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Young feds: Don't stop thinking about tomorrow
Friday - 1/3/2014, 2:00am EST
When I was first hired as a federal employee, there were several people that greatly influenced me. One of those was a midcareer line worker named Shelly Lassiter. She encouraged me to start saving for my retirement when I was 26 years old. I told her all the normal excuses such as paying off student loans and that I really couldn't afford it. She still insisted, so I compromised and said "Fine, I would contribute five percent to get the government match of 5 percent."
She was satisfied that I had at least started. I paid off a large pile of student loans in three years and I noticed how well my TSP was growing. I had a lot more money available after my student loans were paid off, so I increased my contribution to the TSP. As we got small raises I took that extra money and increased my TSP. Yes my lifestyle is frugal and most would guess I make a lot less money. I am fine with that because keeping up with the Jones' is just too costly.
I would like to influence other mid-level and senior-level employees as well as Human Resources employees to encourage younger feds to start saving at least 5 percent. Plan for the long term because we all know, all too well, it gets here before you know it. Ready or not it will be here sooner than you realize. Yes, there are bumps in the road and uncertainty — that is a fact of life.
The best part about investing at least 5 percent in the TSP is that you get the 5 percent match from the government. This is a 100 percent return on your investment in your future. The second best thing is the low expenses — 20 basis points. That is a $20 fee for every $1,000 you have invested in the TSP. This is very low compared to the average 401(k) or actively managed retirement account or mutual fund. Recently, PBS Frontline did an investigative report on this topic, which can be seen here.
Recently there has been a budget agreement that will require new hires to contribute 4.4 percent for the FERS pension and continue requiring them to contribute 6.2 percent for Social Security. This will reduce the net paycheck for new employees but everyone needs to start saving as soon as possible because time is the largest determining factor in whether you will have a successful retirement (unless you win the lottery or inherit a large amount of money).
Young individuals can choose their lifestyle today, the amount they save and the time they allow that money to grow. These are important decisions made today that will affect their futures. I encourage you to plan for your own retirement. — Kevin P.
NEARLY USELESS FACTOID
Compiled by Jack Moore
What were once thought to be the world's oldest diamonds — 4.3 billion-year-old microscopic gems discovered in 2007 — have turned out to be only leftover bits of cleaning supplies.
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