

The pension is an institutionally-controlled defined benefit plan. This means you have no management or control over how funds are invested, and the deal is that if you retire after X years of work, you’ll receive a monthly pension check of $Y a month — period.

The TSP is a self-directed defined contribution plan. That means each month while still working you direct a certain amount of money onto the plan — you decide how much. You can select from a limited menu what type of funds or portfolio to invest in, and the investment returns will be whatever they’ll be, no guarantees. Then when you retire, you have several options to access the money — you have a lot of flexibility, you’re not stuck with just one fixed paycheck a month.

Sorry, don’t know how the loans work for government plans.