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Shows & Panels
Guiding your TSP through dangerous political fog
Wednesday - 10/9/2013, 2:00am EDT
Uncle Sam's TSP is the biggest employer-backed 401(k) style plan in the country. Investing in it is a great — but not required — way for workers under the old CSRS retirement plan to further boost their retirement income.
For the vast majority of working feds under the FERS program, investing in the TSP is a must because their federal retirement benefit is much smaller than the CSRS formula. FERS employees can qualify for a 5 percent government match — in effect a 5 percent tax-deferred pay raise, in the TSP.
Right now, the average TSP account balance for workers under the FERS program is $99,056 with $3,090 in Roth accounts. The average for CSRS is $98,416 (with $5,236 in a Roth), and for members of the uniformed military services the average is $25,604 (Roth $1,684).
There are also 929 federal employees with account balances of $1 million or more. A recent column told how at least one of them got to that magic number.
But whatever your balance today, and your time left in government, the hype surrounding the debt-ceiling issue has probably gotten your attention. Some experts say that if it happens, it could cause a worldwide recession, starting right here at home. Some say the stock markets could tank and it could take years to recover. Others say that hard times, when the markets are down, is the best time to buy. Remember the investors mantra: Buy low, sell high. Just about everybody knows that. The hitch comes in deciding when it is high tide and when the market is low. That means market-timers must be right twice: Knowing exactly when to leave the market and exactly the best time to return.
So what should you be doing, not doing or considering? Let's ask a pro. Today at 10 a.m. on our Your Turn radio show, financial planner Arthur Stein is our guest. He says one of the major investment challenges "is framing a response to an unusual event" like the shutdown or the debt ceiling issue. He used the S & P 500 index (the C Fund) as an example.
He said the markets were down two weeks before the shutdown started but on the first day of the shutdown, the S&P went up? On Oct. 3, he said the S&P 500 was down 3.7 percent from its high on Sept. 18. BUT it was still 17 percent higher than at the beginning of the year.
Incidentally, Stein knows the TSP millionaire whose advice we quoted in the column.
Later in the show Sean Reilly, senior writer for the Federal Times will update us on the shutdown, we'll talk about the possibility of post-shutdown layoffs and buyouts and the latest from the U.S. Postal Service.
NEARLY USELESS FACTOID
Compiled by Jack Moore
The alpine swift, a small migratory bird weighing less than a quarter of a pound, can stay aloft in flight for more than 200 days without touching down
(Source: Smithsonian Magazine)
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